Pang Lim et al v.

Lo Seng
Facts:
1. Pang Lim and Lo Seng were partners under the firm name, Lo Seng & Co. The
partnership was in the business of running a distillery
2. The land on which the distillery was build was leased from another, Lo Yao,
through his agent Lo Shui.
3. Upon expiration of the lease, a contract to extend the lease for 15 years was
entered into by the parties
4. Later on, Lim sold ALL his interest in the distillery to Seng (including his
interest in the lease).
5. Lo Shui, as agent of Lo Yao, conveyed the land to Pang Lim and Benito
Galvez. However, Lo Seng refused to yield the property causing Lim and
Galvez to institute an action for unlawful detainer against Seng.
Justice of Peace: Favored Lim and Galvez
CFI: Upheld
Issue: Whether it is contrary to law for partner who has left the partnership may,
after his departure, use information known to him by reason of the partnership for
his own benefit.
Held: Yes, it is contrary.
Ratio:
1. In business relations, partners are required to exhibit towards each other the
highest degree of good faith. The relation of the partners is essentially
fiduciary as one is the confidential agent of the other.
2. The partner cannot, to the detriment of another, apply exclusively to his own
benefit, knowledge and information gained as a partner.
RE: W/N the Unlawful Detainer action may prosper
Held: No, it may not.
Ratio:
1. In an action for unlawful detainer, the question to be resolved is that of the
right to possession. It must be shown that the occupants possession is
unlawful.
2. In selling all his share in the partnership, Lim likewise sold his interest in the
lease. Hence, Lo Seng became the owner of such rights in the lease. Lim
cannot terminate the lease on the basis that he is estopped from the sale
(estoppel by deed).