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  • Mendiola Vs Court of Appeals (497 SCRA 346)

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    Kathrine Marie Abquina
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    The Supreme Court ruled that no partnership or co-ownership existed between petitioner Mendiola and private respondent Pacfor based on three key findings: 1) The essential element of community of interest or co-ownership of partnership property was absent in their relationship. Mendiola was not a part-owner of Pacfor Phils. 2) The parties merely shared profits, which alone does not establish a partnership. 3) A corporation like Pacfor cannot become a member of a partnership without express authorization, which was not proved in this case. The court found the relationship to be one of employer-employee.

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    Mendiola vs Court of Appeals (497 SCRA 346)

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    The Supreme Court ruled that no partnership or co-ownership existed between petitioner Mendiola and private respondent Pacfor based on three key findings: 1) The essential element of community of interest or co-ownership of partnership property was absent in their relationship. Mendiola was not a part-owner of Pacfor Phils. 2) The parties merely shared profits, which alone does not establish a partnership. 3) A corporation like Pacfor cannot become a member of a partnership without express authorization, which was not proved in this case. The court found the relationship to be one of employer-employee.

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    © All Rights Reserved
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    102 views2 pages

    Mendiola Vs Court of Appeals (497 SCRA 346)

    Uploaded by

    Kathrine Marie Abquina
    The Supreme Court ruled that no partnership or co-ownership existed between petitioner Mendiola and private respondent Pacfor based on three key findings: 1) The essential element of community of interest or co-ownership of partnership property was absent in their relationship. Mendiola was not a part-owner of Pacfor Phils. 2) The parties merely shared profits, which alone does not establish a partnership. 3) A corporation like Pacfor cannot become a member of a partnership without express authorization, which was not proved in this case. The court found the relationship to be one of employer-employee.

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    © All Rights Reserved
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    of 2

    1.

    Mendiola vs Court of Appeals (497 SCRA 346) [Partnership]


    Private respondent Pacific Forest Resources Phils., Inc. (Pacfor), a foreign corporation, entered
    into a Side Agreement with petitioner Arsenio T. Mendiola (ATM), assuming that Pacfor-Phils is
    already approved by SEC. The Side Agreement outlines the business relationship of the parties
    with regard to the Philippine operations of Pacfor. Pacfor will establish a Pacfor representative
    office in the Philippines, to be known as Pacfor Phils, and petitioner will be its President. The
    representative office funded by Pacfor/ATM shall bear the petitioner’s base salary and the
    company’s overhead expenditures, since Pacfor Phils. is equally owned on a 50-50 equity by
    ATM and Pacfor-usa.

    Petitioner wrote the VP for Asia of Pacfor seeking confirmation of his 50% equity of Pacfor Phils.
    Private respondent replied that petitioner is not a part-owner of Pacfor Phils because he is
    merely Pacfor-USA’s representative office and not an entity separate and distinct from
    Pacfor-USA. Petitioner claimed that he was all along made to believe that he was in a joint
    venture with Pacfor-USA as ATM Marketing Corp.

    Issue: Whether there is partnership or co-ownership existing between petitioner Mendiola and
    private respondent Pacfor.

    Held: There is no partnership or co-ownership existing between petitioner Mendiola and


    private respondent Pacfor. Mendiola is an employee of the latter. Employer-employee
    relationship.

    In a partnership, the members become co-owners of what is contributed to the firm capital and
    of all property that may be acquired thereby and through the efforts of the members. The
    property or stock of the partnership forms a community of goods, a common fund, in which each
    party has a proprietary interest. In fact, the New Civil Code regards a partner as a co-owner of
    specific partnership property. Each partner possesses a joint interest in the whole of
    partnership property. If the relation does not have this feature, it is not one of
    partnership. This essential element, the community of interest, or co-ownership of, or joint
    interest in partnership property is absent in the relations between petitioner and private
    respondent Pacfor. Petitioner is not a part-owner of Pacfor Phils. William Gleason, private
    respondent Pacfor’s President established this fact when he said that Pacfor Phils. is simply a
    “theoretical company” for the purpose of dividing the income 50-50. He stressed that petitioner
    knew of this arrangement from the very start, having been the one to propose to private
    respondent Pacfor the setting up of a representative office, and “not a branch office” in the
    Philippines to save on taxes. Thus, the parties in this case, merely shared profits. This alone
    does not make a partnership.

    Besides, a corporation cannot become a member of a partnership in the absence of


    express authorization by statute or charter. This doctrine is based on the following
    considerations:
    (1) that the mutual agency between the partners, whereby the corporation would be bound
    by the acts of persons who are not its duly appointed and authorized agents and officers,
    would be inconsistent with the policy of the law that the corporation shall manage its own
    affairs separately and exclusively; and,
    (2) that such an arrangement would improperly allow corporate property to become subject
    to risks not contemplated by the stockholders when they originally invested in the
    corporation. No such authorization has been proved in the case at bar.

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