DAN FUE LEUNG v.
IAC and LEUNG YIU comprehensively adequate and thus put an end to
Gutierrez, Jr., J. (1989)
 Leung YIU filed a complaint with the CFI Manila to
recover the sum of money equivalent to 22% of the
annual profits derived from the operation of Sun Wah
Panciteria since October, 1955 from petitioner DAN Fue
Leung
 Sun Wah Panciteria is a restaurant located at Sta. Cruz,
Manila. It was established sometime in October, 1955
and was registered as a single proprietorship. Its
licenses and permits were issued to and in favor of DAN
as the sole proprietor
 Respondent Leung YIU however contends that Sun Wah
Panciteria was actually a partnership and that he was
one of the partners having contributed P4,000.00 to its
initial establishment
 This is evidenced by a receipt wherein DAN
acknowledged his acceptance of the P4,000 by affixing
his signature thereto. Said receipt was written in
Chinese characters so the trial court commissioned an
interpreter to translate its contents into English. The
translator issued a certification and testified that the
translation to the best of her knowledge and belief was
correct, and such translation corroborates YIU’s claim
 Aside from the translator, other witnesses corroborated
YIU’s testimony saying that they were present when the
receipt was signed by DAN. Furthermore, an
examination was conducted by the Crime Lab of certain
documentary exhibits to determine whether the
signatures therein when compared to the signature of
DAN appearing in the pay envelopes of employees of the
restaurant were the same
 Also, YIU allegedly received from DAN the amount of
P12,000 from the profits of the operation of the
restaurant for the year 1974. This was corroborated by
both issuing and drawee Banks
 On the other hand, DAN interposed a general denial of
YIU’s claims. He denied having received from YIU the
amount of P4,000 and he contested and impugned the
genuineness of the receipt. DAN also denied having
issued a check in favor of YIU representing profits of the
restaurant for the year 1974
 DAN avers that he started the Sun Wah Panciteria using
his own savings. To bolster his contention that he was
the sole owner of the restaurant, DAN 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
 The trial court gave credence to YIU’s complaint and
entered judgment in favor of YIU. The trial court ordered
DAN to deliver and pay to YIU the sum equivalent to
22% of the annual profit derived from the operation of
Sun Wah Panciteria from October, 1955, until fully paid,
and attorney's fees
 YIU later filed a verified MR to request that the decision
rendered by the trial court should include the net profit
of the Sun Wah Panciteria which was not specified in the
decision, and prayer for a new trial to allow YIU to
adduce evidence so that the said decision will be
further litigation
 Trial court granted YIU’s motion over the objections of
DAN. Ultimately, the trial court issued an amended
decision, ordering DAN to pay YIU the sum equivalent to
22% of the net profit of P8,000 per day from the time of
judicial demand, until fully paid, plus attorney's fees and
costs
 DAN appealed the trial court's amended decision to the
then Intermediate Appellate Court. IAC rendered
judgment first modifying the trial court’s decision. Later,
the appellate court, modified its own decision and
affirmed the lower court's decision in toto
 DAN filed his MR but the IAC denied the dame – hence,
this petition
ISSUE: WON YIU and DAN are partners thus meriting the
award to YIU of shares in the restaurant’s profits
HELD: YES!
RATIO:
 DAN first faults both lower courts’ factual finding that
YIU is a partner of DAN in the setting up and operations
of the panciteria on the ground that YIU’s complaint
avers that YIU merely extended “financial assistance” to
DAN at the time of the establishment of the Panciteria.
DAN avers that YIU’s complaint did not claim that he is a
partner of the business entitled to shares in the profits
 this is UNTENBALE!
 Looking at YIU’s material allegations in his complaint,
what he established was that he gave P4,000 to DAN
with the understanding that he would be entitled to 22%
of the annual profit derived from the operation of the
said panciteria. These allegations, which were proved,
irresistibly make YIU and DAN partners in the
establishment of Sun Wah Panciteria, pursuant to Art
1767, CC which 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"
 DAN next faults the respondent court for giving
probative value to the Crime Lab Report on the ground
that the alleged standards or specimens used at the
conclusion were never testified to by any witness nor has
any witness identified the handwriting in the standards
or specimens belonging to DAN  this argument DOES
NOT HOLD WATER
 The records also show that when the pay envelopes
were presented by YIU for marking as exhibits, DAN did
not interpose any objection. Neither did DAN file an
opposition to the motion of YIU to have these exhibits
examined by the Crime Lab despite due notice to him.
Likewise, no explanation has been offered for his silence
nor was any hint of objection registered for that
purpose. DAN is therefor estopped from questioning the
validity of the Crime Lab report
 DAN next raises the issue of prescription. He argues that
the alleged receipt is dated Oct 1955 and the complaint
was filed only on July 1978 or after the lapse of 22 years.
 As such, pursuant to Art 1144, CC, YIU’s action has
prescribed for having been filed well beyond the 10yr
period  this argument is NOT well-taken
 AS already held above, YIU is a partner of DAN 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. 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.
 IN THE CASE AT BAR, YIU's cause of action is premised
upon the failure of DAN to give him the agreed profits in
the operation of Sun Wah Panciteria. In effect YIU was
asking for an accounting of his interests in the
partnership!
 It is Art 1842 in conjunction with Arts 1144 and 1155
which is applicable. Regarding the prescriptive period
within which a partner may demand an accounting, Arts
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
 Finally, DAN assails the monetary awards for being
excessive and unconscionable and above the claim of YIU
as embodied in his complaint  this contention, too,
MUST FAIL
 The cashier of Sun Wah Panciteria established the true
and correct income of the restaurant. For a regular day,
the restaurant earns P7,000 to more than P10,000 (not
including the restaurant’s income from catering
services). These statements of the cashier were never
rebutted and DAN never presented contrary proof
 There is more than substantial evidence to support the
factual findings of the trial court and the appellate court.
There is no basis in the records to sustain the petitioners
contention that the damages awarded are excessive
 AS A FINAL POINT, it would be absurd to order DAN to
pay his obligation into the future with no fixed ending
date. Thus, the Court decrees the dissolution of the
partnership pursuant to Art 18311

