Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-13260

October 31, 1960

LINO P. BERNARDO, petitioner,

vs.
EUFERMIA PASCUAL, ET AL., and WORKMEN'S COMPENSATION COMMISSION, respondents.

Bernardo and Dimayuga for petitioner.

Eliseo B. Bote for respondents.

GUTIERREZ DAVID, J.:

This is a petition to review on certiorari a decision of the Workmen's Compensation

Commission, awarding compensation to the widow and children of the deceased Pedro
Pascual who met death as a result of an accident while felling a tree in petitioner's lumber
concession.

The record shows that on March 9, 1955, the deceased Pedro Pascual was, together with
Rogelio Bacane and Martin Quinto, in the woods at Corona, San Miguel Bulacan. Bacane and
Quinto, both loggers admittedly in the employ of herein petitioner, were cutting timber, while
fifty meter away from them the deceased was felling are which he had started hewing three

days before. When Bacane and Quinto heard the sound of the falling treeand following the
practice among loggersthey shouted to Pascual to find out if he was alright. As the latter did
not answer, they rushed to where he was and there found him prostrate on the ground with
blood tricking from his mouth. Shortly thereafter, he died from a fractured skull and his
companions took his body home in petitioner's truck.

On March 31, 1955, the widow of the deceased on behalf of herself and their children filed a
claim for compensation with the Workmen's Compensation Commission. Originally filed
against the Bernardo Sawmill, the claim was on February 6, 1956 amended to include herein
petitioner Lino P. Bernardo, the timber concessionaire and owner and operator of the sawmill,
as party respondent. In his answer, the latter denied that he was a timber concessionaire
before October 13, 1955, or that he had an employer-employee relationship with the deceased.
He also objected to the claim on the ground of prescription. The referee assigned to hear the
case having denied the claim, the claimants petitioned for review. On August 27, 1957, the
reviewing commissioner reversed the referee's decision and ordered Lino P. Bernardo to pay
claimants P3,120.00 as compensation, to reimburse them P200.00 for burial expenses and to
pay to the Workmen's Compensation Fund P32.00 as fees. Reconsideration of this award
having been denied, Lino P. Bernardo brought the present petition for certiorari.

Petitioner first charged that the respondent Commissioner abused its discretion in reversing
the decision of the referee and finding that the deceased was his employee. Petitioner,
however was failed to substantiate the charge. On the other, Rogelio Bacane and Martin
Quinto, whose employment with the petitioner was never denied and who were present and
were working together with deceased at the time the latter met his death, testified at the
hearing of the case that the said deceased was their co-laborer in the lumber concession of
petitioner Lino P. Bernardo. Indeed, the respondent Commission expressly found that their
testimonies "clearly point to the existence of an employer-employee relation between the
respondent (herein petitioner) and the deceased." It also appear that the deceased, Bacane and
Quinto used to receive their wages from Emilio Bautista, petitioner's "Katiwala". As a matter of
fact, the widow of the deceased received from said Bautista the wages corresponding to
services last rendered by her husband. Petitioner claims that Bautista was a forest guard of
the Government and was not his employee. This claim, however, loses its force when we
consider the fact that forest guards hired by lumber concessionaire, though appointed by the
Department of Agriculture and Natural Resources (under Forestry Order No. 11), are still
deemed employees of the concessionaires. (See Martha Lumber Mill vs. Lagradante, et al., 99
Phil., 434; 52 Off. Gaz. [9] 4230.)

