2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.

DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
About the time the Sun Wah Panciteria started to become
operational, the private respondent gave P4,000.00 as his
1.) DAN FUE LEUNG,petitioner,vs. HON. INTERMEDIATE
contribution to the partnership. This is evidenced by a receipt
APPELLATE COURT and LEUNG YIU,respondents.
wherein the petitioner acknowledged his acceptance of the
G.R. No. 70926 January 31, 1989 P4,000.00 by affixing his signature thereto. Furthermore, the
GUTIERREZ,JR., J.: private respondent received from the petitioner the amount of
P12,000.00 covered by the latter's Equitable Banking Corporation
FACTS:
Check from the profits of the operation of the restaurant for the
The petitioner asks for the reversal of the decision of the then year 1974
Intermediate Appellate Court in AC-G.R. No. CV-00881 which
The petitioner denied having received from the private respondent
affirmed the decision of the then Court of First Instance of Manila,
the amount of P4,000.00. He contested and impugned the
Branch II in Civil Case No. 116725 declaring private respondent
genuineness of the receipt. His evidence is summarized as
Leung Yiu a partner of petitioner Dan Fue Leung in the business
follows:
of Sun Wah Panciteria and ordering the petitioner to pay to the
private respondent his share in the annual profits of the said The petitioner did not receive any contribution at the time he
restaurant. started the Sun Wah Panciteria. He used his savings from his
salaries as an employee at Camp Stotsenberg in Clark Field and
This case originated from a complaint filed by respondent Leung
later as waiter at the Toho Restaurant amounting to a little more
Yiu with the then Court of First Instance of Manila, Branch II to
than P2,000.00 as capital in establishing Sun Wah Panciteria.
recover the sum equivalent to twenty-two percent (22%) of the
Petitioner presented various government licenses and permits
annual profits derived from the operation of Sun Wah Panciteria
showing the Sun Wah Panciteria was and still is a single
since October, 1955 from petitioner Dan Fue Leung.
proprietorship solely owned and operated by himself alone. Fue
The Sun Wah Panciteria, a restaurant, located at Florentino Leung also flatly denied having issued to the private respondent
Torres Street, Sta. Cruz, Manila, was established sometime in the receipt (Exhibit G) and the Equitable Banking Corporation's
October, 1955. It was registered as a single proprietorship and its Check No. 13389470 B in the amount of P12,000.00 (Exhibit B).
licenses and permits were issued to and in favor of petitioner Dan
Fue Leung as the sole proprietor. Respondent Leung Yiu adduced
evidence during the trial of the case to show that Sun Wah ISSUE: WON Private respondent is a partner of the petitioner
Panciteria was actually a partnership and that he was one of the in Sun Wah Panciteria?
partners having contributed P4,000.00 to its initial establishment. HELD:
The private respondents evidence is summarized as follows:
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
The private respondent is a partner of the petitioner in Sun Wah as the partnership exists. Prescription begins to run only upon the
Panciteria. The requisites of a partnership which are 1) two or dissolution of the partnership when the final accounting is done.
more persons bind themselves to contribute money, property, or Considering the facts of this case, the Court may decree a
industry to a common fund; and 2) intention on the part of the dissolution of the partnership under Article 1831 of the Civil Code
partners to divide the profits among themselves (Article 1767, which, in part, provides:
Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil. 110)-have been
Art. 1831. On application by or for a partner the
established. As stated by the respondent, a partner shares not
only in profits but also in the losses of the firm. If excellent court shall decree a dissolution whenever:
relations exist among the partners at the start of business and all xxx xxx xxx
the partners are more interested in seeing the firm grow rather (3) A partner has been guilty of such conduct as
than get immediate returns, a deferment of sharing in the profits is tends to affect prejudicially the carrying on of the
perfectly plausible. It would be incorrect to state that if a partner business;
does not assert his rights anytime within ten years from the start
(4) A partner willfully or persistently commits a
of operations, such rights are irretrievably lost. The private
breach of the partnership agreement, or otherwise
respondent's cause of action is premised upon the failure of the
so conducts himself in matters relating to the
petitioner to give him the agreed profits in the operation of Sun
partnership business that it is not reasonably
Wah Panciteria. In effect the private respondent was asking for an
practicable to carry on the business in partnership
accounting of his interests in the partnership.
