G.R. No.

134559 December 9, 1999 engineering firm for the building of sixty low-cost housing units and actually even set up a model house
on one of the subdivision lots. He did all of these for a total expense of P85,000.
ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA BARING, petitioners,
vs.COURT OF APPEALS and MANUEL TORRES, respondents. Respondent claimed that the subdivision project failed, however, because petitioners and their relatives
had separately caused the annotations of adverse claims on the title to the land, which eventually
Courts may not extricate parties from the necessary consequences of their acts. That the terms of a scared away prospective buyers. Despite his requests, petitioners refused to cause the clearing of the
contract turn out to be financially disadvantageous to them will not relieve them of their obligations claims, thereby forcing him to give up on the project.5
therein. The lack of an inventory of real property will not ipso facto release the contracting partners
from their respective obligations to each other arising from acts executed in accordance with their Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, who were
agreement. however acquitted. Thereafter, they filed the present civil case which, upon respondent's motion, was
later dismissed by the trial court in an Order dated September 6, 1982. On appeal, however, the
The Case appellate court remanded the case for further proceedings. Thereafter, the RTC issued its assailed
The Petition for Review on Certiorari before us assails the March 5, 1998 Decision1 of the Court of Decision, which, as earlier stated, was affirmed by the CA.
Appeals2 (CA) in CA-GR CV No. 42378 and its June 25, 1998 Resolution denying reconsideration. The Hence, this Petition.6
assailed Decision affirmed the ruling of the Regional Trial Court (RTC) of Cebu City in Civil Case No. R-
21208, which disposed as follows: Ruling of the Court of Appeals

WHEREFORE, for all the foregoing considerations, the Court, finding for the defendant and against the In affirming the trial court, the Court of Appeals held that petitioners and respondent had formed a
plaintiffs, orders the dismissal of the plaintiffs complaint. The counterclaims of the defendant are partnership for the development of the subdivision. Thus, they must bear the loss suffered by the
likewise ordered dismissed. No pronouncement as to costs.3 partnership in the same proportion as their share in the profits stipulated in the contract. Disagreeing
with the trial court's pronouncement that losses as well as profits in a joint venture should be
The Facts distributed equally,7 the CA invoked Article 1797 of the Civil Code which provides:
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture agreement" Art. 1797 — The losses and profits shall be distributed in conformity with the agreement. If only the
with Respondent Manuel Torres for the development of a parcel of land into a subdivision. Pursuant to share of each partner in the profits has been agreed upon, the share of each in the losses shall be in the
the contract, they executed a Deed of Sale covering the said parcel of land in favor of respondent, who same proportion.
then had it registered in his name. By mortgaging the property, respondent obtained from Equitable
Bank a loan of P40,000 which, under the Joint Venture Agreement, was to be used for the development The CA elucidated further:
of the subdivision.4 All three of them also agreed to share the proceeds from the sale of the subdivided
lots. In the absence of stipulation, the share of each partner in the profits and losses shall be in proportion
to what he may have contributed, but the industrial partner shall not be liable for the losses. As for the
The project did not push through, and the land was subsequently foreclosed by the bank. profits, the industrial partner shall receive such share as may be just and equitable under the
circumstances. If besides his services he has contributed capital, he shall also receive a share in the
According to petitioners, the project failed because of "respondent's lack of funds or means and skills." profits in proportion to his capital.
They add that respondent used the loan not for the development of the subdivision, but in furtherance
of his own company, Universal Umbrella Company. The Issue

On the other hand, respondent alleged that he used the loan to implement the Agreement. With the Petitioners impute to the Court of Appeals the following error:
said amount, he was able to effect the survey and the subdivision of the lots. He secured the Lapu Lapu
City Council's approval of the subdivision project which he advertised in a local newspaper. He also . . . [The] Court of Appeals erred in concluding that the transaction
caused the construction of roads, curbs and gutters. Likewise, he entered into a contract with an . . . between the petitioners and respondent was that of a joint venture/partnership, ignoring outright
the provision of Article 1769, and other related provisions of the Civil Code of the Philippines.8
The Court's Ruling SECOND: That the SECOND PARTY, had received from the FIRST PARTY, the necessary amount of
TWENTY THOUSAND (P20,000.00) pesos, Philippine currency, for their personal obligations and this
The Petition is bereft of merit. particular amount will serve as an advance payment from the FIRST PARTY for the property mentioned
Main Issue: to be sub-divided and to be deducted from the sales.

