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PARTNERSHIP
It is a CONTRACT whereby two or more persons (1) bind themselves to CONTRIBUTE money, property, or industry to a COMMON FUND (2) with the intention of dividing the PROFITS among themselves or in order to EXERCISE a PROFESSION
a STATUS and a FIDUCIARY RELATION subsisting between persons carrying on a business in common with a view on profit
CHARACTERISTICS OF THE CONTRACT OF PARTNERSHIP [C, C, L, I, AS, NP]
- CONSENSUAL perfected by mere consent
- CONTRIBUTION of money, property or industry to a COMMON FUND
- object must be a LAWFUL one
- INTENTION of DIVIDING the PROFIT among the PARTNERS
- “AFFECTIO SOCIETATIS” the desire to formulate an ACTIVE UNION, with people among whom there exist a mutual CONFIDENCE and TRUSTS
- NEW PERSONALITY the object must be for profit and not merely for the common enjoyment otherwise only a co-ownership has been formed. HOWEVER, pecuniary profit need not be the only aim, it is enough that it is the principal purpose
BUSINESS TRUSTS when certain persons entrust their property or money to others who will manage the same for the former
RULES ON CAPACITY TO BECOME A PARTNER
- a person capacitated to enter into contractual relations may become a partner
- an UNEMANCIPATED MINOR CANNOT become a partner UNLESS his parent or guardian consents
- a MARRIED WOMAN, cannot contribute conjugal funds as her contribution to the partnership UNLESS she is permitted to do so by her husband OR UNLESS she is the administrator of the conjugal partnership, in which the COURT must give its consent authority
- a PARTNERSHIP being a juridical person by itself can form another partnership
- a CORPORATION cannot become a partner on grounds of public policy
a partner shares not only in profits but also in the losses of the firm
RULE: the partnership has a PERSONALITY SEPARATE and DISTINCT from that of each partner
CONSEQUENCES OF THE PARTNERSHIP BEING A JURIDICAL ENTITY
- its juridical personality is SEPARATE and DISTINCT from that of each partner
- the partnership CAN in GENERAL: A) acquire and possess property of all kinds B) incur obligations C) bring civil and criminal actions D) can be adjudged insolvent even if the individual members be each financially solvent
- unless he is generally sued, a partner has no right to make a separate appearance in court, if the partnership being sued is already represented
LIMITATIONS ON ALIEN PARTNERSHIP
- if 60% capital is not owned by Filipinos the firm cannot acquire by purchase or otherwise AGRICULTURAL Philippine lands
- foreign partnership may “lease” lands provided the period does not exceed 99 years
- foreign partnership may be “MORTGAGEES” of land period of 5 years, renewable for another 5 years they cannot purchase it in a foreclosure sale
RULES IN CASE OF ASSOCIATIONS NOT LAWFULLY ORGANIZED AS PARTNERSHIP
- it possesses NO LEGAL PERSONALITY it cannot sue as such HOWEVER, the partners in their individual capacity CAN
- one who enters into a contract with a partnership as such cannot when sued later on for recovery of the debt, allege the lack of legal personality on the part of the firm, even if indeed it had no personality ESTOPPEL
whether a partnership has a juridical personality or not depends on its PERSONAL LAW of the partnership or the law of the place where the partnership was organized
REQUISITES FOR EXISTENCE OF PARTNERSHIP [I, CF, JI]
- INTENTION to create a partnership
- COMMON FUND obtained from contributions
- JOINT INTERESTS in the PROFITS
WHAT DO NOT ESTABLISH A PARTNERSHIP
- mere co-ownership or co-possession even with profit sharing
- mere sharing of GROSS returns even with joint ownership of the properties involved
RULES TO DETERMINE THE EXISTENCE OF A PARTNERSHIP
- persons who are not partners to each other are not partners as to third persons EXCEPTION: PARTNERSHIP BY ESTOPPEL
- CO-OWNERSHIP of a property does not itself establish a partnership, even though the co-owners share in the profits derived from the incident of joint ownership
- need for INVENTORY of IMMOVABLES
** for EFFECTIVITY of the partnership contract insofar as innocent third persons are concerned the same must be REGISTERED if REAL PROPERTIES are INVOLVED
a partnership contract is NOT CONVERED by the STATUTE of FRAUDS
an AGREEMENT TO FORM a partnership does not itself create a partnership
when there are conditions to be fulfilled or when a certain period is to lapse, the partnership is not created till after the fulfillment of the conditions or the arrival of the term and this is true even if one of the parties has already advanced his agreed share of the capital
RULE: if CAPITAL is P3,000 or more REQUIRED:
- PUBLIC INSTRUMENT
- RECORDED – S.E.C.