with him;
It is Article 1842 of the Civil Code in conjunction with Articles 1144
xxx xxx xxx
and 1155 which is applicable. Article 1842 states:
(6) Other circumstances render a dissolution
The right to an account of his interest shall accrue
equitable.
to any partner, or his legal representative as
against the winding up partners or the surviving There shall be a liquidation and winding up of partnership affairs,
partners or the person or partnership continuing return of capital, and other incidents of dissolution because the
the business, at the date of dissolution, in the continuation of the partnership has become inequitable.
absence or any agreement to the contrary.
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
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
2. Sison v. Helen McQuaid
December 29, 1953
Principle: Liquidation shall happen before a partner may claim his
share of profit from the partnership.
Facts:
Plaintiff brought an action in the CFI against defendant.
Defendant borrowed from him money (P 2,210) to enable her to
pay her obligations and to add to her capital in her lumber
business. She could not pay so she proposed to take plaintiff as a
partner in her business, plaintiff to contribute the P 2,210 due him
from defendant.Before the last World War, the partnership sold
230,000board ft. of lumber to the US Army for P 13,800.00.
Defendant refused to deliver of it (P 6,900.00) to plaintiff
despite his repeated demands. Plaintiff filed an action to compel
defendant to pay him his half of the profit from the partnership.The
case was dismissed upon the ground of prescription.
Issue: Whether or not plaintiff is entitled to the sum he claims
Held:
NO. Order of dismissal was affirmed, but on the ground
that the complaint states no cause of action.
Ratio: It is not clear from the complaint just when the cause of
action accrued. Thus the dismissal of the case is erroneous.
However order should be retained on the ground that the
complaint has no cause of action. Plaintiff seeks to recover
fromdefendant one-half of the purchase price of lumber sold by
the partnership to the United States Army. But his complaint
doesnot show why he should be entitled to the sum he claims. It
does not allege that there has been a liquidation of the
partnershipbusiness and the said sum has been found to be due
him as his share of the profits. The proceeds from the sale of a
certainamount of lumber cannot be considered profits until costs
and expenses have been deducted. Moreover, the profits of
thebusiness cannot be determined by taking into account the
result of one particular transaction instead of all the
transactionshad. Hence, the need for a general liquidation before
a member of a partnership may claim a specific sum as his share
of theprofits
3. FERNANDEZ vs. DE LA ROSA
G.R. No. 413
February 2, 1903
FACTS:Fernandez alleges that in January, 1900, he entered into
a verbal agreement with Dela Rosa to form a partnership for the
purchase of cascoes and the carrying on of the business of letting
the same for hire in Manila, and Dela Rosa is to buy the cascoes
and each partner to furnish for that purpose such amount of
money as he could, the profits to be divided proportionately;
Fernandez furnished Dela Rosa sums to purchase and repair
cascoes, the latter taking the titles in his own name; that in April
the parties undertook to draw up articles of partnership for the
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
purpose of embodying the same in an authentic document, but
that the defendant having proposed a draft of such articles which
differed materially from the terms of the earlier verbal agreement,
and being unwillingly to include the 2nd casco in the partnership,
they were unable to come to any understanding and no written
agreement was executed; that the defendant having in the
meantime had the control and management of the two cascoes,
the plaintiff made a demand for an accounting upon him, which
the defendant refused to render, denying the existence of the
partnership altogether.
