Case Summary (G.R. No. 134559)
Petitioner and Respondent
Petitioners: Antonia Torres and Emeteria Baring (joined by Antonia’s husband, Angelo Torres)
Respondent: Manuel R. Torres; Court of Appeals as nominal respondent
Key Dates
– March 5, 1969: Execution of Deed of Sale and Joint Venture Agreement
– September 6, 1982: Trial court dismissal of civil complaint
– March 5, 1998: Court of Appeals Decision in CA-GR CV No. 42378
– June 25, 1998: CA Resolution denying reconsideration
– December 9, 1999: Supreme Court decision
Applicable Law
Because the decision date is post-1990, the 1987 Philippine Constitution governs, while substantive issues are resolved under the Civil Code of the Philippines (Articles 1315, 1350, 1422, 1767, 1771–73, 1797) and Rule 45 of the Rules of Court.
Facts
Under the March 5, 1969 Joint Venture Agreement, petitioners transferred the subject land by Deed of Sale to respondent, who paid P20,000 as advance and mortgaged the property for P40,000 to fund subdivision development. The parties agreed to share net proceeds 60% (petitioners) and 40% (respondent). Respondent conducted surveys, subdivision, installation of infrastructure, and contracted to build 60 low-cost units, allegedly expending P85,000. The project failed and the bank foreclosed. Petitioners claimed respondent diverted the loan to his umbrella company; respondent attributed failure to adverse claims annotated by petitioners.
Procedural History
Petitioners first filed estafa charges, resulting in acquittal. They then filed a civil complaint, dismissed by the Regional Trial Court (RTC) on respondent’s motion (September 6, 1982). On appeal, the RTC’s dismissal was overturned and remanded. The RTC ultimately ruled for respondent. The Court of Appeals affirmed in a March 5, 1998 Decision and denied reconsideration on June 25, 1998. Petitioners sought certiorari under Rule 45.
Ruling of the Court of Appeals
The CA characterized the venture as a partnership, applying Article 1797: profit‐sharing percentages govern loss distribution in the absence of separate stipulation. It rejected the trial court’s view of equal loss distribution, holding that petitioners (industrial partners contributing land) share losses proportionate to their agreed profit share.
Issue on Appeal
Whether the March 5, 1969 transaction constituted a partnership (joint venture) under Articles 1767, 1769 and related provisions, or whether the agreements were void, entitling petitioners to damages instead of loss apportionment.
Existence of Partnership under Article 1767
Article 1767 defines partnership as a contract whereby two or more persons contribute money, property, or industry to a common fund with intent to divide profits. Here, petitioners contributed land; respondent contributed funds and industry; and profits were to be divided 60/40. The parties executed the project: petitioners transferred title, respondent mortgaged the land, surveyed, subdivided, and constructed infrastructure. These acts confirm the partnership’s formation.
Binding Effect of Contracts under Article 1315
Article 1315 binds parties not only to express stipulations but also to necessary consequences in keeping with good faith, usage, and law. Educated signatories are presumed to understand their contract. Courts cannot relieve parties of adverse outcomes when they consciously accepted contract terms. Petitioners cannot now disavow their partnership.
Alleged Nullity under Article 1773
Article 1773 voids partnerships involving immovable property without a signed, attached inventory in the public instrument, primarily to protect third parties. No third-party rights are here implicated. Moreover, petitioners themselves rely on the agreement to claim damages. They cannot both nullify and enforce the same contract. The inst
...continue readingCase Syllabus (G.R. No. 134559)
Procedural History
- Petition for Review on Certiorari filed before the Supreme Court assailing:
• The March 5, 1998 Decision of the Court of Appeals (Second Division) in CA-GR CV No. 42378.
• The June 25, 1998 Resolution of the same court denying reconsideration. - The CA had affirmed the Regional Trial Court (RTC) of Cebu City’s dismissal (Civil Case No. R-21208) of petitioners’ complaint and of respondent’s counterclaims, with no pronouncement as to costs.
Facts
- Petitioners, sisters Antonia Torres and Emeteria Baring, entered into a “joint venture agreement” with respondent Manuel Torres to develop a 17,009 sq. m. parcel (Lot No. 1368, TCT No. T-0184) in Lapu-Lapu City into a subdivision.
- They executed an absolute Deed of Sale covering 1,700 sq. m. in favor of respondent, who registered the property in his name and mortgaged it to Equitable Bank for ₱40,000, to be used under the joint venture.
- All parties agreed to share the proceeds from lot sales: 60% to petitioners, 40% to respondent; additional profits to be divided according to these percentages.
- Respondent alleged he used the ₱40,000 for subdivision works—survey, road construction, curbs, gutters, Lapu-Lapu City Council approval, advertising, and contracting to build sixty low-cost housing units (including a model house)—and spent a total of ₱85,000.
- Petitioners claimed respondent misapplied the loan to his own company and lacked skill or means; they also caused adverse annotations on title, allegedly scaring away buyers.
- After foreclosure by the bank and acquittal in a criminal estafa case, petitioners filed the present civil suit, which was dismissed by the RTC, remanded by the appellate court, and again dismissed by the RTC and affirmed by the CA.
Ruling of the Regional Trial Court
- Found for respondent and ag