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  • Mendiola vs. CA Digested

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    The petitioner claimed he was in a partnership with Pacific Forest Resources, Phils., Inc. (Pacfor) based on an agreement to establish Pacfor as a representative office in the Philippines, with petitioner as President and 50% owner. However, the Court found no partnership existed. For a partnership, members must co-own partnership property and have a joint interest in the whole property. But here, petitioner was not actually a part-owner of Pacfor and did not jointly own its property. The agreement simply split profits between the parties, which alone does not create a partnership. Additionally, a corporation like Pacfor cannot be a partner without express authorization, which was not shown. Therefore, the Court concluded no partnership was formed between

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    Mendiola Vs. CA digested

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    The petitioner claimed he was in a partnership with Pacific Forest Resources, Phils., Inc. (Pacfor) based on an agreement to establish Pacfor as a representative office in the Philippines, with petitioner as President and 50% owner. However, the Court found no partnership existed. For a partnership, members must co-own partnership property and have a joint interest in the whole property. But here, petitioner was not actually a part-owner of Pacfor and did not jointly own its property. The agreement simply split profits between the parties, which alone does not create a partnership. Additionally, a corporation like Pacfor cannot be a partner without express authorization, which was not shown. Therefore, the Court concluded no partnership was formed between

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    9 views2 pages

    Mendiola vs. CA Digested

    Uploaded by

    gregoriomanueldon.patrocinio
    The petitioner claimed he was in a partnership with Pacific Forest Resources, Phils., Inc. (Pacfor) based on an agreement to establish Pacfor as a representative office in the Philippines, with petitioner as President and 50% owner. However, the Court found no partnership existed. For a partnership, members must co-own partnership property and have a joint interest in the whole property. But here, petitioner was not actually a part-owner of Pacfor and did not jointly own its property. The agreement simply split profits between the parties, which alone does not create a partnership. Additionally, a corporation like Pacfor cannot be a partner without express authorization, which was not shown. Therefore, the Court concluded no partnership was formed between

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    © All Rights Reserved
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    of 2

    ARSENIO T.

    MENDIOLA, petitioner,
    vs.
    COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, PACIFIC FOREST RESOURCES, PHILS., INC. and/or
    CELLMARK AB, respondents.

    ISSUE: whether or not their exist a partnership between petitioner and respondent Corporation

    FACTS:

    Herein private respondent Pacific Forest Resources, Phils., Inc. (Pacfor) is a corporation organized and existing under
    the laws of California, USA. It entered into a "Side Agreement on Representative Office known as Pacific Forest
    Resources (Phils.), Inc."5 with petitioner Arsenio T. Mendiola (ATM) where Private respondent will establish a Pacfor
    representative office in the Philippines, to be known as Pacfor Phils, and petitioner ATM will be its President. Petitioner's
    base salary and the overhead expenditures of the company shall be borne by the representative office and funded by
    Pacfor/ATM, since Pacfor Phils. is equally owned on a 50-50 equity by ATM and Pacfor-usa.

    In July 2000 after seeking confirmation of his 50% equity of Pacfor Phils petitioner was informed that he is not a part-
    owner of Pacfor Phils. because the latter is merely Pacfor-USA's representative office and not an entity separate and
    distinct from Pacfor-USA. ATM demanded for his unpaid commission however was instead ordered to turn over all
    papers, documents, files, records, and other materials in his possession that belong to Pacfor or Pacfor Phils by
    respondent company. He was also required to remit more than three hundred thousand-peso Christmas giveaway fund
    for clients of Pacfor Phils. Private respondent Pacfor likewise sent letters to its clients in the Philippines, advising them
    not to deal with Pacfor Phils.

    Petitioner construed these directives as a severance of the "unregistered partnership" between him and Pacfor, and the
    termination of his employment as resident manager of Pacfor Phils and after being charged with willful disobedience
    and serious misconduct petitioner filed his complaint for illegal dismissal against respondent.

    The Labor Arbiter ruled in favor of petitioner, finding there was constructive dismissal however Private respondent
    Pacfor appealed to the NLRC which ruled in its favor for lack of jurisdiction and lack of merit. It held among others that
    petitioner is not an employee of private respondent Pacfor, but a full co-owner (50/50 equity).The Court of Appeals
    upheld the ruling of the NLRC.

    Hence, this appeal were Petitioner argues that he is an industrial partner of the partnership he formed with private
    respondent Pacfor, and also an employee of the partnership

    Ruling:

    No, their exist no partnership between petitioner and respondent Corporation. The Court explained that
    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.38 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.41 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.42 No such
    authorization has been proved in the case at bar.

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