[G.R. No. 70926. January 31, 1989.]
DAN FUE LEUNG, petitioner, vs. HON.
INTERMEDIATE APPELLATE COURT and LEUNG YIU, respondents.
John L. Uy for petitioner.
Edgardo F. Sundiam for private respondent.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS;
CAUSE OF ACTION; NATURE OF ACTION IS DETERMINED BY THE FACTS CONSTITUTING THE
CAUSE OF ACTION. — 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." (De Tavera v. Philippine
Tuberculosis Society, Inc., 113 SCRA 243; Alger Electric, Inc. v. Court of
Appeals, 135 SCRA 37).
2. CIVIL LAW; SPECIAL CONTRACTS;
PARTNERSHIP; REQUISITES. — 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 (Article 1767, Civil Code; Yulo v. Yang Chiao Cheng, 106 Phil.
110)
3. ID.; ID.; ID.; OBLIGATIONS OF PARTNERS;
RIGHT TO DEMAND AN ACCOUNTING EXISTS AS LONG AS PARTNERSHIP EXISTS;
PRESCRIPTION BEGINS TO RUN ONLY UPON DISSOLUTION OF PARTNERSHIP WHEN FINAL
ACCOUNTING IS DONE. — 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 as the partnership
exists. Prescription begins to run only upon the dissolution of the partnership
when the final accounting is done.
4. ID.; ID.; ID.; DISSOLUTION AND WINDING
UP; LIQUIDATION AND WINDING UP OF PARTNERSHIP AFFAIRS, RETURN OF CAPITAL AND
OTHER INCIDENTS OF DISSOLUTION PROPER BECAUSE CONTINUATION OF PARTNERSHIP HAS
BECOME INEQUITABLE. — There shall be 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.
D E C I S I O N
GUTIERREZ, JR., J p:
The petitioner asks for the reversal of the
decision of the then Intermediate Appellate Court in AC-G.R. No. CV-00881 which
affirmed the decision of the then Court of First Instance of Manila, Branch II
in Civil Case No. 116725 declaring private respondent Leung Yiu a partner of
petitioner Dan Fue Leung in the business of Sun Wah Panciteria and ordering the
petitioner to pay to the private respondent his share in the annual profits of
the said restaurant.
This case originated from a complaint filed
by respondent Leung Yiu with the then Court of First Instance of Manila, Branch
II to recover the sum equivalent to twenty-two percent (22%) of the annual
profits derived from the operation of Sun Wah Panciteria since October, 1955
from petitioner Dan Fue Leung.
The Sun Wah Panciteria, a restaurant,
located at Florentino Torres Street, Sta. Cruz, Manila, was established
sometime in October, 1955. It was registered as a single proprietorship and its
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 Panciteria was actually a partnership and that he
was one of the partners having contributed P4,000.00 to its initial
establishment.
The private respondent's evidence is
summarized as follows:
About the time the Sun Wah Panciteria
started to become operational, the private respondent gave P4,000.00 as his
contribution to the partnership. This is evidenced by a receipt identified as
Exhibit "A" wherein the petitioner acknowledged his acceptance of the
P4,000.00 by affixing his signature thereto. The receipt was written in Chinese
characters so that the trial court commissioned an interpreter in the person of
Ms. Florence Yap to translate its contents into English. Florence Yap issued a
certification and testified that the translation to the best of her knowledge
and belief was correct. The private respondent identified the signature on the
receipt as that of the petitioner (Exhibit A-3) because it was affixed by the
latter in his (private respondents's) presence. Witnesses So Sia and Antonio Ah
Heng corroborated the private respondent's testimony to the effect that they
were both present when the receipt (Exhibit "A") was signed by the
petitioner. So Sia further testified that he himself received from the
petitioner a similar receipt (Exhibit D) evidencing delivery of his own
investment in another amount of P4,000.00. An examination was conducted by the
PC Crime Laboratory on orders of the trial court granting the private respondent's
motion for examination of certain documentary exhibits. The signatures in
Exhibits "A" and "D" when compared to the signature of the
petitioner appearing in the pay envelopes of employees of the restaurant,
namely Ah Heng and Maria Wong (Exhibits H, H-1 to H-24) showed that the
signatures in the two receipts were indeed the signatures of the petitioner.
