Leung v. Leung
REITERATIONFacts
The Antecedents: Respondent Leung Yiu filed a complaint against petitioner Dan Fue Leung to recover 22% of the annual profits from Sun Wah Panciteria, a restaurant established in October 1955. Leung Yiu claimed he contributed P4,000.00 to the establishment of the business, evidenced by a receipt signed by petitioner. Petitioner denied receiving the contribution and claimed sole proprietorship, presenting licenses and permits in his name. The trial court, crediting Leung Yiu's evidence, declared him a partner and ordered petitioner to pay his share of the profits. Procedural History: The trial court initially ordered petitioner to pay 22% of the annual profits. Upon motion for reconsideration, it amended the decision to P8,000.00 per day from judicial demand. The Intermediate Appellate Court modified this, awarding temperate damages based on daily net profits for different periods, but later affirmed the lower court's amended decision, specifying judicial demand as July 13, 1978. The Supreme Court reviewed the case. The Petition: Petitioner sought reversal of the appellate court's decision, arguing that the lower courts erred in declaring respondent a partner when the complaint only alleged 'financial assistance' and that the PC Crime Laboratory report on the signatures was inadmissible. He also raised the issue of prescription.
Issue(s)
Whether the complaint sufficiently alleged a partnership despite using the term 'financial assistance'. Whether the PC Crime Laboratory report on the signatures was admissible. Whether the action had prescribed.
Ruling
The petition is dismissed for lack of merit. The decision of the respondent court is affirmed with the modification that the partnership is ordered dissolved.
Ratio Decidendi
On the nature of the complaint and partnership: The Supreme Court held that the lower courts did not err in construing the complaint as asserting rights as a partner, notwithstanding the use of the term 'financial assistance.' The complaint explicitly stated that as a return for such assistance, the private respondent would be entitled to 22% of the annual profit derived from the operation of the panciteria. This, coupled with the contribution of P4,000.00 evidenced by a receipt, aligns with the definition of a partnership under Article 1767 of the Civil Code, which requires contribution to a common fund with the intention of dividing profits. The Court emphasized that the nature of an action is determined by the facts alleged in the complaint, and the allegation of receiving a share of profits in return for a contribution clearly indicates a partnership. On the admissibility of the PC Crime Laboratory Report: The Court found no reason to reject or ignore the PC Crime Laboratory Report (Exhibit 'J'). The records showed that the petitioner did not interpose any objection when the pay envelopes (Exhibits 'H', 'H-1' to 'H-24'), which served as handwriting standards, were presented. Furthermore, the petitioner did not file an opposition to the motion for examination of the documents by the PC Crime Laboratory despite due notice. Under these circumstances, the Court concluded that the petitioner waived any objection to the admissibility of the report and the standards used, and the records sufficiently established a partnership based on the findings. On the issue of prescription: The Supreme Court ruled that the argument of prescription was not well-taken. The Court reiterated that the private respondent was a partner, and the right to demand an accounting of a partner's interest accrues at the date of dissolution, in the absence of any agreement to the contrary. Articles 1806, 1807, and 1809 of the Civil Code indicate that the right to demand an accounting exists as long as the partnership exists, and prescription begins to run only upon dissolution. Therefore, the ten-year prescriptive period for written contracts under Article 1144 of the Civil Code was not applicable, as the cause of action was premised on the failure to render an accounting of partnership interests, not on a breach of a written contract for a fixed sum.
Main Doctrine
The term 'financial assistance' in a complaint, when coupled with allegations of entitlement to a share of the profits derived from the operation of a business, establishes a partnership, not merely a loan or gratuity. The right to demand an accounting of partnership interest accrues upon dissolution, and prescription does not begin to run until then, provided the partnership continues to exist.