G.R. No.

L-12541

August 28, 1959

ROSARIO U. YULO, assisted by her husband JOSE C. YULO, vs. YANG CHIAO SENG,

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FACTS: Defendant Yang Chiao Seng proposed to the palintiff Mrs. Rosario U. Yulo the formation of a partnership
between them to run and operate a theatre on the premises occupied by former Cine Oro. The principal conditions of the
offer are (1) that Yang Chiao Seng guarantees Mrs. Yulo a monthly participation of P3,000, (2) that the partnership shall
be for a period of two years and six months, with the condition that if the land is expropriated or rendered impracticable for
the business, Mrs. Yulo's right of lease is terminated by the owner, then the partnership shall be terminated ; among
others
Pursuant to the above offer, they executed a partnership agreement establishing the "Yang & Company, Limited," The
capital is fixed at P100,000, P80,000 of which is to be furnished by Yang Chiao Seng and P20,000, by Mrs. Yulo. All gains
and profits are to be distributed pro rata. The share of Mrs. Yulo in the capital was never contributed.
The land on which the theatre was constructed was leased by plaintiff Mrs. Yulo from Emilia Carrion Santa Marina and
Maria Carrion Santa Marina for an indefinite period of time. But on April 12, 1949, the owners notified Mrs. Yulo of the
owner's desire to cancel the contract of lease . The Municipal Court of Manila rendered judgment ordering the ejectment
of Mrs. Yulo and Mr. Yang. Mrs. Yulo demanded from Yang Chiao Seng her share in the profits of the business for the
period Dec. 11949 to dec. 1950. Yang answered that he had to suspend the payment (of the rentals) because of the
pendency of the ejectment suit by the owners of the land against Mrs. Yulo. Thus, he was retaining the rentals to make
good to the landowners the rentals due from Mrs. Yulo in arrears
Mrs. Yulo instituted this action alleging the existence of a partnership between them and that the defendant Yang Chiao
Seng has refused to pay her share .In answer to the complaint, defendant alleges that the real agreement between the
plaintiff and the defendant was one of lease and not of partnership;
ISSUE: What was the contract entered into, one of partnership or sublease?
RULING: We have gone over the evidence and we fully agree with the conclusion of the trial court 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; (2) intention on the part of the partners to divide
the profits among themselves. (Art. 1767, Civil Code.).
In the first place, plaintiff did not furnish the supposed P20,000 capital. In the second place, she did not furnish any help or
intervention in the management of the theatre. In the third place, it does not appear that she has ever demanded from
defendant any accounting of the expenses and earnings of the business. Were she really a partner, her first concern
should have been to find out how the business was progressing, She was absolutely silent with respect to any of the acts
that a partner should have done; all that she did was to receive her share of P3,000 a month, which can not be interpreted
in any manner than a payment for the use of the premises which she had leased from the owners.
Plaintiff claims the sum of P41,000 as representing her share or participation in the business from December, 1949. But
the original letter of the defendant, expressly states that the agreement between the plaintiff and the defendant was to end
upon the termination of the right of the plaintiff to the lease. Plaintiff's right having terminated in July, 1949, the partnership
agreement or the agreement for her to receive a participation of P3,000 automatically ceased as of said date.

G.R. No. L-10510

March 17, 1961

M. MC CONNEL vs. THE COURT OF APPEALS

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FACTS: Park Rite Co., Inc., a Philippine corporation, leased from Rafael Perez Rosales y Samanillo
a vacant lot on Juan Luna street (Manila) which it used for parking motor vehicles for a
consideration.It turned out that in operating its parking business, the corporation occupied and used
not only the Samanillo lot it had leased but also an adjacent lot belonging to the respondentsappellees Padilla, without the owners' knowledge and consent. When the latter discovered the truth,
they demanded payment for the use and occupation of the lot.
The corporation (then controlled by petitioners Cirilo Parades and Ursula Tolentino, who had
purchased and held 1,496 of its 1,500 shares) disclaimed liability, blaming the original incorporators,
McConnel, Rodriguez and Cochrane. Whereupon, the lot owners filed against it a complaint for
forcible entry in the Municipal Court of Manila on 7 October 1947 (Civil Case No. 4031).
Judgment was rendered ordering the Park Rite Co., Inc. to pay P7,410.00 plus legal interest as
damages from April 15, 1947 until return of the lot. Upon execution, the corporation was found
without any assets other than P550.00 deposited in Court and there remained a balance of
P11,182.50 outstanding and unsatisfied.
The judgment creditors then filed suit against the corporation and its past and present stockholders,
to recover from them, jointly and severally, the unsatisfied balance of the judgment,
ISSUE: whether the individual stockholders maybe held liable for obligations contracted by the
corporation,
RULING: this Court has already answered the question in the affirmative wherever circumstances
have shown that the corporate entity is being used as an alter ego or business conduit for the sole
benefit of the stockholders, or else to defeat public convenience, justify wrong, protect fraud, or
defend crime \.
There is also no doubt in our mind that the corporationwas a mere alter ego or business conduit of
the defendants Cirilo Pared es and Ursula Tolentino, and before them the defendants M.
McConnel, W. P. Cochrane, and Ricardo Rodriguez. The evidence clearly shows that these persons
completely dominated and controlled the corporation and that the functions of the corporation were
solely for their benefits.
The facts thus found can not be varied by us, and conclusively show that the corporation is a mere
instrumentality of the individual stockholder's, hence the latter must individually answer for the
corporate obligations.