Furthermore, the private respondent
received from the petitioner the amount of P12,000.00 covered by the latter's
Equitable Banking Corporation Check No. 13389470-B from the profits of the
operation of the restaurant for the year 1974. Witness Teodulo Diaz, Chief of
the Savings Department of the China Banking Corporation testified that said
check (Exhibit B) was deposited by and duly credited to the private
respondent's savings account with the bank after it was cleared by the drawee
bank, the Equitable Banking Corporation. Another witness Elvira Rana of the
Equitable Banking Corporation testified that the check in question was in fact
and in truth drawn by the petitioner and debited against his own account in
said bank. This fact was clearly shown and indicated in the petitioner's
statement of account after the check (Exhibit B) was duly cleared. Rana further
testified that upon clearance of the check and pursuant to normal banking
procedure, said check was returned to the petitioner as the maker thereof.
The petitioner denied having received from
the private respondent the amount of P4,000.00. He contested and impugned the
genuineness of the receipt (Exhibit D). His evidence is summarized as follows:
The petitioner did not receive any
contribution at the time he started the Sun Wah Panciteria. He used his savings
from his salaries as an employee at Camp Stotsenberg in Clark Field and later as
waiter at the Toho Restaurant amounting to a little more than P2,000.00 as
capital in establishing Sun Wah Panciteria. To bolster his contention that he
was the sole owner of the restaurant, the petitioner 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. Fue Leung
also flatly denied having issued to the private respondent the receipt (Exhibit
G) and the Equitable Banking Corporation's Check No. 13389470 B in the amount
of P12,000.00 (Exhibit B).
As between the conflicting evidence of the
parties, the trial court gave credence to that of the plaintiff's. Hence, the
court ruled in favor of the private respondent. The dispositive portion of the
decision reads:
"WHEREFORE, judgment is hereby
rendered in favor of the plaintiff and against the defendant, ordering the
latter to deliver and pay to the former, 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 in the amount of P5,000.00 and cost
of suit." (p. 125, Rollo)
The private respondent filed a verified
motion for reconsideration in the nature of a motion for new trial and, as
supplement to the said motion, he requested that the decision rendered should
include the net profit of the Sun Wah Panciteria which was not specified in the
decision, and allow private respondent to adduce evidence so that the said
decision will be comprehensively adequate and thus put an end to further
litigation.
The motion was granted over the objections
of the petitioner. After hearing, the trial court rendered an amended decision,
the dispositive portion of which reads:
"FOR ALL THE FOREGOING CONSIDERATIONS,
the motion for reconsideration filed by the plaintiff, which was granted
earlier by the Court, is hereby reiterated and the decision rendered by this
Court on September 30, 1980, is hereby amended. The dispositive portion of said
decision should read now as follows:
"WHEREFORE, judgment is hereby
rendered, ordering the plaintiff (sic) and against the defendant, ordering the
latter to pay the former the sum equivalent to 22% of the net profit of
P8,000.00 per day from the time of judicial demand, until fully paid, plus the
sum of P5,000.00 as and for attorney's fees and costs of suit." (p. 150,
Rollo)
The petitioner appealed the trial court's
amended decision to the then Intermediate Appellate Court. The questioned
decision was further modified by the appellate court. The dispositive portion
of the appellate court's decision reads:
"WHEREFORE, the decision appealed from
is modified, the dispositive portion thereof reading as follows:
"1. Ordering the defendant to pay the
plaintiff by way of temperate damages 22% of the net profit of P2,000.00 a day
from judicial demand to May 15, 1971;
"2. Similarly, the sum equivalent to
22% of the net profit of P8,000.00 a day from May 16, 1971 to August 30, 1975;
"3. And thereafter until fully paid
the sum equivalent to 22% of the net profit of P8,000.00 a day.
"Except as modified, the decision of
the court a quo is affirmed in all other respects. (p. 102, Rollo)
Later, the appellate court, in a
resolution, modified its decision and affirmed the lower court's decision. The
dispositive portion of the resolution reads:
"WHEREFORE, the dispositive portion of
the amended judgment of the court a quo reading as follows:
WHEREFORE, judgment is rendered in favor of
the plaintiff and against the defendant, ordering the latter to pay to the
former the sum equivalent to 22% of the net profit of P8,000.00 per day from
the time of judicial demand, until fully 'paid, plus the sum of P5,000.00 as
and for attorney's fees and costs of suit'.
is hereby retained in full and affirmed in
toto it being understood that the date of judicial demand is July 13,
1978." (pp. 105-106, Rollo).
In the same resolution, the motion for
reconsideration filed by petitioner was denied.
