Emnace V CA Digest

Emnace v.
CA Petitioner insists that venue was improperly laid

since the action is a real action involving a parcel of
GR No. 126334 (23 November 2001)
land that is located outside the territorial jurisdiction
SUBJECT MATTER: Partnerships; Rights of a partner of the court a quo.
DOCTRINE:
SC ruled that there was no error on the part of the
For as long as the partnership exists, any of the partners may trial court and the Court of Appeals in holding that it
demand an accounting of the partnership’s business, and was filed in correct venue.
prescription of the said right starts to run only upon the
dissolution of the partnership when the final accounting is An action for accounting, payment of partnership
done. shares, division of assets and damages is a personal
FACTS: action which, under the Rules, may be commenced
and tried where the defendant resides or may be
Emilio Emnace, Vicente Tabanao and Jacinto Divina-gracia
found, or where the plaintiffs reside, at the election
were partners in a fishing business, Ma. Nelma Fishing
of the latter
Industry.
After Jacinto Divinagracia’s withdrew from the partnership, 2. Petitioner’s argument:
they decided to dissolve their partnership and executed an Petitioner asserts that the surviving spouse of
agreement of partition and distribution of the partnership Vicente Tabanao has no legal capacity to sue since
properties among them some time in January of 1986. Assets she was never appointed as administratrix or
to be distributed were five (5) fishing boats, six (6) vehicles, executrix of his estate.
and two (2) parcels of land.
Tabanao died in 1994. SC ruled that petitioner’s objection in this regard is
misplaced. The surviving spouse does not need to be
Throughout the existence of the partnership, and even after appointed as executrix or administratrix of the
Vicente Tabanao’s demise, petitioner failed to submit to estate before she can file the action. She and her
Tabanao’s heirs any statement of assets and liabilities of the children are complainants in their own right as
partnership, and to render an accounting of the partnership’s successors of Vicente Tabanao. From the very
finances. Petitioner also reneged on his promise to turn over moment of Vicente Tabanao’s death, his rights
to Tabanao’s heirs the deceased’s 1/3 share in the total insofar as the partnership was concerned were
assets of the partnership, amounting to P30,000,000.00, or transmitted to his heirs, for rights to the succession
the sum of P10,000,000.00, despite formal demand for are transmitted from the moment of death of the
payment thereof. decedent.
Consequently, Tabanao’s heirs, respondents herein, filed
against petitioner an action for accounting, payment of Whatever claims and rights Vicente Tabanao had
shares, division of assets and damages. against the partnership and petitioner were
transmitted to respondents by operation of law,
Petitioner filed a motion to dismiss the complaint on the
more particularly by succession. Moreover,
grounds of improper venue, lack of jurisdiction over the
respondents became owners of their respective
nature of the action or suit, and lack of capacity of the estate
hereditary shares from the moment Vicente
of Tabanao to sue.
Tabanao died.
Trial court denied the motion to dismiss.
Respondents filed an amended complaint, incorporating the As successors who stepped into the shoes of their
additional prayer that petitioner be ordered to “sell all (the decedent upon his death, they can commence any
partnership’s) assets and thereafter action originally pertaining to the decedent. From
pay/remit/deliver/surrender/yield to the plaintiffs” their the moment of his death, his rights as a partner and
corresponding share in the proceeds thereof. to demand fulfillment of petitioner’s obligations as
outlined in their dissolution agreement were
Petitioner filed a manifestation and motion to dismiss. As an transmitted to respondents. They, therefore, had the
additional ground, petitioner raised prescription warranting capacity to sue and seek the court’s intervention to
the outright dismissal of the complaint trial court denying the compel petitioner to fulfill his obligations.
motion to dismiss
Trial court ruled that prescription begins to run only upon the 3. Petitioner’s argument:
dissolution of the partnership when the final accounting is Petitioner contends that the trial court should have
done. Hence, prescription has not set in the absence of a final dismissed the complaint on the ground of
accounting. prescription, arguing that respondents’ action
prescribed four (4) years after it accrued in 1986.
Court of Appeals rendered the assailed decision, dismissing
the petition for certiorari.
The three (3) final stages of a partnership are: (1)
Petitioner filed the instant petition for review. dissolution; (2) winding-up; and (3) termination.
ISSUE/S: The partnership, although dissolved, continues to
exist and its legal personality is retained, at which
1. WON the action for accounting was filed in an time it completes the winding up of its affairs,
improper venue. (NO) including the partitioning and distribution of the
2. WON the surviving spouse of Tabunao has legal net partnership assets to the partners.
capacity to sue. (YES)
3. WON the action for accounting has prescribed. (NO) For as long as the partnership exists, any of the
 TOPICAL partners may demand an accounting of the
HOLDING/RATIO: partnership’s business. Prescription of the said right
1. Petitioner’s argument:
starts to run only upon the dissolution of the
partnership when the final accounting is done.
The SC found that prescription had not even begun

to run in the absence of a final accounting.
Article 1842 of the Civil Code provides:

The right to an account of his interest shall accrue to
any partner, or his legal representative as against the
winding up partners or the surviving partners or the
person or partnership continuing the business, at the
date of dissolution, in the absence of any agreement
to the contrary.
The provision states that the right to demand an

accounting accrues at the date of dissolution in the
absence of any agreement to the contrary. When a
final accounting is made, it is only then that
prescription begins to run. In the case at bar, no
final accounting has been made, and that is
precisely what respondents are seeking in their
action before the trial court, since petitioner has
failed or refused to render an accounting of the
partnership’s business and assets. Hence, the said
action is not barred by prescription.

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Emnace v.

CA Petitioner insists that venue was improperly laid

The SC found that prescription had not even begun

Article 1842 of the Civil Code provides:

The provision states that the right to demand an

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