1 Art 1831: On application by or for a partner the court shall decree a

dissolution whenever:
xxx xxx xxx
(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;
xxx xxx xxx
(6) Other circumstances render a dissolution equitable xxx xxx xxx
 BEARNEZA v. DEQUILLA
Romualdez, J. (1922)
 In the year 1903, Balbino DEQUILLA and PERPETUA
Bearneza formed a partnership for the purpose of
exploiting a fish pond situated in Talisay, Barotac Nuevo,
Iloilo
 PERPETUA obligated herself to contribute to the
payment of the expenses of the business, which
obligation she made good, and both agreeing to divide
the profits between themselves, which they had been
doing until the death of PERPETUA in the year 1912
 PERPETUA left a will where she appointed DOMINGO
Bearneza as her heir to succeed to all her rights and
interests in the fish pond in question
 DOMINGO later demanded from DEQUILLA the delivery
of the part of the fish pond belonging to PERPETUA.
DEQUILLA refused, prompting DOMINGO to file the
instant case to recover said part of the fish pond
belonging to his decedent, PERPETUA, and one-half of
the profits received by DEQUILLA from the fish pond
from the year 1913-1919, as damages (P13,100)
 In his answer, DEQUILLA denies generally and
specifically the allegations of the complaint, and alleges,
as special defense, that the formation of the supposed
partnership between PERPETUA and himself for the
exploitation of the aforesaid fish pond was not carried
into effect, on account of PERPETUA’s refusal to defray
the expenses of reconstruction and exploitation of said
fish pond
 As another special defense, DEQUILLA alleges that in the
event that the court should hold PERPETUA to be
entitled to the undivided one-half of the fish pond,
DOMINGO's action has prescribed, the time for bringing
the same having elapsed
 The trial court below rendered judgment declaring
DOMINGO as owner of one-half of the fish pond but DID
NOT award him any of the damages, the same not having
been proven – hence, this appeal by DEQUILLA
 It has not been proven that PERPETUA participated in
the ownership of said land. On the contrary, DEQUILLA
was able to amply show that he has been paying, as
exclusive owner of the fish pond, the land tax thereon
 The conclusion, therefore, from the evidence is that the
land on which the fish pond was constructed did not
constitute a part of the subject-matter of the aforesaid
partnership
 Now, coming to the main issue, being a civil
partnership, the same was dissolved by the death of
PERPETUA
 It cannot be maintained that the partnership continued
to exist after the death of PERPETUA, inasmuch as it
does not appear that any stipulation to that effect has
ever been made by her and DEQUILLA
 The partnership having been dissolved by the death
of PERPETUA, its subsequent legal status was that of
a partnership in liquidation, and the only rights
inherited by her testamentary heir, DOMINGO, were
those resulting from the said liquidation in favor of
the deceased partner, and nothing more
 Before this liquidation is made, which up to the present
has not been effected, it is impossible to determine what
rights or interests, if any, the deceased PERPETUA had,
the partnership bond having been dissolved
 There is no sufficient ground for holding that a
community of property existed between the DOMINGO
and DEQUILLA, it not being known whether DOMINGO’s
predecessor PERPETUA still had any interest in the
partnership property which could have been
transmitted by will to the DOMINGO

ISSUE: WON DOMINGO has a right of action

HELD: NO, DOMINGO has no right of action, at least until

after the winding up and liquidation of the partnership, if
any transmissible interest exists. The decision of the trial
court is REVERSED and SET ASIDE

RATIO:
 The partnership formed by PERPETUA and DEQUILLA
was of a civil nature. It was a particular partnership, as
defined in Art 1678, CC, it having had for its subject-
matter a specified thing, to wit, the exploitation of the
aforementioned fish pond
 So a question arises as to WON PERPETUA has a right
over the land on which the fish pond has been
constructed – the answer is NO. The trial court, hence,
could not award a portion of the same to PERPETUA’s
heir. Only the portion that constitutes part of the
subject-matter of the partnership could be properly
awarded by the trial court, not the land!