PRIMELINK PROPERTIES AND DEVT CORP V. LAZATIN-MAGAT,G.R.

O 167379
(2006)FACTS:
Primelink is a domestic corporation engaged in realestate development while
respondents Lazatin are co-ownersof 2 parcels of land in Tagaytay. In 1994, Primelink,
representedby Lopez (President) and the Lazatins entered into a jointventure
agreement (JVA) for the development of the subjectproperty into a residential
subdivision1.

Under the JVA, the Lazatins obliged themselves tocontribute the subject property as
their share and for itspart, Primelink undertook to contribute, money, laborpersonnel,
machineries, equipment, etc2.

For 4 years however, Primelink failed to develop thesaid land. As such, the Lazatins
filed a complaint torescind the JVA3.

The trial court ruled in favor of the Lazatins and orderedPrimelink to return the
possession of the propertywithout the Lazatins paying for said improvements.Onappeal,
CA affirmed the same.4.

Primelink assaidled the order that turning overimprovements to the Lazatins without
reimbursement isunjust; that Lazatin did not ask the properties to beplaced under their
possession but merely asked forrescission of the JVA
ISSUE:
WON the improvements made by Primelink should alsobe turned over under the
possession of respondent Lazatin
HELD:
Yes. The order of the court for Primelink to returnpossession of the real estate property
belonging to Lazatinincluding all improvements thereon was not a judgment thatwas
different in kind that what was prayed for by the Lazatins;it was just a necessary
consequence to the order of rescission.As a general rule, the relation of the parties in
joint ventures isgovernment by their agreement. When the agreement is silenton any
particular issue, the general principles of partnershipmay be resorted to.The legal
concept of a joint venture is of common law origin. Ithas generally been understood to
mean an organizationformed for some temporary purpose. It is, in fact,
hardlydistinguishable from partnership since elements are similar

community of interest in the business, sharing of profits andlosses, and a mutual right of
control. The main distinction is thatpartnership contemplates a general business with
somedegree of continuity, while a joint venture is formed for theexecution of a single
transaction, and is thus of a temporarynature.
With the rescission of the JVA on account of petitioners
fraudulent acts, all authority of any partner to act for thepartnership is terminated except
insofar as may be necessaryto wind up the partnership affairs or to complete
transactionsbegun but not yet finished. On dissolution, the partnership isnot terminated
but continues until the winding up ofpartnership affairs is completed. Winding up means
theadministration of the assets of the partnership for the purposeof terminating the
partnership and discharging the obligationsof the partnership.It must be stressed that
although respondents acquiredpossession of the lands and the improvements thereon,
thesaid lands and improvements remained partnership property,subject to the rights and
obligations of the parties under Art1837 and 1838 NCC, and subject to the outcome of
thesettlement of the accounts between the parties as provided inArt 1839, absent any
agreement of the parties in their JVA tothe contrary. Until the partnership accounts are
determined, itcannot be ascertained how much any of the parties is entitled,if at all.

Business Organization Partnership, Agency, Trust Dissolution and Winding Up Joint

Venture Agreement Rights of Innocent Party
In 1994, Primelink Properties and the Lazatin siblings entered into a joint venture agreement
whereby the Lazatins shall contribute a huge parcel of land and Primelink shall develop the
same into a subdivision. For 4 years however, Primelink failed to develop the said land. So
in 1998, the Lazatins filed a complaint to rescind the joint venture agreement with prayer for
preliminary injunction. In said case, Primelink was declared in default or failing to file an
answer and for asking multiple motions for extension. The trial court eventually ruled in favor
of the Lazatins and it ordered Primelink to return the possession of said land to the Lazatins
as well as some improvements which Primelink had so far over the property without the
Lazatins paying for said improvements. This decision was affirmed by the Court of Appeals.
Primelink is now assailing the order; that turning over improvements to the Lazatins without
reimbursement is unjust; that the Lazatins did not ask the properties to be placed under their
possession but they merely asked for rescission.
ISSUE: Whether or not the improvements made by Primelink should also be turned over
under the possession of the Lazatins.
HELD: Yes. In the first place, even though the Lazatins did specifically pray for possession
the same (placing of improvements under their possession) is incidental in the relief they
prayed for. They are therefore entitled possession over the parcel of land plus the
improvements made thereon made by Primelink.
In this jurisdiction, joint ventures are governed by the laws of partnership. Under the laws of
partnership, when a partnership is dissolved, as in this case when the trial court rescinded
the joint venture agreement, the innocent party has the right to wind up the partnership affairs.
With the rescission of the JVA on account of petitioners fraudulent acts, all authority of any
partner to act for the partnership is terminated except so far as may be necessary to wind up
the partnership affairs or to complete transactions begun but not yet finished. On dissolution,
the partnership is not terminated but continues until the winding up of partnership affairs is
completed. Winding up means the administration of the assets of the partnership for the
purpose of terminating the business and discharging the obligations of the partnership.
It must be stressed, too, that although the Lazatins acquired possession of the lands and the
improvements thereon, the said lands and improvements remained partnership property,
subject to the rights and obligations of the parties, inter se, of the creditors and of third parties
and subject to the outcome of the settlement of the accounts between the parties, absent any
agreement of the parties in their JVA to the contrary (here no agreement in the JVA as to
winding up). Until the partnership accounts are determined, it cannot be ascertained how
much any of the parties is entitled to, if at all.