Reniva, King Joshua B.

1. A. What is Dissolution?
A dissolution of a partnership generally occurs when one of the partners ceases to be a
partner in the firm. Dissolution is distinct from the termination of a partnership and the
"winding up" of partnership business. Although the term dissolution implies termination,
dissolution is actually the beginning of the process that ultimately terminates a
partnership. It is, in essence, a change in the relationship between the partners.
Accordingly, if a partner resigns or if a partnership expels a partner, the partnership is
considered legally dissolved. Other causes of dissolution are the BANKRUPTCY or
death of a partner, an agreement of all partners to dissolve, or an event that makes the
partnership business illegal. For instance, if a partnership operates a gambling casino
and gambling subsequently becomes illegal, the partnership will be considered legally
dissolved. In addition, a partner may withdraw from the partnership and thereby cause a
dissolution. If, however, the partner withdraws in violation of a partnership agreement,
the partner may be liable for damages as a result of the untimely or unauthorized
withdrawal.

B. Upon its Dissolution, can the Partnership continues its legal personality?
Upon its dissolution, the partnership continues and its legal personality is retained until the complete
winding up of its business culminating in its termination (Art. 1829, Civil Code).

Please note however 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 the termination of
the partnership. Thus, it has been held in SEC Opinions dated August 18, 1983 and
June 29, 1960 that the admission of new partners through a sale of the interest of an
existing partner dissolves the partnership.

2. Enumerate the three Final Stages of a parnership?

The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up;
and (3) termination. Thepartnership, although dissolved, continues to exist and its
legal personality is retained, at which time it completes the winding up of its affairs,
including the partitioning and distribution of the net partnership assets to the
partners. For as long as the partnership exists, any of the partners may demand an
 accounting of the partnership'sbusiness. Prescription of the said right starts to run
only upon the dissolution of the partnership when the finalaccounting is done

 Winding up - Winding up is the process of dissolving a company. While winding

up, a company ceases to do business as usual. Its sole purpose is to sell off
stock, pay off creditors, and distribute any remaining assets to partners or
shareholders.

3. One of the case of dissolution of a partnership is by increasing of any partner or

the partnership.

An existing partnership may admit a new partner with the consent of all the partners.
When a new partner is admitted, the partnership is dissolved and a new partnership is
formed. Upon the admission of a new partner, a new agreement covering partners'
interests, profit and loss sharing and other consideration should be drawn because the
dissolution of the original partnership cancels the old agreement.
The admission of a new partner, may occur in either of the two ways, namely;
Purchase of all or part of the interest of one or more of the existing partners.
Investment of assets in the partnership by the incoming partner.