Case Brief: Torres vs. CA

G.R. No. 134559   December 9, 1999

ANTONIA TORRES, assisted by her husband, ANGELO TORRES; and EMETERIA BARING, petitioners,

vs.

COURT OF APPEALS and MANUEL TORRES, respondents.

Facts:

Petitioners Torres and Baring entered into a “joint venture agreement” with Respondent Torres for the development of a parcel of land into a subdivision. They executed a Deed of Sale covering the said parcel of land in favor of respondent Manual Torres, who then had it registered in his name. By mortgaging the property, respondent Manuel Torres obtained from Equitable Bank a loan of P40,000, which was supposed to be used for the development of subdivision as per the JVA. However, the project did not push through and the land was subsequently foreclosed by the bank.

Petitioners Antonia Torres alleged that it was due to respondent’s lack of funds/skills that caused the project to fail, and that respondent use the loan in the furtherance of his own company. On the otherhand, respondent Manuel Torres alleged that he used the loan to implement the JVA – surveying and subdivision of lots, approval of the project, advertisement, and construction of roads and the likes, and that he did all of these for a total of P85,000.

Petitioners filed a case for estafa against respondent but failed. They then instituted a civil case. CA held that the two parties formed a partnership for the development of subdivision and as such, they must bear the loss suffered by the partnership in the same proportion as their share in profits. Hence, the petition.

Issue #1:

Whether or not the transaction between petitioner and respondent was that of joint venture/partnership.

Held:

Yes. There formed a partnership between the two on the basis of joint-venture agreement and deed of sale. A reading of the terms of agreement shows the existence of partnership pursuant to Art 1767 of Civil Code, which states “By the contract of partnership two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves.” In the agreement, petitioners would contribute property to the partnership in the form of land which was to be developed into a subdivision; while respondent would give, in addition to his industry, the amount needed for general expenses and other costs. Furthermore, the income from the said project would be divided according to the stipulated percentage. Clearly, the contract manifested the intention of the parties to form a partnership.

Issue #2:

Whether or not the deed of sale between the two was valid.

Held:

No. Petitioners were wrong in contending that the JVA is void under Article 1422[14] of the Civil Code, because it is the direct result of an earlier illegal contract, which was for the sale of the land without valid consideration.

The Joint Venture Agreement clearly states that the consideration for the sale was the expectation of profits from the subdivision project. Its first stipulation states that petitioners did not actually receive payment for the parcel of land sold to respondent. Consideration, more properly denominated as cause, can take different forms, such as the prestation or promise of a thing or service by another.

In this case, the cause of the contract of sale consisted not in the stated peso value of the land, but in the expectation of profits from the subdivision project, for which the land was intended to be used. As explained by the trial court, the land was in effect given to the partnership as petitioners participation therein. There was therefore a consideration for the sale, the petitioners acting in the expectation that, should the venture come into fruition, they would get sixty percent of the net profits.

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