DAN FUE LEUNG VS IAC and LEUNG YIU

FACTS:

FACTS:

Dan Fue Leung.The Sun Wah Panciteria 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.Lower court ruled in favor of the private respondent. Petitioner appealed the trial court's amended decision. However,the questioned decision was further modified and affirmed by the appellate court. 

Both the trial court and the appellate court declared that the private petitioner is a partner and is entitled to a share of the annual profits of the restaurant. Hence, an appeal to the SC.The petitioner argues 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. It was, therefore, error for the Appellate Court to interpretor construe 'financial assistance' to mean the contribution of capital by a partner to a partnership.

ISSUE:

WON the private respondent is a partner of the petitioner in the establishment of Sun Wah Panciteria.

HELD:

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.SC affirmed appellate court's decision and ordered the dissolution of the partnership.