Q: P and G are partners engaged in real estate business.

P received information that someone is

interested to buy a parcel of land owned by the partnership. P did not disclose this material fact to G.
Instead, he induced G to sell to him his share in nominal price. Thereafter, P sold the entire property to
the buyer and made huge profit. G sued P seeking damages alleging deceit by P. The latter, as defense,
countered that G did not ask him about any interested purchaser of the lot. Is P liable for damages?
Decide.

A: YES. P should not have concealed the fact that there was a buyer interested to purchase the firm’s
property. Good faith not only requires that a partner should not make any false concealment to his
partner, but also abstain from concealment (Poss v. Gottlieb, 193 NYS 418, 421).

Q: Joe and Rudy formed a partnership to operate a car repair shop in Quezon City. Joe provided the
capital while Rudy contributed his labor and industry. On one side of their shop, Joe opened and
operated a coffee shop, while on the other side, Rudy put up a car accessories store. May they engage in
such separate businesses? Why? (2001 Bar)

A: Joe, the capitalist partner, may engage in the restaurant business because it is not the same kind of
business the partnership is engaged in. On the other hand, Rudy may not engage in any other business
unless their partnership expressly permits him to do so because as an industrial partner, he has to
devote his full time to the business of the partnership (NCC, Art. 1789).