In disclaiming employer-employee relationship with the deceased, petitioner has made the
rather reckless accusation that the said deceased was a "lumber smuggler" who had been
stealing timber from the concession area. No explanation, however, was given why the
deceased at the time of his death was felling a tree in board daylight and in the presence of
petitioner's two loggers. In this connection, we might add that the finding of the respondent
Commission that the deceased was petitioner's employee at the time of his death is a finding
of fact and there being no sufficient showing that the same is unsupported by substantial
evidence, the same should de deemed final and conclusive upon this Court. (Magdrigal
Shipping Co. vs. Del Rosario, et al., G.R. No. L-13130, October 31, 1959; NLU vs. Sta. Ana, 101
Phil., 297; 54 Off. Gaz. [6] 1817; see also PAL vs. PAL Employees Association G.R. No. L-8197,
October 31, 1958; Donato vs. Phil. Marine Officers Association, G.R. No. L-12506, May 18,
1958; 15c and Up Employees' Association vs. Dept. and Bazaar Free Workers' Union, G.R. No.
L-9168, October 18, 1956; NLU vs. Dinglasan, 98 Phil., 649; 52 Off. Gaz. (4) 1933; Batangas
Transportation Co. vs. Rivera and WCC, supra, p. 175.).

Petitioner also argues that the claim was made out of time and therefore already barred
because it was filed only on February 6, 1956. It will be recalled that claimants fileds their
original claim on March 31, 1955 against the Bernardo Sawmill, and February 6, 1956,
amended it to include petitioner Lino P. Bernardo as party respondent, it appearing that he was
the owner and operator of the sawmill. It will thus be seen that in amending the claim,
claimants merely specified the real party in interest in accordance with the rule that every
action must be prosecuted in the name of such party in interest (Section 2, Rule 3, Rules of
Court). Since the amendments did not state a new cause of action but merely made more
determinate the real party respondent, it evidently relates back to the date of the original
complaint or claim, which was admittedly filed within the 3-months period from the death of
the employee as fixed by section 24, of the Workmen's Compensation Act.

With respect to petitioner's claim that he became a lumber concessionaire only on October 13,
1955, suffice it to say that prior to the date, he was partner to several persons owning the
concession in San Miguel, Bulacan, and subsequent thereto, he acquired the interest of his
partners and became the sole concessionaire. Under those circumstances he became liable to
the creditors of the partnership. (Art. 1840, new Civil Code.)

WHEREFORE, the decision of the Workmen's Compensation Commission sought to be

reviewed is affirmed, with costs.

Padilla, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, and Paredes
JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-5837

May 31, 1954

CRISTOBAL BONNEVIE, ET AL., plaintiffs-appellants,

vs.
JAIME HERNANDEZ, defendant-appellee.

Ojeda and Vilgera for appellants.

Cea and Zurbano for appellee.

REYES, J.:

This is an action for the recovery of the sum of P115,312.50, with interests, as plaintiffs'
alleged share in the profits of a partnership.

It appears that prior to January, 1947, plaintiffs with other associates formed a syndicate or
secret partnership for the purpose of acquiring the plants, franchises and other properties of
the Manila Electric Co. hereinafter called the Meralco in the provinces of Camarines Sur,
Albay, and Sorsogon, with the idea of continuing that company's business in that region. No
formal articles were drawn for it was the purpose of the members to incorporate once the deal
had been consummated. But in the meantime they elected Pedro Serranzana and David
Serrano general manager and secretary-treasurer, respectively, of the partnership.

Negotiation for the purchase was commenced, but as it made no headway, defendant was
taken in as a member of the partnership so that he could push the deal through, and to that
end he was given the necessary power of attorney. Using partnership funds, defendant was
able to buy the Meralco properties for P122,000, paying P40,000 upon the signing of the deed
of sale and agreeing to pay the balance in two equal installments, that is, P41,000 on or before
July 31, 1947, and another P41,000 on or before January 31, 1948, with interest at 6 per cent
per annum and with a penalty clause which reads:

(6) That in case the VENDEE fails to make the payment or payments of the balance due or any
part thereof as herein provided, this contract shall, at the option of the VENDOR, be annuled
and, in such an event, all payments made by the VENDEE to the VENDOR by virtue of this
contract shall be forfeited and retained by the VENDOR in full satisfaction as the liquidated
damages sustained by said VENDOR; and the said VENDOR shall have the right to forthwith
reenter and take possession of the premises, properties and rights which are the
subject-matter of this contract.

