DIVISION

[ GR No. 126334, Nov 23, 2001 ]

EMILIO EMNACE v. CA +

DECISION

422 Phil. 10.

FACTS:

Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in a
business concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they
decided to dissolve their partnership and executed an agreement of partition and distribution of
the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the
partnership. Throughout the existence of the partnership, and even after Vicente Tabanao's
untimely demise in 1994, 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. 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.The trial court denied the motion to dismiss. The
trial court held that the heirs of tabano had a right to sue in their own names, in view of the
provision of article. 777 of the CC.

ISSUES
1. Whether the venue was improperly laid since the action is a real action involving the
parcel of the land that is allocated outside the territorial jurisdiction of the court quo.
2. Whether the heirs or private respondents have the legal capacity to sue.
3. Whether or not the heirs of tabano are barred by prescriptions
RULING
1. NO. the records indubitably show that respondents are asking that the assets of the partnership be
accounted for, sold and distributed according to the agreement of the partners. The fact that two
of the assets of the partnership are parcels of land does not materially change the nature of the
action. It is an action in personam because it is an action against a person, namely, petitioner, on
the basis of his personal liability. It is not an action in rem where the action is against the thing
itself instead of against the person, ] Furthermore, there is no showing that the parcels of land
involved in this case are being disputed. In fact, it is only incidental that part of the assets of the
partnership under liquidation happen to be parcels of land.

It also seeks the enforcement of, and petitioner's compliance with, the contract that the
partners executed to formalize the partnership's dissolution, as well as to implement the
liquidation and partition of the partnership's assets. Clearly, it is a personal action that, in effect,
claims a debt from petitioner and seeks the performance of a personal duty on his part. In fine,
respondents' complaint seeking the liquidation and partition of the assets of the partnership with
damages is a personal action which may be filed in the proper court where any of the parties
reside. Besides, venue has nothing to do with jurisdiction for venue touches more upon the
substance or merits of the case. As it is, venue in this case was properly laid and the trial court
correctly ruled so.

2. YES. 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, which is a
mode of acquisition by virtue of which the property, rights and obligations to the extent of the
value of the inheritance of a person are transmitted.Moreover, respondents became owners of
their respective hereditary shares from the moment Vicente Tabanao died.

A prior settlement of the estate, or even the appointment of Salvacion Tabanao as executrix or
administratrix, is not necessary for any of the heirs to acquire legal capacity to sue. As
successors who stepped into the shoes of their decedent upon his death, they can commence
any action originally pertaining to the decedent. [35] 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. NO. 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.

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 article stated that 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 the heirs are seeking in
their action before the trial court. Since menace has failed or refused to render accounting of the
partnerhsip’s business and assets. Hence, the said action is not barred by prescription.