NAME: REYNA MAREZ D.

MICABALO

Case 3

Cases: Read and Digest the following cases:

1. Hanlon vs. Hausserman and Beam, 40 Phil. 796 (1920)

FACTS:
• R.Y. Hanlon started an action in the first place. A. and John W.
Haussermann, the defendants, to submit to Y. W. Beam to account for a
portion of the profits made by them in restoring the Benguet Consolidated
Mining Company's plant, and in particular to compel them to turn over
50,000 shares of the company's stock with dividends earned to the plaintiff.
Hanlon, Haussermann, Beam, and Sellner initially decided that P75,000 was
required to restore the mine; P50,000 would come from Hanlon through
securing and getting subscriptions for the P50,000. Haussermann and Beam
would contribute P25,000 toward the company's equity. They were to be
paid in shares of stock as compensation for the services provided to help
this proposal get off the ground.

ISSUES:
• If a party to a contract is implicitly released if the other fails to adhere to a
specific clause on or before the deadline for performance.

RULING:
• It must be decided in regard to the parties' intentions as inferred from the
contract itself in light of the circumstances surrounding the contract's
formation.
• The accomplishment of that requirement was necessary for all scenarios
regarding the rehabilitation of the Benguet mining property. Therefore,
there can be no question that the parties saw Hanlon's adherence to this
agreement as being the key element in the overall scheme.
• Given that the profit-sharing agreement already contained an
unambiguous resolutory provision, it must have felt unnecessary to include
one in the subsequent contract. Therefore, any extension of time granted by
the mining corporation after the initial six months would have been
completely out of goodwill and not something that Hanlon could have
demanded as a matter of right.
 • According to the equitable doctrine, if the parties to the agreement have
treated time as being of the essence of the agreement, then the delinquency
will not be excused and specific performance will not be granted; however,
if it appears that time has not been made to be of the essence of the
agreement, then equity will excuse the delinquency and specific
performance will be granted, due compensation being made for the damage
caused by the delay

2. Pang Lim and Galvez vs. Lo Seng 42 Phil 282

FACTS:
• Before June 1, 1916, two of the parties involved in this dispute, Lo Seng and
Pang Lim, two Chinese natives of the City of Manila, worked together as
partners in the distillery "El Progreso" that they operated in the
Municipality of Paombong, Province of Bulacan. The land on which the
aforementioned distillery is situated, along with the buildings and other
initial business improvements, were, at the time to which reference is now
made, the property of another Chinese resident of Hongkong named Lo
Yao, who leased the same to the company Lo Seng and Co. in September
1911 for a period of three years. After this lease's expiration, a new written
agreement in the making of which Lo Yao was represented by one Lo Shui
as an actual attorney to extend the lease for an additional fifteen years came
into force. The Bureau of Internal Revenue needed numerous costly
modifications to be made in the distillery, and it was decided that these
renovations should be completed at the lessees' expense. This requirement
appears to have been the reason the contract was made for such a long
period of time. According to this arrangement, Lo Seng and Co. and later
Lo Seng alone invested tens of thousands of pesos in expanding and
modernizing the facility.
• As a result, Lo Seng became the distillery's sole owner on June 1, 1916. On
June 28, 1918, Lo Shui, acting once more as Lo Yao's attorney in fact, signed
and acknowledged a deed that purported to transfer ownership of the
entire distillery plant, including the land used in connection with it, to Pang
Lim and another Chinese man by the name of Benito Galvez. This
document, like the lease, was never entered into the property registry. After
Lo Seng refused to give in to their demands for ownership, Pang Lim and
Benito Galvez filed the current action of unlawful detainer at the Paombong
court of the judge of the peace in an effort to regain possession of the
property. The matter was appealed from the justice of the peace's ruling to
the court of first instance, where the plaintiffs were found to be in the right.
The defendant then filed an appeal with the Supreme Court.
 ISSUES:
• Pang Lim is in a position to terminate the lease agreement in question
because he participated in it, which makes it impossible for him to continue
with his unlawful eviction case.

RULING:
• The fact that Pang Lim had been a partner with Lo Seng and Benito Galvez
a worker previous to the acquisition of this property starkly reveals the bad
faith of the plaintiffs in their attempt to deny the defendant of this lease. As
a result, both had developed trusting relationships with Lo Seng and, as a
result, had knowledge of the property's potential and perhaps even
experience that would have allowed them to profitably use the distillery in
the event that they had acquired ownership.
• The partner who secures the renewal is deemed to be a constructive trustee
of the firm with regard to the lease if it is done in his or her own name and
for their own benefit and begins at a later date than the firm's lease
expiration. Benito Galvez or Pang Lim cannot force Lo Seng out because he
has the possessory right over Pang Lim. Having lawful possession as
against one cotenant, he is entitled to retain it against both

3. Catalan vs. Gatchalian 105 Phil 1270

FACTS:
• Gatchalian and Catalan work together. In order to obtain a credit from Dr.
Marave, they mortgaged two lots to him along with the improvements on
them. The duty wasn't fulfilled by the partnership. Dr. Marave purchased
the properties at an open auction. Catalan claims that because he bought
the property back, the original title should be revoked and a new one
granted in his name.

