Civil Law,  Legally Yours

Torres and Baring v. CA

Torres and Baring v. CA

G.R. No. 134559; December 9, 1999

FACTS:

Sisters Torres and Emeteria Baring entered into a “joint venture agreement” with Manuel Torres for the development of a parcel of land into a subdivision.  Thus, the petitioners sold the land in favor of the respondent Torres who then registered the land in his name. No inventory was made and attached to the public instrument. Consequently, Torres mortgaged the property for a loan, and used the loan to develop the subdivision surveying the land, and constructing roads, curbs, and gutters. Ultimately, the development plan failed and the land was foreclosed. The petitioners then tried to file a civil claim to relieve themselves of their obligations but were denied by the court for having formed a partnership saying that they should bear the loss as a partner pursuant to Art. 1797 of the NCC.

The petitioners however contend that no partnership was formed due to the joint venture agreement and the execution of the deed of sale. Furthermore, they also contend that the joint venture agreement was void pursuant to Art. 1773

ISSUES:

  1. Was a partnership formed due to the Joint Venture and Deed of Sale execution of the deed of sale?
  2. Was the joint venture agreement void pursuant to Art. 1773?

HELD:

Yes. The Court held that a partnership was formed because: 1) petitioners contributed property in the form of land to the partnership, which was to be developed into a subdivision, and that the respondent contributed his industry and his money for other costs; 2) the income from the said project was to be divided according to a percentage. Furthermore, the respondent cannot be said to have made no contribution to the partnership since a partner may not only contribute money or property, but also industry according to Art. 1767 of the NCC. Furthermore, Art. 1773 cannot apply in this case. According to the Court, Art. 1773 was primarily intended to protect third persons so that the latter would not be prejudiced in case they are defrauded with the partnership in the belief in the efficacy of the guaranty in which immovable may consist.

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