3. No, Mario is not correct.

Under the law, a partner's act can bind the

partnership if the acting partner had no knowledge or notice of the dissolution.
Although Ned was a silent partner, he still should have been notified of Al's
insolvency in order for the partnership assets not to be liable to the supplier.
The law also states that a previous creditor should be especially notified of the
dissolution. Mere publication is not notice to the previous creditor. Since the
supplier in the instant case is deemed to be an old creditor, he should have
received a special notification.
Even if Ned is not authorized to represent the partnership because of his being a
silent partner, the supplier is not aware of such fact. As to third persons, an
unauthorized partner's act may bind the partnership if the third person has
actual knowledge of the dissolution. In the case at bar, the third person is the
supplier and he has no knowledge of the firm's dissolution. Therefore, as to third
persons, Ned's action is binding on the partnership.
----------------------------Alternative answer:
Yes, Mario is correct. Under the law, a partner's act does not bind the partnership
after dissolution if the acting partner is not authorized to act on behalf of the
partnership and if the third person had constructive knowledge of the firm's
dissolution. The law also states that silent partners do not take active part in the
management of the business, though they share in the profits and losses. In the
case at bar, the third person is the supplier of the wheelbarrows and Ned, being
a silent partner, is not authorized to enter into a contract with said supplier. Also,
since the supplier in this case has not extended credit to the partnership he is
deemed to be a new creditor, who is not entitled to special notice. Mere
publication of the firm's dissolution in the newspaper is constructive notice to
him. Hence, Ned's act and the contract with the supplier do not bind the
partnership.

b) My answer would be different if there was no such notice of dissolution

published in the newspaper. Under the New Civil Code, the partners act after
dissolution can bind the partnership even if such partner is not authorized to act
on behalf of the partnership if the third person had no actual or constructive
knowledge of the dissolution. If the supplier had not learned of the dissolution in
some other manner and did not know that Ned is a silent partner, then the
partnership will be liable to him if no publication was made in the newspaper.

4.

5) a. Harry, Ronald, and Hermione, who are partnership creditors, shall be paid
first P100,000.00, P200,000.00, and P50,000.00 respectively, for a total sum of
P350,000.00 leaving a balance of P650,000.00. Louie, also a creditor, shall be
paid P50,000.00. This leaves a balance of P600,000.00.
The contributions of Huey, Duey, and Louie to the partnership capital shall be
returned to them in the total sum of P100,000.00, leaving a balance of
P500,000.00, which shall be divided among Huey, Duey, and Louie. Since there is
no agreement as to how the profits should be divided, the profits will be divided
in proportion to their capital contributions. Thus, Huey will be entitled to 2/10 or
P100,000.00, Duey will be entitled to 3/10 or P150,000.00, and Louie will be
entitled to 5/10 or P250,000.00.
b) The partnership assets shall be exhausted to satisfy the liabilities. The assets
of P1,000,000.00 shall be used to pay the liabilities, leaving an unpaid balance of
P500,000.00. The partners shall then contribute to the loss in proportion to their
capital contribution if there is no agreement on how the loss should be divided
among the partners. Consequently, Huey will be liable out of his separate
property in the amount of P100,000.00, Duey, P150,000.00, and Louie,
P250,000.00. Since Louie is already dead, his estate is still liable for the
contributions needed to pay off the partnership obligations.

6. a) The general rule under the New Civil Code states that a person who has
contributed capital to a partnership erroneously believing that he has become a
limited partner is not personally liable as a general partner by reason of his
exercise of a limited partner. However, he must promptly renounce his interest in
the profits of the business or other compensation by way of income, have his
name removed from the firm name, and not participate in the management of
the business. The partnership must comply with the requirements of the
formation of a limited partnership and register the firm with the Securities and
Exchange Commission. If they fail to register with the SEC, the partnership will
be considered as a general partnership.
b) No, Mr. Johnson cannot be exempt from liability against Bankwise. Mr. Johnson
is estopped from denying that he is a general partner to third persons because
his name appears on the firm name. He shall become liable for the debt of P3M
from Bankwise together with the other general partners. However, he may seek
reimbursement from Maria and Pedro because to their agreement, he is a limited
partner.
c) No, Dawn may not be bound by the said provision and join as a general
partner. Under the law, the limited partner may have the right to substitute an
assignee in his place. Consequently, the assignees would ordinarily become
limited partners since this is the kind of partners they are substituting. Also,
being admitted to the partnership after its formation, heirs and assignees cannot

be compelled to assume personal and unlimited responsibility for the obligations

of the firm.
d) Dawn can be both a general and limited partner by filing an amendment to
the original certificate. This certificate should state the names of the general
partners as well as the limited partners, adding thereto the word Limited
among other requirements enumerated under Article 1844. This certificate
should be sworn to and filed with the Securities and Exchange Commission.