JOINT VENTURES
 Partnership is a going concern; they put it up in order to engage in
a business; form of livelihood.
 Joint Venture – 2 or more come together to undertake one
project; just 1 venture.
 innominate contract
 Is a JVA governed by the Law on Contracts or the Law on
Partnership?
 No statutory law on Joint Ventures.
 JVA is essentially a partnership.
 These 3 are borne out of a meeting of the minds.
 When is there a JVA? When at least 5 people come into
agreement to pursue business through a corporation.
o What if they did not agree on how much would be the
contribution, etc. profits, share, etc. is there already a Joint
Venture? YES. Fernandez v. Dela Rosa and if the profits are not
stated, based on their capital contribution.
1. Informal Joint Venture Arrangement –
o Consensual
o What if they did not agree on how much would be the
contribution, etc. profits, share, etc. is there already a Joint
Venture? YES. Fernandez v. Dela Rosa and if the profits are not
stated, based on their capital contribution.
o No declaration to the world that it is a partnership.
o Doesn’t advertise itself as a separate being.
o T/F When a public doesn’t realize it is dealing, just because it’s
not separate, there is no partnership. (F) because a
partnership is a meeting of the minds, arises not because you
have a firm but because you have a partnership; when you
agree, tri-level of existence comes into play.
o Even an informal one is bound by the Law on Partnership.
o 5 people in a bright but secluded place, agreed to enter into a
business but only 2 were active, business became bankrupt,
who wins, ABC or partnership creditors? It is a partnership but
in an informal partnership setting that attributes will not be
employed; example falls under Formal because they
established a firm, so they cannot escape. Creditors will win.
They only need to know that they are dealing with the
partnership, even if there is no solemnity.
o There is no firm; usually pursued by established corporations.
o Co-ownership does not mean that the parties are in a
partnership.
2. Formal Partnership Arrangement –
o T/F Every partnership in a JVA is informal (F)
o What is the form that makes it formal? It must have a name
and must be registered in the SEC.
o T/F Every non-registered JVA is informal (F); When can it not
be written but formal? Partnership is principal and nominate
contract.
1. Registration with SEC
2. Establish a firm
3. Separate business enterprise
3. Joint Venture Corporation/Company –
o They only become partners if they agree to enter (insert def.
of partnership) and they are governed by the Corporation
Code with regard to the corporation and governed by the Law
on Partnership as to their partnership.
REALUBIT v. JASO (ice-making business)
 Deed of Assignment in favor of Jasos.
 Is the transfer, sale of Biondo of his equity rights valid? Yes.
 Can a partner validly assign his rights to an outsider? YES.
 Can they assign ALL their proprietary rights? NO. Only equity
rights.
 Why can’t they not dispose of the first 2 proprietary rights?
Mutual agency and delectus personae; how do these impede the
power of the owner to dispose of the proprietary rights because
can’t step into the shoes of the original partners – every partner
has the right to refuse and to choose who he enters into a
contract with.
 Does the transferee own the equity interest? Yes.
 Does the assignee step into his shoes? NO.
 Does Biondo now cease to be a partner? NO. A partner can ask to
demand the contribution and if they agreed to do it, doesn’t
mean that he is withdrawing from the partnership.
 Does the assignee have the right to demand on the partnership an
accounting? YES.
 Does the assignee have the right to share in the profits?
 Does he have the right to return to the partnership those which
he obtained from the partnership? NO.
 Can only get it after winding-down and dissolution.
 Do courts have the power to dissolve the partnership? Was there
a request for dissolution? Can courts compel them to accept as
partners? Does the assignee have the power to demand
dissolution of the partnership?
o No request for dissolution.
November 22, 2017
 Co-ownership not automatically makes it a partnership.
FONG v. DUEÑAS (bakery case)
 Delectus Personae
 Any party may withdraw.
 Does not need to go to court.
 Fong wanted to rescind and recover, Duenas didn’t want because
he already used it in the business.
 SC said that there was already breach on both of their parts: F
didn’t give 32.5 he only gave 5. Duenas didn’t get the shares and
didn’t register with the SEC, and used the money for his own
business.
 In pari delicto.
 Is it correct to compel Duenas to return the 5 million?
 Can one partner be held liable if one partner spent a contribution
into the JVA? No. Proper remedy is withdrawal and dissolution.
 Did the business ever become property of the partnership to
which Fong would have equity demands? When does it become
property of the partnership?
o When he has agreed to contribute it.
Comment:
 You don’t have to rescind, only withdraw.
KILOSBAYAN v. GUINGONA, JR.
 In a lessor-lessee
 What makes contributor a partner? He takes an equity position.
 What is basis of SC? Risk-bearing provision.
 Why does the risk-bearing provision make PGMC a partner?
 It took all the losses.
 Gross receipts participation exempts him from losses, so it doesn’t
make him partner.
 What is clear indication that PGMC is not exempted from losses,
risk-bearing provision.
 Why are both stipulations void? Every stipulation exempting a
partner from losses except an industrial partner is void because
goes against essence that the parties are equity holders.