ISSUES:
• Whether or not Catalan’s redemption of the properties makes him the
absolute owner of the lands?

RULING:
• Under Article 1807 of the NCC every partner becomes a trustee for his
copartner with relation to any benefits or profits arising from his act as a
partner. Consequently, when Catalan redeemed the properties in dispute,
he became a trustee and held the property on behalf of his business partner
 Gatchalian, with the power to demand that Gatchalian pay his share of the
redemption price.

4. Fortis vs. Gutierrez Hermanos 6 Phil. 100

FACTS:
• Plaintiff filed this lawsuit to recover a debt owed to him as salary for the
year 1902 as a result of his employment with the defendants in 1900, 1901,
and 1902. He claimed that he was entitled to 5% of the defendants'
business's net profits for the relevant year as remuneration. A claim for 600
pesos, which the plaintiff had spent on the defendants in 1903, was also
included in the lawsuit. The lower court's decision found that the contract
had been made as the plaintiff claimed; that 5% of the business's net profits
for the year 1902 equaled 26,378.68 pesos (Mexican pesos); that the plaintiff
had received 12,811.75 pesos (Mexican pesos) as payment for this salary;
and that the defendants should be held liable for the sum of 13,566.93 pesos.
• The offenders were also compelled to pay the court judgment for the 600
pesos indicated in the complaint, plus interest. When converted to
Philippine Pesos, the total judgment awarded in favor of the plaintiff
against the defendants came to P3,025.40. Defendants raised this case by bill
of exceptions after their motion for a fresh trial was refused.

ISSUES:
• Regardless of whether the plaintiff and the defendants are business
partners.

RULING:
• It was merely an employment contract. In the administration of the
company's operations, the plaintiff had neither a voice nor a vote. In no way
did the fact that the pay he received was to be based on the profits generated
by the defendants in their business constitute him a partner therein.
According to the defendants' articles of partnership, the proceeds were to
be distributed in a specific way among the listed partners.
• This provision of the articles of partnership was not altered or modified in
any way by the contract that was formed between the plaintiff and the
defendant partnership's management at the time. According to the norm,
receiving a portion of a company's revenues serves as prima facie proof that
a person is a partner. The only exception is if the profit is used to pay an
employee's wages.

5. Ramnani vs. Court of Appeals 196 SCRA 731

FACTS:
• Ishwar, Choithram, and Navalrai, all of whom go by the name Jethmal
Ramnani, are full-blooded brothers. Ishwar and Sonya's primary place of
business was in New York. They signed a general power of attorney on
January 24, 1966, designating Navalrai and Choithram as attorneys-in-fact
and giving them authority to manage and conduct their business concern
in the Philippines after realizing how difficult it would be to manage their
investments there. On February 1 and May 16, 1966, Choithram entered into
two agreements for the purchase of two parcels of land in Barrio Ugong,
Pasig, Rizal, from Ortigas & Company, Ltd. Partnership. On that site,
Choithram built a building in 1966.
• Choithram constructed three other buildings there using a loan of P100,000
from the Merchants Bank and revenue from the first building. Ishwar asked
Choithram to account for the revenue and costs associated with these
properties from 1967 to 1970 at some point in 1970. Choithram was
unsuccessful and declined to provide this accounting. Ishwar then
cancelled the general power of attorney. On April 1, 1971, and May 24, 1971,
respectively, Choithram and Ortigas received the proper notice of this
revocation. For the benefit of the general public's knowledge, this notice
was also published in The Manila Times' April 2, 1971 issue and registered
with the Securities and Exchange Commission on March 29, 1971.
• However, on February 19, 1973, Choithram transferred all of Ishwar and
Sonya's rights and interests to his daughter-in-law, Nirmla Ramnani.
Ishwar and Sonya filed a suit on October 6, 1982, seeking the return of the
aforementioned properties or the payment of their value and damages
against Choitram and/or his spouses Nirmla, Moti, and Ortigas.

ISSUES:
• Whether Ishram can recover the entire properties subject in the litigation.

RULING:
• Choithram then made the decision to make a real estate investment. In his
capacity as Ishwar's actual agent, he acquired the two (2) parcels of land in
question from Ortigas. He borrowed money in addition to the remaining
funds given to him and utilized it to construct two buildings rather than
paying for the lots in full up front. Despite the fact that the structures were
later set on fire, Choithram was still able to erect two other structures there.
Rent was collected once he rented them out. Through the industry and
genius of Choithram, Ishwar's property was developed and improved into
what it is now. Justice and equality demand that the two equitably split the
rewards of their combined work and investment.