Chunky Monkey CM Digest

Case Name: BASTIDA V. MENZI & CO

Docket: G.R. No. 35840
Date: March 31, 1933

Despite agreement that Bastida was to receive 35% of the profit from the business of mixing
and distributing fertilizer registered in the name of Menzi & Co., there was never any contract
of partnership constituted on the following key elements:
a. there was never any common fund created between the parties, since the entire
business as well as the expenses and disbursements for operating it were entirely for
the account of Menzi& Co.;
b. there was no provision in the agreement for reimbursing Menzi& Co. in case there should
be no profits at the end of the year; and
c. the fertilizer business was just one of the many lines of business of Menzi& Co., and
there were no separate books and no separate bank accounts kept for that particular
line of business. The arrangement was one of employment.

FACTS:
1. Menzi Co. was organized in 1921 for the purpose of importing and selling general
merchandise, including fertilizers and fertilizer ingredients. Sometime in November of
that year, the plaintiff, who had had some experience in mixing and selling fertilizer,
went to see Toehl, the manager of the sundries department of Menzi & Co. (through
which the fertilizer business was carried out) and told him that he had a written
contract with the Philippine Sugar Centrals Agency for 1,250 tons of mixed fertilizers,
and that he could obtain other contracts, including one from Calamba Sugar Estates
for 450 tons, but that he did not have the money to buy the ingredients to fill the order
and carry on the business. He offered to assign to Menzi & Co. his contract with Phil
Sugar Centrals Agency and to supervise the mixing of the fertilizer and to obtain other
orders for 50 % of the net profit that Menzi & Co., Inc., might derive therefrom. J. M.
Menzi (gen. manager of Menzi & Co.) accepted the offer. The agreement between the
parties was verbal and was confirmed by the letter of Menzi to the plaintiff on January
10, 1922.
2. Menzi & Co. continued to carry on its fertilizer business under this arrangement with
the plaintiff. It ordered ingredients from the US and other countries, and the interest
on the drafts for the purchase of these materials was charged to the business as a part
of the cost of the materials. The mixed fertilizers were sold by Menzi & Co. between
January 19 and April 1, 1922 under its “Corona” brand.
3. Pursuant to the verbal agreement, the defendant corporation on April 27, 1922 entered
into a written contract with the plaintiff, marked Exhibit A, which is the basis of the
present action. Still, the fertilizer business as carried on in the same manner as it was
prior to the written contract, but the net profit that the plaintiff herein shall get would
only be 35%. The intervention of the plaintiff was limited to supervising the mixing of
the fertilizers in the bodegas of Menzi. The trademarks used in the sale of the fertilizer
were registered in the Bureau of Commerce & Industry in the name of Menzi & Co.,
Inc. and the fees were paid by that company.
4. Prior to the expiration of the contract (April 27, 1927), the manager of Menzi notified
the plaintiff that the contract for his services would not be renewed. Subsequently,
when the contract expired, Menzi proceeded to liquidate the fertilizer business in
question. The plaintiff refused to agree to this. It argued, among others, that the
written contract entered into by the parties is a contract of general regular commercial
partnership, wherein Menzi was the capitalist and the plaintiff the industrial partner.

WHETHER THE RELATIONSHIP BETWEEN THE PETITIONER AND MENZI WAS THAT
OF PARTNERS

Balbanero, Bruzon, Go, Olazo, Ong, Santos, Sarmiento, Umandap, Yrreverre

Chunky Monkey CM Digest

 No. The relationship established between the parties was not that of partners, but that
of employer and employee, whereby the plaintiff was to receive 35% of the net
profits of the fertilizer business of Menzi in compensation for his services for
supervising the mixing of the fertilizers. Neither the provisions of the contract nor the
conduct of the parties prior or subsequent to its execution justified the finding that it
was a contract of co-partnership. The written contract was, in fact, a continuation of
the verbal agreement between the parties, whereby the plaintiff worked for the
defendant corporation for one-half of the net profits derived by the corporation form
certain fertilizer contracts.
 According to Art. 116 of the Code of Commerce, articles of association by which two
or more persons obligate themselves to place in a common fund any property,
industry, or any of these things, in order to obtain profit, shall be commercial, no
matter what it class may be, provided it has been established in accordance with the
provisions of the Code.
 However in this case, there was no common fund. The business belonged to Menzi
& Co. The plaintiff was working for Menzi, and instead of receiving a fixed salary, he
was to receive 35% of the net profits as compensation for his services.
 It is nowhere stated in Exhibit A that the parties were establishing a partnership or
intended to become partners. Great stress is laid by the trial judge and plaintiff's
attorneys on the fact that in the sixth paragraph of said exhibit the phrase "en sociedad
con" is used in providing that defendant corporation shall not engage in the business
of prepared fertilizers except in association with the plaintiff (en sociedad con). The
fact is that en sociedad con, as there used, merely means en reunion con or in
association with, and does not carry the meaning of "in partnership with". Although
the word "associated" may be related etymologically to the Spanish word "socio",
meaning partner, it does not in its common acceptation imply any partnership relation.
 It is also important to note that although Menzi agreed to furnish the necessary
financial aid for the fertilizer business, it did not obligate itself to contribute any fixed
sum as capital or to defray at its own expense the cost of securing the necessary
credit.

Balbanero, Bruzon, Go, Olazo, Ong, Santos, Sarmiento, Umandap, Yrreverre