Dela Rosa admits that the project of forming a partnership in the
casco business in which he was already engaged to some extent
individually was discussed between himself and the plaintiff in
January, 1900, but he denies that any agreement was ever
consummated. He denies that the plaintiff furnished any money in
January, 1900, for the purchase of the first casco, or for repairs on
the same, but claims that he borrowed 300 pesos on his individual
account in January from the bakery firm, consisting of the plaintiff,
Marcos Angulo, and Antonio Angulo. The 825 pesos, which he
admits he received from the Fernandez March 5, he claims was
for the purchase of the first casco, which he alleged was bought
March 12, and he alleges that he never received anything from
the defendant toward the purchase of the 2ndcasco. He claims to
have paid, exclusive of repairs, 1,200 pesos for the first casco and
2,000 pesos for the second one.
ISSUE:
(1) Did a partnership exist between the parties?
(2) If such partnership existed, was it terminated as a result of the
act of the defendant in receiving back the 1,125 pesos?
HELD:
(1) Partnership is a contract by which 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. (Civil Code, art. 1665.)
The essential points upon which the minds of the parties must
meet in a contract of partnership are, therefore, (1) mutual
contribution to a common stock, and (2) a joint interest in the
profits. If the contract contains these two elements the partnership
relation results, and the law itself fixes the incidents of this relation
if the parties fail to do so. (Civil Code, secs. 1689, 1695.)
We have found as a fact that money was furnished by the plaintiff
and received by the defendant with the understanding that it was
to be used for the purchase of the cascoes in question. This
establishes the first element of the contract, namely, mutual
contribution to a common stock. The second element, namely, the
intention to share profits, appears to be an unavoidable deduction
from the fact of the purchase of the cascoes in common, in the
absence of any other explanation of the object of the parties in
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
making the purchase in that form, and, it may be added, in view of
the admitted fact that prior to the purchase of the first casco the
formation of a partnership had been a subject of negotiation
between them.
It is thus apparent that a complete and perfect contract of
partnership was entered into by the parties. This contract, it is
true, might have been subject to a suspensive condition,
postponing its operation until an agreement was reached as to the
respective participation of the partners in the profits, the character
of the partnership as collective oren comandita, and other details,
but although it is asserted by counsel for the defendant that such
was the case, there is little or nothing in the record to support this
claim, and that fact that the defendant did actually go on and
purchase the boat, as it would seem, before any attempt had
been made to formulate partnership articles, strongly
discountenances the theory.
The execution of a written agreement was not necessary in order
to give efficacy to the verbal contract of partnership as a civil
contract, the contributions of the partners not having been in the
form of immovables or rights in immovables. (Civil Code, art.
1667.) The special provision cited, requiring the execution of a
public writing in the single case mentioned and dispensing with all
formal requirements in other cases, renders inapplicable to this
species of contract the general provisions of article 1280 of the
Civil Code.
2) The remaining question is as to the legal effect of the
acceptance by the plaintiff of the money returned to him by the
defendant after the definitive failure of the attempt to agree upon
partnership articles. The amount returned fell short, in our view of
the facts, of that which the plaintiff had contributed to the capital of
the partnership, since it did not include the sum which he had
furnished for the repairs of casco No. 1515. Moreover, it is quite
possible, as claimed by the plaintiff, that a profit may have been
realized from the business during the period in which the
defendant have been administering it prior to the return of the
money, and if so he still retained that sum in his hands. For these
reasons the acceptance of the money by the plaintiff did not have
the effect of terminating the legal existence of the partnership by
converting it into asocietas leonina, as claimed by counsel for the
defendant.
The result is that we hold and declare that a partnership was
formed between the parties in January, 1900, the existence of
which the defendant is bound to recognize; that cascoes No. 1515
and 2089 constitute partnership property, and that the plaintiff is
entitled to an accounting of the defendants administration of such
property, and of the profits derived therefrom. This declaration
does not involve an adjudication as to any disputed items of the
partnership account.
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
ISSUE/S: W/N the books are admissible in evidence?
