Case Digest (G.R. No. L-12541) Core Legal Reasoning Model
Core Legal Reasoning Model
Facts:
On June 17, 1945, Yang Chiao Seng wrote to Rosario U. Yulo, assisted by her husband Jose C. Yulo, proposing a theatrical venture on the former Cine Oro site in Plaza Sta. Cruz, Manila. He guaranteed her a monthly participation of ₱3,000, payable quarterly in advance, and stipulated a partnership from July 1, 1945 to December 31, 1947, subject to early termination if the land lease was cancelled or rendered impracticable. Mrs. Yulo was authorized to conduct ordinary lobby commerce and, upon normal expiry, to retain all improvements, though Yang could remove them if the partnership ended prematurely. They executed a written Articles of Partnership for “Yang & Company, Limited” with ₱100,000 capital (₱80,000 by Yang, ₱20,000 by Yulo), profit-sharing pro rata, and Yulo’s liability limited to her capital. In June 1946 they extended the term to December 31, 1950, with profits divided equally and the building vesting exclusively in Mrs. Yulo thereafter. Meanwhile, Mrs. Yulo had leased Case Digest (G.R. No. L-12541) Expanded Legal Reasoning Model
Expanded Legal Reasoning Model
Facts:
- Formation and Terms of the Alleged Partnership
- June 17, 1945 Letter Offer
- Defendant Yang Chiao Seng proposes a joint operation of a theatre at former Cine Oro, Plaza Sta. Cruz, Manila.
- Key conditions:
- Guaranteed monthly participation of ₱3,000 to Mrs. Yulo, payable quarterly in advance.
- Partnership term: July 1, 1945 to December 31, 1947, terminable upon expropriation, impracticability, owner’s construction, or lease termination.
- Mrs. Yulo may conduct lobby business so long as it does not obstruct theatre patrons.
- Post-December 31, 1947 improvements belong to Mrs. Yulo; if terminated before 18 months, Yang may remove improvements.
- July 1, 1945 Articles of Partnership (Exh. “B”)
- Formation of “Yang & Company, Limited” to exhibit motion pictures.
- Capital: ₱100,000 (₱80,000 by Yang; ₱20,000 by Mrs. Yulo).
- Profits and losses shared in proportion to capital contributions; Mrs. Yulo’s liability limited to her ₱20,000.
- Lease of the Theatre Premises and Related Litigation
- Lease to Mrs. Yulo by Emilia and Maria Carrion Santa Marina
- Indefinite term; cancellable after one year with 90 days’ written notice.
- April 5, 1948 – Last lease executed.
- April 12, 1949 – Lessor gives notice to cancel lease effective July 31, 1949.
- Judicial Proceedings on Lease
- July 3, 1949 – Mrs. Yulo files suit in CFI Manila to declare lease indefinite.
- August 17, 1949 – Lessors sue in Municipal Court to eject Mrs. Yulo and Yang.
- February 9, 1950 – Municipal Court orders ejectment; appealed to CFI.
- CFI and Court of Appeals affirm termination of lease as of July 31, 1949, and fix rent at ₱100/month.
- Dispute Between Mrs. Yulo and Yang; Trial Court Proceedings
- October 27, 1950 – Mrs. Yulo demands profit share; Yang suspends payment, claiming arrears in rent due to lessors.
- May 26, 1954 – Mrs. Yulo sues Yang for:
- Participation in profits (Dec 1949–Dec 1950): ₱35,000.
- Rent for building from Jan 1, 1951 at ₱5,000/month.
- Damages for bad faith: ₱160,000; exemplary damages: ₱5,000; attorney’s fees: ₱10,000.
- Yang’s Answer and Counterclaim
- Asserts the real agreement was a sublease, not partnership, to evade prohibition on subleasing.
- Denies profit-share claims; contends fair rental is ₱1,100/month.
- Counterclaims ₱100,000 damages for attachment on his property.
- First Trial (April 19, 1955)
- Yang absent; plaintiff’s evidence admitted; judgment for Mrs. Yulo:
- ₱41,000 participation up to Dec 1950.
- ₱5,000/month rent from Jan 1951.
- ₱300 for lobby use (July 1945 onward).
- Decision set aside on reconsideration for failure to grant agreed postponement.
- Second Trial and CFI Decision
- Finds no partnership: Mrs. Yulo did not contribute capital or management, only received a guaranteed sum.
- Classifies agreement as a sublease; partnership ceased when lease ended July 31, 1949.
- Dismisses plaintiff’s complaint and defendant’s counterclaim for lack of proof.
- Appeal to the Supreme Court by Mrs. Yulo
Issues:
- Nature of the Agreement
- Was the relationship between Mrs. Yulo and Yang a bona fide partnership or a sublease disguised as partnership?
- Entitlement to Payments
- If a partnership existed, is Mrs. Yulo entitled to profit participation from December 1949 to December 1950?
- If the partnership terminated December 31, 1950, what are the rental obligations of Yang thereafter?
- Damages and Counterclaims
- Is Mrs. Yulo entitled to moral/exemplary damages and attorney’s fees?
- Is Yang entitled to damages for attachment of his property?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)