- FAILURE TO COMPLY – shall not effect the liability of the partnership and its members to third persons
** IF REAL PROPERTIES have been contributed, REGARDLESS of the VALUE, a public instrument is needed for the attainment of legal personality
REQUIREMENTS WHERE IMMOVABLE / REAL PROPERTY IS CONTRIBUTED
- PUBLIC INSTRUMENT
- INVENTORY – signed and attached to the P.I.
- applies regardless of the value of the real property
- applies even if only real rights over the real property are contributed
- applies if aside from real property, cash or personal property is contributed
TRANSFER of land to the partnership must be duly “recorded” in the ROD to make the transfer effective insofar as third persons are concerned
RULE: any immovable property or an interest therein maybe acquired in the partnership name title so acquired can be conveyed only in the partnership name
IF the partnership has ALIENS, it CANNOT OWN LANDS, whether public or private or whether agricultural or commercial EXCEPT through HEREDITARY SUCCESSION
LIMITATIONS ON ACQUISITION
1. AGRICULTURAL LANDS – 1024 HECTARES
- lease of public lands (GRAZING) – 2000 HAS.
RULES IF A) articles are kept secret among the members B) any one of the members may contract in his “own” name with third persons
- NOT a partnership – NOT a LEGAL PERSON
- it may be sued by third person under the common name it uses
- it cannot sue as such and cannot be ordinarily be a party to a civil action
- insofar as innocent third parties are concerned the parities can be considered as members of a partnership
- as between themselves or insofar as third persons are prejudiced only the rules of co-ownership must apply
EFFECT OF CERTAIN TRANSACTIONS
- contracts entered into by a “partner” in his own name may be sued upon still by him in his individual capacity, not withstanding the absence of a partnership
- when two or more individuals, having a common interests in a business bring a court action, it should be presumed that they prosecute the same in their individual capacity as co-owners and not in behalf of a partnership which does not exist in legal contemplation
CLASSIFICATION OF PARTNERSHIPS A) ACCORDING TO MANNER OF CREATION
- ORALLY constituted
- constituted in a PRIVATE INSTRUMENT
- constituted in a PUBLIC INSTRUMENT
- REGISTERED – S.E.C. B) ACCORDING TO OBJECT
- UNIVERSAL
- PARTICULAR C) ACCORDING TO LIABILITY
- LIMITED PARTNERSHIP
- GENERAL PARTNERSHIP D) ACCORDING TO LEGALITY
- LAWFUL OR LEGAL
- UNLAWFUL OR ILLEGAL E) ACCORDING TO DURATION
- for a SPECIFIC PEIOD or FIXED PERIOD
- PARTNERSHIP AT WILL F) ACCORDING TO REPRESENTATION TO OTHERS
- ORDINARY PARTNERSHIP
- PARTNERSHIP BY ETOPPEL G) AS TO LEGALITY OF EXISTENCE
- DE JURE PARTNERSHIP
- DE FACTO PARTNERSHIP H ) AS TO PUBLICITY
- SECRET PARTNERSHIP
- NOTORIOUS / OPEN PARTNERSHIP I ) AS TO PURPSE
- COMMERCIAL / TRADING
- PROFESSIONAL / NON-TRADING
GENERAL PARTNERSHIP
one where all the partners are general partners they are LIABLE even with respect to their individual properties, after the assets of the partnership has been exhausted
LIMITED PATNERSHIP one where at least one partner is a general partner and the others are limited partners one whose liability is limited only up to the extent of his contribution
- even if contributions have not yet been made the firm already exists, for partnership is a consensual contract
DURATION OF PARTNERSHIP UNLIMITED
- EXPRESSLY – definite period
- IMPLIEDLY – upon achievement of its purpose
PARTNERSHIP AT WILL a partnership wherein its continued existence really depends upon the will of the partners or even on the will of any of them 2 KINDS:
