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

WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of
merit, and the case is REMANDED to the Regional Trial Court.