Rojas v. Maglana
Maglana and Rojas executed Articles of Co-Partnership called Eastcoast Development Enterprises (EDE) with two of them as partners for the purpose of applying and securing timber licenses and to operate, develop and promote such forests’ rights and concessions. Their sharing basis was in proportion to share and share alike.
Maglana managed the business affairs while Rojas acted as superintendent. Eventually, they availed the services of Pahamotang as industrial partner. Thereafter, they executed their own Articles of Co-Partnership under the same firm name with virtually the same purpose. After some time, the two bought the interest of Pahamotang and the two returned to being the sole partners and continued the partnership without any written agreement or reconstitution of written Articles of Partnership.
Consequently, Rojas entered into a management contract with another logging enterprise in the name of CMS, withdrew his equipment from EDE for use in CMS, and abandoned the partnership altogether. Maglana wrote Rojas reminding him of his contributions to the capital investments and to perform his duties as logging superintended. However, Rojas informed Maglanathat he will not be able to comply with the contribution and he will no longer work as superintendent. Thus, Maglana told Rojas that the latter’s share will just be 20% of the net profits. Rojas took funds more than his contribution. Thus, Maglana notified Rojas that he dissolved the partnership. Thereafter, Rojas filed an action for the recovery of his share in the profits and for damages for sudden withdrawal of the partnership.
For such claim, he argues that the first partnership between him and Maglana had not been dissolved. Thus, based on the sharing basis of share and share alike as in the first partnership, which is still subsisting and undissolved after the second partnership with Pahamotang, he should be entitled to profits as computed. However, the trial court dismissed his claim for profits and maintained that the partnership subsequent to the second partnership one of a de facto and at will. Thus, the sharing should be based on their verbal agreements which is on actual contribution.
- Was the first partnership dissolved?
- Is Rojas entitled to profits?
- Is Rojas entitled to damages?
1. No, the first partnership was not dissolved. The Court held that it was not the intention of the partners to dissolve the first partnership upon the constitution of the second one. The acceptance of another industrial partner is not sufficient to hold the view that the first partnership on that basis that: a) They adopted the same name; b) They adopted the same purpose and the same capital contributions of Rojas and Maglana; c) The timber licenses subsequently procured were in favor of the first partnership; d) the First Articles of Partnership were only amended in the form of Supplementary Articles of Co-Partnership and was never registered. The new partnership was virtually the same as the old one.
Nevertheless, the second partnership was indeed dissolved by common consent. However, such dissolution did not affect the first which continued to exist, which is supported by the fact that the two were still reminding and negotiating with each other in the fulfillment of the duly registered Articles of Co-Partnership. Thus, there can be no De Facto Partnership nor a Partnership at Will for there is still an existing partnership which is duly registered.
2. No. On the basis of the findings of the commissioners, despite the sharing basis, Rojas still has unsatisfied debts to the partnership. Thus, the Court applied Art. 1786 in that a partner who has undertaken to contribute a sum of money fail to do so becomes a debtor of the partnership.
3. No. Rojas cannot claim for damages since he entirely abandoned the partnership and refused to contribute to the capital investment and perform his duties as stipulated in the partnership agreement.