ROJAS VS.

MAGLANA
FACTS:
Maglana and Rojas executed their Articles of Co-partnership called East Coast Development
Enterpises which had an indefinite term of existence and was registered with the SEC and had a Timber
License.
One of the EDEs purposes was to apply or secure timber and/or private forest lands and to operate,
develop and promote such forests rights and concessions. Maglana shall manage the business affairs
while Rojas shall be the logging superintendent. All profits and losses shall be divided share and share
alike between them. Due to difficulties encountered they decided to avail of the sources of Pahamatong
as industrial partner and executed another articles of co-partnership with the latter. The purpose of this
second partnership was to hold and secure renewal of timber license and the term of which was fixed to
30 years. Still later on, the three executed a conditional sale of interest in the partnership wherein
Maglana and Rojas shall purchase the interest, share and participation in the partnership of
Pahamotang. It was also agreed that after payment of such including 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 the partnership without any written agreement or
reconstitution of their articles of partnership.
Subsequently, Rojas entered into a management contract with CMS Estate Inc. Maglan wrote him re: his
contribution to the capital investments as well as his duties as logging superintendent. Rojas replied that
he will not be able to comply with both. Maglana then told Rojas that the latters share will just be 20%
of the net profits. Such was the sharing from 1957 to 1959 without complaint or dispute.
Rojas took funds from the partnership more than his contribution. Maglana notified Rojas that he
dissolved the partnership. Rojas filed an action against Maglana for the recovery of properties and
accounting of the partnership and damages.
CFI: the partnership of Maglana and Rojas is after Pahamotang retired is one of de facto and at will; the
sharing of profits and losses is on the basis of actual contributions; there is no evidence these properties
were acquired by the partnership funds thus it should not belong to it; neither is entitled to damages;
the letter of Maglana in effect dissolved the partnership; sale of forest concession is valid and binding
and should be considered as Maglanas contribution; Rojas must pay or turn over to the partnership the
profits he received from CMS and pay his personal account to the partnership; Maglana must be paid
Php 85,000.00 which he shouldve received but was not paid to him and must be considered as his
contribution.
ISSUE: what is the nature of the partnership and legal relationship of Maglana and Rojas after
Pahamoyang retired from the second partnership? May Maglana unilaterally dissolve the partnership?

HELD: There was no intention to dissolve the first partnership upon the constitution of the second as
everything else was the same except for the fact that they took in an industrial partner: they pursued
the same purposes, the capital contributions call for the same amounts, all subsequent renewals of
Timber License were secured in favor of the first partnership. To all intents and purposes therefore, the
First Articles of Partnership were only amended, in the form of Supplementary Articles of Co-Partnership
which was never registered. Otherwise stated, even during the existence of the second partnership, all
business transactions were carried out under the duly registered articles. It is not a partnership de facto
or at will as it was existing and duly registered.
As to the question of whether or not Maglana can unilaterally dissolve the partnership in the case at bar,
the answer is in the affirmative.
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.
Rojas is not entitled to any profits as he failed to give the amount he had undertaken to contribute thus,
had become a debtor of the partnership. Maglana cannot be liable for damages since his withdrawal
was justified. Rojas abandoned the partnership through his acts and also took funds in an amount more
than his contribution.

Questions:
Did the entry of Pahamotang as an industrial partner dissolved the first partnership?
Yes. Since his entry increased the members of the partnership. The dissolution of a partnership is the
change in the relation of the partners caused by any partner ceasing to be associated in the carrying on
as distinguished from the winding up of the business.