Case Digest 18
Atty. CAF
Digested by: Antonette R. Badong
PIONEER INSURANCE V. CA
G.R. NO. 84197 & 84157, JULY 28, 1989
GUTIERREZ, JR., J
Topic: Classification of Partnerships (Articles 1776-1781, 1783, 1825)
PRINCIPLE: Where persons associate themselves together under articles to purchase
property to carry on a business, and their organization is so defective as to come short
of creating a corporation within the statute, they become in legal effect partners inter
se, and their rights as members of the company to the property acquired by the
company will be recognized (Smith v. Schoodoc Pond Packing Co., 84 A 268, 109 Me.
555; Whipple v. Parker, 29 Mich. 369).
FACTS: Japan Domestic Airlines (JDA) and Lim entered into and executed a sales
contract (Exhibit A) for the sale and purchase of two (2) DC-3A Type aircrafts and one
(1) set of necessary spare parts for the total agreed price of US $109,000.00 to be paid
in installments. One DC-3 Aircraft with Registry No. PIC-718, arrived in Manila on June
7, 1965 while the other aircraft, arrived in Manila on July 18, 1965. Pioneer Insurance
and Surety Corporation as surety executed and issued its Surety Bond No. 6639
(Exhibit C) in favor of JDA, in behalf of its principal, Lim, for the balance price of the
aircrafts and spare parts.
It appears that Border Machinery and Heavy Equipment Company, Inc. (Bormaheco),
Francisco and Modesto Cervantes (Cervanteses) and Constancio Maglana
(respondents in both petitions) contributed some funds used in the purchase of the
above aircrafts and spare parts. The funds were supposed to be their contributions to
a new corporation proposed by Lim to expand his airline business. They executed two
(2) separate indemnity agreements (Exhibits D-1 and D-2) in favor of Pioneer, one
signed by Maglana and the other jointly signed by Lim for SAL, Bormaheco and the
Cervanteses. The indemnity agreements stipulated that the indemnitors principally
agree and bind themselves jointly and severally to indemnify and hold and save
harmless Pioneer from and against any/all damages, losses, costs, damages, taxes,
penalties, charges and expenses of whatever kind and nature which Pioneer may incur
in consequence of having become surety upon the bond/note and to pay, reimburse
and make good to Pioneer, its successors and assigns, all sums and amounts of
money which it or its representatives should or may pay or cause to be paid or become
liable to pay on them of whatever kind and nature.
Lim doing business under the name and style of SAL executed in favor of Pioneer as
deed of chattel mortgage as security for the latter's suretyship in favor of the former. It
was stipulated therein that Lim transfer and convey to the surety the two aircrafts. The
deed (Exhibit D) was duly registered with the Office of the Register of Deeds of the
City of Manila and with the Civil Aeronautics Administration pursuant to the Chattel
Mortgage Law and the Civil Aeronautics Law (Republic Act No. 776), respectively. Lim
defaulted on his subsequent installment payments prompting JDA to request payments
from the surety. Pioneer paid a total sum of P298,626.12.
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Pioneer then filed a petition for the extrajudicial foreclosure of the said chattel mortgage
before the Sheriff of Davao City. The Cervanteses and Maglana, however, filed a third
party claim alleging that they are co-owners of the aircrafts. Pioneer also filed an action
for judicial foreclosure with an application for a writ of preliminary attachment against
Lim and respondents, the Cervanteses, Bormaheco and Maglana. In their Answers,
Maglana, Bormaheco and the Cervanteses filed cross-claims against Lim alleging that
they were not privies to the contracts signed by Lim and, by way of counterclaim,
sought for damages for being exposed to litigation and for recovery of the sums of
money they advanced to Lim for the purchase of the aircrafts in question.
ISSUE: Whether a de facto partnership among them was created, and that as a
consequence of such relationship all must share in the losses and/or gains of the
venture in proportion to their contribution as a result of the failure of respondents
Bormaheco, Spouses Cervantes, Constancio Maglana and petitioner Lim to
incorporate.
