Rojas vs Maglana, G.R. No. 30616, December 10, 1990

Rojas vs Maglana, G.R. No. 30616, December 10, 1990

NATURE: Direct appeal from the decision of the CFI of Davao

Summary: In  Jan 1955, Maglana & Rojas executed their Articles of Co-Partnership called Eastcoast Development Enterprises (EDE) with only the two of them as partners. The partnership EDE which was registered with SEC had an indefinite term of existence.  One of the purposes of the partnership was to apply/secure timber/minor forest products licenses and concession over public or private forest lands and to operate, develop, and promote such forests rights and concessions. A duly registered article of co-partnership was filed together with an application for timber concession covering certain areas in Davao with the Bureau of Forestry. It was then approved and a timber license was issued. Under their article of co-partnership, appellee Maglana  was tasked to manage, market, handle cash, and be the authorized signatory for the partnership. Appellant Rojas, on the other hand, is the logging superintended tasked to manage logging operations of the partnership. It also stated in the articles that all profits & losses shall be divided share and share alike between partners. During Jan 14 1955 – Apr 30 1956, there was no operation of the said partnership. Due to difficulties, Rojas and Maglana decided to avail the services of Pahamatong as industrial partner. On March 1956, the 3 executed their articles of co-partnership under the firm name EDE. Everything was the same except for the purpose which was to hold and secure renewal of timber license and the term was fixed for 30 years.

The new partnership was able to ship logs and acquire profits and was able to get a proceed of 643,633.07. On Oct 23, 1956, The 3 executed a document, “Conditional Sale of interest in the partnership EDE” agreeing among themselves that Maglana and Rojas shall purchase the interest, share, participation in the partnership of pahamoting in the assessed value of 31,501.12. It was also agreed that after payment of the sum to Pahamotang including the loan secured by the latter in favor of the partnership, the two original partners shall become owners of all equipment contributed by Pahamatong and that the name of the second partnership be dissolved upon fulfillment of the condition. After the withdrawal of Pahamotang, the partnership was continued by the original partners without any written agreement or reconstitution of their written articles of partnership.

Problem arose when Rojas abandoned the partnership due to joining with another logging enterprise, and withdrew his equipment from the partnership. Maglana reminded Rojas of his obligation in their partnership but Rojas said he wouldn’t comply. He then took funds from the partnership more than his contribution. Thus, Maglana notified Rojas that he dissolved the partnership. Rojas then filed for recovery of properties, accounting, receivership, and damages against Maglana.

Issue:

1.       WON the nature of partnership of Maglana and Rojas after dissolution of the second partnership is de facto and at will.

2.       WON the sharing of partnership profits should be on the basis of contribution or ratio/proportion of their respective contributions.

Held:

1.       No. Under the circumstances, the relationship of Rojas and Maglana after the withdrawal of Pahamotang can neither be considered as a De Facto Partnership, nor a Partnership At Will, for as stressed, there is an existing partnership, duly registered. The dissolution of the second partnership does not affect the first partnership which continued to exist. The fact that Maglana wrote Rojas for the fulfillment of his obligation in the partnership and Rojas subsequent reply further stressed that both considered themselves governed by the articles of the duly registered partnership. Hence, as there are only two parties when Maglana notified Rojas that he dissolved the partnership, it is in effect a notice of withdrawal.

Under Article 1830, par. 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. 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 be compelled to remain in the firm. With his withdrawal, the number of members is decreased, hence, the dissolution. And in whatever way he may view the situation, the conclusion is inevitable that Rojas and Maglana shall be guided in the liquidation of the partnership by the provisions of its duly registered Articles of Co-Partnership; that is, all profits and losses of the partnership shall be divided "share and share alike" between the partners.

2.       YES. On the basis of the Commissioners' Report, the corresponding contribution of the partners from 19561961 are as follows: Eufracio Rojas who should have contributed P158,158.00, contributed only P18,750.00 while Maglana who should have contributed P160,984.00, contributed P267,541.44 (Decision, R.A. p. 976). It is a settled rule that 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 (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 (Ibid., p. 95).