Agad vs Mabato GR No.

L-24193 June 28, 1968

FACTS:
1.) Plaintiff Mauricio Agad alleged that he and Defendant Severino Mabato are partners in a fishpond
business, to the capital of which Agad contributed P1000 with the right to receive 50% of profits;

2.) that from 1952 up to and including 1956, Mabato who handled the partnership funds, had yearly
rendered accounts of the operations of the partnership;

3.) that despite repeated demands Mabato had failed and refused to render accounts for the years 1957
up to 1963.

4.) Agad prayed that judgment be rendered sentencing Mabato to pay him the sum of P14,000 as his
share in the profits of the partnership for the period from 1957 to 1963.

5.) In his Answer, Mabato admitted the formal allegations of the complaint and denied the existence of said
partnership on the ground that the contract therefor had not been perfected because Agad had
allegedly failed to give his P1000 contribution to the partnership capital.

6.) 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

RTC Ruling
The complaint was subsequently dismissed upon the theory that the contract of partnership is null and void
pursuant to Art. 1773,CC because an inventory referred to had not been attached
thereto. Agad brought the matter for review by record on appeal.

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.

ISSUE
1.) WON immovable property or real rights have been contributed to the partnership under
consideration.

RULING:
NO. None of the partners contributed either a fishpond or a real right to any fishpond. Their contributions were
limited to the sum of P1000 each. Par. 4 of Annex A provides:
“that the capital of said partners hip is two thousand (P2000) pesos od which one thousand (P1000)
has been contributed by Severino Mabato and one thousand (P1000) has been
contributed by Mauricio Agad.”

The operation of the fishpond mentioned in Annex A was the purpose of the partnership. Neither
said fishpond or 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.
Art. 1773, CC is not in point in this case.
LOURDES NAVARRO AND MENARDO NAVARRO, petitioners, vs. COURT OF APPEALS,

FACTS:
1.) Private respondent Olivia V. Yanson and Petitioner Lourdes Navarro were engaged in the business of
Air Freight Service Agency.
2.) Pursuant to the Agreement which they entered, they agreed to operate the said Agency;
3.) It is the Private Respondent Olivia Yanson who supplies the necessary equipment and money used in
the operation of the agency.
4.) Her brother in the person of Atty. Rodolfo Villaflores was the manager thereof while petitioner Lourdes
Navarro was the Cashier;
5.) In compliance to her obligation as stated in their agreement, private respondent brought into their
business certain chattels or movables or personal properties.
6.) However, those personal properties remain to be registered in her name;
7.) Among the provisions stipulated in their agreement is the equal sharing of whatever proceeds realized
from their business;
8.) However, sometime on July 23, 1976, private respondent Olivia V. Yanson, in order for her to recovery
the above-mentioned personal properties which she brought into their business, filed a complaint
against petitioner Lourdes Navarro for "Delivery of Personal Properties With Damages and with an
application for a writ of replevin.

RTC : On July 27, 1976, then Executive Judge approved private respondents' application for a writ of replevin.

For her defense, petitioner Navarro argue that she and private respondent Yanson actually formed a verbal
partnership which was engaged in the business of Air Freight Service Agency. She contended that the decision
sustaining the writ of replevin is void since the properties belonging to the partnership do not actually belong to
any of the parties until the final disposition and winding up of the partnership.

CA: On June 26, 1991, petitioners filed with respondent court a petition for annulment of the trial court's
decision, claiming that the trial judge erred in declaring the non-existence of a partnership, contrary to the
evidence on record. The appellate court, as aforesaid, out rightly dismissed the petition due to absence of
extrinsic or collateral fraud, observing further that an appeal was the proper remedy.

Petitioners claim that the trial judge ignored evidence that would show that the parties "clearly intended to
form, and (in fact) actually formed a verbal partnership engaged in the business of Air Freight Service Agency
in Bacolod"; and that the decision sustaining the writ of replevin is void since the properties belonging to the
partnership do not actually belong to any of the parties until the final disposition and winding up of the
partnership

ISSUE:
1. Whether or not there was a partnership that existed between the parties.
2. Whether the properties that were commonly used in the operation of Allied Air Freight belonged to the
alleged partnership business.

RULING:
1. NO. Article 1767 of the New Civil Code defines the contract of partnership: Art. 1767. By the contract of
partnership two or more persons bind themselves to contribute money, property, or industry to a common fund,
with the intention of dividing the proceeds among themselves. A cursory examination of the evidences presented
no proof that a partnership, whether oral or written had been constituted. In fact, those movables brought by the
plaintiff for the use in the operation of the business remain registered in her name.