 Share in the profits is also void.
 How will they distribute those losses? Stipulation, none or void,
share in the profits, none, if none, proportion to their
contributions.
INFOTECH v. COMELEC
 Mere metting of the minds between 2 or more to pursue a
business and this venture constitutes a joint venture.
 Do the written evidence have to be in 1 document for a JVA or a
consotirum to come into being? NO.
 It’s not enough to be informal consortium.
 Why was it important for COMELEC to find a formal consortium?
Separate juridical entity; and in order to determine that thye were
a consortium, did it need to be in a singular contract?
 Nexus of 5 in a partnership is not bilateral, but a meeting of the
minds among all 5.
 No JV Company
TRAVENO
 Main reason: Clear from the arrangement that from the MOA,
that they allotted to one another specific roles. If it’s the role of
the hacienda to do this role, then it can’t make another do its
role.
TORRES v. CA
 In a pure agency, public is supposed to determine the fact of
agency; can’t presume that such is an agent: obligation to
determine the fact of agency and if the agent is acting within the
scope of his authority.
 Important in a partnership to determine
BASTIDA v. MENZI
 Although right to an accounting is inherent in a contract of
partnership, and an aspect of proprietary rights
 Would right to accounting be exactly the same whether he is a
partner or not? NO.
 Rights of a partner to an accounting is exactly the same as the
right of a non-partner to an accounting.
 Which scheme is it covered if it is a JV? Informal because
 Accidental elements: contribution and share in the profits
 Informal because they did not intend to go out into the world and
to represent themselves.
 Everything was still being handled.
 Formal informal always has something to do with the public.
 Couldn’t attribute partnership since nothing was presented to the
world.
December 7, 2017
Informal Joint Venture
 Essence: No firm presented to the world
 Those who deal with the venture don’t see a firm.
PHILEX MINING v. CIR
 Power of Attorney said that Philex would be in charge of the
management of the mines, Baguio Gold would provide funds.
Loan. Share profits 50-50 from the operation. You may advance. It
advanced 11 million into the venture. Mines were not successful.
Baguio Gold was indebted to Philex. Bad debts.
 What happened to Baguio? Bankrupt.
 CIR said that this was a JVA. Since it is not a loan, Philex was
supposed to get 50% profits from whatever it would earn.
 If you look at the tentative terms, it is a Management Agreement.
 What is the subject matter of an agency? Service.
 What is subject matter in a contract of sale? Property.
 What is the object in a Management Agreement? Is it an obli to
do or to give? To do.
 Contracts of services.
 What is difference between Agency Contract and a Management
Agreement? It empowers agent to go out into the world;
management contract cannot do that.
 Agency is fiduciary in character, management is obligatory, so it
can’t be rescinded or revoked without substantial breach.
 Under Philex, if it was good for 10 years, at the 5th year, Baguio
Gold said “I changed my mind, I terminate this relationship.”
Philex says “No. Contract says 10 years” Baguio: Of course I can do
that, power of atty is essentially revocable. Philex: This is a
development contract, hence non-revocable.
o Agency, Partnership
o SPA meant to hide the true nature of the agreement.
 How do you find from the arrangement that the intent was to
[insert definition of partnership]?
 Management Agreement, should the employee be liable for loss?
No.
 Not intended to share in the losses. 2 essential elements:
o Contribute to a common fund
o Sharing in the profits and losses
 When an agent consents to represent, did he not consent with
the principal to enter into a business enterprise?
 Couple had an on goind business, died in a car accident, leaving 5
children together, inherited, and the next year, they continued to
draw profits from the business that their parents left them,
 together, does that make them partners? No. Mere co-ownership
does not make them partners because they did not intend to bind
themselves to contribute money, profits, etc. to a common fund.
o Finding themselves in that situation after a year, proceeded to
stay there.
 Agent who participates in the losses
o Contribution of service is as an agent and not as a partner.
 To contribute to a common fund –
 Enter contract of services in your name, instead of commission,
5% of profits.
o That doesn’t make them a partner.
o What if 10%, but with stipulation on losses – YES. Because
they can still stipulate.
o It becomes a partnership agreement, bound themselves to
take part in the profits and the losses.
 An agreement to participate in net profits doesn’t mean you
participate in the loss, yet when you participate in the loss,
deemed compensable, not contributed.
o Where do you find it? 1st element. Why does language of 1st
element mean that they also bear losses? Equity
Arrangement.
 When an agent also agrees to take up in the losses, he becomes
an equity holder now.
o Does everyone who partake in the net profits is an equity
holder? No.
 Is an agen/partner bound to advance the expenses that may be
incurred?
 When money must be advanced, whose obligation is it? Principal
owns the business. All the risks and stuff obligations are his to
fulfill.
o EXCEPT: Stipulated.
 Is the obligation of Philex to advance some of the requirements,
not an agent because of that? No.
 Does 50% make him a partner? No.
