Primelink Properties And Development Corporation v. Lazatin-Magat

SR., J.:

Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 69200 and its Resolution2 denying petitioners' motion for reconsideration thereof. The factual and procedural antecedents are as follows: Primelink Properties and Development Corporation (Primelink for brevity) is a domestic corporation engaged in real estate development. Rafaelito W. Lopez is its President and Chief Executive Officer.3 Ma.

Clara T. Lazatin-Magat and her brothers, Jose Serafin T. Lazatin, Jaime T. Lazatin and Jose Marcos T. Lazatin (the Lazatins for brevity), are co-owners of two (2) adjoining parcels of land, with a combined area of 30,000 square meters, located in Tagaytay City and covered by Transfer Certificate of Title (TCT) No. T-108484 of the Register of Deeds of Tagaytay City. On March 10, 1994, the Lazatins and Primelink, represented by Lopez, in his capacity as President, entered into a Joint Venture Agreement5 (JVA) for the development of the aforementioned property into a residential subdivision to be known as "Tagaytay Garden Villas." Under the JVA, the Lazatin siblings obliged themselves to contribute the two parcels of land as their share in the joint venture.

For its part, Primelink undertook to contribute money, labor, personnel, machineries, equipment, contractor's pool, marketing activities, managerial expertise and other needed resources to develop the property and construct therein the units for sale to the public. Specifically, Primelink bound itself to accomplish the following, upon the execution of the deed: a.) Survey the land, and prepare the projects master plans, engineering designs, structural and architectural plans, site development plans, and such other need plans in accordance with existing laws and the rules and regulations of appropriate government institutions, firms or agencies; b.) Secure and pay for all the licenses, permits and clearances needed for the projects; c.) Furnish all materials, equipment, labor and services for the development of the land in preparation for the construction and sale of the different types of units (single-detached, duplex/twin, cluster and row house); d.) Guarantee completion of the land development work if not prevented by force majeure or fortuitous event or by competent authority, or other unavoidable circumstances beyond the DEVELOPER'S control, not to exceed three years from the date of the signing of this Joint Venture Agreement, except the installation of the electrical facilities which is solely MERALCO'S responsibility; e.) Provide necessary manpower resources, like executive and managerial officers, support personnel and marketing staff, to handle all services related to land and housing development (administrative and construction) and marketing (sales, advertising and promotions).6 The Lazatins and Primelink covenanted that they shall be entitled to draw allowances/advances as follows: 1.

During the first two years of the Project, the DEVELOPER and the LANDOWNER can draw allowances or make advances not exceeding a total of twenty percent (20%) of the net revenue for that period, on the basis of sixty percent (60%) for the DEVELOPER and forty percent (40%) for the LANDOWNERS. The drawing allowances/advances are limited to twenty percent (20%) of the net revenue for the first two years, in order to have sufficient reserves or funds to protect and/or guarantee the construction and completion of the different types of units mentioned above. 2.

After two years, the DEVELOPER and the LANDOWNERS shall be entitled to drawing allowances and/or advances equivalent to sixty percent (60%) and forty percent (40%), respectively, of the total net revenue or income of the sale of the units.7 They also agreed to share in the profits from the joint venture, thus: 1. The DEVELOPER shall be entitled to sixty percent (60%) of the net revenue or income of the Joint Venture project, after deducting all expenses incurred in connection with the land development (such as administrative management and construction expenses), and marketing (such as sales, advertising and promotions), and 2. The LANDOWNERS shall be entitled to forty percent (40%) of the net revenue or income of the Joint Venture project, after deducting all the above-mentioned expenses.8 Primelink submitted to the Lazatins its Projection of the Sales-Income-Cost of the project: SALES-INCOME-COST PROJECTION SELLING PRICE COST PRICE DIFFERENCE INCOME CLUSTER: A1 3,200,000 - A2 1,260,000 = 1,940,000 x 24 = ~~P~~ 46,560,000.00 TWIN: B1 2,500,000 - B2 960,000 = 1,540,000 x 24 = 36,960,000.00 SINGLE: C1 3,500,000 - C2 1,400,000 = 2,100,000 x 16 = 33,600,000.00 ROW-TYPE TOWNHOMES: D1 1,600,000 - D2 700,000 = 900,000 x 24 = 21,600,000.00