[INTRODUCTION; FORM] ○ Under the exception, the contract shall be void if inventory

01 AGAD V. MABATO of the property contributed is not made, signed by the

June 28, 1968 | Concepcion, C.J. |
Petitioner/s: Mauricio Agad
Respondent/s: Severino Mabato and Mabato & Agad Company
Doctrine: 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.
Facts:
● On Aug. 29, 1952, Agad and Mabato, pursuant to a public
instrument, engaged in a partnership for a fishpond business. Agad
contributed P1,000, with right to receive 50% of profits. Mabato
handled the partnership funds.
○ 1952-1956: Mabato rendered yearly accounts therefor
○ 1957-1963: Mabato failed to render accounts despite
repeated demands
● Aggrieved, Agad filed the complaint to (1) claim P14,000 as share
in profits from 1957-1963 and P1,000 as attorney’s fees, and (2)
ask for order of dissolution of partnership and winding up of its
affairs.
○ Mabato’s defense: denied existence of partnership;
contract therefor had not been perfected despite execution
of the public instrument as Agad failed to give his P1,000
contribution to the capital; filed a motion to dismiss
○ TC: Motion to dismiss granted; contract of partnership was
null and void pursuant to NCC 17731 as inventory of
fishpond allegedly contributed to the partnership was not
attached thereto; subsequent MR denied.
parties, and attached to the public instrument pursuant to
NCC 1773.
● However, NCC 1773 does not apply. No contribution of a fishpond
was actually made, nor can such contribution be inferred from the
purpose of the partnership constituted.
○ The partners’ respective contributions to the capital were
limited to cash amounting P1,000. This is bolstered by par.
4 of the partnership agreement, stating that the capital of
the partnership was only cash worth P2,000.
○ Moreover, the partnership agreement stated that the
partnership was established “to operate a fishpond”, not to
“engage in a fishpond business”. Thus, contrary to the
allegation of Mabato, a fishpond property was not
necessary for the partnership, and the contribution of the
same cannot be assumed.
Dispositive
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.

Ruling:
W/N the partnership agreement was void for not having an inventory of
immovable property or real rights contributed thereto.—NO. No
fishpond was contributed to the partnership. As such, the partnership was
valid in the form it was entered into.
● The general rule in NCC 1771 provides that 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.

1
NCC 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.