Both the trial court and the appellate
court found that the private respondent is a partner of the petitioner in the
setting up and operations of the panciteria. While the dispositive portions
merely ordered the payment of the respondent's share, there is no question from
the factual findings that the respondent invested in the business as a partner.
Hence, the two courts declared that the private petitioner is entitled to a
share of the annual profits of the restaurant. The petitioner, however, claims
that this factual finding is erroneous. Thus, the petitioner argues: "The
complaint avers that private respondent extended 'financial assistance' to
herein petitioner at the time of the establishment of the Sun Wah Panciteria,
in return of which private respondent allegedly will receive a share in the
profits of the restaurant. The same complaint did not claim that private
respondent is a partner of the business. It was, therefore, a serious error for
the lower court and the Hon. Intermediate Appellate Court to grant a relief not
called for by the complaint. It was also error for the Hon. Intermediate
Appellate Court to interpret or construe 'financial assistance' to mean the
contribution of capital by a partner to a partnership;" (p. 75, Rollo)
The pertinent portions of the complaint
state:
xxx xxx xxx
"2. That on or about the latter (sic)
of September, 1955, defendant sought the financial assistance of plaintiff in
operating the defendant's eatery known as Sun Wah Panciteria, located in the
given address of defendant; as a return for such financial assistance. plaintiff
would be entitled to twenty-two percentum (22%) of the annual profit derived
from the operation of the said panciteria;
"3. That on October 1, 1955, plaintiff
delivered to the defendant the sum of four thousand pesos (P4,000.00),
Philippine Currency, of which copy for the receipt of such amount, duly
acknowledged by the defendant is attached hereto as Annex "A", and
form an integral part hereof;" (p. 11, Rollo)
In essence, the private respondent alleged
that when Sun Wah Panciteria was established, he gave P4,000.00 to the
petitioner with the understanding that he would be entitled to twenty-two
percent (22%) of the annual profit derived from the operation of the said
panciteria. These allegations, which were proved, make the private respondent
and the petitioner partners in the establishment of Sun Wah Panciteria because
Article 1767 of the Civil Code 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".
Therefore, the lower courts did not err in
construing the complaint as one wherein the private respondent asserted his
rights as partner of the petitioner in the establishment of the Sun Wah
Panciteria, notwithstanding the use of the term financial assistance therein.
We agree with the appellate court's observation to the effect that ". . .
given its ordinary meaning, financial assistance 'is the giving out of money to
another without the expectation of any returns therefrom'. It connotes an ex
gratia dole out in favor of someone driven into a state of destitution. But
this circumstance under which the P4,000.00 was given to the petitioner does
not obtain in this case." (p. 99, Rollo) The complaint explicitly stated
that "as a return for such financial assistance, plaintiff (private
respondent) would be entitled to twenty-two percentum (22%) of the annual
profit derived from the operation of the said panciteria." (p. 107, Rollo)
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." (De Tavera v. Philippine Tuberculosis Society, Inc., 113
SCRA 243; Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37).
The appellate court did not err in
declaring that the main issue in the instant case was whether or not the
private respondent is a partner of the petitioner in the establishment of Sun
Wah Panciteria.
The petitioner also contends that the respondent
court gravely erred in giving probative value to the PC Crime Laboratory Report
(Exhibit "J") on the ground that the alleged standards or specimens
used by the PC Crime Laboratory in arriving at the conclusion were never
testified to by any witness nor has any witness identified the handwriting in
the standards or specimens belonging to the petitioner. The supposed standards
or specimens of handwriting were marked as Exhibits "H",
"H-1" to "H-24" and admitted as evidence for the private
respondent over the vigorous objection of the petitioner's counsel. LLphil
The records show that the PC Crime
Laboratory upon orders of the lower court examined the signatures in the two
receipts issued separately by the petitioner to the private respondent and So Sia
(Exhibits "A" and "D") and compared the signatures on them
with the signatures of the petitioner on the various pay envelopes (Exhibits
"H", "H-1" to "H-24") of Antonio Ah Heng and
Maria Wong, employees of the restaurant. After the usual examination conducted
on the questioned documents, the PC Crime Laboratory submitted its findings
(Exhibit J) attesting that the signatures appearing in both receipts (Exhibits
"A" and "D") were the signatures of the petitioner.