Although defendant was the one named vendee in the deed of sale, there is no question that
the transaction was in penalty made for the partnership so that the latter assumed control of
the business the day following the sale.

About the latter half of the following month the members of the partnership proceeded with the
formation of the proposed corporation, apportioning among themselves its shares of stock in
proportion to their respective contributions to the capital of the partnership and their individual
efforts in bringing about the acquisition of the Meralco properties. But before the incorporation
papers could be perfected, several partners, not satisfied with the way matters were being run
and fearful that the venture might prove a failure because the business was not going well and
there was a possibility of their being assessed more than their original investments when the
time came to meet the two installments of the unpaid purchase price due the Meralco,
expressed their desire to withdraw from the partnership and get back the money they had
invested therein. In accordance with this wish, one of them, Judge Jaime Reyes, in a meeting
held on April 10, 1947, to consider various matters connected with the business, presented a
resolution to the effect that those partners who did not want to remain in the association
should be allowed to withdraw and get back their contributions. The resolution was approved,
with the herein plaintiffs voting affirmatively, and on that same day plaintiffs and Judge Reyes

withdrew from the partnership, and, as admitted by both parties, the partnership was then
dissolved. In accordance with the terms of the resolution, the withdrawing partners were, on
the following day, reimbursed their respective contributions to the partnership fund.

Following the dissolution of the partnership, the members who preferred to remain in the
business went ahead with the formation of the corporation, taking in new associates as
stockholders. And defendant, on his part, in fulfillment of his trust, made a formal assignment
of the Meralco properties to the treasurer of the corporation, giving them a book value of
P365,000, in return for which the corporation issued, to the various subscribers to its capital
stock, shares of stock of the total face value of P225,000 and assumed the obligation of paying
what was still due the Meralco on the purchase price. The new corporation was named "Bicol
Electric Company."

Though business was losing during the first year, that is, in 1947, the corporation, thanks to a
loan obtained from the RFC later prospered and made money. Then trouble began for one of
its big stockholders, the defendant herein.

Two years from their withdrawal from the partnership, when the corporate business was
already in a prosperous condition, plaintiffs brought the present suit against Jaime Hernandez,
claiming a share in the profit the latter is supposed to have made from the assignment of the
Meralco properties to the corporation, estimated by plaintiffs to be P225,000 and their share of
it to be P115,312.50.

Defendant's answer denies that he has made any profit out of the assignment in question and
alleges that in any event plaintiffs, after their withdrawal from the partnership, ceased to have
any further interest in the subsequent transactions of the remaining members.

After trial the lower court found that the partnership had not realized any profit out of the
assignment of the Meralco properties to the corporation and that, even supposing that profit
had really been made, defendant would not be the one to answer to plaintiffs for their share
thereof, because he did not receive the consideration for the assignment, which according to
the court, consisted of the subscriptions of various persons to the capital stock of the
corporation. The court therefore dismissed the complaint with costs against the plaintiffs.

From this decision plaintiffs appealed. The case comes within our jurisdiction because of the
amount involved.

We find no merit in the appeal.

In the first place, the profit alleged to have been realized from the assignment of the Meralco
properties to the new corporation, the Bicol Electric Company, is more apparent than real. It is
true that the value set for those properties in the deed of assignment was P365,000 when the
acquisition price was only P122,000. But one should not jump to the conclusion that a profit,
consisting of the difference between the two sums was really made out of the transaction, for
the assignment was not made for cash but in payment for subscriptions to shares of stock in
the assignee, and while those shares had a total face value of P225,000, this is not necessarily
their real worth. Needless to say, the real value of the shares of stock of a corporation depends
upon the value of its assets over and above its liabilities. It does not appear that the Bicol
Electric Company had any assets other than those acquired from the Meralco, and according
to the evidence the company, aside from owing the Meralco, P82,000 was, in the language of
the court below, actually "in the red."

