MARSMAN DRYSDALE LAND, INC. VS.

PHILIPPINE A joint venture being a form of partnership, it is to be

GEOANALYTICS, INC. AND GOTESCO PROPERTIES, governed by the laws on partnership. Under the laws on
INC. partnership, particularly Article 1797 of the Civil Code,
the losses and profits shall be distributed in accordance
with the agreement; if only the share of each partner in
FACTS: Marsman Drysdale, Inc. (Marsman) and Gotesco the profits has been agreed upon, the share of each in the
Properties, Inc. (Gotesco) entered into a joint venture losses shall be in the same proportion.
agreement for the construction and development of an In the joint venture agreement, Marsman and Gotesco
office building on a land owned by Marsman. They agreed on a 50-50 ratio on the proceeds of the project,
agreed on a 50-50 ratio on the proceeds of the project, but did not provide for the splitting of losses. Applying
but did not agree on how losses would be divided. Article 1797, the same ratio applies in splitting the
obligation-loss of the joint venture to PGI.
The joint venture engaged the services of Philippine
Geoanalytics, Inc. (PGI) to provide subsurface soil
exploration, seismic study and geotechnical engineering.
PGI completed its seismic study but failed to complete its
subsurface soil exploration because the area where
drilling was to be made had not been cleared. The
building project was subsequently shelved due to
unfavorable economic conditions.

PGI billed the joint venture for work done, but was not
paid despite its repeated demands. PGI, thus, filed a
collection case against Marsman and Gotesco. Marsman
passed the obligation to Gotesco because under the joint
venture agreement, Gotesco was solely liable for the
monetary expenses of the project, and Marsman’s
participation was limited to the land. Gotesco, on the
other hand, asserted that PGI had no cause of action
against it as PGI had yet to complete the services in its
contract, and it was Marsman’s failure to clear the
property of debris which prevented PGI from completing
its work.

ISSUE: Whether or not Marsman and Gotesco are both

liable to pay PGI its unpaid claims.

RULING: Yes. Marsman and Gotesco are jointly liable to

PGI.

PGI was never a party to the joint venture agreement.

While the joint venture agreement clearly spelled out the
capital contributions of Marsman (land) and Gotesco
(cash) and the funding mechanism, it cannot be used to
defeat the lawful claim of PGI against the two joint
venturers- partners. PGI’s contract clearly listed the joint
venturers Marsman and Gotesco as the beneficial owner
of the project, and all billing invoices indicated the
consortium as the client.