The records also show that when the pay envelopes
(Exhibits "H", "H-1" to "H-24") were presented by
the private respondent for marking as exhibits, the petitioner did not
interpose any objection. Neither did the petitioner file an opposition to the
motion of the private respondent to have these exhibits together with the two
receipts examined by the PC Crime Laboratory despite due notice to him.
Likewise, no explanation has been offered for his silence nor was any hint of
objection registered for that purpose.
Under these circumstances, we find no
reason why Exhibit "J" should be rejected or ignored. The records
sufficiently establish that there was a partnership.
The petitioner raises the issue of
prescription. He argues: The Hon. Respondent Intermediate Appellate Court
gravely erred in not resolving the issue of prescription in favor of
petitioner. The alleged receipt is dated October 1, 1955 and the complaint was
filed only on July 13, 1978 or after the lapse of twenty-two (22) years, nine
(9) months and twelve (12) days. From October 1, 1955 to duly 13, 1978, no
written demands were ever made by private respondent.
The petitioner's argument is based on
Article 1144 of the Civil Code which provides:
Art. 1144. The following actions must be
brought within ten years from the time the right of section accrues:
"(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment."
in relation to Article 1155 thereof which
provides:
"Art. 1155. The prescription of
actions is interrupted when they are filed before the court, when there is a
written extra-judicial demand by the creditor, and when there is any written
acknowledgment of the debt by the debtor."
The argument is not well-taken.
The private respondent is a partner of the
petitioner 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 (Article 1767, Civil Code; Yulo v. Yang
Chiao Cheng, 106 Phil. 110) — have been established. As stated by the
respondent, 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. The private respondent's cause of action is premised upon
the failure of the petitioner to give him the agreed profits in the operation
of Sun Wah Panciteria. In effect the private respondent was asking for an
accounting of his interests in the partnership.
It is Article 1842 of the Civil Code in
conjunction with Articles 1144 and 1155 which is applicable. Article 1842
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."
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 as the
partnership exists. Prescription begins to run only upon the dissolution of the
partnership when the final accounting is done.
Finally, the petitioner assails the
appellate court's monetary awards in favor of the private respondent for being
excessive and unconscionable and above the claim of private respondent as
embodied in his complaint and testimonial evidence presented by said private
respondent to support his claim in the complaint.
Apart from his own testimony and
allegations, the private respondent presented the cashier of Sun Wah
Panciteria, a certain Mrs. Sarah L. Licup, to testify on the income of the
restaurant.
Mrs. Licup stated:
"ATTY. HIPOLITO (direct examination to
Mrs. Licup).
"Q Mrs. Witness, yon stated that among
your duties was that you were in charge of the custody of the cashier's box, of
the money, being the cashier, is that correct?
"A Yes, sir.
"Q So that every time there is a
customer who pays, you were the one who accepted the money and you gave the
change, if any, is that correct?
"A Yes.
"Q Now, after 11:30 (P.M.) which is
the closing time as you said, what do you do with the money?
"A We balance it with the manager, Mr.
Dan Fue Leung.
"ATTY. HIPOLITO:
I see.
"Q So, in other words, after your job,
you huddle or confer together?
"A Yes, count it all. I total it. We
sum it up.
"Q Now, Mrs. Witness, in an average
day, more or less, will you please tell us, how much is the gross income of the
restaurant?
"A For regular days, I received around
P7,000.00 a day during my shift alone and during pay days I receive more than
P10,000.00. That is excluding the catering outside the place.
"Q What about the catering service,
will you please tell the Honorable Court how many times a week were there
catering services?
"A Sometimes three times a month;
sometimes two times a month or more.
xxx xxx xxx
"Q Now more or less, do you know the
cost of the catering service?
"A Yes, because I am the one who
receives the payment also of the catering.
"Q How much is that?
"A That ranges from two thousand to
six thousand pesos, sir.
"Q Per service?
"A Per service, Per catering.
"Q So in other words, Mrs. witness,
for your shift alone in a single day from 3:30 P.M. to 11:30 P.M. in the
evening the restaurant grosses an income of P7,000.00 in a regular day?
"A Yes.
"Q And ten thousand pesos during pay
day?
"A Yes.(TSN, pp. 53 to 59, inclusive,
November 15, 1978).
xxx xxx xxx
"COURT:
Any cross?
"ATTY. UY (counsel for defendant):
No cross-examination, Your Honor. (TSN. p.
