G.R. No. 18707 - Po Yeng Cheo vs. Lim Ka Yam

Plaintiff and Appellee: Po Yeng Cheo, sole heir of the deceased Po Gui Yao and owner/inheritor of an interest in a mercantile business.
Defendant and Appellant: Lim Ka Yam, original managing partner of the business, whose death led to the substitution by his administrator, Lim Yock Tock.

The business operated under the style "Kwong Cheong Tay" in Manila and was originally a mercantile partnership.
Capitalization and Interests:

Total capital reportedly amounted to P160,000.
After the death of Po Gui Yao, the partnership interests were divided among seven persons with the following contributions:

ii. Chua Chi Yek – P50,000 iii. Lim Ka Yam – P10,000 iv. Lee Kom Chuen – P10,000

vi. Chan Liong Chao – P10,000 vii. Lee Ho Yuen – P10,000

The business was long established, having been in existence even before 1903.
In 1910, the business ceased operations, principally because the plaintiff at that time stopped transmitting merchandise from Hong Kong, where he resided.
Lim Ka Yam, acting as manager, never formally executed a liquidation of the business, despite repeated demands by Po Yeng Cheo.
An attempted submission by Lim Yock Tock, based on a vague narrative and statement of assets and liabilities drafted by Lim Ka Yam, was found to be worthless by the trial court.

The plaintiff sought an accounting from Lim Ka Yam and recovery of his proportional share in the business assets.
The trial court, presided by Hon. C. A. Imperial, ordered Lim Yock Tock as administrator to present a liquidation within a specified time.
Given the inability to obtain a proper accounting (because the business had long ceased operations and required documents were unavailable), the trial court rendered final judgment in favor of Po Yeng Cheo on December 27, 1921.
The judgment ordered recovery of:

Sixty thousand pesos (P60,000), representing the plaintiff’s share of the capital.
An additional estimated amount of P11,000 corresponding to the plaintiff’s interest in shares of the Yut Siong Chyip Konski and the Manila Electric Railroad and Light Company.

Lim Yock Tock, as administrator of Lim Ka Yam, was held liable based on these findings.

The factual basis for the accounting was largely based on the earlier determination which noted that nothing substantial had been secured from the supposed liquidation and accounting process.
The case raised questions regarding the proper person against whom an accounting should be sought, particularly after the death of a managing partner.
The proceedings were further complicated by the fact that the only remaining assets were undivided shares, not converted into cash.

Whether the managing partner (Lim Ka Yam) could be held personally liable for the capital contributions made by the partners in a mercantile enterprise.
Whether it is appropriate for one partner to recover his individual interest from another without a proper liquidation of the business.

Whether, upon the death of the manager, the action for accounting should have been prosecuted against his legal representative (administrator) rather than targeting his personal conduct.
Whether the rules governing the liquidation of partnerships and civil associations require the surviving partners to settle the affairs rather than imposing accountability on the deceased partner’s administrator.

Whether the trial court erred in abandoning the effort to obtain a substantial accounting when it knew that further investigation would not yield the complete liquidation of the business operations.
The appropriateness of converting undivided assets (shares) into a monetary recovery without first effectuating a formal liquidation process.