Existence of a Partnership THIRD: That the FIRST PARTY, will not collect from the SECOND PARTY, the interest and the principal
amount involving the amount of TWENTY THOUSAND (P20,000.00) Pesos, Philippine Currency, until the
Petitioners deny having formed a partnership with respondent. They contend that the Joint Venture sub-division project is terminated and ready for sale to any interested parties, and the amount of
Agreement and the earlier Deed of Sale, both of which were the bases of the appellate court's finding TWENTY THOUSAND (P20,000.00) pesos, Philippine currency, will be deducted accordingly.
of a partnership, were void.
FOURTH: That all general expense[s] and all cost[s] involved in the sub-division project should be paid
In the same breath, however, they assert that under those very same contracts, respondent is liable for by the FIRST PARTY, exclusively and all the expenses will not be deducted from the sales after the
his failure to implement the project. Because the agreement entitled them to receive 60 percent of the development of the sub-division project.
proceeds from the sale of the subdivision lots, they pray that respondent pay them damages equivalent
to 60 percent of the value of the property.9 FIFTH: That the sales of the sub-divided lots will be divided into SIXTY PERCENTUM 60% for the SECOND
PARTY and FORTY PERCENTUM 40% for the FIRST PARTY, and additional profits or whatever income
The pertinent portions of the Joint Venture Agreement read as follows: deriving from the sales will be divided equally according to the . . . percentage [agreed upon] by both
parties.
KNOW ALL MEN BY THESE PRESENTS:
SIXTH: That the intended sub-division project of the property involved will start the work and all
This AGREEMENT, is made and entered into at Cebu City, Philippines, this 5th day of March, 1969, by improvements upon the adjacent lots will be negotiated in both parties['] favor and all sales shall [be]
and between MR. MANUEL R. TORRES, . . . the FIRST PARTY, likewise, MRS. ANTONIA B. TORRES, and decided by both parties.
MISS EMETERIA BARING, . . . the SECOND PARTY:
SEVENTH: That the SECOND PARTIES, should be given an option to get back the property mentioned
W I T N E S S E T H: provided the amount of TWENTY THOUSAND (P20,000.00) Pesos, Philippine Currency, borrowed by the
That, whereas, the SECOND PARTY, voluntarily offered the FIRST PARTY, this property located at Lapu- SECOND PARTY, will be paid in full to the FIRST PARTY, including all necessary improvements spent by
Lapu City, Island of Mactan, under Lot No. 1368 covering TCT No. T-0184 with a total area of 17,009 the FIRST PARTY, and-the FIRST PARTY will be given a grace period to turnover the property mentioned
square meters, to be sub-divided by the FIRST PARTY; above.

Whereas, the FIRST PARTY had given the SECOND PARTY, the sum of: TWENTY THOUSAND (P20,000.00) That this AGREEMENT shall be binding and obligatory to the parties who executed same freely and
Pesos, Philippine Currency upon the execution of this contract for the property entrusted by the voluntarily for the uses and purposes therein stated.10
SECOND PARTY, for sub-division projects and development purposes; A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership
NOW THEREFORE, for and in consideration of the above covenants and promises herein contained the pursuant to Article 1767 of the Civil Code, which provides:
respective parties hereto do hereby stipulate and agree as follows: Art. 1767. By the contract of partnership two or more persons bind themselves to contribute money,
ONE: That the SECOND PARTY signed an absolute Deed of Sale . . . dated March 5, 1969, in the amount property, or industry to a common fund, with the intention of dividing the profits among themselves.
of TWENTY FIVE THOUSAND FIVE HUNDRED THIRTEEN & FIFTY CTVS. (P25,513.50) Philippine Currency, Under the above-quoted Agreement, petitioners would contribute property to the partnership in the
for 1,700 square meters at ONE [PESO] & FIFTY CTVS. (P1.50) Philippine Currency, in favor of the FIRST form of land which was to be developed into a subdivision; while respondent would give, in addition to
PARTY, but the SECOND PARTY did not actually receive the payment. 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 We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent Arturo
manifested the intention of the parties to form a partnership.11 M. Tolentino states that under the aforecited provision which is a complement of Article 1771,12 "The
execution of a public instrument would be useless if there is no inventory of the property contributed,
It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title because without its designation and description, they cannot be subject to inscription in the Registry of
to the land to facilitate its use in the name of the respondent. On the other hand, respondent caused Property, and their contribution cannot prejudice third persons. This will result in fraud to those who
the subject land to be mortgaged, the proceeds of which were used for the survey and the subdivision contract with the partnership in the belief [in] the efficacy of the guaranty in which the immovables
of the land. As noted earlier, he developed the roads, the curbs and the gutters of the subdivision and may consist. Thus, the contract is declared void by the law when no such inventory is made." The case
entered into a contract to construct low-cost housing units on the property. at bar does not involve third parties who may be prejudiced.
Respondent's actions clearly belie petitioners' contention that he made no contribution to the Second, petitioners themselves invoke the allegedly void contract as basis for their claim that
partnership. Under Article 1767 of the Civil Code, a partner may contribute not only money or property, respondent should pay them 60 percent of the value of the property.13 They cannot in one breath deny
but also industry. the contract and in another recognize it, depending on what momentarily suits their purpose. Parties
Petitioners Bound by cannot adopt inconsistent positions in regard to a contract and courts will not tolerate, much less
Terms of Contract approve, such practice.