RULING: NO. The petitioner questions the appellate court's findings ordering him to
reimburse certain amounts given by the respondents to the petitioner as their
contributions to the intended corporation, to wit:
"However, defendant Lim should be held liable to pay his co-defendants' cross-claims
in the total amount of P184,878.74 as correctly found by the trial court, with the interest
from the filing of the cross-claims until the amount is fully paid. Defendants Lim should
pay one-half of the said amount to Bormaheco and the Cervanteses and the other onehalf to defendant Maglana. It is established in the records that defendant Lim had duly
received the amount of P151,000.00 from defendants Bormaheco and Maglana
representing the latter's participation in the ownership of the subject airplanes and
spare parts (Exhibit 58). In addition, the cross-party plaintiffs incurred additional
expenses, hence, the total sum of P184,878.74."
While it has been held that as between themselves the rights of the stockholders in a
defectively incorporated association should be governed by the supposed charter and
the laws of the state relating thereto and not by the rules governing partners, it is
ordinarily held that persons who attempt, but fail, to form a corporation and who carry
on business under the corporate name occupy a position of partners inter se. Thus,
where persons associate themselves together under articles to purchase property to
carry on a business, and their organization is so defective as to come short of creating
a corporation within the statute, they become in legal effect partners inter se, and their
rights as members of the company to the property acquired by the company will be
recognized. However, such a relation does not necessarily exist, for ordinarily persons
cannot be made to assume the relation of partners, as between themselves, when their
purpose is that no partnership shall exist, and it should be implied only when necessary
to do justice between the parties; thus, one who takes no part except to subscribe for
stock in a proposed corporation which is never legally formed does not become a
partner with other subscribers who engage in business under the name of the
pretended corporation, so as to be liable as such in an action for settlement of the
alleged partnership and contribution. A partnership relation between certain
stockholders and other stockholders, who were also directors, will not be implied in the
absence of an agreement, so as to make the former liable to contribute for payment of
debts illegally contracted by the latter.
It is therefore clear that the petitioner never had the intention to form a corporation with
the respondents despite his representations to them. This gives credence to the cross2
claims of the respondents to the effect that they were induced and lured by the
petitioner to make contributions to a proposed corporation which was never formed
because the petitioner reneged on their agreement.
Applying therefore the principles of law earlier cited to the facts of the case,
necessarily, no de facto partnership was created among the parties which would
entitle the petitioner to a reimbursement of the supposed losses of the proposed
corporation. The record shows that the petitioner was acting on his own and not in
behalf of his other would-be incorporators in transacting the sale of the airplanes and
spare parts.
Case Digest 19
Atty. CAF
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Digested by: Rene Canete
MORAN V. CA
G.R. NO. L-59956, OCTOBER 31, 1984
Topic: Obligations of the Partners among Themselves - Contributions (Articles 17841796, 1808)
PRINCIPLE: Article 1797 of the Civil Code provides: The losses and profits shall be
distributed in conformity with the agreement. If only the share of each partner in the
profits has been agreed upon, the share of each in the losses shall be in the same
proportion.
FACTS: This is a petition for review on certiorari of the decision of the respondent
Court of Appeals which ordered petitioner Isabelo Moran, Jr. to pay damages to
respondent Mariano E, Pecson.
On February 22, 1971 Pecson and Moran entered into an agreement whereby both
would contribute P15,000 each for the purpose of printing 95,000 posters (featuring
the delegates to the 1971 Constitutional Convention), with Moran actually supervising
the work; that Pecson would receive a commission of P l,000 a month starting on April
15, 1971 up to December 15, 1971; that on December 15, 1971, a liquidation of the
accounts in the distribution and printing of the 95,000 posters would be made, that
Pecson gave Moran P10,000 for which the latter issued a receipt; that only a few
posters were printed; that on or about May 28, 1971, Moran executed in favor of
Pecson a promissory note in the amount of P20,000 payable in two equal installments
(P10,000 payable on or before June 15, 1971 and P10,000 payable on or before June
30, 1971), the whole sum becoming due upon default in the payment of the first
installment on the date due, complete with the costs of collection.
Private respondent Pecson filed with the Court of First Instance of Manila an action for
the recovery of a sum of money and alleged in his complaint three (3) causes of action,
namely: (1) on the alleged partnership agreement, the return of his contribution of
P10,000.00, payment of his share in the profits that the partnership would have
earned, and, payment of unpaid commission; (2) on the alleged promissory note,
payment of the sum of P20,000.00; and, (3) moral and exemplary damages and
attorney's fees.
