View full case

ANTONIA TORRES v. CA

FACTS:

The case involves a joint venture agreement between petitioners Antonia Torres and Emeteria Baring, and respondent Manuel Torres, for the development of a parcel of land into a subdivision. Pursuant to the agreement, a deed of sale was executed and the property was registered in respondent's name. Respondent obtained a loan from a bank for the development of the subdivision.

However, the project failed and the land was foreclosed by the bank. Petitioners alleged that the project failed due to respondent's lack of funds and misuse of the loan. On the other hand, respondent claimed that he used the loan for the implementation of the agreement and made efforts for the subdivision project.

Petitioners filed a criminal case for estafa against respondent and a civil case which was later dismissed by the trial court but remanded by the appellate court. The Court of Appeals affirmed the trial court's ruling, holding that petitioners and respondent formed a partnership for the development of the subdivision. This is the subject of the present petition for review on certiorari.

ISSUES:

  1. Whether the transaction between the petitioners and the respondent constituted a partnership.

  2. Whether the Joint Venture Agreement was void due to the absence of an inventory of the contributed real property.

  3. Whether the respondent should be liable for damages due to the failure of the subdivision project.

RULING:

  1. The Supreme Court ruled that the transaction was indeed a partnership as characterized by the contribution of the property by the petitioners and the labor and capital by the respondent with the intention of sharing profits.

  2. The Court held that the absence of an inventory did not void the partnership because Article 1773 was intended to protect third parties, and the case at bar did not involve third parties. Furthermore, petitioners cannot deny the contract while simultaneously invoking its terms to claim damages.

  3. The Supreme Court found that neither party was solely responsible for the project's failure and upheld the Court of Appeals' decision that petitioners were not entitled to damages.

PRINCIPLES:

  1. Contracts and Binding Consequences: Under Article 1315 of the Civil Code, contracts bind the parties not only to what has been expressly stipulated but also to all necessary consequences thereof.

  2. Partnership Constitution: Article 1767 of the Civil Code defines a partnership as an agreement where 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.

  3. Nullity of Partnership Involving Real Property: Article 1773 of the Civil Code declares a contract of partnership void if immovable property is contributed and an inventory is not made, signed, and attached to the public instrument.

  4. Estoppel in Contract: Parties cannot adopt inconsistent positions regarding a contract; they cannot deny the contract while simultaneously invoking it to claim benefits.

  5. Cause of a Contract: A contract's validity can be based on the expectation of future profits, and consideration need not be in the form of an immediate monetary payment.