Emnace vs.

CA
GR. 126334 | November 23, 2001

Petitioner: Emilio Emnace Respondent: CA

Topic: Right to Formal Account

Facts:
Emilio Emnace, Vicente Tabanao, and Jacinto Divinagracia were partners in Ma.
Nelma Fishing Industry. In January 1986, they decided to dissolve the partnership
following Divinagracia's withdrawal. They then executed an agreement to partition
and distribute the partnership's assets among themselves.

After Vicente Tabanao died in 1994, Emilio Emnace did not provide Tabanao's
heirs with any financial statements or accounting of the partnership's assets,
liabilities, or finances, despite this being required throughout the partnership's
existence. Subsequently, the respondents filed an action for the petitioner for the
accounting of the partnership.

Unsatisfied, the petitioner then filed a petition for review, raising the same four
issues:

1. Failure to pay proper docket fees

2. Court's territorial jurisdiction over the land in question
3. Plaintiff heirs' lack of capacity to sue
4. Prescription of the plaintiff heirs' cause of action

Issue: Whether or not the complaint of the respondents be dismissed grounded by

prescription

Ruling:
No. The court rejects the petitioner's argument that the respondents' right to inquire
into the partnership's affairs expired in 1990. According to Article 1842 of the Civil
Code, a partner's right to an accounting begins at the date of dissolution, unless
otherwise agreed. When read in conjunction with Articles 1807 and 1809, this
means that prescription only starts running after a final accounting is made. In this
case, no final accounting has been provided, which is precisely what the
respondents are seeking in their court action. The petitioner has failed or refused
to render an accounting of the partnership's business and assets. Consequently,
the respondents' action is not barred by prescription, as the time limit hasn't even
begun to run due to the absence of a final accounting.
 ROJAS vs. MAAGLANA
GR. 30616| December 10, 1990

Petitioner: Eufracio Rojas Respondent: Constancio Maglana

Topic: Division of Assets

Facts:
Rojas and Maglana established a registered partnership called Eastcoast
Development Enterprises (EDE) in 1955. The following year, they expanded their
business venture by forming a second partnership with Pahamotang. However, this
new arrangement was short-lived and eventually dissolved. After Pahamotang's
departure, Rojas and Maglana chose to continue their partnership, but did so
without drafting a new written agreement. As time progressed, issues arose when
Rojas failed to meet his partnership obligations, neglecting both his financial
contributions and his responsibilities as logging superintendent. The situation
deteriorated to the point where Maglana decided to dissolve the partnership in
1961, an action that ultimately led to a legal dispute between the two former
partners.

Issue: Whether the sharing basis of the partnership between Rojas and Maglana
should be in proportion to their contributions or share and share alike.

Ruling:
No. The Supreme Court modified the lower court's decision, ruling on several key
points. Firstly, it determined that the original registered partnership (EDE)
continued to exist until liquidation, regardless of the second partnership's formation
and dissolution with Pahamotang. The Court upheld the "share and share alike"
profit-sharing basis as stipulated in the original Articles of Partnership, rather than
basing it on actual contributions.

However, it emphasized the necessity of a thorough accounting before profit

distribution. The Commissioners' Report revealed a significant discrepancy in
contributions: Rojas contributed far less than agreed (P18,750 out of P158,158),
while Maglana exceeded his required contribution (P267,541.44 out of P160,984).
Despite the equal sharing provision, the Court ruled that Rojas was not entitled to
any profits due to his failure to fulfill his obligations, citing Articles 1786 and 1788 of
the Civil Code, which state that a partner who fails to contribute becomes a debtor
to the partnership. Finally, the Court affirmed the Commissioners' Report, which
indicated Rojas would be liable to the partnership under various sharing scenarios,
including the 50-50 basis.
 GUY vs. GACOTT
GR. 206147| January 13, 2016

Petitioner: Michael Guy Respondent: Glenn Gacott

Topic: Partnership Liability

Facts:
Atty. Glenn Gacott purchased defective transceivers from Quantech Systems
Corporation (QSC) and subsequently filed a complaint for damages. The Regional
Trial Court ruled in Gacott's favor, ordering QSC to pay damages. However, during
the execution phase, it was discovered that QSC was actually a partnership, not a
corporation as previously believed. Michael C. Guy was listed as a general partner
of QSC. In an attempt to satisfy the judgment, Gacott had Guy's vehicle attached.
In response, Guy filed a motion to lift the attachment, arguing that he was not a
party to the original case and therefore his property should not be subject to the
judgment.

Issue: Whether Guy, as a partner of QSC, can be held personally liable for the
judgment against the partnership without being impleaded in the original case.

Ruling:
No. The Supreme Court ruled in favor of Guy, making several key holdings. First, it
determined that a partner must be separately and distinctly impleaded before
being bound by a judgment against the partnership. Second, the Court
emphasized that partners' liability is subsidiary in nature, requiring partnership
assets to be exhausted before a partner's personal property can be levied upon.
Third, it clarified that partners' liability to third persons is generally joint, not
solidary, unless specific circumstances outlined in Articles 1822-1824 of the Civil
Code are present. The Court also noted that Guy was never made a party to the
original case and had no opportunity to defend himself, violating his right to due
process. Furthermore, it stressed that the solidary liability of partners only applies
in specific circumstances not present in this case. Consequently, the Court ordered
the release of Guy's vehicle and reversed the decisions of both the lower court and
the Court of Appeals.