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AGENCY & PARTNERSHIP | B2015CASES

ROJAS V. MAGLANA
December 10, 1990Paras, C.J.Raeses, Roberto Miguel
SUMMARY:
Maglana and Rojas executed their articles of co-partnershipcalled EDE. It had an indefinite
term, was registered with the SEC, and had aTimer License. Later, Agustin Pahamitang became
an industrial partner andanother articles of co-partnership was executed. The term of the
second co-partnership was fixed to 30 years. After some time, the three executed aconditional
sale of interest in the partnership where Magalana and Rojas shallpurchase the interest, share,
and participation of Pahamotang. It was agreedthat, after payment of such including the loan
secured by Pahamotang, thetwo shall become owners of all equipment contributed by
Pahamotang. Thetwo continued the partnership without any written agreement orreconstitution
of the articles of partnership. Subsequently, Rojas entered intoa contarct with CMS Estate.
Maglana reminded him of his contribution to thecapital investments and his duties to the
partnership. Rojas said he would not be able to comply. Maglana told Rojas that the latter
is only entitled to 20% of the profits, which was the sharing from 1957-1959 without dispute.
Rojastook funds from the partnership which was more than his share. Maglananotified Rojas
that he had dissolved the partnership. Rojas filed an actionagainst Magallana. The CFI ruled
that the partnership of the two afterPahamotang left was one de facto and at will. The SC said
that it was not,considering that the first partnership was never dissolved. With regard to
theissue of unilateral dissolution, the SC held that Maglana had the power to doso.
DOCTRINE:
Under Article 1830, par. 2 of the Civil Code, even if there is aspecified term, one partner can
cause its dissolution by expresslywithdrawing even before the expiration of the period, with or
without justifiable cause. Of course, if the cause is not justified or no cause was given,the
withdrawing partner is liable for damages but in no case can he becompelled to remain in the
firm. With his withdrawal, the number of members is decreased, hence, the dissolution. And in
whatever way he mayview the situation, the conclusion is inevitable that Rojas and Maglana
shallbe guided in the liquidation of the partnership by the provisions of its dulyregistered
Articles of Co-Partnership; that is, all profits and losses of thepartnership shall be divided "share
and share alike" between the partners.
FACTS:
Maglana and Rojas executed their Articles of Co-partnership called
Eastcoast Development
Enterpises
(EDE) which had an indefinite term of existence and was registered with the SEC and had a
Timber License. One of the
EDEs purposes was to apply or
secure timber and/or private forest lands andto operate, develop and promote such forests
rights and concessions. Maglanashall manage the business affairs while Rojas shall be the
loggingsuperintendent. All profits and losses shall be divided share and share alikebetween
them.Later on, the two availed the services of Agustin Pahamotang as industrialpartner and
executed another articles of co-partnership with the latter. Thepurpose of this second
partnership was to hold and secure renewal of timberlicense and the term of which was fixed to
30 years.Still later on, the three executed a conditional sale of interest in the partnershipwherein
Maglana and Rojas shall purchase the interest, share and participationin the partnership of
Pahamotang. It was also agreed that after payment of suchincluding amount of loan secured by
Pahamotang in favor of the partnership,the two shall become owners of all equipment
contributed by Pahamotang.After this, the two continued the partnership without any written
agreement orreconstitution of their articles of partnership.Subsequently, Rojas entered into a

management contract with CMS Estate Inc.Maglana wrote him regarding his contribution to
the capital investments aswell as his duties as logging superintendent. Rojas replied that he will
not beable to comply with both. Maglana then told Rojas
that the latters share will
just be 20% of the net profits. Such was the sharing from 1957 to 1959 without complaint or
dispute. Rojas took funds from the partnership more than hiscontribution. Maglana notified
Rojas that he dissolved the partnership. Rojasfiled an action against Maglana for the recovery of
properties and accounting of the partnership and damages.
CFI RULING:
1.
The partnership of Maglana and Rojas after Pahamotang retired is oneof de facto and at will; the
sharing of profits and losses is on the basisof actual contributions;2.
there is no evidence these properties were acquired by thepartnership funds thus it should not belong
to it;3.
neither is entitled to damages; the letter of Maglana in effect dissolvedthe partnership;4.
sale of forest concession is valid and binding and should be
considered as Maglanas contribution;
5.
Rojas must pay or turn over to the partnership the profits he receivedfrom CMS and pay his
personal account to the partnership