- when there is no term, express or implied
- when it is continued by the habitual managers although the period has ended or the purpose has been accomplished
3 IMPORTANT DUTIES OF EVERY PARTNER [C, D-F, W]
- duty to CONTRIBUTE what had been promised
- duty to DELIVER the FRUITS of what should have been delivered
- duty to WARRANT
RIULES ON THE DUTY TO CONTRIBUTE
- the contribution must be made at the time the partnership is entered into UNLESS a different period is stipulated
- no demand is needed to put the partner in default
- the partner must exercise due diligence in preserving the property to be contributed before he actually contributes the same
- a partner who promises to contribute to the partnership becomes a promissory debtor of the partnership
RULES ON THE DUTY TO DELIVER THE FRUITS
- IF property has been promised, the fruits thereof should also be given
- the fruits referred to are those arising from the time they should have been delivered, without a need of any demand
- IF the partner is in BAD FAITH, he is liable not only for the fruits actually produced, BUT also for those that could have been produced
- IF MONEY HAS BEEN PROMISED, INTEREST and DAMAGES from the time he should have complied with his obligation should be given
- NO DEMAND is needed to put the partner in default
- it is DELIVERY, actual or constructive that TRANSFERS OWNERSHIP
RULES ON THE DUTY TO WARRANT
- the warranty in case of eviction refers to specific and determinate things already contributed
- there is EVICTION whenever by a final judgment based on a right prior to the sale or an act imputable to the partner, the partnership is deprived of the whole or a part of the thing purchased
RULE WHEN CONTRIBUTION CONSISTS OF GOODS
APPRAISAL of VALUE is needed to determine how much was contributed
HOW APPRAISAL MADE
- as PRESCRIBED in the CONTRACT
- in default, by EXPERTS chosen by the partners, and at CURRENT PRICES * necessity of the INVENTORY – APPRAISAL
RULE on RISK of LOSS after goods have been contributed, the partnership bears the risk of subsequent changes in the value
RULE: a partner who has undertaken to contribute a sum of money and fails to do so becomes a debtor for the interest and damages from the time he should have complied with his obligation
CAPITALIST PARTNER one who FURNISHES CAPITAL * NOT EXEMPTED from LOSSES * he can engage in other business PROVIDED there is no competition between the partnership and his business * share in the profits according to agreements
INDUSTRIAL PARTNER one who FURNISHES INDUSTRY or LABOR * he is EXEMPTED from LOSSES as between the partner BUT liable to strangers without prejudice to reimbursement from the capitalist partner * he CANNOT engage in any other BUSINESS WITHOUT the express CONSENT of the other partners, OTHERWISE
- he can be EXCLUDED from the firm
- the BENEFITS he obtains from the other businesses CAN BE AVAILED of by the other partners - plus damages whether or not there is COMPETITION * in computing always look for ----- NET PROFITS ----- NET LOSSES
CAPITALIST – INDUSTRIALIST PARTNER one who contributes BOTH CAPITAL and INDUSTRY
GENERAL PARTNER one who is liable “beyond” the extent of his contribution
LIMITED PARTNER one who is liable “only” to the extent of his contribution
*** an industrial partner can only be a general partner, never a limited partner
MANAGING PARTNER one who manages actively the firms affairs
SILENT PARTNER
RULE : - the partner shall be obliged to bring to the partnership capital what he received even though he may have given receipt for his share only
* DOES NOT APPLY when debt was collected after dissolution of the partnership
RULE : * every partner is responsible to the partnership for damages suffered by it through his fault
* he cannot compensate them with the profits and benefits, which he may have earned for the partnership by his industry
* the courts may equitably lessen his responsibility
“RES PERIT DOMINO”
*RULES ON WHO BEARS THE RISK OF LOSS
- if SPECIFIC and DETERMINATE THINGS NOT FUNGIBLE whose USUFRUCT is enjoyed by a firm the PARTNER who OWNS it bears the loss for ownership was never transferred to the firm
- FUNGIBLE or DETERIORABLE FIRM bears the loss for it is evident ownership was transferred
- THINGS CONTRIBUTED to be SOLD FIRM bears the loss for evidently the firm was intended to be the owner
- CONTRIBUTED under APPRAISAL FIRM bears the loss because this has the effect of an implied sale
RULE on RESPONSIBILITY of the FIRM
- to REFUND amounts disbursed on behalf of the firm plus legal interest from the time expenses where made
- to ANSWER to each partner for OBLIGATIONS he may have entered into in good faith in the interest of the partnership, as well as the risks in consequence of its management
* REFUND must be made even in case of failure of the enterprise entered into, provided the partner is not at fault * AMOUNT DISBURSED – does not refer to the ORIGINAL CAPITAL
*HOW PROFITS ARE DISTRIBUTED
- according to AGREEMENT
- IF NONE, according to amount of CONTRIBUTION
*HOW LOSSES are DISTRIBUTED
- according to AGREEMENT as to losses
- IF NONE, according to agreement as to PROFITS
- IF NONE, according to amount of CONTRIBUTION
* an INDUSTRIAL PARTNER shall receive a JUST and EQUITABLE share in the profits
*RULE on INDUSTRIAL PARTNERS’ LIABILITIES
- may be held liable by third persons BUT he may recover what he has paid from the other capitalist partners
- RULE on DESIGNATION by THIRD PERSON of SHARES in PROFITS and LOSSES * third person is NOT a PARTNER -- appointed to only distribute shares
* the designation of shares by third persons may be IMPUGNED, IF it is MANIFESTLY INEQUITABLE * the designation of shares by third persons CANNOT be IMPUGNED EVEN IF MANIFESTLY INEQUITABLE IF:
- the aggrieved partner has already BEGUN to EXECUTE the decision
- the aggrieved partner has not IMPUGNED the distribution within 3 months he had knowledge
*RULE IF APPOINTMENT OTHER THAN in the ARTICLES of PARTNERSHIP
- power to act may be REVOKED at ANY TIME with or without just cause REMOVAL should be done by the controlling interest
- EXTENT of POWER as long as he remains manager, he can perform all acts of administration BUT – if others oppose and he persists, he can be removed
*RULE WHEN there are 2 or MORE MANAGERS CONDITIONS:
- 2 or more partners are managers
- there is no specification of respective duties
- there is no stipulation requiring UNANIMITY
SPECIFIC RULES :
- each may separately execute all acts of administration UNLIMITED POWER to ADMINISTER
- IF any of the managers OPPOSE MAJORITY RULE IN CASE OF A TIE - persons owning controlling interest prevail provided they are also managers
* right to oppose is not given to NON-MANAGERS * OPPOSITION should be done BEFORE the acts produce legal effects insofar as third persons are concerned
RULE WHEN UNANIMITY is REQUIRED
- the CONCURRENCE of all shall be necessary for the validity of the acts
- the ABSENCE or DISABILITY of ANYONE of them CANNOT BE ALLEGED UNLESS there is imminent danger of grave or irreparable injury to the partnership
- whenever other circumstances render it just and reasonable
* the right to demand an accounting exists as long as the partnership exists * prescription begins to run only upon the dissolution of the partnership when the final accounting is done
