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    Rojas v. Maglana

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    Sienna Nacario
    The Supreme Court ruled that: 1) The original partnership agreement governed the partnership instead of a partnership at will when the second partnership dissolved. 2) Rojas was indebted to the partnership for failing to contribute the amount promised and was not entitled to any profits. 3) Maglana's unilateral dissolution of the partnership through a withdrawal notice was valid under the Civil Code.

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    Rojas v. Maglana

    Uploaded by

    Sienna Nacario
    73 views4 pages
    The Supreme Court ruled that: 1) The original partnership agreement governed the partnership instead of a partnership at will when the second partnership dissolved. 2) Rojas was indebted to the partnership for failing to contribute the amount promised and was not entitled to any profits. 3) Maglana's unilateral dissolution of the partnership through a withdrawal notice was valid under the Civil Code.

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    The Supreme Court ruled that: 1) The original partnership agreement governed the partnership instead of a partnership at will when the second partnership dissolved. 2) Rojas was indebted to the partnership for failing to contribute the amount promised and was not entitled to any profits. 3) Maglana's unilateral dissolution of the partnership through a withdrawal notice was valid under the Civil Code.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    73 views4 pages

    Rojas v. Maglana

    Uploaded by

    Sienna Nacario
    The Supreme Court ruled that: 1) The original partnership agreement governed the partnership instead of a partnership at will when the second partnership dissolved. 2) Rojas was indebted to the partnership for failing to contribute the amount promised and was not entitled to any profits. 3) Maglana's unilateral dissolution of the partnership through a withdrawal notice was valid under the Civil Code.

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    © All Rights Reserved
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    Rojas v.

    Maglana
    1990

    Facts:
    • In 1955, Rojas and Maglana executed their Articles of Co-Partnership. The Partnership
    was called Eastcoast Development Enterprises (EDE) and registered the same with the
    SEC.

    • The purpose of the partnership is to apply and secure timber and other forest product
    licenses.

    • The Articles also provided that losses and profit shall be divided “share and share alike”
    or in equal shares.

    • Maglana was in charge of the partnership’s business affairs while Rojas managed its
    logging operations.

    • In 1956, they decided to get Pahamotang as their industrial partner and executed a new
    Articles of Partnership with slight changes to the purpose and term of existence of the
    partnership.

    • This time the purpose of the partnership is to hold and secure the renewal of timber
    licenses and fixing the term to 30 years.

    • Pahamotang eventually sold his interests in the partnership to Rojas and Maglana,
    dissolving the second partnership.

    • In 1957, Rojas entered into a management contract with another logging enterprise and
    abandoned the partnership. He withdrew equipment, which were his supposed
    contribution to the first partnership and transferred them to CMS Estate.

    • Maglana wrote to Rojas to contribute to the capital investments of the partnership and
    to perform his obligations as logging superintendent.

    • Rojas told Maglana that he is no longer contributing and that he will not be working as
    logging superintendent for EDE anymore.

    • Later on, Rojas withdrew funds from the partnership which exceeded his contribution.

    • In 1961, Maglana notified him that he has already dissolved the partnership.

    • Rojas filed before the CFI of Davao an action against Maglana for the recovery of
    properties, accounting and receivership but this was denied.
    • However, upon appeal, the judge appointed commissioners to examine the accounts of
    EDE.

    • Several issues were raised during pretrial including the nature of the partnership after the
    dissolution of the second partnership, the sharing basis as well as the legal effect of
    Maglana’s letter notifying Rojas of the dissolution of the partnership in 1961.

    • The lower court ruled that the partnership after the second one is a de facto partnership
    or partnership at will, that the share of profits and losses is based on actual contributions
    (20% for Rojas and 80% for Maglana) and that the letter of Maglana in 1961 effectively
    dissolved the partnership.

    • So Rojas filed this appeal.


    • Rojas insists that the original AOP was not replaced by the second one because when the
    second partnership was dissolved, the first AOP continued to govern the partnership.
    • So Rojas insists that Maglana’s letter in 1961 did not dissolve the partnership because it
    contravenes the terms in the AOP.
    • Rojas also insists that the profits should be shared equally pursuant to the registered AOP.

    ISSUE: W/N the terms of the first AOP should be applied? – YES
    W/N Rojas is entitled to profits – NO
    W/N Rojas is indebted to the partnership for not contributing funds? – YES
    W/N Rojas abandoned the Partnership - YES

    HELD:
    • With regard to the nature of the partnership after the dissolution of the second one, the
    Court ruled that the first partnership persisted since there was no intention to dissolve
    the first one given that the partnership adopted the same name and pursued the same
    purpose and all the licenses that they secured were in favor of the first partnership.

    • Also, all business transactions and subsequent renewals of the timber licenses were
    secured in favor of the first partnership, which was duly registered. The trial court was
    wrong in holding that the partnership after the dissolution of the second one is a de facto
    partnership.

    • This is further proved by the fact that the correspondences between Rojas and Maglana
    show that they considered themselves to be governed by the articles of the registered
    partnership.

    • SO basically, when Pahamotang left, the partnership reverted back to the original
    partnership under the terms of the registered AOP.
    • So their profits shall be divided “share and share” alike according the terms.

    • However, based on the accounting by the commissioners, Rojas only contributed around
    P18,000 when he should have contributed P158,000 and Maglana contributed P267,000
    when he should have contributed only P160,000.

    • The Court held that when a partner undertakes to contribute money but fails, he becomes
    indebted to the partnership for the amount he promised to contribute.

    • Because of this Rojas will not be entitled to any of the profits since he is indebted to the
    partnership.

    • As regards the effectivity of Maglana’s unilateral dissolution of the partnership, the Court
    ruled that it was valid since no partner can be compelled to remain in a partnership. In
    effect, his letter notifying Rojas of the dissolution was a notice of withdrawal.

    • Even in a partnership not at will, a partner can unilaterally dissolve the partnership by a
    notice of dissolution, which in effect is a notice of withdrawal.

    • The CC also provides that dissolution can be made by the express will of any partner.

    • The Court also ruled that Maglana’s withdrawal was not motivated by bad faith so he
    cannot be held liable for damages because the reason for his withdrawal is because of
    Rojas’ failure to perform his obligations in the partnership.

    Doctrine on Formalities: When there has been a duly registered articles of partnership, and
    afterwards the original partners is joined by an industrial partner with their consent but do not
    register a new partnership, and afterwards the industrial partner withdraws from the
    partnership, and the original partners continue under the same set-up as the original partnership
    without reconstituting a new AOP, there is no partnership at will and they are reverted to the
    original partnership which was duly registered with the SEC.

    Doctrine on Contribution: When a partner who has undertaken to contribute a sum of money
    fails to do so, he becomes 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.

    Doctrine on Fiduciary Duties: The fiduciary duty of loyalty means that the partners must place
    the partnership's best interest above their own personal interest. And partners shall avoid
    conflicts of interest between the partnership and their personal dealings. In other
    words, partners may not act to harm the partnership's goal for their own gain
    ARTICLE 1808. The capitalist partners
    cannot engage for their own account
    in any operation which is of the kind
    of business in which the partnership is
    engaged, unless there is a stipulation
    to the contrary.
    Any capitalist partner violating this
    prohibition shall bring to the common
    funds any profits accruing to him from
    his transactions, and shall personally
    bear all the losses.

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