After the trial, the Court of First Instance held that by virtue of the partnership
agreement entered into by the parties-plaintiff and defendant the plaintiff did contribute
P10,000.00, and another sum of P7,000.00 for the Voice of the Veteran or Delegate
Magazine. Of the expected 95,000 copies of the posters, the defendant was able to
print 2,000 copies only authorized of which, however, were sold at P5.00 each.
Nothing more was done after this and it can be said that the venture did not really get
off the ground. On the other hand, the plaintiff failed to give his full contribution of
P15,000.00. Thus, each party is entitled to rescind the contract which right is implied
in reciprocal obligations under Article 1385 of the Civil Code whereunder 'rescission
creates the obligation to return the things which were the object of the contract.
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ISSUE: Whether or not the HONORABLE COURT OF APPEALS grievously erred in
not granting the petitioner’s compulsory counterclaim for damages amounting to
P20,000.00 pesos.
RULING: The respondent court erred when it concluded that the project never left the
ground because the project did take place. Only it failed. It was the private respondent
himself who presented a copy of the book entitled "Voice of the Veterans" in the lower
court as Exhibit "L". Therefore, it would be an error to state that the project never took
place and on this basis decree the return of the private respondent's investment.
As already mentioned, there are risks in any business venture and the failure of the
undertaking cannot entirely be blamed on the managing partner alone, especially if the
latter exercised his best business judgment. The Court found no valid basis for the
grant of the counterclaim.
WHEREFORE, the petition is GRANTED. The decision of the respondent Court of
Appeals (now Intermediate Appellate Court) is hereby SET ASIDE and a new one is
rendered ordering the petitioner Isabelo Moran, Jr., to pay private respondent Mariano
Pecson SIX THOUSAND (P6,000.00) PESOS representing the amount of the private
respondent's contribution to the partnership but which remained unused; and THREE
THOUSAND (P3,000.00) PESOS representing one half (1/2) of the net profits gained
by the partnership in the sale of the two thousand (2,000) copies of the posters, with
interests at the legal rate on both amounts from the date the complaint was filed until
full payment is made.
Case Digest 20
Atty. CAF
Digested by: Serge Adever Cua
5
EUFRACIO D. ROJAS V. CONSTANCIO B. MAGLANA
G.R. NO. 30616, DECEMBER 10, 1990
Topic: Obligations of the Partners among Themselves - Contributions (Articles 17841796, 1808)
PRINCIPLE:
Article 1786. Every partner is a debtor of the partnership for whatever he may have
promised to contribute thereto.
He shall also be bound for warranty in case of eviction with regard to specific and
determinate things which he may have contributed to the partnership, in the same
cases and in the same manner as the vendor is bound with respect to the vendee. He
shall also be liable for the fruits thereof from the time they should have been delivered,
without the need of any demand.
Article 1788. A partner who has undertaken to contribute a sum of money and fails to
do so becomes a debtor for the interest and damages from the time he should have
complied with his obligation.
The same rule applies to any amount he may have taken from the partnership coffers,
and his liability shall begin from the time he converted the amount to his own use.
FACTS:
In 1955, Maglana and Rojas formed Eastcoast Development Enterprises (EDE) with
an indefinite term of existence. The partnership aimed to apply or secure timber and
minor forests products licenses and concessions over public and private forest lands,
operating, developing, and promoting such forests rights and concessions. The
partnership was registered with the Securities and Exchange Commission and had an
application for a timber concession covering Cateel and Baganga, Davao. Maglana
managed the business affairs, including marketing and handling of cash, while Rojas
was the logging superintendent and managed the logging operations.
During the period from January 14, 1955, to April 30, 1956, the partnership was not
operational. Due to difficulties, Rojas and Maglana decided to avail of the services of
Pahamotang as industrial partner. On March 4, 1956, Maglana, Rojas, and Agustin
Pahamotang executed their Articles of Co-Partnership under the firm name
EASTCOAST DEVELOPMENT ENTERPRISES (EDE). The partnership started
operation on May 1, 1956, and realized profits, with an income derived from the
proceeds of the logs in the sum of P643,633.07.
