Short answer. Article 1819 provides that where title is in the partnership's name, a conveyance a partner executes in his own name still passes the partnership's equitable interest, but only if the sale is within the partner's authority under Article 1818. If the sale exceeded that authority, no such interest passes to the buyer.
What the law says
Where title to real property is in the name of the partnership, a conveyance executed by a partner, in his own name, passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of the first paragraph of article 1818.
Civil Code, Article 1819 — Conveyance of Partnership Realty. Read the full provision →
What the law says
Every partner is an agent of the partnership for the purpose of its business, and the act of every partner, including the execution in the partnership name of any instrument, for apparently carrying on in the usual way the business of the partnership of which he is a member binds the partnership, unless the partner so acting has in fact no authority to act for the partnership in the particular matter, and the person with whom he is dealing has knowledge of the fact that he has no such authority.
Civil Code, Article 1818 — Partner as Agent of the Partnership. Read the full provision →
Selling in his own name does not automatically fail
Article 1819 directly addresses this situation: where title to real property is in the name of the partnership, a conveyance executed by a partner, in his own name, passes the equitable interest of the partnership, provided the act is one within the authority of the partner under the provisions of the first paragraph of article 1818. So the fact that the deed was signed in the partner's own name rather than the partnership's name does not, by itself, defeat the sale. What actually decides whether the buyer received the partnership's equitable interest is whether the selling partner had the authority to make that sale in the first place.
Whether the partner had that authority
Article 1818's first paragraph makes every partner an agent of the partnership for its business, so that an act for apparently carrying on in the usual way the business of the partnership generally binds the partnership, unless the partner had no real authority and the buyer knew it. If selling this particular piece of land was within the ordinary course of how the partnership conducted its business, or the other partners had actually authorized the sale, the conveyance likely passed the partnership's equitable interest to the buyer even though it was executed in the partner's own name.
What happens if the sale exceeded his authority
If selling that land was not within the partner's authority, meaning it fell outside the usual course of the partnership's business and the other partners never authorized it, then the condition Article 1819 sets is not met, and no equitable interest of the partnership passes to the buyer through that conveyance. In that situation, the partnership generally retains its interest in the property despite the deed, and the buyer's claim would rest on whatever personal interest, if any, the selling partner actually had, which for partnership-owned property titled in the partnership's name may be limited.
What to check when this dispute arises
Resolving what interest passed comes down to establishing whether the sale of that particular property was within the ordinary business of the partnership or was separately authorized by the other partners, since Article 1819 makes the partner's authority the deciding factor rather than the form of the deed. It is also relevant whether the buyer knew or had reason to know that the selling partner lacked authority, since a buyer's knowledge of a partner's actual lack of authority can affect whether the conveyance is treated as valid against the partnership.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- In the Matter of Urgent Petition for the Release of Prisoners on Humanitarian Grounds, G.R. No. 252117, July 28, 2020 — read the decision on LawPhil →
- Villamor & Victolero Construction Company, et al. vs. Sogo Realty and Development Corporation/Sogo Realty, G.R. No. 218771 / G.R. No. 220689, June 3, 2019 — read the decision on LawPhil →
Related provisions
- Civil Code, Article 1819 — Conveyance of Partnership Realty
- Civil Code, Article 1818 — Partner as Agent of the Partnership