Rojas vs.

Maglana 192 SCRA 110 Maglana, Rojas and Agustin Pahamotang executed
Facts: On January 14, 1955, Maglana and Rojas their Articles of Co-Partnership under the firm name
executed their Articles of Co-Partnership called EASTCOAST DEVELOPMENT ENTERPRISES (EDE). Aside
Eastcoast Development Enterprises (EDE) with only from the slight difference in the purpose of the
the two of them as partners. The partnership EDE with second partnership which is to hold and secure
an indefinite term of existence was duly registered on renewal of timber license instead of to secure the
January 21, 1955 with the Securities and Exchange license as in the first partnership and the term of the
Commission. A duly registered Articles of Co- second partnership is fixed to thirty (30) years,
Partnership was filed together with an application for everything else is the same.
a timber concession covering the area located at
Cateel and Baganga, Davao with the Bureau of The partnership formed by Maglana, Pahamotang
Forestry which was approved and Timber License was and Rojas started operations on May 1, 1956, and
duly issued. was able to ship logs and realize profits.
Pahamotang, Maglana and Rojas executed a
Under the said Articles of Co-Partnership, appellee document entitled "CONDITIONAL SALE OF INTEREST
Maglana shall manage the business affairs of the IN THE PARTNERSHIP, EASTCOAST DEVELOPMENT
partnership, including marketing and handling of ENTERPRISE" agreeing among themselves that
cash and is authorized to sign all papers and Maglana and Rojas shall purchase the interest, share
instruments relating to the partnership, while and participation in the Partnership of Pahamotang.
appellant Rojas shall be the logging superintendent It was also agreed in the said instrument that after
and shall manage the logging operations of the payment to Pahamotang including the amount of
partnership. It is also provided in the said articles of loan secured by Pahamotang in favor of the
co-partnership that all profits and losses of the partnership, the two (Maglana and Rojas) shall
partnership shall be divided share and share alike become the owners of all equipment contributed by
between the partners. Pahamotang and the EASTCOAST DEVELOPMENT
ENTERPRISES, the name also given to the second
During the period from January 14, 1955 to April 30, partnership, be dissolved.
1956, there was no operation of said partnership.
Because of the difficulties encountered, Rojas and Pahamotang was paid in full. No other rights and
Maglana decided to avail of the services of obligations accrued in the name of the second
Pahamotang as industrial partner. On March 4, 1956, partnership. After the withdrawal of Pahamotang,


the partnership was continued by Maglana and Pahamotang retired from the second partnership is
Rojas without the benefit of any written agreement or one of a de facto and at will.
reconstitution of their written Articles of Partnership.
Issues
Rojas entered into a management contract with 1. Whether or not the nature of partnership of
another logging enterprise, the CMS Estate, Inc. He Maglana and Rojas after dissolution of the second
left and abandoned the partnership. Rojas withdrew partnership is de facto and at will.
his equipment from the partnership for use in the 2. Whether or not Maglana can unilaterally dissolve
newly acquired area. The equipment withdrawn the partnership (EDE).
were his supposed contributions to the first 3. Whether or not the sharing of partnership
partnership and was transferred to CMS Estate, Inc.
by way of chattel mortgage. Maglana wrote Rojas Ruling
reminding the latter of his obligation to contribute, (1) NO. It appears evident that it was not the intention
either in cash or in equipment, to the capital of the partners to dissolve the first partnership, upon
investments of the partnership as well as his obligation the constitution of the second one, which they
to perform his duties as logging superintendent. Rojas unmistakably called an "Additional Agreement". To
told Maglana that he will not be able to comply with all intents and purposes therefore, the First Articles of
the promised contributions and he will not work as Partnership were only amended, in the form of
logging superintendent. Maglana then told Rojas Supplementary Articles of Co-Partnership which was
that the latter's share will just be 20% of the net profits. never registered. Otherwise stated, even during the
Such was the sharing from 1957 to 1959 without existence of the second partnership, all business
complaint or dispute. Meanwhile, Rojas took funds transactions were carried out under the duly
from the partnership more than his contribution. Thus, registered articles.
in a letter Maglana notified Rojas that he dissolved
the partnership. As found by the trial court, it is an admitted fact that
even up to now, there are still subsisting obligations
Rojas filed an action before the Court of First Instance and contracts of the latter. No rights and obligations
of Davao against Maglana for the recovery of accrued in the name of the second partnership
properties, accounting, receivership and damages. except in favor of Pahamotang which was fully paid
RTC declared that the nature of the partnership and by the duly registered partnership.
the legal relations of Maglana and Rojas after


On the other hand, there is no dispute that the (2) YES. As there are only two parties when Maglana
second partnership was dissolved by common notified Rojas that he dissolved the partnership, it is in
consent. Said dissolution did not affect the first effect a notice of withdrawal. Under Article 1830, par.
partnership which continued to exist. Significantly, 2 of the Civil Code, even if there is a specified term,
Maglana and Rojas agreed to purchase the interest, one partner can cause its dissolution by expressly
share and participation in the second partnership of withdrawing even before the expiration of the
Pahamotang and that thereafter, the two (Maglana period, with or without justifiable cause. Of course, if
and Rojas) became the owners of equipment the cause is not justified or no cause was given, the
contributed by Pahamotang. withdrawing partner is liable for damages but in no
case can he be compelled to remain in the firm. With
Even more convincing, is the fact that Maglana on his withdrawal, the number of members is decreased,
March 17, 1957, wrote Rojas, reminding the latter of hence, the dissolution. And in whatever way he may
his obligation to contribute either in cash or in view the situation, the conclusion is inevitable that
equipment, to the capital investment of the Rojas and Maglana shall be guided in the liquidation
partnership as well as his obligation to perform his of the partnership by the provisions of its duly
duties as logging superintendent. This reminder registered Articles of Co-Partnership; that is, all profits
cannot refer to any other but to the provisions of the and losses of the partnership shall be divided "share
duly registered Articles of Co-Partnership. As earlier and share alike" between the partners. But an
stated, Rojas replied that he will not be able to accounting must first be made and which in fact was
comply with the promised contributions and he will ordered by the trial court and accomplished by the
not work as logging superintendent. By such commissioners appointed for the purpose.
statements, it is obvious that Roxas understood what
Maglana was referring to and left no room for doubt (3) YES. On the basis of the Commissioners' Report, the
that both considered themselves governed by the corresponding contribution of the partners from 1956-
articles of the duly registered partnership. 1961 are as follows: Eufracio Rojas who should have
contributed P158,158.00, contributed only P18,750.00
Under the circumstances, the relationship of Rojas while Maglana who should have contributed
and Maglana after the withdrawal of Pahamotang P160,984.00, contributed P267,541.44. It is a settled
can neither be considered as a De Facto Partnership, rule that when a partner who has undertaken to
nor a Partnership At Will, for as stressed, there is an contribute a sum of money fails to do so, he becomes
existing partnership, duly registered. a debtor of the partnership for whatever he may


have promised to contribute (Article 1786, Civil
Code) and for interests and damages from the time
he should have complied with his obligation (Article
1788, Civil Code) (Moran, Jr. v. Court of Appeals, 133
SCRA 94 [1984]). Being a contract of partnership,
each partner must share in the profits and losses of
the venture. That is the essence of a partnership

Summary
The 2nd partnership after Pahamatong’s withdrawal
cannot be considered as a De Facto Partnership nor
a Partnership at Will since a duly registered
partnership still existed between Rojas and Maglana,
in which evidence shows that they still intend to be
bound by the articles of partnership of the same.

De Facto Partnership- one that has failed to comply

Partnership at Will- one in which no time is specified