On October 25, 1956, Pahamotang, Maglana, and Rojas executed a document entitled
"CONDITIONAL SALE OF INTEREST IN THE PARTNERSHIP, EASTCOAST
DEVELOPMENT ENTERPRISE" agreeing among themselves that Maglana and Rojas
shall purchase the interest, share, and participation in the Partnership of Pahamotang
assessed in the amount of P31,501.12. After payment of the sum, the partnership was
dissolved.
After Rojas entered into a management contract with another logging enterprise, CMS
Estate, Inc., he left and abandoned the partnership. On February 4, 1957, Rojas
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withdrew his equipment from the partnership for use in the newly acquired area.
Maglana reminded Rojas of his obligation to contribute to the capital investments and
perform his duties as logging superintendent. Two weeks after March 17, 1957, Rojas
told Maglana that he would not be able to comply with the promised contributions and
would not work as logging superintendent.
In 1961, Judge Romero appointed commissioners to examine the Eastcoast
Development Enterprises' accounts. Maglana filed a complaint against the
commissioners, which was denied by Judge Romero for lack of merit. The
commissioners began examining the partnership's records and supporting papers,
which were compiled in three volumes.
On May 11, 1964, Maglana filed a motion for leave of court to amend his answer with
counterclaim, which was granted on May 22, 1964. On May 27, 1964, Judge M.G.
Reyes approved the submitted Commissioners' Report. Rojas filed his motion for
reconsideration of the order dated May 27, 1964, which was opposed by the appellant.
A mandatory pre-trial was conducted on September 8 and 9, 1964, and the following
issues were agreed upon: the nature of partnership and legal relations of Maglana and
Rojas after the dissolution of the second partnership; their sharing basis: whether in
proportion to their contribution or share and share alike; the ownership of properties
bought by Maglana in his wife's name; damages suffered and who should be liable for
them; and the legal effect of the letter dated February 23, 1961 of Maglana dissolving
the partnership.
The lower court rendered its decision on March 11, 1968, declaring that the partnership
of the defendant and the plaintiff is one of a de facto and at will after Pahamotang
retired from the second partnership. The sharing of profits and losses is based on
actual contributions, with the plaintiff's share being on the basis of his actual
contribution.
The court also declared that neither parties are entitled to damages, as it is not a wise
policy to place a price on the right of a person to litigate or come to court for the
assertion of rights they believe they are entitled to. The court ordered plaintiff Rojas to
pay or turn over the profits he received from the CMS Estate, Inc., denied the claim
that he should be ordered to pay the further sum of P85,000.00, and credits the
defendant the amount he should have received as logging superintendent. The
complaint was dismissed with costs against the plaintiff.
ISSUE:
What is the nature of the partnership and legal relationship of the Maglana-Rojas after
Pahamotang retired from the second partnership.
RULING:
The lower court ruled that the second partnership was dissolved without a written
contract of co-partnership, resulting in a de facto partnership and at will. The
partnership carried on by Rojas and Maglana after the dissolution was considered a
partnership at will. However, Rojas argued that the registered partnership under the
firm name of Eastcoast Development Enterprises (EDE) had not been novated,
superseded, or dissolved by the unregistered articles of co-partnership among
appellant Rojas, appellee Maglana, and Agustin Pahamotang, dated March 4, 1956.
He argued that the terms and stipulations of the registered Articles of Co-Partnership
7
should govern the relations between him and Maglana. The letter of appellee Maglana
dated February 23, 1961, did not legally dissolve the registered partnership between
them, violating the partnership agreement agreed upon in their Articles of CoPartnership.
The case revolves around the dissolution of a registered partnership between Rojas
and Maglana, which was not intended to dissolve the first partnership. Instead, they
formed an "Additional Agreement" with the same name, EASTCOAST
DEVELOPMENT ENTERPRISES, and pursued the same purposes. The capital
contributions of both partners were stipulated in both partnerships, and all subsequent
renewals of Timber License No. 35-36 were secured in favor of the First Partnership,
the original licensee.