4. G.R. No. L-4281 March 30, 1908 HELD:
JOSE GARRIDO,plaintiff-appellant, Yes, for after all the entries had been jointly made, and
vs. therefore their correctness must be taken to be admitted by
AGUSTIN ASENCIO,defendant-appellee. Garrido (and Asencio) except so far as it is made to appear that
FACTS: they are erroneous as a result of fraud or mistake. Garrido has
failed to prove that he has been misled by fraud or mistake.
Plaintiff and defendant were members of a partnership
It appears from the record that the statement of account,
doing business under the firm name ofAsencio y Cia. The
the vouchers, and the books of the company were placed at the
business of the partnership did not prosper and it was dissolved
disposition of the plaintiff for more than six weeks prior to the trial,
by mutual agreement of the members. The plaintiff brings this
and that during the trial he was given every opportunity to indicate
action to recover from the defendant, who appears to have been
any erroneous or fraudulent items appearing in the account, yet
left in charge of the books and the funds of the firm, the amount of
he was unable, or in any event he declined to specify such items,
the capital which he had invested in the business. The defendant,
contenting himself with a general statement to the effect that there
alleging that there had been considerable losses in the conduct of
must be some mistake, as he did not and could not believe that
the business of the partnership, denied that there was anything
the business had been conducted at a loss.
due the plaintiff as claimed, and filed a cross complaint wherein
he prayed for a judgment against the plaintiff for a certain amount
which he alleged to be due by the plaintiff under the articles of
partnership on account of plaintiff's share of these losses.
5. G.R. No. L-47823 July 26, 1943
As proof, Asencio presented the books which admittedly
JOSE ORNUM and EMERENCIANA ORNUM,petitioners,
were kept and made jointly by him and Garrido. Garrido charged
vs.
however that the books should not be admitted in evidence
MARIANO, LASALA, et al.,respondent.
because they were not kept strictly in accordance with with the
provisions of Title III, Book I, of the Code of Commerce.
The trial court found that the evidence substantially An approval of statement of accounts precludes the right to further
sustains the claim of the defendant as to the alleged losses in the liquidation, unless the latter can show the existence of fraud,
business of the partnership and gave judgment in his favor. deceit, error, and mistake in said appeal
2. PARTNERS RIGHTS AND OBLIGATIONS EE.M.DELACRUZ, DMD
AMONG THEMSELVES
ART. 1808 AND ART 1809
FACTS: Is the respondent entitled to afurther liquidation?

In 1908 Pedro Lasala, father of the respondents, and

Emerenciano Ornum formed a partnership. Lasala as capitalist
HELD:
while Ornum will be the industrial partner. Lasala delivered the
sum of P1,000 to Ornum who will conduct a business at his place No. After accepting his shares without any reservation,
of residence in Romblon. respondent virtually confirmed his approval of the statement of
accounts, and its signing thereby becamea mere formality to be
In1912,whentheassetsofthepartnershipconsistedofo
complied with by Lasala exclusively. His refusal to sign, after
utstanding accounts and old stock of merchandise,Emerenciano
receiving the shares, amounted to a waiver of that formality in
Ornum, following the wishes of his wife, asked for
favor of Ornum who had already performed his obligation. This
the dissolution of the Lasala,Emerenciano. Ornum looked for
approval precludes any right on the part of respondent to a further
some one who could take his place and he suggested the names
liquidation, unless he canshow there was fraud or mistake in said
of the petitioners who accordingly became the new partners.
approval.
After twenty years the business had grown to such an
extent that is total value, including profits, amounted to
P44,618.67. Statements of accounts were periodically prepared
by the petitioners and sent to the respondents who invariably did
not make any objection thereto.

Ornum submitted a statement of accounts to

respondents, his copartner. Instead of objecting to said statement,
respondent Lasala promised to sign the same as soon as he
received his shares as shown in said statement. Aftersaid shares
had been paid by Ornum and accepted by respondents without
reservation, the latter refused to sign the statement .Lasala
demanded a new liquidation, claiming that he was entitled to more
than what the statement of account shows.

Issue: