Mr. Jose V. Bithao

February 8, 1994 Mr. Jose V. Bithao 1002 Lualhati St., Tondo, Manila S i r : This refers to your letter of January 27, 1994 inquiring on what action can a partner in a registered partnership do in order to implement her proposal to dissolve the firm and/or remove her name from the articles of partnership. The pertinent provision of the Civil Code of the Philippines provides: "ARTICLE 1830. Dissolution is caused : xxx xxx xxx (2) In contravention of the agreement between the partners where the circumstances do not permit a dissolution under any other provision of this article, by the express will of any partner at anytime . xxx xxx xxx (Emphasis supplied) Likewise, legal jurisprudence on the matter states: "A partnership may be dissolved by the act of a partner, even though in contravention of a stipulation for a definite duration of the partnership relation." (40 Am Jur., Sec. 241). "Any partnership, whether under the articles of partnership it is to exist for a definite period of time or for the accomplishment of a particular purpose, or whether those articles contain any stipulation express or implied as to the time of existence, may be dissolved by the act of any partner alone in accordance with his own will and pleasure." (Am Jur. supra, sec. 236) "The act of one partner in withdrawing from the firm . . . operates as a dissolution of the partnership, notwithstanding that by the articles of partnership, the partnership is to exist for a definite time." (Ibid.) Provided further that, "in case of a partnership for a definite term, a dissolution before the expiration of the stipulated time is a breach of agreement which subjects such partner to a claim for damages for breach of contract if the dissolution is not justified . . . in either case the action of the partner actually dissolves the partnership." (Ibid., citing Karrick v. Hannaman, 168 US 328, 42 L ed. 484, 18 S. Ct. 135) "This is due to the fact that a partnership is, in its essence, a contract of agency based on the assent of each of the partners, which may be retracted at any time as to future dealings although the term of the partnership may not have expired." (Ibid, citing Carpenter v. Lattieri, 72 Conn. 377, 44 A 730, 77 Am., St. Rep. 315). In the light of the foregoing citations, the filing of an affidavit of withdrawal by the withdrawing partner from the partnership suffices to give cause for the dissolution of a partnership. It is, however, essential that the remaining partners of the firm be duly notified. By such notice, the partnership is deemed dissolved. Likewise, notice of the dissolution must be communicated forthwith to the Commission. However, it must be noted that the Civil Code in defining the term "dissolution" insofar as it refers to partnership provides as follows: "The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as distinguished from the winding up of the business ." (Article 1828, Civil Code, emphasis supplied) Thus, the Commission on several occasions has ruled that the term "dissolution" as used in our Civil Code simply means the point in time when all the partners cease to carry on the business together and should not be understood as necessarily including the winding up and termination of the partnership. Thus, while the withdrawal of a partner dissolves the partnership, the dissolution in such a case is only in the sense that his connection with the partnership is terminated, that is, there is a technical dissolution. "Any change in the membership or personnel of a partnership, either by the retirement of a partner or by the admission of new members into the partnership, produces technically an immediate dissolution of the existing partnership relation and the formation of a new one, although common business usage speaks of the admission of a partner to a firm and regards the firm as subsisting so long as the course of its business is not materially interrupted." (40 Am. Jur., par 197, p.267 citing Fritz v. Commissioners of Internal Revenue (CCA 5th) 76 F (2s) 460 ( Ltr. to Atty. Mamento Lumibao, dtd. June 29, 1960 ) Accordingly, a technical dissolution of a partnership brought about by the withdrawal of one partner does not preclude the remaining two (2) partners from continuing the partnership if it is so expressly stipulated in the articles of partnership that the firm shall continue to exist even if any one of the partners withdraws from the partnership, in which event, a corresponding amended articles of partnership shall be filed with the Commission deleting the name of the withdrawing partner in the articles of partnership. Neither will the dissolution preclude the two (2) remaining partners to put up a new partnership adopting the same name of the dissolved partnership if there is no such stipulation to continue in the articles of partnership. cdlex Please be advised accordingly. Very truly yours, (SGD.) ROSARIO N. LOPEZ Chairman