G.R. No. 185592 - Fong vs. Duenas

In November 1996, petitioner George C. Fong and respondent Jose V. DueAas, former schoolmates, verbally agreed to form a joint venture to engage in the food business under a holding company to be named Alliance Holdings, Inc., with a total authorized capital of ₱65 million.
They agreed to equal capital contributions: Fong to contribute ₱32.5 million in cash; DueAas to contribute shares of D.C. Danton, Inc. and Bakcom Food Industries, Inc., valued at ₱32.5 million, subject to documentary proof of valuation.

Between November 25, 1996 and June 13, 1997, Fong remitted ₱5 million in tranches as “advance subscription” to Alliance; DueAas began processing an international Boboli license but did not deliver the valuation documents for his shares and failed to incorporate Alliance with the SEC.
On June 13, 1997, Fong wrote DueAas limiting his total contribution to ₱5 million, citing personal commitments and business delays; DueAas nonetheless continued to invest the funds in Danton and Bakcom operations.

On October 30, 1997, Fong notified DueAas of the rescission of their verbal joint venture and demanded refund of the ₱5 million; DueAas admitted using the funds for his companies and proposed payment schemes which Fong rejected.
Fong filed a complaint on April 24, 1998 for collection of sum of money and damages.
June 27, 2006: The Regional Trial Court (RTC), Makati Branch 64, found the complaint to be one for rescission, held DueAas unjustly enriched, ordered return of ₱5 million plus 10% attorney’s fees and costs; October 30, 2006: RTC granted interest of 6% per annum.
September 16, 2008 and December 8, 2008: The Court of Appeals (CA) annulled the RTC decision, ruling Fong’s June 13, 1997 letter converted his advances into investments and that he knew refund could not be immediate.
Fong filed a petition for review on certiorari before the Supreme Court.

Whether the nature of Fong’s complaint is one for rescission of the joint venture agreement or for collection of a sum of money.
Whether Fong’s cash advances were advance subscriptions to Alliance or mere investments properly applied by DueAas in Danton and Bakcom.
Whether Fong validly rescinded the joint venture and is entitled to restitution of the ₱5 million with interest.
The effect of mutual breach of the joint venture agreement under Civil Code Articles 1191 and 1192 on the award of damages and on extinguishment of obligations.