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G.R.No.L24193
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RepublicofthePhilippines
SUPREMECOURT
Manila
ENBANC
G.R.No.L24193June28,1968
MAURICIOAGAD,plaintiffappellant,
vs.
SEVERINOMABATOandMABATOandAGADCOMPANY,defendantsappellees.
Angeles,MaskarinoandAssociatesforplaintiffappellant.
VictorioS.Advinculafordefendantsappellees.
CONCEPCION,C.J.:
Inthisappeal,takenbyplaintiffMauricioAgad,fromanorderofdismissaloftheCourtofFirstInstanceofDavao,
wearecalledupontodeterminetheapplicabilityofArticle1773ofourCivilCodetothecontractofpartnershipon
whichthecomplainthereinisbased.
AllegingthatheanddefendantSeverinoMabatoarepursuanttoapublicinstrumentdatedAugust29,1952,
copyofwhichisattachedtothecomplaintasAnnex"A"partnersinafishpondbusiness,tothecapitalofwhich
Agad contributed P1,000, with the right to receive 50% of the profits that from 1952 up to and including 1956,
Mabato who handled the partnership funds, had yearly rendered accounts of the operations of the partnership
and that, despite repeated demands, Mabato had failed and refused to render accounts for the years 1957 to
1963, Agad prayed in his complaint against Mabato and Mabato & Agad Company, filed on June 9, 1964, that
judgmentberenderedsentencingMabatotopayhim(Agad)thesumofP14,000,ashisshareintheprofitsofthe
partnershipfortheperiodfrom1957to1963,inadditiontoP1,000asattorney'sfees,andorderingthedissolution
ofthepartnership,aswellasthewindingupofitsaffairsbyareceivertobeappointedtherefor.
In his answer, Mabato admitted the formal allegations of the complaint and denied the existence of said
partnership,uponthegroundthatthecontractthereforhadnotbeenperfected,despitetheexecutionofAnnex
"A",becauseAgadhadallegedlyfailedtogivehisP1,000contributiontothepartnershipcapital.Mabatoprayed,
therefore,thatthecomplaintbedismissedthatAnnex"A"bedeclaredvoidabinitioandthatAgadbesentenced
topayactual,moralandexemplarydamages,aswellasattorney'sfees.
Subsequently,Mabatofiledamotiontodismiss,uponthegroundthatthecomplaintstatesnocauseofactionand
that the lower court had no jurisdiction over the subject matter of the case, because it involves principally the
determination of rights over public lands. After due hearing, the court issued the order appealed from, granting
themotiontodismissthecomplaintforfailuretostateacauseofaction.Thisconclusionwaspredicateduponthe
theory that the contract of partnership, Annex "A", is null and void, pursuant to Art. 1773 of our Civil Code,
becauseaninventoryofthefishpondreferredinsaidinstrumenthadnotbeenattachedthereto.Areconsideration
ofthisorderhavingbeendenied,Agadbroughtthemattertousforreviewbyrecordonappeal.
Articles1771and1773ofsaidCodeprovide:
Art. 1771. A partnership may be constituted in any form, except where immovable property or real rights
arecontributedthereto,inwhichcaseapublicinstrumentshallbenecessary.
Art. 1773. A contract of partnership is void, whenever immovable property is contributed thereto, if
inventoryofsaidpropertyisnotmade,signedbythepartiesandattachedtothepublicinstrument.
Theissuebeforeushingesonwhetherornot"immovablepropertyorrealrights"havebeencontributed to the
partnership under consideration. Mabato alleged and the lower court held that the answer should be in the
affirmative, because "it is really inconceivable how a partnership engaged in the fishpond business could exist
withoutsaidfishpondproperty(being)contributedtothepartnership."Itshouldbenoted,however,that,asstated
in Annex "A" the partnership was established "to operate a fishpond", not to "engage in a fishpond business".
Moreover,noneofthepartnerscontributedeitherafishpondorarealrighttoanyfishpond.Theircontributions
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werelimitedtothesumofP1,000each.Indeed,Paragraph4ofAnnex"A"provides:
ThatthecapitalofthesaidpartnershipisTwoThousand(P2,000.00)PesosPhilippineCurrency,ofwhich
One Thousand (P1,000.00) pesos has been contributed by Severino Mabato and One Thousand
(P1,000.00)PesoshasbeencontributedbyMauricioAgad.
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TheoperationofthefishpondmentionedinAnnex"A"wasthepurposeofthepartnership.Neithersaidfishpond
norarealrighttheretowascontributedtothepartnershiporbecamepartofthecapitalthereof,evenifafishpond
orarealrighttheretocouldbecomepartofitsassets.
WHEREFORE, we find that said Article 1773 of the Civil Code is not in point and that, the order appealed from
should be, as it is hereby set aside and the case remanded to the lower court for further proceedings, with the
costsofthisinstanceagainstdefendantappellee,SeverinoMabato.Itissoordered.
Reyes,J.B.L.,Dizon,Makalintal,Zaldivar,Sanchez,Castro,AngelesandFernando,JJ.,concur.
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