G.R. No. 164401 – 578 Phil. 262 – 555 SCRA 275 – Civil Law – Partnership – Prescription – Demand for an accounting – Oral Partnership
In 1977, Chua and Jacinto Sunga verbally agreed to form a partnership for the sale and distribution of Shellane LPGs. Their business was very profitable but in 1989 Jacinto died. Upon Jacinto’s death, his daughter Lilibeth took over the business as well as the business assets. Chua then demanded for an accounting but Lilibeth kept on evading him. In 1992 however, Lilibeth gave Chua P200k. She said that the same represents a partial payment; that the rest will come after she finally made an accounting. She never made an accounting so in 1992, Chua filed a complaint for “Winding Up of Partnership Affairs, Accounting, Appraisal and Recovery of Shares and Damages with Writ of Preliminary Attachment” against Lilibeth.
Lilibeth in her defense argued among others that Chua’s action has prescribed.
ISSUE: Whether or not Chua’s claim is barred by prescription.
HELD: No. The action for accounting filed by Chua three (3) years after Jacinto’s death was well within the prescribed period. The Civil Code provides that an action to enforce an oral contract prescribes in six (6) years while the right to demand an accounting for a partner’s interest as against the person continuing the business accrues at the date of dissolution, in the absence of any contrary agreement. Considering that the death of a partner results in the dissolution of the partnership, in this case, it was after Jacinto’s death that Chua as the surviving partner had the right to an account of his interest as against Lilibeth. It bears stressing that while Jacinto’s death dissolved the partnership, the dissolution did not immediately terminate the partnership. The Civil Code expressly provides that upon dissolution, the partnership continues and its legal personality is retained until the complete winding up of its business, culminating in its termination.
