Ponente: Gutierrez, Jr., J.
FACTS
Sun Wah Panciteria is a restaurant located in the heart of Chinatown. It stands in a busy corner near Recto and is patronized by people from all walks of life. It is, by all indicators, a successful enterprise
Owned and operated by Dan Fue Leung, the panciteria commenced its operations in 1955. Dan Fue Leung had the business registered as a sole proprietorship, with all licenses and permits issued under his name alone.
In 1977, Leung Yiu filed an action to recover a sum of money against Dan Fue Leung. The former was contending that a partnership exists between him and the latter, having contributed P4,000 as capital at about the time the panciteria started to become operational. Leung Yiu avers that in exchange for his monetary contribution, it was agreed that he will be entitled to 22% of the panciteria's annual profits.
Leung Yiu's assertion was evidenced by the following:
- a receipt signed by Dan Fue Leung, acknowledging his acceptance of the P4,000 contribution;
- PC Crime Laboratory report verifying the authenticity of Dan Fue Leung's signature; ando testimonies of witnesses who were present when the money was handed over to Dan Fue Leung.
TRIAL COURT: Partnership exists. Dan Fue Leung to pay Leung Yiu the sum equivalent of 22% of the net profit of P8,000 per day from the time of judicial demand, until fully paid.
INTERMEDIATE APPELLATE COURT: Affirmed trial court ruling.
Hence, the instant petition.
RULING
Petition denied. IAC ruling affirmed. Partnership ordered dissolved.
Whether a partnershipexists between Dan Fue Leung and Leung Yiu. – YES.
There is no question from the factual findings that Yeung Liu invested in the panciteria as a partner. His monetary contribution of P4,000 was sufficiently proven by the pieces of evidence and testimonies presented during the trial, which evidence were not controverted by Dan Fue Liung.
Dan Fue Leung's contention that the P4,000 monetary contribution was a mere "financial assistance" – i.e., an ex gratia dole out in favor of someone driven into a state of destitution – does not avail in the instant case. This is because in Leung Yiu's actual complaint, it was explicitly stated that as a return for such financial assistance, Leung Yiu would be entitled to 22% of the annual profit derived from the operation of the panciteria.
The well-settled doctrine is that the nature of the action filed in court is determined by the facts alleged in the complaint as constituting the cause of action.
Whether Leung Yiu's cause of action has prescribed, given that 22 years have passed before the instant complaint was filed. – NO.
Art. 1144 of the CC, which states that an action upon a written contract must be brought within 10 years from the time the right of action accrues, does not apply in the instant case, where the existence of a partnership has been sufficiently established. 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. Therefore, it would be incorrect to state that if a partner does not assert his rights anytime within 10 years from the start of operations, such rights are irretrievably lost.
Besides, Leung Yiu's cause of action is premised upon Dan Fue Leung's failure to give him the agreed profits in the operation of the subject panciteria. In effect, Leung Yiu is asking for an accounting of his interests in the partnership.
Given the foregoing, the applicable provision is Article 1842 of the CC, which states: "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 or any agreement to the contrary."
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.
Whether the Court may decree the dissolution of the partnership. – YES.
Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831 of the CC. Said dissolution may be decreed on application by or for a partner, or when a partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business, or when a partner willfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him, or when other circumstances exist as to render a dissolution equitable.
In the present case, the continuation of the partnership has become inequitable. Therefore, the Court decrees the liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution..