Fue Leung vs.

IAC

Facts:

Sun Wah Panciteria, a restaurant, was established and registered as a single proprietorship in favor of
petitioner Dan Fue Leung as the sole proprietor. Respondent Leung Yiu adduced evidence during the trial
to show that Sun Wah Panciteria was actually a partnership. TC held that there was indeed a partnership.

Issue:

In what instances the court may decree dissolution of partnership?

Held:

Article 1831 of the Civil Code provides that on application by or for a partner the court shall decree a
dissolution of partnership whenever a partner has been guilty of conduct that tend to prejudicially affect
the partnership/business; or a partner willfully or persistently commits breach of the partnership
agreement, or other circumstances that the court may find dissolution as equitable.

In this case, 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.