In the second place, assuming that the assignment actually brought profit to the partnership, it
is hard to see how defendant could be made to answer for plaintiffs' alleged share thereof. As
stated in the decision below, defendant did not receive the consideration for the assignment
for, as already stated, the assignment was made in payment for subscriptions of various
persons to the capital stock of the new corporation. Plaintiffs, in order to give color of legality
to their claim against defendant, maintain that the latter should be held liable for damages
caused to them, consisting of the loss of their share of the profits, due to defendant's failure
properly to perform his duty as a liquidator of the dissolved partnership, this on the theory that
as managing partner of the partnership, it was defendant's duty to liquidate its affairs upon its
dissolutions. But it does not appear that plaintiffs have ever asked for a liquidation, and as will
presently be explained no liquidation was called for because when plaintiffs withdrew from the
partnership the understanding was that after they had been reimbursed their investment, they
were no longer to have any further interest in the partnership or its assets and liabilities.
Moreover, the stipulation of facts made at the hearing does not bear out the claim that
defendant was the managing partner of the partnership, for if there appears that the
partnership had its general manager in the person of Pedro Serranzana, who upon the
formation of the new corporation also became its vice-president and general manager.

As a general rule, when a partner retires from the firm, he is entitled to the payment of what
may be due him after a liquidation. But certainly no liquidation is necessary where there is
already a settlement or an agreement as to what the retiring partner shall receive. In the instant
case, it appears that a settlement was agreed upon on the very day the partnership was
dissolved. For when plaintiffs and Judge Jaime Reyes withdrew from the partnership on that
day they did so as agreed to by all the partners, subject to the only condition that they were to
be repaid their contributions or investments within three days from said date. And this
condition was fulfilled when on the following day they were reimbursed the respective
amounts due them pursuant to the agreement.

There is evidence that the partnership was at that time operating its business at a loss and that
the partnership did not have necessary funds to meet its obligation to Meralco for the balance
of the purchase price. And in that connection it should be recalled that nonpayment of that
obligation would result in the partnership losing its entire investment because of the penalty
clause in the deed of sale. Because of these circumstances there is every reason to believe
that plaintiffs together with Judge Jaime Reyes, withdrew from the partnership for fear that
they might lose their entire investment should they choose to remain in the partnership which
then faced the danger of losing its entire assets. As testified to by Judge Reyes, one of the
withdrawing partners, it was clearly understood that upon their withdrawal and return to them
of their investment they would have nothing more to do with the association. It must, therefore,
have been the intention or understanding of the parties that the withdrawing partners were
relinquishing all their rights and interest in the partnership upon the return to them of their
investment. That Judge Reyes did not join the plaintiffs in this action is a clear indication that
such was really the understanding. Judge Reyes has testified that when he was invited to join
in the present claim he refused because he did not want to be a "sin verguenza." And, indeed, if
the agreement was that the withdrawing partners were still to have participation in the
subsequent transactions of the partnership so that they would have a share not only in the
profits but also in the losses, it is not likely that their investment would have been returned to
them.

It is, therefore, our conclusion that the acceptance by the withdrawing partners, including the
plaintiffs, of their investment in the instant case was understood and intended by all the parties
as a final settlement of whatever rights or claim the withdrawing partners might have in the
dissolved partnership. Such being the case they are now precluded from claiming any share in
the alleged profits, should there be any, at the time of the dissolution.

In view of the foregoing, we find plaintiffs' claim against defendant to be without legal basis so
that the judgment of dismissal rendered by the court below should be, as it is hereby, affirmed,
with costs against the appellants.

Paras, C. J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, Labrador and Concepcion,
JJ., concur.