When there are two or more debtors, the obligation is

presumed to be joint unless the law or the obligation
expressly states that the liability is solidary, or unless the
nature of the obligation requires solidary liability
(Articles 1207 and 1208, Civil Code). In this case, since
solidary liability was not required by law, or the contract,
or by the nature of the obligation, the obligation to PGI
was presumed to be joint between Marsman and
Gotesco.
J TIOSEJO INVESTMENT CORP VS ANG
FACTS: J. Tiosejo entered into a Joint Venture Agreement
with PPGI for the development of a residential
condominium project known as Meditel in Mandaluyong
City. Petitioner contributed the lot while PPGI undertook
to develop the condominium.
The parties further agreed to a 17%-83% sharing as to
developed units. PPGI further undertook to use all
proceeds from the pre-selling of its saleable units for the
completion of the Condominium Project.
In 1996, PPGI executed a Contract to Sell with Spouses
Ang on a certain condominium unit and parking slot for
P2,077,334.25 and P313,500.00, respectively.
Respondent Spouses filed before the Housing and Land
Use Regulatory Board (HLURB) a complaint for the
rescission of the Contract to Sell, against J. Tiosejo and
PPGI. They claim that they were promised that the condo
unit would be available for turn-over and occupancy by
December 1998, however the project was not completed
as of the said date. Spouses Ang instructed petitioner and
PPGI to stop depositing the post-dated checks they
issued and to cancel said Contracts to Sell.
Despite several demands, petitioner and PPGI have failed
and refused to refund the P611,519.52 they already paid
under the circumstances.
PPGI:
a. the delay was attributable to the economic crisis
and to force majeure (unexpected and
unforeseen inflation and increase rates and cost
of building materials)
b. they offered several alternatives to Spouses Ang
to transfer their investment to its other feasible
projects and for the amounts they already paid to
be considered as partial payment for the
replacement unit/s.
J Tiosejo Investmen:
a. its prestation under the JVA consisted of
contributing the property on which the
condominium was to be contributed.
b. Not being privy to the Contracts to Sell
executed by PPGI and respondents, it did not
receive any portion of the payments made by
the latter; and, that without any contributory
fault and negligence on its part, PPGI (and not
the petitioner) breached its undertakings
under the JVA by failing to complete the
condominium project
Housing and Land Use (HLU): ruled in favor of
respondents, rescinding the contract and ordering
petitioner and PPGI to pay refund, interest, damages,
attorney’s fees and administrative fines.
HLURB Board of Commissioner:s affirmed the HLU’s
order.
Office of the President (OP): dismissed petitioner’s
appeal on the ground that the latter’s appeal
memorandum was filed out of time and that the HLURB
Board committed no grave abuse of discretion in
rendering the appealed decision. MR was also denied.
CA: MR was denied for lack of merit.
ISSUE: Whether or not the CA erred in affirming the
HLURB’s decision insofar as it found J.
Teosejo’s with PPGI to pay Spouses Ang.
HELD: NO, the HLURB Arbiter and Board correctly held
petitioner liable alongside PPGI for
respondents’ claims and the administrative fine.
By express terms of the JVA, it appears that petitioner not
only retained ownership of the property pending
completion of the condominium project but had also
bound itself to answer liabilities proceeding from
contracts entered into by PPGI with third parties.
Article VIII, Section 1 of the JVA distinctly provides as
follows:
Section 1: Rescission and damages:xxx
In any case, the Owner shall respect and strictly comply
with any covenant entered into by the Developer and
third parties with respect to any of its units in the
Condominium Project. To enable the owner to comply
with this contingent liability, the Developer shall furnish
the Owner with a copy of its contracts with the said
buyers on a month-to-month basis.
xxx
Viewed in the light of the foregoing provision of the JVA,
petitioner cannot avoid liability by claiming that it was
not in any way privy to the Contracts to Sell executed by
PPGI and respondents. Moreover, a joint venture is
considered in this jurisdiction as a form of partnership
and is, accordingly, governed by the law of partnerships.
Under Article 1824 of the Civil Code of the Philippines, all
partners are solidarily liable with the partnership for
everything chargeable to the partnership, including loss
or injury caused to a third person or penalties incurred
due to any wrongful act or omission of any partner
acting in the ordinary course of the business of the
partnership or with the authority of his co- partners.
Whether innocent or guilty, all the partners are solidarily
liable with the partnership itself.
Doctrines: A joint venture is considered in this
jurisdiction as a form of partnership and is accordingly,
governed by the law on partnerships.
Under Article 1824 of the Civil Code of the Philippines, all
partners are solidarily liable with the partnership for
everything chargeable to the partnership, including loss
or injury caused to a third person or penalties incurred
due to any wrongful act or omission of any partner acting
in the ordinary course of the business of the partnership
or with the authority of his co-partners. Whether
innocent or guilty, all the partners are solidarily liable
with the partnership itself.
NARRA NICKEL MINING vs REDMONT
CONSOLIDATED MINES CORP
FACTS: Redmont is a domestic corporation interested in
mining and exploration in some areas in Palawan. Upon
finding out that those areas are covered by MPSA
applications of other three (allegedly) Filipino
corporations namely: NARRA, TESORO, and
MACARTHUR, it filed a petition seeking the denial of their
permits on the ground that the three mentioned are
foreign-owned corporations.
Redmont alleged:
 at least 60% of the capital stock of McArthur,
Tesoro and Narra are owned and controlled by
MBMI Resources, Inc. (MBMI), a 100%
Canadian corporation.
 since MBMI is a considerable stockholder of
petitioners, it was the driving force behind
petitioners’ filing of the MPSAs over the areas
covered by applications since it knows that it
can only participate in mining activities
through corporations which are deemed
Filipino citizens.
 given that petitioners’ capital stocks were
mostly owned by MBMI, they were likewise
disqualified from engaging in mining activities
through MPSAs, which are reserved only for
Filipino citizens.
Narra Nickel, et. Al:
 they were qualified persons under Section
3(aq) of Republic Act No. (RA) 7942 or the
Philippine Mining Act of 1995.
 their nationality as applicants is immaterial
because they also applied for Financial or
Technical Assistance Agreements (FTAA)
denominated as AFTA-IVB-09 for McArthur,
AFTA-IVB-08 for Tesoro and AFTA-IVB-07 for
Narra, which are granted to foreign-owned
corporations.
 they claimed that the issue on nationality
should not be raised since McArthur, Tesoro
and Narra are in fact Philippine Nationals as
60% of their capital is owned by citizens of the
Philippines.
 asserted that though MBMI owns 40% of the
shares of PLMC (which owns 5,997 shares of
Narra), 40% of the shares of MMC (which owns
5,997 shares of McArthur) and 40% of the
shares of SLMC (which, in turn, owns 5,997
shares of Tesoro), the shares of MBMI will not
make it the owner of at least 60% of the capital
stock of each of petitioners.
The Panel of Arbitrators gave credit to the petition and
declared their MPA’s null and void.
Petitioners question the use of the exception of the res
inter alios acta or the "admission by co-partner or agent"
rule and "admission by privies" under the Rules of Court
in the instant case, by pointing out that statements made
by MBMI should not be admitted in this case since it is
not a party to the case and that it is not a "partner" of
petitioners.
Petitioners claim that before the above-mentioned Rule
can be applied to a case, "the partnership relation must
be shown, and that proof of the fact must be made by
evidence other than the admission itself." Petitioners
assert no such partnership exists.
ISSUE: WON a mere Joint Venture or a partnership exist
between the parties.
HELD: Partnership exists between the parties.
Joint ventures have been deemed to be "akin" to
partnerships since it is difficult to distinguish between
joint ventures and partnerships. Thus:
[T]he relations of the parties to a joint venture and the
nature of their association are so similar and closely akin
to a partnership that it is ordinarily held that their rights,
duties, and liabilities are to be tested by rules which are
closely analogous to and substantially the same, if not
exactly the same, as those which govern partnership. In
fact, in joint venture agreements, rules and legal
incidents governing partnerships are applied.
Accordingly, culled from the incidents and records of this
case, it can be assumed that the relationships entered
between and among petitioners and MBMI are no simple
"joint venture agreements."
As a rule, corporations are prohibited from entering into
partnership agreements; consequently, corporations
enter into joint venture agreements with other
corporations or partnerships for certain transactions in
order to form "pseudo partnerships."
Obviously, as the intricate web of "ventures" entered into
by and among petitioners and MBMI was executed to
circumvent the legal prohibition against corporations
entering into partnerships, then the relationship created
should be deemed as "partnerships," and the laws on
partnership should be applied. Thus, a joint venture
agreement between and among corporations may be
seen as similar to partnerships since the elements of
partnership are present.
Considering that the relationships found between
petitioners and MBMI are considered to be partnerships,
then the CA is justified in applying Sec. 29, Rule 130 of
the Rules by stating that "by entering into a joint venture,
MBMI have a joint interest" with Narra, Tesoro and
McArthur.