AGENCY & PARTNERSHIP |B2015CASESROJAS V. MAGLANADecember 10, 1990Paras, C.J.Raeses, Roberto MiguelSUMMARY: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 ofthe articles of partnership. Subsequently, Rojas entered intoa contarct with CMS Estate. Maglana reminded him of his contribution to thecapital investmentsand his duties tothe partnership. Rojas said he would notbe able to comply. Maglana told Rojas that the latter isonly entitled to 20% ofthe 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 withoutjustifiable 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 ofmembers 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 calledEastcoast DevelopmentEnterpises(EDE) which had an indefinite term ofexistence and was registered with the SEC and had a Timber License. Oneof theEDEs purposes was to apply orsecure 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 securerenewalof timberlicense and the term of which was fixed to 30 years.Still later on, the three executed a conditional saleof 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 thepartnership without any written agreement orreconstitution oftheir articles of partnership.Subsequently, Rojas entered into a management contract with CMS Estate Inc.Maglana wrote him regarding his contribution to thecapital investmentsaswell as his duties as logging superintendent. Rojas replied that he will not beable to comply with both. Maglana then told Rojasthat the latters share willjust be 20% of the netprofits. Such was the sharing from 1957 to 1959withoutcomplaint or dispute. Rojas took funds from the partnership more than hiscontribution. Maglana notified Rojas that he dissolved the partnership. Rojasfiled an action against Maglanafor the recovery of properties and accounting ofthe 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 actualcontributions;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 beconsidered as Maglanascontribution;5.Rojas must pay orturn over to the partnership the profits he receivedfrom CMS and pay his personal account to thepartnership