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#38 Pabalan Vs Velez

Pabalan owned two lots that he agreed to contribute to a partnership with Walter Fitton called "AM Pabalan and Company". The agreement stated Pabalan would sell the lots to Fitton for $6,000, with Pabalan receiving $3,000 upfront and contributing the remaining $3,000 to the partnership. However, when Fitton died he failed to pay the remaining $3,000, resulting in losses for Pabalan. Pabalan sued to rescind the partnership and sale agreements.

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608 views1 page

#38 Pabalan Vs Velez

Pabalan owned two lots that he agreed to contribute to a partnership with Walter Fitton called "AM Pabalan and Company". The agreement stated Pabalan would sell the lots to Fitton for $6,000, with Pabalan receiving $3,000 upfront and contributing the remaining $3,000 to the partnership. However, when Fitton died he failed to pay the remaining $3,000, resulting in losses for Pabalan. Pabalan sued to rescind the partnership and sale agreements.

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SRB4
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© © All Rights Reserved
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Pabalan owned two lots, a rural real estate devoted to agricultural

purposes and an urban lot. In his desire to put the two lots to
productive use, he agreed to enter into a regular mercantile
partnership with Walter Fitton.
The agreement stipulates that they form a partnership known by the
name of AM Pabalan and Company with a capital stock at P9,000;
that Pabalan would contribute P3,000 in cash while Fitton would
contribute P6,000 in real property; that Pabalan would sell his two lots
to Fitton for P6,000; that Pabalan would receive P3,000 of the purchase
price while the remaining will be his contribution to the capital; and
that Fitton would contribute the said two lots as his agreed capital
contribution.
Pabalan received P3,000 of the purchase price. When Fitton died, he
failed to pay into the partnership funds the remaining P3,000. Owing to
the failure of Fitton to comply with his obligation, the properties in
question had been entirely unproductive, resulting in losses and
damages to Pabalan. Plaintiff prayed for the rescission of the double
contract (partnership and sale) entered into. Defendant Velez is the
administrator of Fittons estate.
ISSUE: WON recission is the proper remedy.
RULING:
Yes, in bilateral contracts, when one of the parties fails to comply with
his engagements, the party prejudiced is entitled to choose between
enforcement of the obligation or a rescission of the contract, with the
payment of damages and interest in either case. In the case at bar,
enforcement cannot be had because the defaulting partner is already
dead. Justice requires the dissolution of the company and the
rescission of the said sale.

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