The case of Fue Leung vs IAC established that Leung Yiu is a partner in the Sun Wah Panciteria restaurant and is entitled to an accounting of his interests. The requirements of a partnership were met as Leung Yiu contributed capital and was supposed to receive a share of the profits. While an agreement allowed for deferring the sharing of profits, Leung Yiu's rights did not expire after 10 years. As a partner, Leung Yiu can demand an accounting as long the partnership exists, and prescription only begins upon dissolution and final accounting.
In Emnace vs CA, the Supreme Court ruled that the heirs of a deceased partner can still demand an accounting from the
The case of Fue Leung vs IAC established that Leung Yiu is a partner in the Sun Wah Panciteria restaurant and is entitled to an accounting of his interests. The requirements of a partnership were met as Leung Yiu contributed capital and was supposed to receive a share of the profits. While an agreement allowed for deferring the sharing of profits, Leung Yiu's rights did not expire after 10 years. As a partner, Leung Yiu can demand an accounting as long the partnership exists, and prescription only begins upon dissolution and final accounting.
In Emnace vs CA, the Supreme Court ruled that the heirs of a deceased partner can still demand an accounting from the
The case of Fue Leung vs IAC established that Leung Yiu is a partner in the Sun Wah Panciteria restaurant and is entitled to an accounting of his interests. The requirements of a partnership were met as Leung Yiu contributed capital and was supposed to receive a share of the profits. While an agreement allowed for deferring the sharing of profits, Leung Yiu's rights did not expire after 10 years. As a partner, Leung Yiu can demand an accounting as long the partnership exists, and prescription only begins upon dissolution and final accounting.
In Emnace vs CA, the Supreme Court ruled that the heirs of a deceased partner can still demand an accounting from the
The case of Fue Leung vs IAC established that Leung Yiu is a partner in the Sun Wah Panciteria restaurant and is entitled to an accounting of his interests. The requirements of a partnership were met as Leung Yiu contributed capital and was supposed to receive a share of the profits. While an agreement allowed for deferring the sharing of profits, Leung Yiu's rights did not expire after 10 years. As a partner, Leung Yiu can demand an accounting as long the partnership exists, and prescription only begins upon dissolution and final accounting.
In Emnace vs CA, the Supreme Court ruled that the heirs of a deceased partner can still demand an accounting from the
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Fue Leung vs IAC 169 SCRA 746
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.
A12 - DAN FUE LEUNG vs. HON. INTERMEDIATE APPELLATE COURT and LEUNG YIU
Facts: The Sun Wah Panciteria, a restaurant 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 with the understanding that he would be entitled to twenty-two percent (22%) of the annual profit. 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.
Issue(s): Whether or not Leung Yiu is a partner entitled to accounting.
Ruling : YES. 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 - 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.
It is Article 1842 of the Civil Code in conjunction with Articles 1144 and 1155 which is applicable. 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.
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. Considering the facts of this case, the Court may decree dissolution of the partnership under Article 1831 of the Civil Code. 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.
Emnace vs CA 370 SCRA 431 (2001)
The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination.36 The partnership, although dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of the net partnership assets to the partners. 37 For as long as the partnership exists, any of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done.
Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Article 1842 of the Civil Code provides:
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 of any agreement to the contrary.
Applied in relation to Articles 1807 and 1809, which also deal with the duty to account, the above- cited provision states that the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an accounting of the partnership's business and assets. Hence, the said action is not barred by prescription.
EMILIO EMNACE vs. COURT OF APPEALS
Facts: Petitioner Emnace, Tabanao and Divinagracia were partners in a business concern known as Ma. Nelma Fishing Industry. Sometime in January of 1986, they decided to dissolve their partnership and executed an agreement of partition and distribution of the partnership properties among them, consequent to Jacinto Divinagracia's withdrawal from the partnership.
Throughout the existence of the partnership, and even after Tabanao's untimely demise in 1994, petitioner Emnace failed to submit to herein respondents Tabanao's heirs any statement of assets and liabilities of the partnership, and to render an accounting of the partnership's finances. Petitioner also reneged on his promise to turn over to Tabanao's heirs the deceased's one-third (1/3) share in the total assets of the partnership despite formal demand for payment thereof.
Tabanao' s heirs filed against petitioner an action for accounting, payment of shares, division of assets and damages. Petitioner contended that the complaint should be dismissed on the ground of prescription, arguing that respondents' action prescribed four (4) years after it accrued in 1986.
Issues: Whether or not the action filed by herein respondent-heirs has already prescribed.
Ruling: The Supreme Court held that the action has not yet prescribed.
The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) termination. The partnership, although dissolved, continues to exist and its legal personality is retained, at which time it completes the winding up of its affairs, including the partitioning and distribution of the net partnership assets to the partners. For as long as the partnership exists, any of the partners may demand an accounting of the partnership's business. Prescription of the said right starts to run only upon the dissolution of the partnership when the final accounting is done. Contrary to petitioner's protestations that respondents' right to inquire into the business affairs of the partnership accrued in 1986, prescribing four (4) years thereafter, prescription had not even begun to run in the absence of a final accounting. Articles 1807 and 1809, which deal with the duty to account, the right to demand an accounting accrues at the date of dissolution in the absence of any agreement to the contrary. When a final accounting is made, it is only then that prescription begins to run. In the case at bar, no final accounting has been made, and that is precisely what respondents are seeking in their action before the trial court, since petitioner has failed or refused to render an accounting of the partnership's business and assets. Hence, the said action is not barred by prescription.
