FELICIANO, Ludy Jane P.

G.R. No. 70926 January 31, 1989

DAN FUE LEUNG, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents

FACTS:
Respondent Leung Yiu filed a complaint with the Court of First Instance of Manila to recover the sum
equivalent to twenty-two percent (22%) of the annual profits derived from the operation of Sun Wah Panciteria
since October, 1955 from petitioner Dan Fue Leung.
The Sun Wah Panciteria, a restaurant, located at Florentino Torres Street, Sta. Cruz, Manila, was established in
October, 1955. Before the business started to become operational, the respondent gave P4,000.00 as his
contribution to the partnership. This is evidenced by a receipt wherein the petitioner acknowledged his
acceptance of the P4,000.00 by affixing his signature thereto. Furthermore, the respondent received from the
petitioner the amount of P12,000.00 covered by a check from the profits of the operation of the restaurant for
the year 1974.

However, the petitioner denied having received from the private respondent the amount of P4,000.00.
According to him he used his savings from his previous employments, amounting to a little more than
P2,000.00 as capital in establishing Sun Wah Panciteria. And that he was the sole owner of the restaurant, he
presented various government licenses and permits showing the Sun Wah Panciteria was and still is a single
proprietorship solely owned and operated by himself alone.

Both the trial court and the appellate court found that the respondent is a partner of the petitioner in the setting
up and operations of the panciteria. That there is no question from the factual findings that the respondent
invested in the business as a partner. Hence, the two courts declared that the private petitioner is entitled to a
share of the annual profits of the restaurant.
The petitioner, however, claims that the decision is erroneous, and that the respondent is not a partner in the
business. That he only extended 'financial assistance' to him at the time of the establishment of the Sun Wah
Panciteria, in return of which the respondent will receive a share in the profits of the restaurant.
ISSUE:
1. Whether or not the respondent is a partner of the petitioner in the establishment of Sun Wah Panciteria.
2. Whether the right of action of the respondent had already prescribed.
RULING:
1.The respondent gave P4,000.00 to the petitioner with the understanding that he would be entitled to twenty-
two percent (22%) of the annual profit derived from the operation of the said panciteria. These allegations,
which were proved, make the private respondent and the petitioner partners in the establishment of Sun Wah
Panciteria because Article 1767 of the Civil Code provides that "By the contract of partnership two or more
persons bind themselves to contribute money, property or industry to a common fund, with the intention of
dividing the profits among themselves".
The claims of the petitioner regarding the “financial assistance”, is found erroneous, "... given its ordinary
meaning, “financial assistance” is the giving out of money to another without the expectation of any returns
therefrom'.
FELICIANO, Ludy Jane P.

2. The petitioner also raises the issue of prescription. He argues: The Hon. Respondent Intermediate Appellate
Court gravely erred in not resolving the issue of prescription in favor of petitioner. The alleged receipt is dated
October 1, 1955 and the complaint was filed only on July 13, 1978 or after the lapse of twenty-two (22) years,
nine (9) months and twelve (12) days. From October 1, 1955 to July 13, 1978, no written demands were ever
made by private respondent.

The argument however is not well-taken.

The private respondent is a partner of the petitioner in Sun Wah Panciteria. The requisites of a partnership
which are — 1) two or more persons bind themselves to contribute money, property, or industry to a common
fund; and 2) intention on the part of the partners to divide the profits among themselves have been established.
As stated by the respondent, a partner shares not only in profits but also in the losses of the firm. If excellent
relations exist among the partners at the start of business and all the partners are more interested in seeing the
firm grow rather than get immediate returns, a deferment of sharing in the profits is perfectly plausible.

It would be incorrect to state that if a partner does not assert his rights anytime within ten years from the start of
operations, such rights are irretrievably lost.

Regarding the prescriptive period within which the private respondent may demand an accounting, Articles
1806, 1807, and 1809 show that the right to demand an accounting exists as long as the partnership exists.
Prescription begins to run only upon the dissolution of the partnership when the final accounting is done.

The decision of the respondent court is AFFIRMED, and the partnership of the parties is ordered dissolved.
FELICIANO, Ludy Jane P.

G.R. No. L-6304 December 29, 1953

SERGIO V. SISON, plaintiff-appellant,

vs.
HELEN J. MCQUAID, defendant-appellee.

FACTS:

Plaintiff brought an action in the Court of First Instance of Manila against defendant, alleging that during the
year 1938 the latter borrowed from him P2,210, to enable her to pay her obligation to the Bureau of Forestry
and to add to her capital in her lumber business, receipt of the amounts advanced being acknowledged in a
document

Defendant was not able to pay the loan in 1938, as she had promised, she proposed to take in plaintiff as a
partner in her lumber business, plaintiff to contribute to the partnership the said sum of P2,210 due to him in
addition to his personal services; that plaintiff agreed to defendant's proposal and, as a result, there was formed
between them, under the provisions of the Civil Code, a partnership in which they were to share alike in the
income or profits of the business, each to get one-half thereof.

Plaintiff, together with defendant, rendered services to the partnership without compensation from June 15,
1938 to December, 1941; that before the last World War, the partnership sold 230,000 board feet of lumber for
P13,800, to the United States Army. The defendant, as manager of the partnership, filed a claim for payment of
the said amount from the army, that the claim was "finally" approved and the full amount paid ,but defendant
has persistently refused to deliver one-half of it, or P6,900, to plaintiff notwithstanding repeated demands,
investing the whole sum of P13,800 for her own benefit.

Plaintiff, therefore, prays for judgment declaring the existence of the alleged partnership and requiring the
defendant to pay him the said sum of P6,900, in addition to damages and costs.

Defendant filed a motion to dismiss on the grounds that plaintiff's action had already prescribed.

ISSUE:

Whether or not plaintiff is entitled to the sum he claims.

RULING:

Plaintiff seeks to recover from defendant one-half of the purchase price of lumber sold by the partnership to the
United States Army. But his complaint does not show why he should be entitled to the sum he claims. It does
not allege that there has been a liquidation of the partnership business and the said sum has been found to be
due him as his share of the profits.

The proceeds from the sale of a certain amount of lumber cannot be considered profits until costs and expenses
have been deducted. Moreover, the profits of the business cannot be determined by taking into account the
result of one particular transaction instead of all the transactions had. Hence, the need for a general liquidation
before a member of a partnership may claim a specific sum as his share of the profits.

The order of dismissal is affirmed, but on the ground that the complaint states no cause of action, and without
prejudice to the filing of an action for accounting or liquidation should that be what plaintiff really wants.