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Dan Fue Leung v. IAC and Leung Yiu (1989) Gutierrez, Jr., J. Leung Yui is claiming his share in the business of Dan Fue, saying he is a partner of the business. Dan Fue says he is not, a nd even if he is, he is prescribed from claiming his share. Sun Wah Panciteria, a restaurant, was established in Manila. It was registered as a single proprietorship and its licenses and permits were issued to Dan Fue Leung as the sole proprietor. Respondent Leung Yiu claims that Sun Wah Panciteria was actually a partnership and that he was one of the partners having contributed P4,000 to its initial establishment. o Evidenced by receipt wherein the Dan Fue acknowledged acceptance of the P4,000. o Witnesses So Sia and Antonio Ah Heng corroborated the testimony of Leung Yiu to the effect that they were both present when the receipt was signed by Dan Fue. o Leung Yiu received from Dan Fue P12,000 covered by Fues Equitable Banking Check from the profits of the operation of the restaurant. Dan Fue denies receipt of P4,000 from Laung Yiu. o Says he did not receive any contribution at the time he started the Panciteria. o He used his savings from his salaries as capital in establishing the Panciteria. o 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. TC ruled in favor of Respondent Leung Yiu. IAC affirmed. o Both TC and IAC found that the Leung Yiu is a partner of the petitioner in the setting up and operations of the panciteria and the Leung Yiu invested in the business as a partner. Petitioner Dan Fue: o The complaint avers that Leung Yiu extended 'financial assistance' to him at the time of the establishment of the Panciteria. And in return, Leung Yiu will receive a share in the profits of the restaurant. o The same complaint did not claim that Leung Yiu is a partner of the business. It was, therefore, an error for the TC and IAC to interpret 'financial assistance' to mean the contribution of capital by a partner to a partnership

Issue/Held: W/n there was a partnership between them --- YES Ratio:

Leung Yiu alleged that when the Panciteria was established, he gave P4,000 with the understanding that he would be entitled to 22% of the annual profit . This makes them partners in the establishment of Sun Wah Panciteria because NCC 1767 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".

Given its ordinary meaning, financial assistance is the giving out of money to another without the expectation of any returns. It connotes an ex gratia dole out in favor of someone driven into a state of destitution. But this circumstance under which the P4,000 was given to the Dan Fue does not apply (bec Leung Yiu is entitled to 22%) Dan Fue raises prescription. He argues: IAC erred in not resolving the issue of prescription in his favor. SC disagrees. The alleged receipt is dated October 1, 1955 and the complaint was filed only on July 13, 1978 or after 22 years. From October 1, 1955 to July 13, 1978, no written demands were ever made by Leung Yiu. His argument is based on NCC 1144 (which says that the ffg actions must be brought within 10 yrs: upon written contract, obligation created by law, upon judgment) in relation to NCC 1155 (prescription is interrupted when they are filed before the court, written extra judicial demand by creditor, & written acknowledgment of debt by debtor) They are partners in Sun Wah Panciteria. The requisites of a partnership 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. If excellent relations exist among the partners 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 10 years from the start of operations, such rights are irretrievably lost.

NCC 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 resolution of the IAC ordering the payment of Dan Fues obligation shows that it continues until fully paid. The question now arises as to whether or not the payment of a share of profits shall continue into the future with no fixed ending date. Considering the facts of this case, the Court may decree a dissolution of the partnership under Article 1831 of the Civil Code which, in part, provides: Art. 1831. On application by or for a partner the court shall decree a dissolution whenever:

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(3) A partner has been guilty of such conduct as tends to affect prejudicially the carrying on of the business; (4) 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; (6) Other circumstances render a dissolution equitable. SC orders a liquidation and winding up of partnership affairs, return of capital, and other incidents of dissolution because the continuation of the partnership has become inequitable. Petition dismissed.