PROPERTY RIGHTS OF PARTNERS [P, I, M]
- rights in specific PARTNERSHIP PROPERTIES
- INTERESTS in the PARTNERSHIP
- right to PARTICIPATE in the MANAGEMENT
RULE : * a partner is CO-OWNER with his partners of SPECIFIC PARTNERSHIP PROPERTY
***** RIGHTS of a PARTNER in SPECIFIC PARTNERSHIP PROPERTY
- he has equal rights with his partners to POSSESS the property BUT only for PARTNERSHIP PURPOSES he may possess such property for other purposes PROVIDED the other partners expressly or impliedly gives their CONSENT
- he CANNOT ASSIGN his right to the property EXCEPT if all the other partners assign their rights in the same property
- his right to the property is NOT SUBJECT to ATTACHMENT or EXECUTION, EXCEPT on a claim against partnership
- his right to the property is NOT SUBJECT to LEGAL SUPPORT
* if there is PARTNERSHIP DEBT, the specific property can be attached
RULE:
* a PARTNERS INTEREST in the partnership is his SHARE of the PROFITS and SURPLUS IT CAN BE : [A, A, LS]
- ASSIGNED
- ATTACHED
- be subject to LEGAL SUPPORT
*EFFECTS of CONVEYANCE by PARTNER of his INTEREST in the PARTNERSHIP
- IF he conveys his WHOLE INTEREST A) partnership may still remain B) partnership may be dissolved * mere conveyance does not dissolve the partnership
- the ASSIGNEE does not necessarily become a partner the ASSIGNOR is still the partner, with a right to demand accounting and settlement
- the ASSIGNEE CANNOT interfere in the MANAGEMENT or ADMINISTRATION of the firm
the ASSIGNEE CANNOT also DEMAND [I, A, I]
A) INFORMATION
B) ACCOUNTING
C) INSPECTION of partnership books
*** while a partners INTEREST in the firm may be CHARGED or LEVIED upon, his INTEREST in a specific firm PROPERTY CANNOT be attached.
RIGHTS of the ASSIGNEE
- to get whatever profits the assignor-partner would have obtained
- to avail himself of the usual remedies in case of fraud in the management
- to ask for ANNULMENT of the contract of assignment IF: A) he was induced to enter into it through any of the vices of consent OR B) he himself was incapacitated to give consent
- to demand an accounting BUT only if the partnership is dissolved
PREFERENTIAL RIGHTS of PARTNERSHIP CREDITORS * partnership creditors are entitled to PRIORITY over partnership assets, including the partners interest in the profits
** SEPARATE or INDIVIDUAL creditors have PREFERENCE in separate or individual properties
* when the CHARGING ORDER is applied for and granted, the court may appoint a receiver of the partners share in the profits the receiver appointed is entitled to any relief necessary to conserve the partnership assets for partnership purposes * interest charged may be redeemed at any time before foreclosure
* AFTER FORECLOSURE the interest may still be redeemed by (without causing dissolution)
- with separate property , by any one or more of the partners OR
- with partnership property , by any one or more partners with the consent of all the partners whose interests are not so charged or sold * consent of the delinquent partner not needed
RULE: every partnership shall operate under a FIRM NAME * the firm name may or may not include the name of one or more of the partners
** STRANGERS who include their names in the firm are liable as partners because of ESTOPPEL, BUT do NOT have the RIGHTS of partners
** IF a LIMITED PARTNER includes his name in the firm name, he has obligations BUT not the rights of a general partner
RULE on LIABILITY for CONTRACTUAL OBLIGATIONS * all partners, including industrial ones, shall be liable pro-rata with all their property and after all the partnership assets have been exhausted
