USA College of Law

Case Name Torres vs. Court of Appeals

Topic Identical or Related Goods and Confusion of Business
Case No. |
G.R. No. 120900 | 20 July 2000
Date
Ponente PANGANIBAN, J
The alleged nullity of the partnership will not prevent courts from considering the
Doctrine Joint Venture Agreement an ordinary contract from which the parties’ rights and
obligations to each other may be inferred and enforced.
Link https://lawphil.net/judjuris/juri1999/dec1999/gr_134559_1999.html

RELEVANT FACTS:

Petitioners Antonia Torres and Emeteria Baring entered into a joint venture agreement with
Private Respondent Manuel Torres for the development of a parcel of land in Lapu-Lapu City,
Cebu into a subdivision. Pursuant to the contract, they executed a Deed of Sale covering the
subject land in favor of the Private Respondent. The Private Respondent was able to register the
land under his name, and use the same to obtain a loan from Equitable Bank to be used for the
development of the subdivision. All of them agreed to share the proceeds from the sale of the
subdivided lots. However, the project did not push through, and the land was subsequently
foreclosed by the bank. Thus, the Petitioners filed a criminal case for estafa against the Private
Respondent and his wife, who was later acquitted.

Thereafter, the Petitioners filed a civil case before the Regional Trial Court (RTC) alleging that the
project failed because of the Private Respondent’s lack of funds, means, and skills to develop the
subdivision. Further, they claimed that the loan acquired by the Private Respondent was used in
the furtherance of his own company. In his defense, the Private Respondent claimed that he was
able to secure the approval of the Lapu-Lapu City Council for the subdivision project, to cause the
construction of roads, curbs, and gutters, and to enter into a contract with an engineering firm to
build low-cost housing units. For him, the project failed because the Petitioners separately caused
annotations of adverse claims on the title of the land, which scared away prospective buyers. In its
decision, the RTC dismissed the Petitioner’s complaint.

On appeal, the Court of Appeals (CA) affirmed the RTC Decision, holding that the Petitioners and
the Private Respondent formed a partnership for the development of the subdivision. Thus, they
must bear the loss suffered by the partnership in the same proportion as their share in the profits
stipulated in the joint venture agreement. Hence, this Petition.
ISSUE:
1. Whether or not the joint venture agreement entered into between the Petitioners and Private
Respondents constitutes a partnership.

2. Supposing it is a partnership, whether or not the joint venture agreement is void under Article
1733 of the Civil Code.
RULING:
1. The Supreme Court ruled in the affirmative. Article 1767 of the Civil Code provides that in a
contact 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
 USA College of Law
present case, it is clear in the joint venture agreement that the Petitioners would contribute
property to the partnership, while the Private Respondent would give additional amount for
general expenses and other costs. Further, they have agreed that the income from the said
project would be divided according to the stipulated percentages. Thus, there is a clear intention
of forming a partnership between the Petitioners and Private Respondent.

2. The Court ruled in the negative. Article 1773, which provides that a contract of partnership is
void whenever an immovable property is contributed thereto, if an inventory of said property is
not made, is intended only to protect third persons. In the present case, no third parties are
involved who may be prejudiced. Hence, it will not prevent the courts from considering the
agreement as an ordinary contract between the parties.

RULING
WHEREFORE, the Petition is hereby DENIED and the challenged Decision AFFIRMED. Costs
against petitioners.