65, November 15, 1978)." (Rollo, pp. 127-128)
The statements of the cashier were not
rebutted. Not only did the petitioner's counsel waive the cross-examination on
the matter of income but he failed to comply with his promise to produce
pertinent records. When a subpoena duces tecum was issued to the petitioner for
the production of their records of sale, his counsel voluntarily offered to
bring them to court. He asked for sufficient time prompting the court to cancel
all hearings for January, 1981 and reset them to the later part of the
following month. The petitioner's counsel never produced any books, prompting the
trial court to state:
"Counsel for the defendant admitted
that the sales of Sun Wah were registered or recorded in the daily sales book,
ledgers, journals and for this purpose, employed a bookkeeper. This inspired
the Court to ask counsel for the defendant to bring said records and counsel
for the defendant promised to bring those that were available. Seemingly, that
was the reason why this case dragged for quite sometime. To bemuddle the issue,
defendant instead of presenting the books where the same, etc. were recorded,
presented witnesses who claimed to have supplied chicken, meat, shrimps, egg
and other poultry products which, however, did not show the gross sales nor
does it prove that the same is the best evidence. This Court gave warning to the
defendant's counsel that if he failed to produce the books, the same will be
considered a waiver on the part of the defendant to produce the said books
inimitably showing decisive records on the income of the eatery pursuant to the
Rules of Court (Sec. 5(e) Rule 131). "Evidence willfully suppressed would
be adverse if produced.' " (Rollo, p. 145)
The records show that the trial court went
out of its way to accord due process to the petitioner.
"The defendant was given all the
chance to present all conceivable witnesses, after the plaintiff has rested his
case on February 25, 1981, however, after presenting several witnesses, counsel
for defendant promised that he will present the defendant as his last witness.
Notably there were several postponement asked by counsel for the defendant and
the last one was on October 1, 1981 when he asked that this case be postponed
for 45 days because said defendant was then in Hongkong and he (defendant) will
be back after said period. The Court acting with great concern and
understanding reset the hearing to November 17, 1981. On said date, the counsel
for the defendant who again failed to present the defendant asked for another
postponement, this time to November 24, 1981 in order to give said defendant
another judicial magnanimity and substantial due process. It was however a
condition in the order granting the postponement to said date that if the
defendant cannot be presented, counsel is deemed to have waived the
presentation of said witness and will submit his case for decision.
"On November 24, 1981, there being a
typhoon prevailing in Manila said date was declared a partial non-working
holiday, so much so, the hearing was reset to December 7 and 22, 1981. On
December 7, 1981, on motion of defendant's counsel, the same was again reset to
December 22, 1981 as previously scheduled which hearing was understood as
intransferable in character. Again on December 22, 1981, the defendant's
counsel asked for postponement on the ground that the defendant was sick. The
Court, after much tolerance and judicial magnanimity, denied said motion and
ordered that the case be submitted for resolution based on the evidence on
record and gave the parties 30 days from December 23, 1981, within which to
file their simultaneous memoranda." (Rollo, pp. 148-150)
The restaurant is located at No. 747
Florentino Torres, Sta. Cruz, Manila in front of the Republic Supermarket. It
is near the corner of Claro M. Recto Street. According to the trial court, it
is in the heart of Chinatown where people who buy and sell jewelries,
businessmen, brokers, manager, bank employees, and people from all walks of
life converge and patronize Sun Wah.
There is more than substantial evidence to
support the factual findings of the trial court and the appellate court. If the
respondent court awarded damages only from judicial demand in 1978 and not from
the opening of the restaurant in 1955, it is because of the petitioner's
contentions that all profits were being plowed back into the expansion of the
business. There is no basis in the records to sustain the petitioner's
contention that the damages awarded are excessive. Even if the Court is minded
to modify the factual findings of both the trial court and the appellate court,
it cannot refer to any portion of the records for such modification. There is
no basis in the records for this Court to change or set aside the factual
findings of the trial court and the appellate court. The petitioner was given
every opportunity to refute or rebut the respondent's submissions but, after
promising to do so, it deliberately failed to present its books and other
evidence.
The resolution of the Intermediate
Appellate Court ordering the payment of the petitioner's obligation shows that
the same 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. LLpr
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:
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."
There shall be 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.
WHEREFORE, the petition for review is
hereby DISMISSED for lack of merit. The decision of the respondent court is
AFFIRMED with a MODIFICATION that as indicated above, the partnership of the
parties is ordered dissolved.
SO ORDERED.
Fernan, (C.J., Chairman), Feliciano, Bidin
and Cortes, JJ., concur.
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