Short answer. On six grounds. Under Article 1831, a court shall decree dissolution on a partner's application when a partner is insane, becomes incapable of performing his part, is guilty of conduct prejudicial to the business, persistently breaches the agreement, when the business can only be carried on at a loss, or when other circumstances make dissolution equitable.
What the law says
A partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him
Civil Code, Article 1831 — Judicial Dissolution. Read the full provision →
The court can order dissolution
Some partnerships cannot be ended simply by a partner walking away — a fixed-term partnership, for instance, or one where the others will not agree to dissolve. Article 1831 provides a judicial route: on application by or for a partner the court shall decree a dissolution whenever one of the listed grounds is present. Two features are worth noting at the outset. It is the court that decrees the dissolution, on proof of a ground, rather than the partner ending it unilaterally.
Incapacity and misconduct
Several grounds concern a partner who can no longer, or will no longer, play his part properly. The court shall dissolve where a partner has been declared insane or is shown to be of unsound mind, or has become in any other way incapable of performing his part of the partnership contract. It shall also dissolve where a partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business, or where a partner wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him.
Loss-making, and the equitable catch-all
Two further grounds look at the venture itself rather than at any one partner. The court shall dissolve where the business of the partnership can only be carried on at a loss — because the whole point of a partnership is profit, and there is no reason to force partners to keep pouring money into something that cannot make any. And it shall dissolve where other circumstances render a dissolution equitable, a deliberate catch-all that lets the court decree dissolution in situations the specific grounds do not name but where fairness plainly calls for an end.
Bringing the application
If you want out of a partnership you cannot simply leave — or you want it ended over a partner's objection — this article is the basis for asking a court to decree dissolution, and the first task is to identify which ground fits your situation and assemble the proof of it. A partner's incapacity, misconduct or persistent breach must be shown, not merely alleged; a loss-making business must be demonstrated on the figures. Gather the records, the correspondence and whatever evidences the ground you rely on, because the court acts on proof of a listed ground, not on a general wish to be free of the arrangement.
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 →
- Josefina P. Realubit vs. Prosencio D. Jaso and Eden G. Jaso, G.R. No. 178782, September 21, 2011 — read the decision on LawPhil →
- Luzviminda J. Villareal, et al. vs. Donaldo Efren C. Ramirez, et al, G.R. No. 144214, July 14, 2003 — read the decision on LawPhil →