G.R. No. 35840 ; March 31, 1933
FRANCISCO BASTIDA, plaintiff-appellee, vs. MENZI & CO., INC., J.M. MENZI and P.C. SCHLOBOHM, defendants. MENZI & CO., appellant.

FACTS

Plaintiff Francisco Bastida entered into a five-year contract (Exhibit A) with defendant Menzi & Co., Inc. for the exploitation of the prepared fertilizer business. Bastida contributed his time and expertise, while Menzi & Co. provided financial support. Bastida alleged that the defendants concealed the true status of the business, made false entries in the books and balance sheets, and refused him full access to the accounts. He sought an accounting, annulment of the yearly balances, and damages. The trial court ruled in favor of Bastida, finding the existence of a partnership and awarding him a share of the business’s goodwill.

ISSUE

Whether the contract between Bastida and Menzi & Co., Inc. created a partnership or was merely an employment or agency agreement.

RULING

The Supreme Court reversed the trial court. The contract did not create a partnership. The essential elements of a partnership—the mutual agreement to contribute money, property, or industry to a common fund, and the intention to divide the profits—were absent. Menzi & Co. was to provide financial assistance, and Bastida was to devote his time and experience, but there was no agreement to share profits as such. Bastida’s compensation was essentially a contingent fee based on net profits, which is not equivalent to a partner’s share. The business was carried on in Menzi & Co.’s name, using its warehouses and trade marks. The contract was one of employment or agency. Consequently, Bastida was not entitled to an accounting as a partner or to a share in the alleged goodwill. He was only entitled to the unpaid balance of his compensation, which the Court fixed at P21,633.20 with legal interest.

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