YULO V.
YANG CHIAO SENG the prohibition contained in the contract of lease between the owners and the
Facts:
Yang Chiao Seng proposed to form a partnership with Rosario Yulo to run
and operate a theatre on the premises occupied by Cine Oro, Plaza Sta. Cruz,
Manila, the principal conditions of the offer being (1) Yang
guarantees Yulo a monthly participation of P3,000 (2) partnership shall be
for a period of 2 years and 6 months with the condition that if the land
is expropriated, rendered impracticable for business, owner constructs a
permanent building, then Yulo’s right to lease and partnership even if period
agreed upon has not yet expired; (3) Yulo is authorized to personally conduct
business in the lobby of the building; and (4) after Dec 31, 1947, all
improvements placed by partnership shall belong to Yulo but if partnership
is terminated before lapse of 1 and ½ years, Yang shall have right to
remove improvements. Parties established, “Yang and Co. Ltd.”, to exist
from July 1,1945 – Dec 31, 1947.In June 1946, they executed a
supplementary agreement extending the partnership for 3 years beginning Jan 1,
1948 to Dec 31, 1950. The land on which the theater was constructed was leased
by Yulo from owners, Emilia Carrion and Maria Carrion Santa Marina for an
indefinite period but that after 1 year, such lease may be cancelled by either
party upon 90-day notice. In Apr 1949, the owners notified Yulo of their
desire to cancel the lease contract come July. Yulo and husband brought a
civil action to declare the lease for a indefinite period. Owners brought their
own civil action for ejectment upon Yulo and Yang.
CFI
: Two cases were heard jointly; Complaint of Yulo and Yang dismissed
declaring contract of lease terminated.
CA
: Affirmed the judgment. In 1950, Yulo demanded from Yang her share in
the profits of the business. Yang answered saying he had to suspend payment
because of pending ejectment suit. Yulo filed present action in 1954, alleging
the existence of a partnership between them and that Yang has refused to
pay her shares.
Defendant’s Position
: The real agreement between plaintiff and defendant was one of lease and not of
partnership; that the partnership was adopted as a subterfuge to get around
plaintiff against the sublease of the property.
Trial Court
: Dismissal. It is not true that a partnership was created between them because
defendant has not actually contributed the sum mentioned in the Articles of
Partnership or any other amount. The agreement is a lease because plaintiff didn’t
share either in the profits or in the losses of the business as required by
Art 1769 (CC) and because plaintiff was granted a “guaranteed participation” in the
profits belies the supposed existence of a partnership.
Issue: Was the agreement a contract a lease or a partnership?
Ruling: Dismissal. The agreement was a sublease not a partnership. The following are
the
requisites of partnership:
(1) two or more persons who bind themselves to contribute money,
property or industry to a common fund;
(2) the intention on the part of the partners to divide the profits among
themselves (Article 1761, CC)Plaintiff did not furnish the supposed
P20,000 capital nor did she furnish any help or intervention in the
management of the theatre. Neither has she demanded from
defendant any accounting of the expenses and earnings of the
business. She was absolutely silent with respect to any of the acts
that a partner should have done; all she did was to receive her share
of P3,000 a month which cannot be interpreted in any manner than
a payment for the use of premises which she had leased from the
owners.