G.R. No. 70926, 31 January 1989
FACTS:
Petitioner prays that the court reverses the ruling of the trial court and the IAC that ordered it to pay the private respondent 22% of his annual earnings as same was his partner in the panciteria. He maintains that he was the sole proprietor of the business, as evidenced by his licenses and documents that bear only his name.
Private respondent avers that he gave P4,000 to petitioner as financial aid to establish the business in exchange for the right to 22% of its annual earnings. As such he is merely demanding what is rightfully his.
Petitioner counters that 22 years have past since the alleged receipt of such financial aid, hence the action has already prescribed.
ISSUE:
Was the private respondent entitled to such earnings?
RULING:
Yes, as he was petitioner’s partner.
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.
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.
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.
*Case digest by Roger Angielo V. Atenta, LLB-4, Andres Bonifacio Law School, SY 2019-2020