AGENCY TRUST AND PARTNERSHIP | ROJAS VS. MAGLANA, 192 SCRA 110, DECEMBER 10, 1990

ROJAS VS. MAGLANA,

192 SCRA 110, DECEMBER 10, 1990

 

TOPIC/DOCTRINE

Withdrawing partner is liable for damages if the cause of withdrawal is not justified or no cause was given but in no case can he be compelled to be in the firm.

 

FACTS

On January 14, 1955, Maglana and Rojas executed their Articles of Co-Partnership (Exhibit "A") called Eastcoast Development Enterprises (EDE) with only the two of them as partners. One of the purposes of the duly-registered partnership was to "apply or secure timber and/or minor forests products licenses and concessions over public and/or private forest lands and to operate, develop and promote such forests rights and concessions."

During the period from January 14, 1955 to April 30, 1956, there was no operation of said partnership. Because of the difficulties encountered, Rojas and Maglana decided to avail of the services of Pahamotang as industrial partner.

Later on, Maglana and Rojas shall purchase the interest, share and participation in the Partnership of Pahamotang. After the withdrawal of Pahamotang, the partnership was continued by Maglana and Rojas without the benefit of any written agreement or reconstitution of their written Articles of Partnership.

On January 28, 1957, Rojas entered into a management contract with another logging enterprise, the CMS Estate, Inc. He left and abandoned the partnership. On February 4, 1957, Rojas withdrew his equipment from the partnership for use in the newly acquired area. The equipment withdrawn were his supposed contributions to the first partnership and was transferred to CMS Estate, Inc. by way of chattel mortgage.

On March 17, 1957, Maglana wrote Rojas reminding the latter of his obligation to contribute, either in cash or in equipment, to the capital investments of the partnership as well as his obligation to perform his duties as logging superintendent. Rojas told Maglana that lie will not be able to comply with the promised contributions and be will not work as logging superintendent.

Meanwhile, Rojas took funds from the partnership more than his contribution. Thus, in a letter dated February 21, 1961 (Exhibit "10") Maglana notified Rojas that he dissolved the partnership.

 

ISSUE

Whether or not Maglana can unilaterally dissolve the partnership in the case at bar.

 

RULING

Yes.

The court ruled that 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 we 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.

As to whether Maglana is liable for damages because of such withdrawal, it will be recalled that after the withdrawal of Pahamotang, Rojas entered into a management contract with another logging enterprise, the CMS Estate, Inc., a company engaged in the same business as the partnership. He withdrew his equipment, refused to contribute either in cash or in equipment to the capital investment and to perform his duties as logging superintendent, as stipulated in their partnership agreement. The records also show that Rojas not only abandoned the partnership but also took funds in an amount more than his contribution. In the given situation Maglana cannot be said to be in bad faith nor can he be liable for damages.







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