John Fortis vs.

Gutierrez Hermanos
G.R. No. L-2484 April 11, 1906
Doctrine:
1. General rule: receipt by a person of share of profits of
business is prima facie evidence that he is a partner;
Exception: profit was for payment as wages of employee.
2. Articles of partnership prevail as to the division of profits
among partners.
3. It is the net profit, after all expenses (including salary of
employee) have been deducted that is shared between
partners.
The profits of the business could not be determined until all of the
expenses had been paid. A part of the expenses to be paid for the year
1902 was the salary of the plaintiff. That salary had to be deducted before
the net profits of the business, which were to be divided among the
partners, could be ascertained. It was necessary to determine what the
profits of the business were after paying all of the expenses except his, in
order to determine what the salary of the plaintiff was. But such
determination does not arrive at the net profits of the business yet. It was
only made for the purpose of fixing the basis upon which his
compensation should be determined.

Facts:
Fortis (plaintiff), an employee of Gutierrez and Hermanos (defendants)
from 1900-1902, brought this action to recover a balance due him as
salary for the year 1902. He alleged that he was entitled, as salary, to 5%
of the net profits of the business of defendants for said year. The
complaint also contained a cause of action for the sum of 600 pesos,
money expended by him for the defendants during the year 1903.

The court ruled in favour of Fortis and found that the 5% net profits for
1902 amounted to 26,378.68 Mexican Pesos (MP), but plaintiff had
received on account of such salary only MP 12,811.75. Thus it ordered the
defendants to pay Fortis the reduced sum of MP 13,025.40.

Issue/s:
Whether defendants were correct to argue that Fortis is a co-partner

Held:
No. The judgment of the court below was affirmed. Case was remanded to
the lower court for execution.

Ratio:
First, it was a mere contract of employment. The plaintiff had neither
voice nor vote in the management of the affairs of the company.

Second, the articles of partnership between the defendants provided that

the profits should be divided among the partners named in a certain
proportion, and the contract made between the plaintiff and the then
manager of the defendant partnership did not in any way vary or modify
this provision of the articles of partnership.