Case Digest (G.R. No. L-4811)
Facts:
In Charles F. Woodhouse vs. Fortunato F. Halili (G.R. No. L-4811, July 31, 1953), the plaintiff-appellant, Charles F. Woodhouse, and the defendant-appellant, Fortunato F. Halili, entered into a written agreement on November 29, 1947 (Exhibit A), whereby they would form a partnership to bottle and distribute Mission soft drinks in the Philippines. Woodhouse was to act as industrial partner or manager and secure the exclusive bottling franchise from Mission Dry Corporation of Los Angeles, while Halili would provide the necessary capital and set general policy. Woodhouse’s attorney initially drafted a corporate agreement (Exhibit II) representing Woodhouse as the exclusive grantee of the franchise; after lawyers for both parties conferred at the Manila Hotel on November 27, 1947, a partnership model (Exhibit A) was signed by Woodhouse on December 3, 1947. On December 10, 1947, Mission Dry Corporation granted the exclusive bottling and distribution rights to Halili and/or WoodhouseCase Digest (G.R. No. L-4811)
Facts:
- Parties and Agreement
- On November 29, 1947, Charles F. Woodhouse (plaintiff/manager) and Fortunato F. Halili (defendant/capitalist) executed a written agreement (Exhibit A) to form a partnership for the bottling and distribution of Mission soft drinks.
- Key provisions:
- Plaintiff to act as industrial partner/manager; defendant as capitalist providing funds.
- Defendant to decide general policy; plaintiff to operate and develop the plant.
- Plaintiff to secure the Mission Soft Drinks franchise for the partnership.
- Plaintiff entitled to 30% of net profits.
- Pre-contract Negotiations and Drafts
- Prior to the agreement, plaintiff secured from Mission Dry Corporation a 30-day option on exclusive bottling/distribution rights (Exhibit J) to strengthen bargaining position.
- Formal negotiations began November 27, 1947, at the Manila Hotel with both parties’ attorneys.
- Drafts prepared:
- Exhibit II/OO by plaintiff’s counsel (contemplating a corporation and stating plaintiff held the exclusive franchise).
- Exhibit HH by defendant’s counsel (basis for Exhibit A).
- The final partnership agreement was signed December 3, 1947, prior to their trip to the United States.
- Franchise Grant and Operations
- On December 10, 1947, Mission Dry Corporation granted defendant and/or plaintiff an exclusive franchise to produce, bottle, distribute, and sell Mission beverages in the Philippines (Exhibit V).
- The parties returned to the Philippines; operations commenced first week of February 1948.
- Advances to plaintiff on account of profits: P2,000 in January; P2,000 in February; P1,000 in March 1948; car use withdrawn March 9, 1948.
- Dispute and Trial Court Proceedings
- Plaintiff demanded execution of formal partnership papers; defendant delayed, then refused after plant operations began.
- Plaintiff’s complaint sought enforcement of the partnership agreement, 30% profit share, accounting, and P200,000 damages.
- Defendant’s answer alleged plaintiff’s misrepresentation of franchise ownership, plaintiff’s failure to secure the franchise, and counter-claimed P200,000 damages.
- The Court of First Instance found no fraud vitiating consent but held the partnership agreement unenforceable; awarded plaintiff a 15% share of net profits.
- Appeals
- Both parties appealed.
- Central factual issue: whether plaintiff’s representation of exclusive franchise ownership was false and whether it annulled the partnership agreement.
- Central legal issues: enforceability of a personal obligation to form a partnership and measure of damages.
Issues:
- Did plaintiff falsely represent that he held an exclusive Mission franchise, vitiating defendant’s consent?
- If the representation was false, did it constitute causal fraud (dolo causante) nullifying the agreement or merely incidental fraud (dolo incidente) warranting damages?
- Can defendant be compelled by specific performance to execute the partnership papers?
- What is the proper measure of damages for each party?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)