FIRST DIVISI ON
[G.R. No. 126334. November 23, 2001]

EMILIO EMNACE, petitioner, vs. COURT OF APPEALS, ESTATE OF VICENTE TABANAO,

SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO DEPOSOY, VICENTA
MAY TABANAO VARELA, ROSELA TABANAO and VINCENT TABANAO, respondents.
DECISION
YNARES-SANTIAGO, J.:

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 Divinagracias withdrawal
from the partnership.[1] Among the assets to be distributed were five (5) fishing boats, six (6)
vehicles, two (2) parcels of land located at Sto. Nio and Talisay, Negros Occidental, and cash
deposits in the local branches of the Bank of the Philippine Islands and Prudential Bank.

Throughout the existence of the partnership, and even after Vicente Tabanaos untimely
demise in 1994, petitioner failed to submit to Tabanaos heirs any statement of assets and
liabilities of the partnership, and to render an accounting of the partnerships finances.
Petitioner also reneged on his promise to turn over to Tabanaos heirs the deceaseds 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.[2]

Consequently, Tabanaos heirs, respondents herein, filed against petitioner an action for
accounting, payment of shares, division of assets and damages.[3] In their complaint,
respondents prayed as follows:

1. Defendant be ordered to render the proper accounting of all the assets and liabilities of the
partnership at bar; and

2. After due notice and hearing defendant be ordered to pay/remit/deliver/surrender/yield to

the plaintiffs the following:

A. No less than One Third (1/3) of the assets, properties, dividends, cash, land(s), fishing
vessels, trucks, motor vehicles, and other forms and substance of treasures which belong
and/or should belong, had accrued and/or must accrue to the partnership;

B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral damages;

C. Attorneys fees equivalent to Thirty Percent (30%) of the entire share/amount/award which
the Honorable Court may resolve the plaintiffs as entitled to plus P1,000.00 for every
appearance in court.[4]

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.[5] On August 30, 1994, the trial court denied the motion to dismiss. It held that venue
was properly laid because, while realties were involved, the action was directed against a
particular person on the basis of his personal liability; hence, the action is not only a personal
action but also an action in personam. As regards petitioners argument of lack of jurisdiction
over the action because the prescribed docket fee was not paid considering the huge amount
involved in the claim, the trial court noted that a request for accounting was made in order that
the exact value of the partnership may be ascertained and, thus, the correct docket fee may be
paid. Finally, the trial court held that the heirs of Tabanao had a right to sue in their own
names, in view of the provision of Article 777 of the Civil Code, which states that the rights to
the succession are transmitted from the moment of the death of the decedent.[6]

The following day, respondents filed an amended complaint,[7] incorporating the additional
prayer that petitioner be ordered to sell all (the partnerships) assets and thereafter
pay/remit/deliver/surrender/yield to the plaintiffs their corresponding share in the proceeds
thereof. In due time, petitioner filed a manifestation and motion to dismiss,[8] arguing that the
trial court did not acquire jurisdiction over the case due to the plaintiffs failure to pay the

proper docket fees. Further, in a supplement to his motion to dismiss,[9] petitioner also raised
prescription as an additional ground warranting the outright dismissal of the complaint.

On June 15, 1995, the trial court issued an Order,[10] denying the motion to dismiss inasmuch
as the grounds raised therein were basically the same as the earlier motion to dismiss which
has been denied. Anent the issue of prescription, the trial court ruled that prescription begins
to run only upon the dissolution of the partnership when the final accounting is done. Hence,
prescription has not set in the absence of a final accounting. Moreover, an action based on a
written contract prescribes in ten years from the time the right of action accrues.