Under Article 1315 of the Civil Code, contracts bind the parties not only to what has been expressly In short, the alleged nullity of the partnership will not prevent courts from considering the Joint
stipulated, but also to all necessary consequences thereof, as follows: Venture Agreement an ordinary contract from which the parties' rights and obligations to each other
may be inferred and enforced.
Art. 1315. Contracts are perfected by mere consent, and from that moment the parties are bound not
only to the fulfillment of what has been expressly stipulated but also to all the consequences which, Partnership Agreement Not the Result
according to their nature, may be in keeping with good faith, usage and law. of an Earlier Illegal Contract

It is undisputed that petitioners are educated and are thus presumed to have understood the terms of Petitioners also contend that the Joint Venture Agreement is void under Article 142214 of the Civil
the contract they voluntarily signed. If it was not in consonance with their expectations, they should Code, because it is the direct result of an earlier illegal contract, which was for the sale of the land
have objected to it and insisted on the provisions they wanted. without valid consideration.

Courts are not authorized to extricate parties from the necessary consequences of their acts, and the This argument is puerile. The Joint Venture Agreement clearly states that the consideration for the sale
fact that the contractual stipulations may turn out to be financially disadvantageous will not relieve was the expectation of profits from the subdivision project. Its first stipulation states that petitioners
parties thereto of their obligations. They cannot now disavow the relationship formed from such did not actually receive payment for the parcel of land sold to respondent. Consideration, more
agreement due to their supposed misunderstanding of its terms. properly denominated as cause, can take different forms, such as the prestation or promise of a thing
or service by another.15
Alleged Nullity of the
Partnership Agreement In this case, the cause of the contract of sale consisted not in the stated peso value of the land, but in
the expectation of profits from the subdivision project, for which the land was intended to be used. As
Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code, which explained by the trial court, "the land was in effect given to the partnership as [petitioner's]
provides: participation therein. . . . There was therefore a consideration for the sale, the [petitioners] acting in the
expectation that, should the venture come into fruition, they [would] get sixty percent of the net
Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if an profits."
inventory of said property is not made, signed by the parties, and attached to the public instrument.
Liability of the Parties

of the real property contributed, the partnership is void.ℒαwρhi ৷

We are not persuaded. True, the Court of Appeals held that petitioners' acts were not the cause of the
failure of the project.16 But it also ruled that neither was respondent responsible therefor.17 In
imputing the blame solely to him, petitioners failed to give any reason why we should disregard the
factual findings of the appellate court relieving him of fault. Verily, factual issues cannot be resolved in a
petition for review under Rule 45, as in this case. Petitioners have not alleged, not to say shown, that
their Petition constitutes one of the exceptions to this doctrine.18 Accordingly, we find no reversible
error in the CA's ruling that petitioners are not entitled to damages.

WHEREFORE, the Perition is hereby DENIED and the challenged Decision AFFIRMED. Costs against
petitioners.

SO ORDERED.