The second partnership was dissolved by common consent, and all business
transactions were carried out under the duly registered articles. However, there are
still subsisting obligations and contracts of the second partnership, except for
Pahamotang, which was fully paid by the duly registered partnership. The relationship
between Rojas and Maglana after the withdrawal of Pahamotang cannot be
considered as a De Facto Partnership or Partnership At Will, as there is an existing,
duly registered partnership.
Under Article 1830, par. 2 of the Civil Code, one partner can cause its dissolution by
expressly withdrawing even before the expiration of the period, with or without
justifiable cause. However, with his withdrawal, the number of members is decreased,
hence the dissolution. The partnership's provisions dictate that all profits and losses
should be divided "share and share alike" between the partners.
An accounting must first be made, which was ordered by the trial court and
accomplished by the commissioners appointed for the purpose. The corresponding
contribution of the partners from 1956-1961 is as follows: Eufracio Rojas, who should
have contributed P158,158.00, contributed only P18,750.00, while Maglana, who
should have contributed P160,984.00, contributed P267,541.44. It is a settled rule that
when a partner fails to contribute a sum of money, they become a debtor of the
partnership for whatever they may have promised to contribute (Article 1786, Civil
Code) and for interests and damages from the time he should have complied with his
obligation (Article 1788, Civil Code).
In the given situation, Maglana cannot be said to be in bad faith nor can he be liable
for damages because of his withdrawal. The legal relationship of the partners after the
withdrawal of Pahamotang is unquestionably a continuation of the duly registered
partnership, and the sharing of profits and losses should be on the basis of share and
share alike as provided for in the duly registered Articles of Co-Partnership.
Case Digest 21
Atty. CAF
Digested by: Dexter Lopez
LUZVIMINDA J. VILLAREAL V. DONALDO EFREN C. RAMIREZ, ET AL
8
G.R. NO. 144214, JULY 14, 2003
Topic: Obligations of the Partners among Themselves - Contributions (Articles 17841796, 1808)
PRINCIPLE: A share in a partnership can be returned only after the completion of the
latter’s dissolution, liquidation and winding up of the business.
FACTS: Luzviminda J. Villareal, Carmelito Jose, and Jesus Jose formed a partnership
with a capital of P750,000 to operate a restaurant and catering business called
"Aquarius Food House and Catering Services." Villareal was the general manager, and
Carmelito Jose was the operations manager. Later, Donaldo Ramirez joined as a
partner with a P250,000 capital contribution. Jesus Jose left the partnership, and his
capital was refunded.
In the same month, without informing Donaldo Ramirez, the petitioners closed the
restaurant, citing increased rental costs. The restaurant's furniture and equipment were
stored at the respondent's house. In 1987, the respondent spouses requested the
return of their capital and their one-third share in the partnership. Their requests went
unanswered.
The respondents filed a lawsuit in the RTC to collect a sum of money from the
petitioners. The petitioners argued that the respondents had indicated their desire to
withdraw from the partnership, leading to its dissolution under Articles 1830 and 1831.
They claimed the respondents were paid with the furniture and equipment worth over
P400,000, and their equity could not be returned due to business losses.
The respondents, in their reply, stated that they had not received regular reports or
accounting from the petitioners, who managed the business. They expected the
furniture and equipment stored in their house to be removed when the petitioners found
a new location for the restaurant
The RTC determined that the parties had entered into a partnership voluntarily, which
could be dissolved at any time. The petitioners' decision to stop operating the
restaurant indicated their intention to dissolve it. Consequently, the RTC ruled in favor
of the respondents, ordering the petitioners to pay jointly and severally.