* NOT APPLICABLE for TORTS or CRIMES ----- LOSS ----- INJURY ----- MISAPPROPRIATION
- ENTER into a COMPROMISE
- SUBMIT to ARBITRATION
- RENOUNCE to CLAIM
*RULES on CONVEYANCE of REAL PROPERTY
1. where title to real property is in the partnership name any partner may convey title to such property by a conveyance executed in the partnership name
* PARTNERSHIP MAY RECOVER SUCH PROPERTY
EXCEPT :
- if the firm is engaged in the buying and selling of land (USUAL BUSINESS)
- if property was conveyed to a HOLDER for VALUE and who had NO KNOWLEDGE of the partners LACK of AUTHORITY
- where title is in the name of the partnership and partner sold in his OWN NAME
IF DONE IN USUAL BUSINESS
buyer does not become owner BUT ACQUIRES EQUITABLE INTEREST
IF NOT DONE IN USUAL BUSINESS buyer does not become owner and is not even entitled to equitable interest
3_. where title is in the name of one or more BUT not all the partners_
partners in whose name the title is named MAY CONVEY BUT the PARTNERSHIP may RECOVER such property IF done not in its USUAL BUSINESS EXCEPT if he had transferred it to a Holder for value
- when property “held in trust” by partner
a sale only conveys EQUITABLE INTEREST
5. when title is in the name of all partners
conveyance executed by all partners possess all rights of such property
EQUITABLE INTEREST -BENEFICIAL INTEREST, BUT NOT NAKED OWNERSHIP
*RULE on ADMISSION or REPRESENTATION MADE by a PARTNER an admission by a partner is an admission against the partnersip,under the following conditions :
- the admissions must concern partnership affairs
- must be within the scope of his authority
RESTRICTIONS ON THE RULE:
- admissions made BEFORE DISSOLUTION are binding only when the partner has authority to act on the particular matter
- admissions made AFTER DISSOLUTION are binding only if the admissions were necessary to WIND UP the business
- an admission made by a former partner made after he has RETIRED from the partnership is not evidence against the firm
EFFECT of NOTICE to a PARTNER notice to a partner is notice to the partnership
*notice to a partner, given while already a partner is a notice to the partnership PROVIDED it relates to partnership affairs
EFFECT of KNOWLEDGE ALTHOUGH NO NOTICE WAS GIVEN:
* knowledge of the partner is also knowledge of the firm PROVIDED THAT :
- the knowledge was acquired by a partner who is acting in the particular matter involved;and
- the partner having knowledge, had reason to believe that the fact related to a matter which had some possibility of being the subject of the partnership business AND he was so situated that he could communicate it to the partner acting on that particular matter
* SERVICE of PLEADINGS on the partner in a law firm is also service on the whole firm and the other partners
LOSS OR INJURY
RULE on WRONGFUL ACT or OMISSION of a PARTNER (SOLIDARY LIABILITY) * the partnership is solidarily liable with the partner if the wrongful act or omission
- the partner is acting in the ordinary course of business of the partnership OR
- with authority of his co-partners
* innocent partners have right to recover from the guilty partner
_ When the firm and other partners not liable:_*
- if the wrongful act or omission was NOT DONE A) within scope of partnership business B) with authority of the other co-partners
- if the act or omission is NOT WRONGFUL
- if the act or omission, although wrongful did not make the partner concern liable
- if the wrongful act or omission was committed after the firm had been dissolved and the same was not in connection with the process of winding up.
