G.R. No.

159333 July 31, 2006

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

Facts:
• Pacific Forest Resources (Pacfor) is a corporation organized and existing under the laws of
California. They entered into an agreement with Mendiola.
• The agreement outlines the business relationship between them, that Pacfor will establish a
representative office in the PH and Mendiola will be the President.
• It also provided that the base salary and overhead expenditures will be borne and funded by
Mendiola, being equally owned on 50-50 equity.
• Years later, Mendiola wrote Pacfor’s Vice President for Asia to confirm about his 50% equity
of Pacfor. He was told he is not a part-owner since his office is merely a representation of the
theoretical company with the purpose of dividing the income to 50-50.
• Mendiola then filed for his unpaid commissions because he was made to believe there was a
joint venture between them. Acting on these complaints, Pacfor dismissed Mendiola.
• Hence, this petition.

Issue:
• Whether or not there was a partnership between Mendiola and Pacfor.

Ruling:
• No. 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.
• 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.
• The essential element is the community of interest which is absent in the case.
• Petitioner is not a part-owner of Pacfor. It was established already when he said that Pacfor 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.
• Thus, the parties in this case, merely shared profits. This alone does not make a partnership.
• Article 1811: A partner is co-owner with his partners of specific partnership property. The
incidents of this co-ownership are such that: (1) A partner, subject to the provisions of this Title
and to any agreement between the partners, has an equal right with his partners to possess
specific partnership property for partnership purposes.