G.R. No. L-10040; January 31, 1916
EUGENIA LICHAUCO, ET AL., plaintiffs-appellants, vs. FAUSTINO LICHAUCO, defendant-appellant.

FACTS:
In October 1901, the parties organized an unregistered commercial partnership named “F. Lichauco Hermanos” for a rice-cleaning business in Dagupan, Pangasinan. The capital was fixed at P100,000. Defendant Faustino Lichauco was appointed manager (gestor) with broad powers. The business became unprofitable and was discontinued by the defendant in May 1904. The defendant dismantled the mill and attempted to sell the machinery. Despite repeated demands from his co-partners, including plaintiff Eugenia Lichauco, the defendant failed to render an accounting or distribute the partnership assets from 1904 until this action was filed in October 1912. During this period, the defendant retained a substantial cash balance belonging to the partnership. The plaintiffs filed this action to compel an accounting and recover their shares of capital and profits.

ISSUE:
1. Whether the plaintiffs could maintain an action for accounting and payment of their shares without a prior formal decree of dissolution and liquidation as potentially contemplated by the partnership articles.
2. Whether the defendant, as manager, was liable for interest on the amounts due to the plaintiffs from the time he should have liquidated and distributed the assets.
3. The propriety of the trial court’s rulings on specific disputed items in the accounting.

RULING:
The Supreme Court ruled in favor of the plaintiffs, modifying the trial court’s judgment.

3. On Disputed Accounting Items:
The trial court correctly charged the defendant with P5,500, the price of machinery sold to Marciano Rivera, plus interest from the date of sale (January 8, 1912).
The plaintiffs’ claims for unaccounted rice valued at P17,746 and related interest were disallowed for lack of sufficient evidence.
The claim to credit the partnership account for a debt allegedly owed by partner Mariano Nable Jose was properly disallowed by the trial court.
The defendant’s claim for a credit of P60.36 for expenses related to the machinery sale was found to be without merit.

DISPOSITIVE:
The judgment of the lower court was REVERSED. The record was ordered returned to the trial court for the entry of a new judgment:
1. Condemning the defendant to pay the plaintiffs their respective shares based on a principal credit balance of P23,131.53;
2. With legal interest at 6% per annum on said balance from May 30, 1904, until fully paid; and
3. With interest at 6% per annum on the P5,500 item from January 8, 1912.
No special costs were awarded for the Supreme Court appeal.