LIABILITY of PARTNERSHIP for MISAPPROPRIATION – (SOLIDARY LIABILITY)
- RECEIVING PARTY MISAPPROPRIATES
- ANY PARTNER MISAPPPROPRIATES
- money or property in custody of partnership
PARTNER BY ESTOPPEL
the change in the relation of the partners caused by any partner causing to be associated in the carrying on of the business it is the point of time the partners cease to carry on the business together
WINDING UP the process settling business affairs after dissolution
TERMINATION the point in time after all the partnership affairs have been wound up
RULE ON DISSOLUTION * on dissolution the partnership is not terminated BUT continues until the winding up of partnership affairs is completed
*EFFECT on OBLIGATIONS
- just because a partnership is dissolved this does not necessarily mean that a partner can evade previous obligations entered into by the partnership
- dissolution saves the former partners from new obligations to which they have not expressly or impliedly consented UNLESS the same be essential for winding up
*CAUSES OF DISSOLUTION
- without VIOLATION of the AGREEMENT between the partners A) TERMINATION of the DEFINITE TERM or PARTICULAR UNDERTAKING B) EXPRESS WILL or ANY PARTY in GOOD FAITH (PARTNERSHIP by WILL) C) EXPRESS WILL of ALL of the PARTNERS except those who have (interests) ASSIGNED or whose interests have been (separate debts) CHARGED D) EXPULSION in good faith of a member
- in CONTRAVENTION of the agreement between the partners by the EXPRESS WILL of ANY PARTNER at any time
- UNLAWFULNESS of the BUSINESS
- LOSS – thing promised A) SPECIFIC THING – PERISHES before delivery B) USUFRUCT is lost EXCEPT if ownership had been transferred to the partnership
- DEATH of ANY partner
- INSOLVENCY of any partner or of the partnership
- CIVIL INTERDICTION of any partner
- DECREE of COURT
*** if the cause is not justified or no cause was given, the withdrawing partner is liable for DAMAGES BUT in no case can he be compelled to remain in the firm
* the insolvency need not be judicially declared, it is enough that the assets be less than the liabilities
DISSOLUTION by JUDICIAL DECREE WHEN ALOWED: (I, UM, I-PP, C, PB, BL, OC)
- partner declared “insane” in any judicial proceeding or is shown to be of UNSOUND MIND
- partner becomes INCAPABLE of performing his part of the partnership contract
- partner has been guilty of such CONDUCT as tends to affect prejudicially the business
- partners PERSISTENT BREACH of agreement
- the business of the partnership can only be denied on at a loss
- other circumstances which render dissolution equitable
IN CASE OF PURCHASER of PARTNERS INTEREST
- after the termination of the specified term or particular undertaking
- AT ANY TIME, if the partnership was a “partnership at will” when the interest was assigned or when the charging ordered was issued
* proof as to the existence of the firm must first be given
* even if a partner has not yet been previously declared insane by the court, dissolution may be asked, as long as the insanity is duly proved in court
* in a suit for dissolution, the court may appoint a RECEIVER at its discretion
EFFECTS OF DISSOLUTION
RULE:
* when the firm is dissolved, a partner can no longer bind the partnership
* a dissolved partnership still has the personality for the winding up of its affairs the firm is still allowed to collect previously acquired credits the firm is still bound to pay of its debts
DISSOLUTION CAUSED by A-I-D RULE: (STILL BOUND) – as to each partners
G.R. where the dissolution is caused by the ACT, INSOLVENCY or DEATH of a partner, each partner is liable to his co-partners for his share of any liability created by any partner acting for the partnership EXCEPTION: - individual liabilities
- if dissolution by ACT the partner acting for the partnership HAD KNOWLEDGE of the dissolution OR
- if dissolution by DEATH or INSOLVENCY the partner acting for the partnership HAD “knowledge or notice” of the death or insolvency
* only the partner acting assumes liability
- AFTER DISSOLUTION, a partner can still “bind” the PARTNERSHIP (WU, UT, TB)
- By any ACT appropriate for WINDING UP partnership affairs
- By COMPLETING transactions UNFINISHED at dissolution
- By any TRANSACTION which could bind the partnership IF dissolution had not taken place PROVIDED the other party is: A) PREVIOUS CREDITOR and had NO KNOWLEDGE or NOTICE of the dissolution OR B) NOT a PREVIOUS CREDITOR, had NO KNOWLEDGE or NOTICE and dissolution was NOT PUBLISHED * if there was publication of the dissolution it is presumed he already knows, regardless of actual knowledge on non knowledge