Petitioner filed a petition for certiorari before the Court of Appeals,[11] raising the following
issues:

I. Whether or not respondent Judge acted without jurisdiction or with grave abuse of discretion
in taking cognizance of a case despite the failure to pay the required docket fee;
II. Whether or not respondent Judge acted without jurisdiction or with grave abuse of
discretion in insisting to try the case which involve (sic) a parcel of land situated outside of its
territorial jurisdiction;
III. Whether or not respondent Judge acted without jurisdiction or with grave abuse of
discretion in allowing the estate of the deceased to appear as party plaintiff, when there is no
intestate case and filed by one who was never appointed by the court as administratrix of the
estates; and
IV. Whether or not respondent Judge acted without jurisdiction or with grave abuse of
discretion in not dismissing the case on the ground of prescription.
On August 8, 1996, the Court of Appeals rendered the assailed decision,[12] dismissing the
petition for certiorari, upon a finding that no grave abuse of discretion amounting to lack or
excess of jurisdiction was committed by the trial court in issuing the questioned orders
denying petitioners motions to dismiss.

Not satisfied, petitioner filed the instant petition for review, raising the same issues resolved by
the Court of Appeals, namely:

I. Failure to pay the proper docket fee;

II. Parcel of land subject of the case pending before the trial court is outside the said courts
territorial jurisdiction;
III. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and
IV. Prescription of the plaintiff heirs cause of action.
It can be readily seen that respondents primary and ultimate objective in instituting the action
below was to recover the decedents 1/3 share in the partnerships assets. While they ask for an
accounting of the partnerships assets and finances, what they are actually asking is for the
trial court to compel petitioner to pay and turn over their share, or the equivalent value thereof,
from the proceeds of the sale of the partnership assets. They also assert that until and unless
a proper accounting is done, the exact value of the partnerships assets, as well as their
corresponding share therein, cannot be ascertained. Consequently, they feel justified in not
having paid the commensurate docket fee as required by the Rules of Court.

We do not agree. The trial court does not have to employ guesswork in ascertaining the
estimated value of the partnerships assets, for respondents themselves voluntarily pegged the
worth thereof at Thirty Million Pesos (P30,000,000.00). Hence, this case is one which is really
not beyond pecuniary estimation, but rather partakes of the nature of a simple collection case
where the value of the subject assets or amount demanded is pecuniarily determinable.[13]
While it is true that the exact value of the partnerships total assets cannot be shown with
certainty at the time of filing, respondents can and must ascertain, through informed and
practical estimation, the amount they expect to collect from the partnership, particularly from
petitioner, in order to determine the proper amount of docket and other fees.[14] It is thus
imperative for respondents to pay the corresponding docket fees in order that the trial court
may acquire jurisdiction over the action.[15]

Nevertheless, unlike in the case of Manchester Development Corp. v. Court of Appeals,[16]

where there was clearly an effort to defraud the government in avoiding to pay the correct
docket fees, we see no attempt to cheat the courts on the part of respondents. In fact, the
lower courts have noted their expressed desire to remit to the court any payable balance or lien
on whatever award which the Honorable Court may grant them in this case should there be any
deficiency in the payment of the docket fees to be computed by the Clerk of Court.[17] There is

evident willingness to pay, and the fact that the docket fee paid so far is inadequate is not an
indication that they are trying to avoid paying the required amount, but may simply be due to
an inability to pay at the time of filing. This consideration may have moved the trial court and
the Court of Appeals to declare that the unpaid docket fees shall be considered a lien on the
judgment award.

Petitioner, however, argues that the trial court and the Court of Appeals erred in condoning the
non-payment of the proper legal fees and in allowing the same to become a lien on the
monetary or property judgment that may be rendered in favor of respondents. There is merit in
petitioners assertion. The third paragraph of Section 16, Rule 141 of the Rules of Court states
that:

The legal fees shall be a lien on the monetary or property judgment in favor of the
pauper-litigant.

