MENDIOLA v.

CA

FACTS

This is the case where Mendiola, herein petitioner, entered with Side Agreement with
Pacfor (USA) who will set up a representative office in the Philippines. The
representative office was named as Pacfor Phils. Mendiola, in said agreement,
designated as president which his salary and company’s overhead shall be borne by the
representative office and shall be funded by Pacfor/ATM being equally owned on 50-50
equity by ATM and Pacfor-USA. The Side Agreement was later amended through a
Revised Operating and Profit Sharing Agreement where petitioner’s salary was
increased.

It happened in this case when Mendiola, wrote and seek a confirmation anent his 50%
equity in Pacfor, but it was denied resulting a filing of a case before this court.

ISSUE:

Whether or not a partnership exists between the parties.

RULING

No. Petitioner is an employee of Pacfor and no partnership between the parties.

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 herein parties.

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.