Bastida v. Menzi & Co.
J.M Menzi, together with his family, owns 99% of the capital stock of Menzi & Co, Inc. together with two others constituting the board of directors. Among various businesses, Menzi & Co, Inc. is also engaged in the fertilizer business, which they sell along with the other products they offer under the company.
In preparation of fertilizers, they secured the services of Francisco Bastida to superintend the operations of mixing the fertilizers with an agreement of giving a a 35% share (from the original 50%) in the sales of fertilizers prepared by him – with the corporation having sole responsibility of accounting for their finances and distribution, including Bastida’s share in the profits.
Bastida was not re-employed upon the expiration of his contract with Menzi & Co. However, Bastida averred that the contract existing between him and the corporation was that of a partnership for having contributed his industry in exchange of 35% in the share of profits.
Thus, he filed a complaint to have Menzi & Co give a proper accounting of his share and that the books should be revealed to him. Furthermore, for being a partner, he further prays to have his share in the goodwill and trademark of the partnership.
Was a partnership formed between Bastida and Menzi & Co?
No. The Court held that no partnership was formed and that Bastida was merely an employee of Menzi & Co. The Court maintained that although Bastida had a share of 35% in the net profits of the fertilizer business in compensation for his services of supervising the mixture of the fertilizers, neither the provisions of the contract nor the conduct of the parties justified the finding that it was a contract of partnership.
Bastida never made any objection as to the defendant’s manner of keeping the accounts or to the charges. On the contrary, he approved and signed every year the balance sheet and the profit and loss statement. It was only when plaintiff’s contract was about to expire and his contract was not to be renewed that he made objections. To this, the court applied Art. 116 of the Code of Commerce – which required a common fund to form a partnership. In the case at bar, there was no common fund belonging to the parties as joint owners or partners.