Respondents cannot invoke the above provision in their favor because it specifically applies to
pauper-litigants. Nowhere in the records does it appear that respondents are litigating as
paupers, and as such are exempted from the payment of court fees.[18]

The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of Court, which
defines the two kinds of claims as: (1) those which are immediately ascertainable; and (2)
those which cannot be immediately ascertained as to the exact amount. This second class of
claims, where the exact amount still has to be finally determined by the courts based on
evidence presented, falls squarely under the third paragraph of said Section 5(a), which
provides:

In case the value of the property or estate or the sum claimed is less or more in accordance
with the appraisal of the court, the difference of fee shall be refunded or paid as the case may
be. (Underscoring ours)

In Pilipinas Shell Petroleum Corporation v. Court of Appeals,[19] this Court pronounced that the
above-quoted provision clearly contemplates an initial payment of the filing fees

corresponding to the estimated amount of the claim subject to adjustment as to what later
may be proved.[20] Moreover, we reiterated therein the principle that the payment of filing fees
cannot be made contingent or dependent on the result of the case. Thus, an initial payment of
the docket fees based on an estimated amount must be paid simultaneous with the filing of
the complaint. Otherwise, the court would stand to lose the filing fees should the judgment
later turn out to be adverse to any claim of the respondent heirs.

The matter of payment of docket fees is not a mere triviality. These fees are necessary to
defray court expenses in the handling of cases. Consequently, in order to avoid tremendous
losses to the judiciary, and to the government as well, the payment of docket fees cannot be
made dependent on the outcome of the case, except when the claimant is a pauper-litigant.

Applied to the instant case, respondents have a specific claim 1/3 of the value of all the
partnership assets but they did not allege a specific amount. They did, however, estimate the
partnerships total assets to be worth Thirty Million Pesos (P30,000,000.00), in a letter[21]
addressed to petitioner. Respondents cannot now say that they are unable to make an
estimate, for the said letter and the admissions therein form part of the records of this case.
They cannot avoid paying the initial docket fees by conveniently omitting the said amount in
their amended complaint. This estimate can be made the basis for the initial docket fees that
respondents should pay. Even if it were later established that the amount proved was less or
more than the amount alleged or estimated, Rule 141, Section 5(a) of the Rules of Court
specifically provides that the court may refund the excess or exact additional fees should the
initial payment be insufficient. It is clear that it is only the difference between the amount
finally awarded and the fees paid upon filing of this complaint that is subject to adjustment
and which may be subjected to a lien.

In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion,[22] this Court
held that when the specific claim has been left for the determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment and it shall be the
responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and
assess and collect the additional fee. Clearly, the rules and jurisprudence contemplate the
initial payment of filing and docket fees based on the estimated claims of the plaintiff, and it is
only when there is a deficiency that a lien may be constituted on the judgment award until
such additional fee is collected.

Based on the foregoing, the trial court erred in not dismissing the complaint outright despite
their failure to pay the proper docket fees. Nevertheless, as in other procedural rules, it may be
liberally construed in certain cases if only to secure a just and speedy disposition of an action.
While the rule is that the payment of the docket fee in the proper amount should be adhered to,
there are certain exceptions which must be strictly construed.[23]

In recent rulings, this Court has relaxed the strict adherence to the Manchester doctrine,
allowing the plaintiff to pay the proper docket fees within a reasonable time before the
expiration of the applicable prescriptive or reglementary period.[24]

In the recent case of National Steel Corp. v. Court of Appeals,[25] this Court held that:

The court acquires jurisdiction over the action if the filing of the initiatory pleading is
accompanied by the payment of the requisite fees, or, if the fees are not paid at the time of the
filing of the pleading, as of the time of full payment of the fees within such reasonable time as
the court may grant, unless, of course, prescription has set in the meantime.

It does not follow, however, that the trial court should have dismissed the complaint for failure
of private respondent to pay the correct amount of docket fees. Although the payment of the
proper docket fees is a jurisdictional requirement, the trial court may allow the plaintiff in an
action to pay the same within a reasonable time before the expiration of the applicable
prescriptive or reglementary period. If the plaintiff fails to comply within this requirement, the
defendant should timely raise the issue of jurisdiction or else he would be considered in
estoppel. In the latter case, the balance between the appropriate docket fees and the amount
actually paid by the plaintiff will be considered a lien or any award he may obtain in his favor.
(Underscoring ours)

Accordingly, the trial court in the case at bar should determine the proper docket fee based on
the estimated amount that respondents seek to collect from petitioner, and direct them to pay
the same within a reasonable time, provided the applicable prescriptive or reglementary period
has not yet expired. Failure to comply therewith, and upon motion by petitioner, the immediate
dismissal of the complaint shall issue on jurisdictional grounds.

