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TORRES VS.

COURT OF APPEALSFacts: Petitioners Antonia Torres and EmeteriaBaring entered into a Joint Venture Agreement (JVA)with respondent Manuel Torres for the developmentof a parcel of land into a subdivision. The executed aDeed of Sale in favor of respondent, who had itregistered in his name. Respondent mortgaged theproperty to Equitable and obtained a P40,000 loan tobe used for the subdivision dev’t. Petitioners andRespondent agreed to share the proceeds form thesale of the subdivided lots. The project did not pushthrough and the land was foreclosed. Petioners fileda criminal case of estafa against respondent and hiswife, alleging that the project failed because of respondent’s lack of funds or means and skills andbecause respondent used the loan to fund hiscompany, Universal Umbrella Co. Respondentalleged that that he used the loan to effect a surveyover the lots, secure city council approval, constructcurbs, roads and gutters and enter in to a contractwith an engineering firm to build houses all at anexpense of P85,000. Respondents were acquittedfrom the criminal case and petitioners filed thepresent civil case. The trial court dismissed the case,but the same, on appeal, was remanded for furtherproceedings. CA: Petitioners and Respondents had formed apartnership for the subdivision dev’t. They must bearthe loss suffered by the partnership in the sameproportion as their share in the profits stipulated inthe contract (Art. 1797). In the absence of stipulationthe share of each partner in profits and losses shallbe in proportion to what he may have contributedBUT the industrial partner shall not be liable forlosses. As for profits, the industrial partner shallreceive such share as may be just and equitable. If besides his services he contributed capital, he shallalso receive a share in the profits proportionate tohis capital. Petitioners: JVA

respondents would provide theindustry and expenses and the income would bedivided. ISSUE : Should the partnership be declared void? SC : Petition Denied. JVA is not void under Art 1422.Petitioners invoke the allegedly void contract toclaim for 60% of the value of the property thus theycan’t deny the contract in one breath and in anotherrecognize it. Respondent is liable for failure toimplement the project. 1767. sign orattach to the public instrument and inventory of thereal property. because the parties didn’t make. JVA is void under Art 1422 becauseit is the direct result of an earlier illegal contractwhich was for the sale of the land without validconsideration. The case at bar does notinvolve 3 rd parties who may be prejudiced.Art 1773 was intended primarily to protect 3 rd persons who may be defrauded when contractingwith the partnership. The consideration forthe sale was the expectation of profits from theproject—60% of which would go to petitioners . The courts may consider the JVA as anordinary contract from which the parties’ rights andobligations may be inferred and enforced. Petitioners wouldcontribute land. CA Affirmed. The Agreement indubitably shows the existence of apartnership pursuant to Art.and partnership is void underArt 1773 .Contracts bind the parties to the stipulations andnecessary consequences. Courts are not authorizedthe extricate parties from the consequences of theiracts should the stipulations turn out to be financiallydisadvantageous.