Aurbach vs.

Sanitary Wares
(Partnership; Joint Venture; Foreign and Domestic Corp)

Facts:
This consolidated petition assailed the decision of the CA directing a certain MANNER OF ELECTION OF
OFFICERS IN THE BOARD OF DIRECTORS
*There are two groups in this case, the Lagdameo group composed of Filipino investors and the American
Standard Inc. (ASI) composed of foreign investors.
The ASI Group and petitioner Salazar (G.R. Nos. 75975-76) contend that the actual intention of the parties should
be viewed strictly on the "Agreement" dated August 15,1962 wherein it is clearly stated that the parties' intention
was to form a corporation and not a joint venture.

Issue:
The main issue hinges on who were the duly elected directors of Saniwares for the year 1983 during its annual
stockholders' meeting held on March 8, 1983. To answer this question the following factors should be determined:
*(1) the nature of the business established by the parties whether it was a joint venture or a corporation and

Held:
While certain provisions of the Agreement would make it appear that the parties thereto disclaim being
partners or joint venturers such disclaimer is directed at third parties and is not inconsistent with, and
does not preclude, the existence of two distinct groups of stockholders in Saniwares one of which (the
Philippine Investors) shall constitute the majority, and the other ASI shall constitute the minority
stockholder. In any event, the evident intention of the Philippine Investors and ASI in entering into the
Agreement is to enter into a joint venture enterprise
An examination of the Agreement shows that certain provisions were inccuded to protect the interests of
ASI as the minority. For example, the vote of 7 out of 9 directors is required in certain enumerated
corporate acts. ASI is contractually entitled to designate a member of the Executive Committee and the
vote of this member is required for certain transactions
The Agreement also requires a 75% super-majority vote for the amendment of the articles and by-laws of
Saniwares. ASI is also given the right to designate the president and plant manager .The Agreement
further provides that the sales policy of Saniwares shall be that which is normally followed by ASI and that
Saniwares should not export "Standard" products otherwise than through ASI's Export Marketing
Services. Under the Agreement, ASI agreed to provide technology and know-how to Saniwares and the
latter paid royalties for the same.
The legal concept of a joint venture is of common law origin. It has no precise legal definition but it has
been generally understood to mean an organization formed for some temporary purpose. It is in fact
hardly distinguishable from the partnership, since their elements are similar community of interest in the
business, sharing of profits and losses, and a mutual right of control.
The main distinction cited by most opinions in common law jurisdictions is that the partnership
contemplates a general business with some degree of continuity, while the joint venture is formed for
the execution of a single transaction, and is thus of a temporary nature.