Eugenia Lichauco vs Faustino Lichauco

G.R. No. L-10040 – 33 Phil. 350 – Civil Law – Partnership – Dissolution 

In 1901, F. Lichauco Hermanos partnership was formed. It was provided, among others, in the partnership agreement that Faustino Lichauco will be the managing partner; and that the firm cannot be dissolved except upon the 2/3 vote of all the partners. In 1904, the firm wasn’t performing well and was unprofitable and so its machineries were dismantled. In 1905, Eugenia and one other partner demanded Faustino to make an accounting of the firm’s assets but Faustino refused to do so. Belatedly in 1912, Eugenia et al filed a civil suit against Faustino to compel the latter to perform ac accounting. Faustino, in his defense, argued that the firm was not dissolved pursuant to the partnership agreement there being no 2/3 vote from all the members (Faustino et al are only 1/5 of the firm).

ISSUE: Whether or not Eugenia et al can demand an accounting.

HELD: Yes. The firm was already dissolved in 1904 when its machineries were dismantled – this was a sign that the firm abandoned and concluded the purpose for it was formed (rice cleaning business). Upon said dissolution, it was the duty of Faustino to liquidate the assets and inform his partners. The provision which requires a 2/3 votes of all the partners to dissolve the firm cannot be given effect because the same denied the right of a less number of partners to effect the dissolution especially where the firm has already sustained huge losses. It would be absurd and unreasonable to hold that such an association could never be dissolved and liquidated without the consent and agreement of two-thirds of its partners, notwithstanding that it had lost all its capital, or had become bankrupt, or that the enterprise for which it had been organized had been concluded or utterly abandoned.

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