Case Citation: CHOITHRAM JETHMAL RAMNANI vs.

COURT OF APPEALS
G.R. No. 85494, 196 SCRA 731

Date: May 7, 1991

Petitioners: CHOITHRAM JETHMAL RAMNANI and/or NIRMLA V. RAMNANI and

MOTI G. RAMNANI

Respondents: COURT OF APPEALS, SPOUSES ISHWAR JETHMAL RAMNANI,

SONYA JETHMAL RAMNANI and OVERSEAS HOLDING CO., LTD.

Doctrine: In a situation where one furnished capital, and another contributed his
industry and talent, justice and equity dictate that the two share equally
the fruit of their joint investment and efforts.

Antecedent Facts: Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are
brothers of the full blood. Ishwar and his spouse Sonya had their main
business based in New York. They then executed a general power of
attorney appointing Navalrai and Choithram as attorneys-in-fact,
empowering them to manage and conduct their business concern in the
Philippines.

In 1966, Choithram, in his capacity as aforesaid attorney-in-fact of

Ishwar, entered into two agreements for the purchase of two parcels of
land from Ortigas & Company, Ltd. Partnership (Ortigas). A building was
constructed thereon by Choithram and this was occupied and rented by
Jethmal Industries and a wardrobe shop called Eppie's Creation. Three
other buildings were built thereon by Choithram through a loan, as well
as the income derived from the first building. However, two of these
buildings were later burned.

Sometime in 1970, Ishwar asked Choithram to account for the income

and expenses relative to these properties during the period 1967 to 1970.
Choithram failed and refused to render such accounting. As a
consequence, Ishwar revoked the general power of attorney.

Nevertheless, Choithram transferred all rights and interests of Ishwar

and Sonya in favor of his daughter-in-law, Nirmla Ramnani. Upon
complete payment of the lots, Ortigas executed the corresponding deeds
of sale in favor of Nirmla.

Thus, Ishwar and Sonya (spouses Ishwar) filed a complaint in the Court
of First Instance against Choitram and/or spouses Nirmla and Moti
(Choithram, et al.) and Ortigas for reconveyance of said properties or
payment of its value and damages. An amended complaint for damages
was thereafter filed by said spouses.

Petitioner’s Contention: Choithram alleged that the appellate court gravely abused its discretion
in making a factual finding not supported by and contrary to the evidence
presented at the trial court.

Respondent’s Contention: Ishwar alleged that he can still recover all the investments entered
into by Choithram.

MTC/RTC Ruling: The trial court dismissed the complaint and counterclaim. A motion for
reconsideration thereof filed by spouses Ishwar was denied.
CA Ruling: The Court of Appeals reversed and set aside the appealed decision of the
lower court which denied plaintiffs-appellants' Motion for
Reconsideration from aforesaid decision. A new decision is hereby
rendered sentencing defendants-appellees to pay, jointly and severally,
plaintiffs-appellants.

Acting on a motion for reconsideration filed by Choithram, et al. and

Ortigas, the appellate court promulgated an amended decision granting
the motion for reconsideration of Ortigas by affirming the dismissal of the
case by the lower court as against Ortigas but denying the motion for
reconsideration of Choithram, et al. Hence, the present petition.

Issue: Whether or not Ishwar can recover all the investments entered into by
Choithram in his capacity as attorney-in-fact

SC Ruling: No, Ishwar cannot recover the entire properties subject.

Clearly, the transfer made by Choithram of the rights and interest of

Ishwar to Nirmla is fictitious and was intended only to place the property
in her name until Choithram acquires Philippine citizenship. Thus, it
must be struck down.

Furthermore, the purported mortgage of the subject properties in

litigation appears to be fraudulent and simulated. Thus, the Court finds
and so declares that this alleged mortgage should be as it is hereby
declared null and void.

Nevertheless, under the peculiar circumstances of this case and despite

the fact that Choithram, et al., have committed acts which demonstrate
their bad faith and scheme to defraud spouses Ishwar and Sonya of their
rightful share in the properties in litigation, the Court cannot ignore the
fact that Choithram must have been motivated by a strong conviction
that as the industrial partner in the acquisition of said assets he has as
much claim to said properties as Ishwar, the capitalist partner in the
joint venture.

The scenario is clear. Spouses Ishwar supplied the capital of $150,000.00

for the business. They entrusted the money to Choithram to invest in a
profitable business venture in the Philippines.

Choithram in turn decided to invest in the real estate business. He

bought the two (2) parcels of land in question from Ortigas as attorney-
in-fact of Ishwar. Instead of paying for the lots in cash, he paid in
installments and used the balance of the capita entrusted to him, plus a
loan, to build two buildings. Although the buildings were burned later,
Choithram was able to build two other buildings on the property. He
rented them out and collected the rentals. Through the industry and
genius of Choithram, Ishwar's property was developed and improved into
what it is now - a valuable asset worth millions of pesos.

We have a situation where two brothers engaged in a business venture.

One furnished the capital, the other contributed his industry and talent.
Justice and equity dictate that the two share equally the fruit of their
joint investment and efforts. No one would end up the loser. After all,
blood is thicker than water.

However, since Choithram, et al. acted with evident bad faith and malice,
they should pay moral and exemplary damages as well as attorney's fees
to spouses Ishwar.

WHEREFORE, the petition in G.R. No. 85494 is DENIED, while the petition
in G.R. No. 85496 is hereby given due course and GRANTED. The judgment
of the Court of Appeals is hereby modified as follows:

1. Dividing equally between respondents spouses Ishwar, on the one hand,

and petitioner Choithram Ramnani, on the other, the two parcels of land
subject of this litigation, including all the improvements thereon, as well as
the rental income of the property from 1967 to the present.

xxx

SO ORDERED.