PRIMELINK PROPERTIES AND DEVT CORP V.
LAZATIN-MAGAT a) ALLEGATIONS: despite the lapse of almost four (4) years from the
G.R. O 167379 (2006)
FACTS:
1) Primelink is a domestic corporation engaged in real estate
development while respondents Lazatin are co-owners of 2 parcels of land
in Tagaytay.
2) In 1994, Primelink, represented by Lopez (President) and the
Lazatins entered into a joint venture agreement (JVA) for the development
of the subject property into a residential subdivision to be known as
TAGAYTAY GARDEN VILLAS.
3) Under the JVA, the Lazatins obliged themselves to contribute the
subject property as their share and for its part, Primelink undertook to
contribute, money, labor personnel, machineries, equipment, etc
4) The parties agreed that any unsettled or unresolved
misunderstanding or conflicting opinions between the parties relative to the
interpretation, scope and reach, and the enforcement/implementation of
any provision of the agreement shall be referred to Voluntary Arbitration in
accordance with the Arbitration Law
5) The Lazatins agreed to subject the title over the subject property to
an escrow agreement. Conformably with the escrow agreement, the
owners duplicate of the title was deposited with the China Banking
Corporation.
a) However, Primelink failed to immediately secure a Development
Permit from Tagaytay City, and applied the permit only on August 30, 1995.
On October 12, 1995, the City issued a Development Permit to Primelink
6) For 4 years however, Primelink failed to develop the said land. As
such, the Lazatins filed a COMPLAINT FOR RESCISSION, ACCOUNTING, AND
DAMAGES, WITH PRAYER FOR TRO AND/OR PRELIMINARY INJUNCTION
AGAINST P
execution of the JVA and the delivery of the title and possession of the land
to defendants, the land development aspect of the project had not yet been
completed, and the construction of the housing units had not yet made any
headway, based on the following facts, namely: (a) of the 50 housing units
programmed for Phase I, only the following types of houses appear on the
site in these condition: (aa) single detached, one completed and two units
uncompleted; (bb) cluster houses, one unit nearing completion; (cc) duplex,
two units completed and two units unfinished; and (dd) row houses, two
units, completed; (b) in Phase II thereof, all that was done by the
defendants was to grade the area; the units so far constructed had been the
object of numerous complaints by their owners/purchasers for poor
workmanship and the use of sub-standard materials in their construction,
thus, undermining the projects marketability
i) claimed that in a sales-income-costs projection prepared and
submitted by defendants, they (plaintiffs) stood to receive the amount of
P70,218,296.00 as their net share in the joint venture project; to date,
however, after almost four (4) years and despite the undertaking in the JVA
that plaintiffs shall initially get 20% of the agreed net revenue during the
first two (2) years (on the basis of the 60%-40% sharing) and their full 40%
share thereafter, defendants had yet to deliver these shares to plaintiffs
which by conservative estimates would amount to no less than
P40,000,000.00
7) The trial court ruled in favor of the Lazatins and ordered Primelink
to return the possession of the property without the Lazatins paying for said
improvements.On appeal, CA affirmed the same.
a) RTC: Evidence on record have shown patent violations by the
defendants of the stipulations particularly paragraph II covering Developers
(defendant) undertakings, as well as paragraph III and paragraph V of the
JVA
b) CA:although respondents therein (plaintiffs below) did not
specifically pray for their takeover of the property and for the possession of
the improvements on the parcels of land, nevertheless, respondents were
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entitled to said relief as a necessary consequence of the ruling of the trial
court ordering the rescission of the JVA. The appellate court cited the ruling
of this Court in the Aurbach case and Article 1838 of the New Civil Code AS
A GENERAL RULE, THE RELATION OF THE PARTIES IN JOINT VENTURES IS
GOVERNED BY THEIR AGREEMENT. WHEN THE AGREEMENT IS SILENT ON
ANY PARTICULAR ISSUE, THE GENERAL PRINCIPLES OF PARTNERSHIP MAY
BE RESORTED TO
8) Primelinkis now contending that the appellate courts decision,
ordering them to turn over the improvements to the Lazatinswithout
reimbursement is unjust; that Lazatin did not ask the properties to be
placed under their possession but merely asked for rescission of the JVA
a) Also aver that, under Article 1384 of the New Civil Code, rescission
shall be only to the extent necessary to cover the damages caused and that,
under Article 1385 of the same Code, rescission creates the obligation to
return the things which were not object of the contract, together with their
fruits, and the price with its interest; consequently, it can be effected only
when respondents can return whatever they may be obliged to return
i) Respondents cannot rescind and, at the same time, retain the
consideration, or part of the consideration received under the JVA
WON the improvements made by Primelink should also be turned over
under the possession of respondent Lazatin? YES.
HELD: The order of the court for Primelink to return possession of the real
estate property belonging to Lazatin including all improvements thereon
was not a judgment that was different in kind than what was prayed for by
the Lazatins; it was just a necessary consequence to the order of rescission.
Section 2(c), Rule 7 of the Rules of Court provides that a pleading shall
specify the relief sought but it may add as general prayer for such further or
other relief as may be deemed just and equitable. Even without the prayer
for a specific remedy, proper relief may be granted by the court if the facts
alleged in the complaint and the evidence introduced so warrant.The court
shall grant relief warranted by the allegations and the proof even if no such
relief is prayed for. The prayer in the complaint for other reliefs equitable
and just in the premises justifies the grant of a relief not otherwise
specifically prayed for
As a general rule, the relation of the parties in joint ventures is government
by their agreement. When the agreement is silent on any particular issue,
the general principles of partnership may be resorted to.
Petitioner Primelink and respondents entered into a joint venture as
evidenced by their JVA which, under the Courts ruling in Aurbach, is a form
of partnership, and as such is to be governed by the laws on partnership.
The legal concept of a joint venture is of common law origin. It has generally
been understood to mean an organization formed for some temporary
purpose. It is, in fact, hardly distinguishable from partnership since elements
are similarcommunity of interest in the business, sharing of profits and
losses, and a mutual right of control. The main distinction is that partnership
contemplates a general business with some degree of continuity, while a
joint venture is formed for the execution of a single transaction, and is thus
of a temporary nature.
With the rescission of the JVA on account of petitioners fraudulent acts, all
authority of any partner to act for the partnership is terminated except
insofar as may be necessary to wind up the partnership affairs or to
complete transactions begun but not yet finished. On dissolution, the
partnership is not terminated but continues until the winding up of
partnership affairs is completed. Winding up means the administration of
the assets of the partnership for the purpose of terminating the partnership
and discharging the obligations of the partnership.
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The transfer of the possession of the parcels of land and the improvements
thereon to respondents was only for a specific purpose: the winding up of
partnership affairs, and the partition and distribution of the net partnership
assets as provided by law. After all, Article 1836 of the New Civil Code
provides that unless otherwise agreed by the parties in their JVA,
respondents have the right to wind up the partnership affairs
It must be stressed that although respondents acquired possession of the
lands and the improvements thereon, the said lands and improvements
remained partnership property, subject to the rights and obligations of the
parties under Art 1837 and 1838 NCC, and subject to the outcome of the
settlement of the accounts between the parties as provided in Art 1839,
absent any agreement of the parties in their JVA to the contrary. Until the
partnership accounts are determined, it cannot be ascertained how much
any of the parties is entitled, if at all.
It was thus premature for petitioner Primelink to be demanding that it be
indemnified for the value of the improvements on the parcels of land
owned by the joint venture/partnership. Notably, the JVA of the parties
does not contain any provision designating any party to wind up the affairs
of the partnership.
The SC then mentions NCC 1837 (in rel. to the rights of the parties when
dissolution is caused in contravention of the partnership agreement), NCC
1838, and NCC 1839.
Benjamin Yu v. National Labor Relations Commission & Jade Mountain
ProductsCo. Ltd., Willy Co, Rhodora Bendal, Lea Bendal, Chiu Shian Jeng
and Chen Ho-Fu
G.R. No. 97212 June 30, 1993
Feliciano, J.
Facts:
Yu ex-Assistant General Manager of the marble quarrying and export
business operatedby a registered partnership called Jade Mountain
Products Co. Ltd.
partnership was originally organized with Bendals as general partners and
Chin Shian Jeng,Chen Ho-Fu and Yu Chang as limited partners; partnership
business consisted of exploitinga marble deposit in Bulacan
Yu, as Assistant General Manager, had a monthly salary of 4000. Yu,
however, actuallyreceived only half of his stipulated salary, since he had
accepted the promise of thepartners that the balance would be paid when
the firm shall have secured additionaloperating funds from abroad. Yu
actually managed the operations and finances of thebusiness; he had overall
supervision of the workers at the marble quarry in Bulacan andtook charge
of the preparation of papers relating to the exportation of the firms
products.
general partners Bendals sold and transferred their interests in the
partnership to Co andEmmanuel Zapanta
partnership was constituted solely by Co and Zapanta; it continued to use
the old firmname of Jade Mountain
Yu dismissed by the new partners
Issues:
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1. WON the partnership which had hired Yu as Asst. Gen. Manager had Legal basis: Art. 1840 (see codal)
beenextinguished and replaced by a new partnership composed of Co and
Zapanta; 2. if indeed anew partnership had come into existence, WON Yu
could nonetheless assert his rights underhis employment contract with the
old partnership as against the new partnership