ISSUES:
1. Are the petitioners responsible for the share of the respondents in the partnership?
2. Is the CA's calculation of Php 253,114 as the respondents' share accurate?
3. Did the CA make the right decision in not imposing costs?
RULING:
1. NO. We hold that respondents have no right to demand from petitioners the return
of their equity share. Both the trial and the appellate courts found that a partnership
had indeed existed, and that it was dissolved when respondents informed petitioners
of the intention to discontinue it because of the formers dissatisfaction with, and loss
of trust in, the latters management of the partnership affairs. Except as managers of
the partnership, petitioners did not personally hold its equity or assets. The partnership
9
has a juridical personality separate and distinct from that of each of the partners. Since
the capital was contributed to the partnership, not to petitioners, it is the partnership
that must refund the equity of the retiring partners, the amount to be refunded is
necessarily limited to its total resources. In other words, it can only pay out what it has
in its coffers, which consists of all its assets. However, before the partners can be paid
their shares, the creditors of the partnership must first be compensated. After all the
creditors have been paid, whatever is left of the partnership assets becomes available
for the payment of the partners shares. The records show that the partnership capital
was actually reduced. When petitioners and respondents ventured into business
together, they should have prepared for the fact that their investment would either grow
or shrink. In the present case, the investment of respondents substantially dwindled.
The original amount of P250,000 which they had invested could no longer be returned
to them, because one third of the partnership properties at the time of dissolution did
not amount to that much. It is a long- established doctrine that the law does not relieve
parties from the effects of unwise, foolish or disastrous contracts they have entered
into with all the required formalities and with full awareness of what they were doing.
Courts have no power to relieve them from obligations they have voluntarily assumed,
simply because their contracts turn out to be disastrous deals or unwise investments.
2. No. Before the partners can be paid their respective shares, the creditors of the
partnership must first be compensated. After that, whatever is left of the partnership
assets becomes available for the payment of the partners’ shares. As such, in the
present case, the exact amount to be refunded to the respondents cannot be
determined until all the partnership assets have been liquidated. CA’s computation
should thus be considered erroneous.
3. Yes. As a rule, costs are adjudged against the losing party. However, the courts also
have the discretion “for special reasons” to decide otherwise. When a decision of the
lower court is reversed, the higher court normally does not award costs, because the
losing party relied on the lower court’s judgment. As such, unless it is shown to be
capricious, award for costs shall not be disturbed by a reviewing tribunal.
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Case Digest 22
Atty. CAF
Digested by: Nicholas John Robles
RAMNANI V. CA
G.R. NO. 85494, MAY 7, 1991
Topic: Profits and Losses (Articles 1797-1799)
PRINCIPLE: Justice and equity dictate that the two share equally the fruit of their joint
investment and efforts.
FACTS: Ishwar Jethmal Ramnani and his wife Sonya, residing in New York, received
$150,000 from Ishwar's father-in-law. In 1965, Ishwar sent $150,000 to his brother
Choithram through two bank drafts ($65,000 and $85,000) for investment in Philippine
real estate. Ishwar granted Choithram and his other brother Navalrai a power of
attorney to manage their business in the Philippines.
Choithram, as the attorney-in-fact, purchased two plots in Pasig Rizal from Ortigas &
Company (Ortigas Ltd.) and constructed and leased three buildings on the land on
behalf of Ishwar and Sonya. Unfortunately, two of these buildings were destroyed by
fire. Ishwar requested financial accounting for income and property expenses from
1967 to 1970, but Choithram refused. Consequently, Ishwar revoked the power of
attorney and notified Choithram and Ortigas of the revocation.
Despite the revocation, Choithram, still acting as attorney-in-fact, transferred the rights
and interests of Ishwar and Sonya related to the property to his son Moti's wife, Nirmla
Ramnani, with Ortigas Ltd. executing deeds in Nirmla's favor. Subsequently, Ishwar
and Sonya filed a lawsuit against Choithram, Nirmla, Moti, and Ortigas Ltd., seeking
property reconveyance or compensation.
ISSUE: Whether partnership was created between the parties involved?
RULING: 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
11
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. For this purpose they appointed Choithram as their attorneyin-fact.
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 capital 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. As of the last estimate in 1985, while the case was pending before
the trial court, the market value of the properties is no less than P22,304,000.00. It
should be worth much more today.
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. Perhaps this
Solomonic solution may pave the way towards their reconciliation. Both would stand
to gain. No one would end up the loser. After all, blood is thicker than water.
However, the Court cannot just close its eyes to the devious machinations and
schemes that Choithram employed in attempting to dispose of, if not dissipate, the
properties to deprive spouses Ishwar of any possible means to recover any award the
Court may grant in their favor. 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.
SC: “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.”
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