[PARTNERSHIP – ESSENTIAL FEATURES] ● The sisters claim that it failed because of Manuel’s lack of funds or

03 TORRES V. CA means or skills. They added that he used the loan for his own
Dec. 9, 1999 | Panganiban, J. | Universal Umbrella Company.
● Manuel alleged that he used the loan to implement the JVA.
Petitioner/s: ANTONIA TORRES, assisted by her husband, ANGELO ○ He alleged that he spent P85,000 in effecting the survey of
TORRES; and EMETERIA BARING, petitioners the lots, in securing the approval of the City Council, in
Respondent/s: COURT OF APPEALS and MANUEL TORRES, constructing roads, and in contracting with an engineering
respondents firm.
○ According to him, the project failed because the sisters
Doctrine: A partner may contribute not only money or property, but also caused the annotations of adverse claims on the land,
industry (ex. Executing a mortgage, developing the roads and gutters, which scared away prospective investors.
entering into contracts for the construction of low-cost housing). ● The sisters then filed an estafa case against Manuel who was
acquitted.
Facts: ● The petitioners then filed a civil case in the RTC.
● Sisters Antonia Torres and Emerita Baring entered into a Joint ● RTC dismissed the complaint.
Venture Agreement (JVA) with Manuel Torres for the development ● CA affirmed the RTC.
of a parcel of land into a subdivision. ○ It held that petitioners and respondent had formed a
● The sisters executed a Deed of Sale in favor of respondent Manuel, partnership for the development of the subdivision. Thus,
who registered it in his name. they must bear the loss suffered by the partnership in the
● Manuel mortgaged the land in order to get a P40,000 loan from same proportion as their share in the profits stipulated in the
Equitable Bank, which, under the JVA, was to be used for the contract.
subdivision. ○ In the absence of stipulation, the share of each partner in
○ All three agreed to share the proceeds from the sale of the the profits and losses shall be in proportion to what he may
lots. have contributed, but the industrial partner shall not be
■ JVA Provision 4: That all general expense[s] and liable for the losses. As for the profits, the industrial partner
all cost[s] involved in the sub-division project shall receive such share as may be just and equitable under
should be paid by the FIRST PARTY, exclusively the circumstances. If besides his services he has
and all the expenses will not be deducted from the contributed capital, he shall also receive a share in the
sales after the development of the sub-division profits in proportion to his capital.
project. ● Petitioner Sisters contend that no partnership was formed with
■ JVA Provision 5: That the sales of the sub-divided Manuel. The JVA and the Deed of Sale which were the bases of the
lots will be divided into SIXTY PERCENTUM 60% CA in finding a partnership are void.
for the SECOND PARTY (Sisters) and FORTY ○ BUT the sisters assert that respondent is liable for his failure
PERCENTUM 40% for the FIRST PARTY to implement the project. Because the agreement entitled
(Manuel), and additional profits or whatever them to receive 60 percent of the proceeds from the sale of
income deriving from the sales will be divided the subdivision lots, they pray that respondent pay them
equally according to the x x x percentage [agreed damages equivalent to 60 percent of the value of the
upon] by both parties. property.
● The project did not push through and the land was foreclosed by the
bank. Ruling:
W/N a partnership was formed between the parties. - YES. A reading of
the terms in the JVA shows the existence of a partnership pursuant to 17671.

1 ART. 1767. 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.
 ● Under the JVA, the sisters would contribute property to the WHEREFORE, the Petition is hereby DENIED and the challenged Decision
partnership in the form of land which was to be developed into a AFFIRMED. Costs against petitioners.
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.
● Respondents actions clearly belie petitioner’s contention that he
made no contribution to the partnership. Under Article 1767 of the
Civil Code, a partner may contribute not only money or property, but
also industry.
○ The parties implemented the contract.
● Under 1315, contracts bind the parties not only to what has been
expressly stipulated, but also to all necessary consequences thereof.
○ Courts are not authorized to extricate parties from the
necessary consequences of their acts, and the fact that the
contractual stipulations may turn out to be financially
disadvantageous will not relieve parties thereto of their
obligations. They cannot now disavow the relationship
formed from such agreement due to their supposed
misunderstanding of its terms.

On the Alleged Nullity of the Partnership Agreement

 Petitioners contend that under 1773, a contract of partnership is void,
whenever immovable property is contributed thereto, if an inventory
of said property is not made, signed by the parties, and attached to
the public instrument.
 However, 1773 was intended primarily to protect third persons.
 Tolentino states that the provision, which is a complement to 1771,
the execution of a public instrument would be useless if there is no
inventory of the property contributed, because without its designation
and description, they cannot be subject to inscription in the Registry
of Property, and their contribution cannot prejudice third persons.
This will result in fraud to those who contract with the partnership.
 The case does not involve third parties who may be prejudiced.

Partnership Agreement not a Result of an Earlier Illegal Contract

 Petitioners contend that the JVA is void for being the direct result of
an earlier illegal contract (1422), which was for the sale of the land
without valid consideration.
 Wrong. JVA clearly states that the consideration for the sale was the
expectation of profits from the subdivision project.

Dispositive