While there may have been co-ownership or co-possession of some items and/or any sharing of proceeds by way
of advances received by both plaintiff and the defendant, these are not indicative and supportive of the existence
of any partnership between them. Art. 1769 par. 2 provides:

2. NO. Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners
or co-possessors do or do not share any profits made by the use of the property” Besides, the alleged
profit was a difference found after valuating the assets and not arising from the real operation of the business. In
accounting procedures, strictly, this could not be profit but a net worth.
Torres v. Court of Appeals G.R. No. 134559, December 9, 1999

A partner may contribute not only money or property, but also industry. 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.

FACTS:
1. Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a “joint venture agreement” with
Respondent Manuel Torres for the development of a parcel of land into a subdivision.
2.
3. They executed a Deed of Sale covering the said parcel of land in favor of Manuel, who then had it registered in
his name and obtained from Equitable Bank a loan of P40,000 which, under the Joint Venture Agreement, was to
be used for the development of the subdivision through mortgage of said property. All three of them also agreed
to share the proceeds from the sale of the subdivided lots.
4. The project failed and the property was foreclosed. Petitioner alleged that it was due to Manuel’s lack of funds or
means and skills. And also alleged that the latter misappropriate the amount loaned to his own company.
5. On the other hand, respondent alleged that he used the loan to implement the Agreement, which incurred
P85,000 expenses. And further avers that failure of project was due to petitioners and their relatives had
separately caused the annotations of adverse claims on the title to the land, which eventually scared away
prospective buyers, forcing him to give up on the project.
6. Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, but were acquitted.
They filed a civil case, but was dismissed by trial court and affirmed by Court of Appeals. Hence, this petition.

ISSUE:
1. WON the petitioners have formed partnership with the respondent.
2. WON the contract of partnership is void.

RULING:
1. YES. A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership
pursuant to Article 1767 of the Civil Code, which provides: “By the contract of partnership two or more
persons bind themselves to contribute money, property, or industry to a common fund, with the intention
of dividing the profits among themselves.”

Under the Agreement, petitioners would contribute property to the partnership in the form of land which was to be
developed into a subdivision; while respondent would give, in addition to his industry, the amount needed
for general expenses and other costs. Furthermore, the income from the said project would be divided
according to the stipulated percentage. There is manifestation of intent to form partnership.

2. YES. Under 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. This was intended primarily to protect third person’s interest. 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.

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.
(Estoppel)

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.
AURELIO LITONJUA, Jr. v. EDUARDO K. LITONJUA, SR., ROBERT T. YANG
G.R. No. 166299-300 December 13, 2005

FACTS:

1. Petitioner Aurelio Litonjua and respondent Eduardo Litonjua are brothers. Aurelio Litonjua and Eduardo
Litonjua executed a private document entering into a partnership with Yang for the formation of a Cineplex
business. To this, Aurelio Litonjua would act as an industrial partner and contribute his shares in the Litonjua
family businesses (theatres, shipping land development).

2. After the relationship between the two brothers became sour, Aurelio filed with the court for specific
performance of accounting and liquidation for his share in the business and the payment to him of
such. Eduardo contended that Aurelio had no cause of action such that the agreement forming the
partnership had not been a public instrument, and as such, is void for violating the provisions of Art. 1771, Art.
1772, Art. 1773 of the NCC.

3. Aurelio alleged that Eduardo entered into a contract of partnership with him. Aurelio showed as evidence a
letter sent to him by Eduardo that the latter is allowing Aurelio to manage their family business (if Eduardo’s
away) and in exchange thereof he will be giving Aurelio P1 million or 10% equity, whichever is higher. A
memorandum was subsequently made for the said partnership agreement. The memorandum this time stated
that in exchange of Aurelio, who just got married, retaining his share in the family business (movie theatres,
shipping and land development) and some other immovable properties, he will be given P1 Million or 10%
equity in all these businesses and those to be subsequently acquired by them whichever is greater.

4. Respondent contended that the actionable document presented by Aurelio is void under Art 1767 in relation
to Art 1773. He further alleged that whatever undertaking Eduardo agreed to do under the memorandum, are
unenforceable under the Statute of Frauds

ISSUES:
1. Is the partnership void?
2. May Aurelio demand specific performance of his share in the partnership?

HELD:
1. YES. The Court held that the partnership is void precisely because of the legal provisions raised. Aurelio
contributed real rights to immovable properties, which should be executed in a public instrument. Moreover, the
contributions exceeded P3,000.00, which should also be in a public instrument and recorded with SEC.

Moreover, an inventory had to be made and hereby attached to the public instrument. Furthermore, the Court
gave notice of the fact that Aurelio cannot contend that the contributions of real property were only made after the
formation of the partnership as evidence proves otherwise.

2. NO. The Court held that the partnership is void, and as such, Aurelio has no cause of action to which to enforce
specific performance.