YULO v.
YANG CHIAO SENG owner, then the partnership shall be terminated even if period
August 28, 1959 | Labrador, J. | Perfected Partnership (Art. 1769)
PETITIONER: Rosario U. Yulo and Jose C. Yulo
RESPONDENTS: Yang Chiao Seng
SUMMARY: Yang Chiao Seng (Yang) proposed to form a partnership with
Mrs. Rosario Yulo (Yulo) to run and operate a theatre on the premises occupied
by former Cine Oro, Plaza Sta. Cruz, Manila. Yang and Yulo established Yang
and Co. Ltd. Yulo leased the land on which the theater was constructed 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 1949. Yulo demanded from Yang her share in the profits of
the business. Yang did not want to give it because of the pending ejectment suit
against Yulo. Yang contends that he is only a subleesee, but Yulo insists that
their relationship was one of partnership. The issue in this case is WoN the
agreement between the parties was a partnership? The Court ruled that 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; and (2) The intention on the part of the
partners to divide the profits among themselves (Article 1761, CC). The facts
show that there never was an intended real partnership despite the articles of
partnership executed.
DOCTRINE: When facts proven show that purported partner never furnished
the P20,000 capital, nor rendered any help or intervention in the management of
the purported partnership business, much less demanded an accounting of its
affairs and its earnings, there never was an intended real partnership despite the
articles of partnership executed. All that the purported partner did was to receive
her share of P3,000 a month, and was in accordance with the original letter of
defendant, which shows that both parties considered themselves as lessor-lessee
under a contract of lease. (Lifted from the outline)
FACTS:
1. Yang Chiao Seng (Yang) proposed to form a partnership with Mrs. Rosario
Yulo (Yulo) to run and operate a theatre on the premises occupied by
former Cine Oro, Plaza Sta. Cruz, Manila.
2. The principal conditions of the offer being:
a. Yang guarantees Yulo a monthly participation of P3,000 payable
quarterly in advance within the first 15 days of each quarter
b. The 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, or if the owner constructs a permanent
building, or if ever Yulos right to lease is terminated by the
agreed upon has not yet expired;
c. Yulo is authorized to personally conduct business in the lobby of
the building; and
d. That after Dec 31, 1947, all improvements placed by partnership
shall belong to Yulo, but if the partnership is terminated before the
lapse of 1 and years, Yang shall have right to remove
improvements.
3. Yang and Yulo established Yang and Co. Ltd. to exist from July 1, 1945
Dec 31, 1947.
a. The capital is fixed at P100,000 where P80,000 will come from
Yang and P20,000 from Yulo.
b. Gains and profits will be distributed in proportion to their capital
contribution.
4. In June 1946, they executed a supplementary agreement extending the
partnership for 3 years beginning Jan 1, 1948 to Dec 31, 1950. Gains and
profit will now be divided equally.
5. Yulo leased the land on which the theater was constructed 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.
6. In Apr 1949, the owners notified Yulo of their desire to cancel the lease
contract come July 1949. 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.
a. RTC decision: Cases were tried jointly and judgment dismissed the
complaint of Yulo and declared the Contract of Lease terminated
as of July 1949. CA affirmed the judgment.
7. Yulo demanded from Yang her share in the profits of the business. Yang
did not want to give it because of the pending ejectment suit against Yulo.
8. Yang says that he is a sublessee and since Yulo did not pay the rentals to
the lessors, he will retain the rentals to make good to the landowners.
9. Yulo argues that their existed a partnership between her and Yang. Yulo
further alleges that Yang has refused to pay her share of the profits, that the
partnership between them was already terminated, which made Yulo the
absolute owner of the building where Cine Astor was located.
10. Yang contends that the real agreement between them was a lease and not a
partnership.
11. RTC DECISION: No partnership, only a lease agreement
a. Yulo has not actually contributed the sum mentioned in the
Articles of Partnership or any other amount.
b. Yulo didnt share either in the profits or in the losses of the
business as required by Art 1769 (CC).
c. Yulo was granted a guaranteed participation in the profits belies
the supposed existence of a partnership.
ISSUES:
1. WoN the agreement was a partnership? NO. It was a sublease.

RULING: We find no error in the judgment of the court below and we affirm it in
toto, with costs against plaintiff-appellant. Judgment affirmed.

RATIO:
1. The agreement was a sublease not a partnership.
2. The following are the requisites of partnership:
a. Two or more persons who bind themselves to contribute money,
property or industry to a common fund;
b. The intention on the part of the partners to divide the profits among
themselves (Article 1761, CC)
3. Yulo 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.