On the matter of improper venue, we find no error on the part of the trial court and the Court of
Appeals in holding that the case below is a personal action which, under the Rules, may be
commenced and tried where the defendant resides or may be found, or where the plaintiffs
reside, at the election of the latter.[26]

Petitioner, however, insists that venue was improperly laid since the action is a real action
involving a parcel of land that is located outside the territorial jurisdiction of the court a quo.
This contention is not well-taken. 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.[27]
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.

The time-tested case of Claridades v. Mercader, et al.,[28] settled this issue thus:

The fact that plaintiff prays for the sale of the assets of the partnership, including the fishpond
in question, did not change the nature or character of the action, such sale being merely a
necessary incident of the liquidation of the partnership, which should precede and/or is part of
its process of dissolution.

The action filed by respondents not only seeks redress against petitioner. It also seeks the
enforcement of, and petitioners compliance with, the contract that the partners executed to
formalize the partnerships dissolution, as well as to implement the liquidation and partition of
the partnerships 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.[29] 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.[30]
Besides, venue has nothing to do with jurisdiction for venue touches more upon the substance

or merits of the case.[31] As it is, venue in this case was properly laid and the trial court
correctly ruled so.

On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao has no legal
capacity to sue since she was never appointed as administratrix or executrix of his estate.
Petitioners objection in this regard is misplaced. 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 Tabanaos 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.[32]

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.[33] Moreover, respondents became
owners of their respective hereditary shares from the moment Vicente Tabanao died.[34]

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 petitioners obligations as outlined in their dissolution
agreement were transmitted to respondents. They, therefore, had the capacity to sue and seek
the courts intervention to compel petitioner to fulfill his obligations.

Finally, petitioner contends that the trial court should have dismissed the complaint on the
ground of prescription, arguing that respondents action prescribed four (4) years after it
accrued in 1986. The trial court and the Court of Appeals gave scant consideration to
petitioners hollow arguments, and rightly so.

The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3)
termination.[36] 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.[37] For as long as
the partnership exists, any of the partners may demand an accounting of the partnerships
business. Prescription of the said right starts to run only upon the dissolution of the
partnership when the final accounting is done.[38]

Contrary to petitioners protestations that respondents right to inquire into the business affairs
of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not
even begun to run in the absence of a final accounting. 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.

Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the
above-cited provision states that the right to demand an accounting accrues at the date of
dissolution in the absence of any agreement to the contrary. 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 respondents are seeking in their action before the trial court,
since petitioner has failed or refused to render an accounting of the partnerships business and
assets. Hence, the said action is not barred by prescription.

In fine, the trial court neither erred nor abused its discretion when it denied petitioners motions
to dismiss. Likewise, the Court of Appeals did not commit reversible error in upholding the trial
courts orders. Precious time has been lost just to settle this preliminary issue, with petitioner
resurrecting the very same arguments from the trial court all the way up to the Supreme Court.
The litigation of the merits and substantial issues of this controversy is now long overdue and
must proceed without further delay.

WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of merit, and
the case is REMANDED to the Regional Trial Court of Cadiz City, Branch 60, which is ORDERED
to determine the proper docket fee based on the estimated amount that plaintiffs therein seek

to collect, and direct said plaintiffs to pay the same within a reasonable time, provided the
applicable prescriptive or reglementary period has not yet expired. Thereafter, the trial court is
ORDERED to conduct the appropriate proceedings in Civil Case No. 416-C.

Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Kapunan, and Pardo, JJ., concur.