Agad v. Mabato
REITERATIONFacts
1. The Antecedents: Plaintiff-appellant Mauricio Agad alleged that he and defendant Severino Mabato entered into a partnership agreement on August 29, 1952, to operate a fishpond business. Agad contributed P1,000 to the partnership capital and was entitled to 50% of the profits. While Mabato rendered accounts for the years 1952 through 1956, he subsequently failed and refused to provide accounts for the period of 1957 to 1963, despite repeated demands. Agad sought P14,000 in profits, P1,000 in attorney's fees, dissolution of the partnership, and the appointment of a receiver. 2. Procedural History: The case originated in the Court of First Instance of Davao, where Agad filed his complaint on June 9, 1964. Defendant Mabato admitted the formal allegations but denied the partnership's existence, claiming the contract was not perfected due to Agad's failure to contribute his capital. Mabato subsequently filed a motion to dismiss, arguing the complaint stated no cause of action and the court lacked jurisdiction as the case involved rights over public lands. The trial court granted the motion, dismissing the complaint based on the theory that the partnership contract was void under Article 1773 of the Civil Code for lacking an inventory of the contributed immovable property. Agad's motion for reconsideration was denied, leading to this appeal. 3. The Petition: Plaintiff-appellant Mauricio Agad appealed the dismissal order, arguing that Article 1773 of the Civil Code, which requires an inventory for partnerships contributing immovable property, was inapplicable. The core of Agad's argument, and the issue before the Supreme Court, was whether immovable property or real rights were actually contributed to the partnership. Agad contended that the partnership was formed to operate a fishpond, not to contribute the fishpond itself, and that the contributions were limited to cash (P1,000 each), as stated in the partnership agreement. The appeal sought to set aside the dismissal order and remand the case for further proceedings.
Issue(s)
Whether the partnership contract is void under Article 1773 of the Civil Code. Whether the complaint states a cause of action.
Ruling
The Supreme Court set aside the order of dismissal and remanded the case to the lower court for further proceedings. The Court ruled that Article 1773 of the Civil Code is not applicable in this case.
Ratio Decidendi
On Issue 1: The Court held that Article 1773 of the Civil Code, which requires an inventory for the validity of a partnership contract involving the contribution of immovable property, is not applicable. The partnership agreement, Annex "A", stipulated that the partnership was established "to operate a fishpond," not to contribute the fishpond itself. The contributions of the partners, Severino Mabato and Mauricio Agad, were limited to P1,000 each in cash, as stated in Paragraph 4 of Annex "A". Therefore, no immovable property or real right to any fishpond was contributed to the partnership, and consequently, the requirement of an inventory under Article 1773 was not triggered. The operation of the fishpond was the purpose of the partnership, not the contribution of the fishpond property to its capital. On Issue 2: Since the Court found that Article 1773 was not applicable and the partnership contract was not void on that ground, the complaint stating the existence of a partnership and seeking an accounting and dissolution does state a valid cause of action. The lower court's dismissal based on the inapplicability of Article 1773 was therefore erroneous. The case was remanded to allow for further proceedings to determine the merits of Agad's claims regarding the accounting and his share of the profits.
Main Doctrine
Article 1773 of the Civil Code, which declares a partnership contract void when immovable property is contributed without an attached inventory signed by the parties, is not applicable when the partnership's purpose is to operate a fishpond, and the partners contribute only money, not the fishpond property itself. The contribution of money, even if intended for a business involving immovable property, does not trigger the requirement of an inventory under Article 1773.