Held:
1. Yes. Changes in the membership of the partnership resulted in the
dissolution of the old partnership which had hired Yu and the emergence of
a new partnership composedof Co and Zapanta.
Legal bases:
Art. 1828. The dissolution of a partnership is the change in the relation of
thepartners caused by any partner ceasing to be associated in the carrying
on asdistinguished from the winding up of the business.
Yu is entitled to enforce his claim for unpaid salaries, as well as other claims
relating to hisemployment with the previous partnership, against the new
partnership
But Yu is not entitled to reinstatement. Reason: new partnership was
entitled to appointand hire a new gen. or asst. gen. manager to run the
affairs of the business enterprisetake over. An asst. gen. manager belongs to
the most senior ranks of management and anew partnership is entitled to
appoint a top manager of its own choice and confidence. Thenon-retention
of Yu did not constitute unlawful termination.

Art. 1830. Dissolution is caused:(1) without violation of the agreement

The new partnership had itsown new General Manager, Co, the principal
between the partners;(b) by the express will of any partner, who must act in
new owner himself. Yus old position thusbecame superfluous or redundant.
good faith, when no definite termor particular undertaking is specified;(2) in
contravention of the agreement between the partners, where the
circumstances donot permit a dissolution under any other provision of this
article, by the express will of anypartner at any time; Yu is entitled to separation pay at the rate of one months pay for each year
of service thathe had rendered to the old partnership, a fraction of at least 6
No winding up of affairs in this case as contemplated in Art. 1829: on months being considered asa whole year.
dissolution thepartnership is not terminated, but continues until the
winding up of partnership affairs iscompleted

the new partnership simply took over the business enterprise owned by
the oldpartnership, and continued using the old name of Jade Mountain
Products CompanyLimited, without winding up the business affairs of the
old partnership, paying off its debts,liquidating and distributing its net
assets, and then re-assembling the said assets or mostof them and opening
a new business enterprise

2.Yes. the new partnership is liable for the debts of the old partnership
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