 But CIR said, still a partner. Why? Every agent who agrees and
binds himself to participate in the losses and profits – TRUE.
 Where an agent advances the expenses to pursue the business of
the principal, he thereby ceases to be a partner – T/F False.
 What in the arrangement provides for the 2nd element?
o Payment of advances would be in proportion to the
contribution.
 All in all, this constituted of the 1st element: When you take the
risk, compensation dependent upon profitability, then he has
assumed the position equity holder.
MARSMAN DRYSDALE v. PHILIPPINE GEOANALYTICS
 IN a JVA, agreed in sharing profits as follows: 80%-20%. In the
event [….] liabilities, they will each be liable in the same manner
as they would distribute profits. Is that stipulation valid?
o VALID as to the parties VOID as to the 3rd persons.
o Pro-rata third persons.
J. TIOSEJO
* Not liable as agents, but liable as principals.
 Is the acting partner acting as his own agent? No. acting as his
partner.
 Are the other partners liable for the acts of the partner?
 Can a partner be sued personally in order to enforce that
contract? YES.
 Separate juridical personality mean only as a tag-along. Who takes
brunt of the business? Owner.
 Was Tiosejo correct in saying that there was fraud on the part of
PPGI?
 Are partners solidarily liable? No. Unless there is fraud.
 General Rule: Not liable
o EXCEPTION: Fraud.
 Wihtout that stipulation saying that Tiosejo would be liable,
would he still be liable?
 Is solidary liability of the 2 valid?
o Why would a judgment rendering them solidarily liable be
good? What is the basis for solidary liability? Contrary to
unlimited liability.
 o If you use modifiers: it is joint and subsidiary.
o The only time partners become unlimitedly liable is Art. 1824,
primary and solidary.
o Solidary and primary partnership, joint and subsidiary
partners.
o GR: Agent not liable.
o EXC: Expressly stipulated and when agent acts with fraud and
when he acts with gross negligence.
AURBACH v. SANITARY WARES
 2 groups of companies: American Brand
 American and Filipino groups (40-60)
 Shareholders’ Agreement
 SEC Registration is the basis of the company.
 In a corporation with 100 stockholders, presumed to be partners
of 1 another T/F = False. Only holders. Come together because
they purchased.
o They would only become partners if the essence of becoming
shareholders is because they come together.
o Not every corporation is a Joint Venture Agreement.
o As between them, there is mutual agency as partners.
 Filipinos wanted to branch out into SEA but the Americans didn’t
want to. Why? Because they already have arrangements with
other countries.
 Under Corporation Code: cumulative voting, for example 10
shares, 10 seats, voting power 10 times. Can put anything. Ensure
minority holders.
 Minority holders wanted to exercise cumulative voting rights.
 Doctrine of Autonomy – The parties to a contract may stipulate
upon any clause, convention, and the same, and it shall be valid
and binding.
o You may enter into any agreement, except when it is contrary
to lamogpupu.
 Specie of a partnership
 Contract among the partners.
 Separate juridical personality, only meant to separate and
augment the contract. As much as possible, the law must be
reconciled and must be bent and be malleable as to be able to
implement the hsareholders agreement.
JG SUMMIT v. CA
 JV Corporation
 ROFR, if any decide to sell equity, offer it first to the other party
and if he refuses, then can sell to another person.
 Delectus Personae
 ROFR strengthens the attribute of delectus personae.
 ROFR is an arrangement between the partners, and that is not
void.
o What can’t be tolerated is Philseco is now disqualified.
 Shareholders agreement have a way of being encrypted into hard
and durable corporation code provisions and will be accepted as
valid.
HONTIVEROS v. TRB
 Ownership of private land (60-40) – public utility.
 Indonesian, JVA.
 In a JVA, the partners entering into the JVA do not lose their
proprietary rights over the properties they contribute.
 Philco is a Filipino Corp. 100% owned by Phil Co owns a large tract
of land for development. Met a Chinese company Sia Si (has
money) and decided to enter JVA, commercial complex, P would
contribute land, S would contribute money. Equity: 60% Philco,
40% Siasi. Kilosbayan says unconsti, but Siasi says that the JVA is a
separate juridical personality.
o CLV and Naguiat (French): 4 and 6 million piece of land, can
they do that? No. Doesn’t allow foreign ownership in land.
o Can that corporation organized by the SEC, 60-40, can they
own the land? YES. Consti says corporation can own not
directly but through the corporation.
 o When you do it outside the JVC, Formal, is it allowed? If JVA
tied up to a JVC, allowed. Why? Because JVC owns it as a
separate juridical person.
o Why is it that when it is in a formal Joint Venture, it isn’t
allowed? Formal Joint venture creates a separate juridical
personality because specie of partnership. (Particular
Partnership)
 JVA always has separate juridical personality because it is a specie
of partnership.
 Is every partner a co-owner? YES.
 Formal JV not allowed.
 What if public corporation 60-40?
o YES.
o In a JVA, is the contribution given by the person, does it
remain its contribution or does it become contribution of the
partnership?