MAURICIO AGAD, PLAINTIFF-APPELLANT VS. SEVERINO MABATO & MABATO & AGAD COMPANY, DEFENDANTS-APPELLEES.

In this appeal, taken by plaintiff Mauricio Agad,
from an order of dismissal of the Court of First Instance of Davao, we are called upon to determine the applicability of
Article 1773 of our Civil Code to the contract of partnership on which the
complaint herein is based.

Alleging that he and defendant Severino
Mabato are – pursuant to a public instrument dated
August 29, 1952, copy of which is attached to the complaint as Annex
“A” – partners in a fishpond business, to the capital of which 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
judgment be rendered sen­tencing Mabato to pay him (Agad) the sum of P14,000, as his share in the profits of
the partnership for the period from 1957 to 1963, in addition to P1,000 as
attorney’s fees, and ordering the dissolution of the partnership, as well as
the winding up of its affairs by a receiver to be appointed therefor.

In his answer, Mabato admitted the
formal allegations of the complaint and denied the existence of said
partnership, upon the ground that the contract therefor
had not been perfected, despite the execution of Annex “A”, because Agad had allegedly failed to give his P1,000
contribution to the partnership capital. 
Mabato prayed, there­fore, that the complaint
be dismissed; that Annex “A” be declared
void ab initio;
and that Agad be sentenced to pay actual, moral and
exemplary damages, as well as attorney’s fees.

Subsequently, Mabato filed a motion to
dismiss, upon the ground that the complaint states no cause of action and 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 the motion to dismiss the complaint
for failure to state a cause of action. 
This conclusion was predicated upon the theory that the con­tract of
partnership, Annex “A”, is null and void, pursuant to Art. 1773 of
our Civil Code, because an inventory of the fishpond referred in said
instrument had not been attached thereto. 
A reconsideration of this order having been denied, Agad
brought the matter to us for review by record on appeal.

Articles 1771 and 1773 of said Code provide:

“Art. 1771. A partnership may be constituted in any form,
except where immovable property or real rights are contributed thereto, in
which case a public instrument shall be necessary.

“Art. 1773. A contract of partnership is void, whenever
immovable property is contributed thereto, if inventory of said property is not
made, signed by the parties, and attached to the Public instrument.”

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 the 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.

x        x          x          x          x          x          x          x          “

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.

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 costs of this instance against defend­ant-appellee, Severino Mabato.

IT IS SO ORDERED.

Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
Castro, Angeles, and Fernando, JJ., concur.