Agad vs Mabato 23 SCRA 1223

Facts: Petitioner Mauricio Agad claims that he and defendant Severino Mabato are partners in
afishpond business to which they contributed P1000 each. As managing partner, Mabato yearly
renderedthe accounts of the operations of the partnership. However, for the years 1957-1963,
defendant failedto render the accounts despite repeated demands. Petitioner filed a complaint
against Mabato to whicha copy of the public instrument evidencing their partnership is attached.
Aside from the share of profits

(P14,000) and attorney’s fees (P1000), petitioner prayed for the dissolution of the partnership and

winding up of its affairs.Mabato denied the existence of the partnership alleging that Agad failed
to pay hisP1000 contribution.He then filed a motion to dismiss on the ground of lack of cause of
action. The lower court dismissed thecomplaint finding a failure to state a cause of action
predicated upon the theory that the contract of partnership is null and void, pursuant to Art. 1773
of our Civil Code, because an inventory of thefishpond referred in said instrument had not been
attached thereto

Ruling: The issue before us hinges on whether or not "immovable property or real rights" have
been contributed 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 without said fishpond property (being) contributed
to the partnership." It should be noted, however, that, as stated in Annex "A" the partnership was
established "to operate a fishpond", not to "engage in a fishpond business". Moreover, none of the
partners contributed either a fishpond or a real right to any fishpond. Their contributions were
limited to the sum of P1,000 each. Indeed, Paragraph 4 of Annex "A" provides:

That the capital of the said partnership is Two Thousand (P2,000.00) Pesos Philippine Currency,
of which One Thousand (P1,000.00) pesos has been contributed by Severino Mabato and One
Thousand (P1,000.00) Pesos has been contributed by Mauricio Agad.

xxx xxx xxx

The operation of the fishpond mentioned in Annex "A" was the purpose of the partnership.
Neither said fishpond nor a real right thereto was contributed to the partnership or became part of
the capital thereof, even if a fishpond or a real right thereto could become part of its assets.

Rationale: Torres vs CA compare with Litonjua vs Litonjua 477 SCRA 576

Torres vs CA G.R. No. 134559. December 9, 1999

Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code,
which provides:

ART. 1773. A contract of partnership is void, whenever immovable property is contributed

thereto, if an inventory of said property is not made, signed by the parties, and attached to the
public instrument.

They contend that since the parties did not make, sign or attach to the public instrument an
inventory of the real property contributed, the partnership is void.

We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent
Arturo M. Tolentino states that under the aforecited provision which is a complement of Article
1771, the execution of a public instrument would be useless if there is no inventory of the
property contributed, because without its designation and description, they cannot be subject to
inscription in the Registry of Property, and their contribution cannot prejudice third persons. This
will result in fraud to those who contract with the partnership in the belief [in] the efficacy of the
guaranty in which the immovables may consist. Thus, the contract is declared void by the law
when no such inventory is made. The case at bar does not involve third parties who may be
prejudiced.

Second, petitioners themselves invoke the allegedly void contract as basis for their claim that
respondent should pay them 60 percent of the value of the property. They cannot in one breath
deny the contract and in another recognize it, depending on what momentarily suits their purpose.
Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate,
much less approve, such practice.

In short, the alleged nullity of the partnership will not prevent courts from considering the Joint
Venture Agreement an ordinary contract from which the parties rights and obligations to each
other may be inferred and enforced.

Litonjua vs Litonjua 477 SCRA 576

Lest it be overlooked, the contract-validating inventory requirement under Article 1773 of the
Civil Code applies as long real property or real rights are initially brought into the partnership. In
short, it is really of no moment which of the partners, or, in this case, who between petitioner and
his brother Eduardo, contributed immovables. In context, the more important consideration is that
real property was contributed, in which case an inventory of the contributed property duly signed
by the parties should be attached to the public instrument, else there is legally no partnership to
speak of.

Petitioner, in an obvious bid to evade the application of Article 1773, argues that the immovables
in question were not contributed, but were acquired after the formation of the supposed
partnership. Needless to stress, the Court cannot accord cogency to this specious argument. For,
as earlier stated, petitioner himself admitted contributing his share in the supposed shipping,
movie theatres and realty development family businesses which already owned immovables even
before Annex A-1 was allegedly executed.

Considering thus the value and nature of petitioners alleged contribution to the purported
partnership, the Court, even if so disposed, cannot plausibly extend Annex A-1 the legal effects
that petitioner so desires and pleads to be given. Annex A-1, in fine, cannot support the existence
of the partnership sued upon and sought to be enforced. The legal and factual milieu of the case
calls for this disposition. A partnership may be constituted in any form, save when immovable
property or real rights are contributed thereto or when the partnership has a capital of at least
P3,000.00, in which case a public instrument shall be necessary.[25] And if only to stress what
has repeatedly been articulated, an inventory to be signed by the parties and attached to the public
instrument is also indispensable to the validity of the partnership whenever immovable property
is contributed to it.