Woodhouse v.

Halili

Facts:
Woodhouse and Halili entered into an agreement:
1.) Organize partnership for bottling and distributing Mission softdrinks (Woodhouse
industrial partner/manager; Halili capitalist)
2.) Halili will decide on matters of general policy while Woodhouse will take charge of
operation and development of bottling plant
3.) Woodhouse to secure the Mission Soft Drinks franchise in behalf of partnership
4.) Woodhouse to receive 30% of net profits
Before agreement, Woodhouse informed Mission Dry that he had an interested prominent
financier willing to invest $500,000 in bottling and distribution; and that in order to close
the deal, the right be granted to him for a limited time.
Woodhouse was given 30 days option.
Woodhouse and Halili went to the US and entered into a franchise agreement with Mission
Dry.
They returned to the Philippines and started operations. Woodhouse was given profits
totalling around 5,000.
Woodhouse demanded Halili that partnership papers be executed. Halili replied that it will
be done only after the sales reaches 50,000. However, even when sales level was
attained, Halili refused to execute papers as well as give him allowances.
Woodhouse filed for execution of contract of partnership, accounting of profits, his 30%
share in the net profits and damaes.
Halilis answer:
o His consent was secured by Woodhouses representation that he was the owner /
about to become owner of exclusive bottling franchise
False representation: Woodhouse didnt secure franchise but was given to
Halili
o Halili didnt fail in his undertaking but Woodhouse failed
o Woodhouse failed to contribute to partnership
o 200,000 damages
CFI ruled in favour of Woodhouse. It also ruled that fraud didnt exist.

Issues:
1. WoN Woodhouse falsely represented that he had an exclusive franchise to bottle Mission
beverages
YES
Drafts of contract prior to final one show how Woodhouse induced Halili to enter into the
agreement.
Woodhouse used the option to bargain with Halili and close the deal with him. It was
improbable for him to disclose that the option was only for 30 days and that it expired
upon the signing of the agreement.
When Halili learned that Woodhouse didnt have the exclusive franchise, Woodhouses
share in the profits was reduced to of that agreed upon.

2. WoN the false representation annuls the agreement to form partnership

NO
Main cause which induced Halili to enter into partnership: ability of Woodhouse to get
exclusive franchise for the partnership
While Woodhouse lost the option, the prinicipal obligation he undertook was to secure
franchise for partnership.
The supposed ownership of the exclusive franchise was used by Woodhouse only to get
from Halili 30% of the net profits.