1 Rojas Vs Maglana - Compress

Note: De Facto, Article 1786, Article 1830 (dissolution)
Eufracio Rojas, plaintiff- appellant

Plaintiff argued that the first partnership between him and
vs. Maglana had not been dissolved by the unregistered second
partnership. Thus, the terms and stipulation in the first
partnership which provides that profits and losses shall be
Constancio Maglana, defendant- appellee. divided share and share alike between the partners, must
apply.
Facts:
Issues
Maglana and Rojas executed Articles of Co-Partnership called
Eastcoast Development Enterprises (EDE) with two of them as 1.) Whether or not the nature of partnership was de facto
partners for the purpose of applying and securing timber and at will.
licenses and to operate, develop and promote such forests’
rights and concessions. Their profits and losses shall be 2.) Whether or not Rojas is entitled to profits of the
divided share and share alike between the partners. The partnership.
partnership EDE was duly registered with the Securities 3.) Whether or not Maglana can unilaterally dissolve the
and Exchange Commission (SEC). partnership.
4.) Whether or not Rojas is entitled to damages for the
Maglana managed the business affairs while Rojas managed unilateral dissolution.
the logging operations. However, due to difficulties
encountered, they availed the services of Pahamotang as
industrial partner. Thereafter, they executed their own Articles
of Co-Partnership under the same firm name. Aside from the
Held:
slight difference in the purpose of the second partnership
which is to hold and secure renewal of timber license instead
of to secure the license as in the fixed partnership and the 1.) Negative. The first partnership was not dissolved.
term of the second partnership is fixed to thirty (30) years, The Court held that it was not the intention of the
everything is the same. partners to dissolve the first partnership upon the
constitution of the second one. The acceptance of
After some time, the two bought the interest of Pahamotang another industrial partner is not sufficient to hold the
and the two returned to being the sole partners and continued view that the first partnership on that basis that: a)
the partnership without any written agreement or
reconstitution of written Articles of Partnership. They adopted the same name; b) They adopted the
same purpose and the same capital contributions of
Thereafter, Rojas entered into a management contract with Rojas and Maglana; c) The timber licenses
another logging enterprise in the name of CMS. He withdrew subsequently procured were in favor of the first
his equipment from EDE which was his supposed contributions partnership; d) the First Articles of Partnership were
to the first partnership. only amended in the form of Supplementary Articles
of Co-Partnership and was never registered. The new
Maglana wrote Rojas reminding him of his contributions to the
capital investments and to perform his duties as logging partnership was virtually the same as the old one.
superintended. However, Rojas informed Maglana that he
will not be able to comply with the contribution and he will Nevertheless, the second partnership was indeed
no longer work as superintendent. Thus, Maglana told Rojas dissolved by common consent. However, such
that the latter’s share will just be 20% of the net profits. dissolution did not affect the first which continued to
However, Rojas took funds more than his contribution. exist, which is supported by the fact that the two were
still reminding and negotiating with each other in the
Thus, Maglana, in a letter, notified Rojas that he dissolved the
partnership. fulfillment of the duly registered Articles of Co-
Partnership. Thus, there can be no De Facto
Thereafter, Rojas filed an action for the recovery of properties, Partnership nor a Partnership at Will for there is still
accounting, receivership and damages. an existing partnership which is duly registered.
2.) Negative
The RTC ruled that:
On the basis of the Commissioner’s Report, Rojas
1.) The nature of the partnership after the dissolution of the
second partnership is one of a de facto and a partnership failed to satisfy his contribution in the partnership.
at will. It is in view that the second partnership It is a settled rule that pursuant to Article 1786, when
superseded the first, so that when the second partnership a partner who has undertaken to contribute a sum of
dissolved, there was no written contract there was no money, fails to do so, he becomes a debtor of the
reconstitution as provided for in the Maglana, Rojas and partnership for whatever he may have promised and
Pahamotang partnership contract.
for interest and damages . Given this, as reported in
2.) Neither parties is entitled to damages.
3.) The letter of Maglana dissolved the partnership. the Commissioners’’ Report, Rojas is not entitled to
4.) The RTC ordered Rojas to pay or turn over to the any profits.
partnership the profits he received form the CMS estate.
Plaintiff Rojas then filed an instant appeal to the SC.

Note: De Facto, Article 1786, Article 1830 (dissolution)
3.) Affirmative. Maglana can unilaterally dissolve the

partnership
Under Article 1830 (2) of the Civil Code, even if there
is a specified term, one partner can cause its
dissolution by expressly withdrawing even before the
expiration of the period with or without justifiable
cause. Such partner, however, is liable for damages if
the cause is not justified, but in no case can be
compelled to remain in the firm.
3. Negative. Maglana is not liable for damages

because of such withdrawal since there are justifiable
causes for the same.
a. It can be recalled that after the withdrawal of
Pahamatong, Rojas entered into a management
contract with another logging nterprise, the CMS
Estate.Inc., a company engaged in the same
business as the partnership.
b. Rojas also withdrew his equipment and refused
to contribute either in cash or in equipment to the
capital investment and to perform his duties as
logging superintendent as stipulated in their
partnership agreement.
c. Also, the records shows that he not only
abandoned the partnership but also took funds
morethat his contribution.
Given this, MAglano cannot be said to be in bad faith

nor can be liable for damages.

1 Rojas Vs Maglana - Compress

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Note: De Facto, Article 1786, Article 1830 (dissolution)

Eufracio Rojas, plaintiff- appellant

Plaintiff Rojas then filed an instant appeal to the SC.

3.) Affirmative. Maglana can unilaterally dissolve the

3. Negative. Maglana is not liable for damages

Given this, MAglano cannot be said to be in bad faith

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