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AT A GLANCE:
Joint venture is an organization formed for some temporary purpose.
A joint venture, therefore, is akin to a partnership, the essential elements of which are as follows:
(1) an agreement to contribute money, property, or industry to a common fund; and
(2) an intent to divide the profits among the contracting parties.
(Carlos Valdes vs. La Colina Development Corporation, G.R. No. 208140, July 12, 2021)
A joint venture, defined as an agreement between two parties to enter into a commercial undertaking, may fall under a partnership for a limited purpose.
In the Philippines, a joint venture is a form of partnership and should thus be governed by the laws of partnership. (Aurbach v. Sanitary Wares Manufacturing Corporation, G.R. No. 75875, December 15, 1989)
Generally understood to mean an organization formed for some temporary purpose, a joint venture is likened to a particular partnership or one which has for its object determinate things, their use or fruits, or a specific undertaking, or the exercise of a profession or vocation. (Article 1783, Civil Code of the Philippines)
In the case of Carlos Valdes vs. La Colina Development Corporation (G.R. No. 208140, July 12, 2021), the Supreme Court ruled that 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.
Jurisprudence says:
“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. This observation is not entirely accurate in this jurisdiction, since under the Civil Code, a partnership may be particular or universal, and a particular partnership may have for its object a specific undertaking. It would seem therefore that under Philippine law, a joint venture is a form of partnership and should be governed by the law of partnerships.
Further, jurisprudence says:
A joint venture, therefore, is akin to a partnership, the essential elements of which are as follows:
(1) an agreement to contribute money, property, or industry to a common fund; and
(2) an intent to divide the profits among the contracting parties. (Carlos Valdes vs. La Colina Development Corporation, G.R. No. 208140, July 12, 2021)
A joint venture “presupposes generally a parity of standing between the joint co-ventures or partners, in which each party has an equal proprietary interest in the capital or property contributed, and where each party exercises equal rights in the conduct of the business. (Heirs of Tan Eng Kee vs. Court of Appeals, G.R. No. 126881, October 3, 2000)
Single business transaction – Since a joint venture is formed for the execution of a single business transaction, it is only of a temporary nature and is not intended to pursue a continuous business.
Joint proprietary interest – In a joint venture, the proprietary interest must be mutual. Consequently, none of the co-venturers can bind the joint venture or his co-venturers.
Share or contribution – To constitute a joint venture, each party to the venture must make a contribution, either by capital, or by way of services, skills, knowledge, materials or money. As regards transfer of property as a party’s share in the joint venture, the property used remains undivided property of its contributor.
Share in profits and losses – As with contribution, parties to a joint venture likewise share in the profit of such venture.
Right of control – Every party to the venture has a right of mutual control over the subject matter of the enterprise, and a right to direct and govern the policy on connection with the joint venture.
Under the Article 1873 of the Civil Code, a particular partnership has for its object determinate things, their use or fruits, or specific undertaking, or the exercise of a profession or vocation.
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