Saturday, October 13, 2007 Partnership By Dominador A. Almirante Labor case digest
PRIVATE respondent Pacific Forest Resources Philippines Inc. (Pacfor) entered into a Side Agreement with petitioner Arsenio T. Mendiola (ATM), which provided, among others, that it will establish a Pacfor representative office in the Philippines and that petitioner ATM will be its president. ATM’s base salary and the overhead expenditures shall be borne by the representative office and funded by Pacfor and ATM. Pacfor Philippines was equally owned on a 50-50 equity by ATM and Pacfor-USA.
In a complaint for illegal dismissal, recovery of separation pay and payment of attorney’s fees, petitioner ATM argued that he is an industrial partner and also an employee of Pacfor. Did the argument find merit?
Ruling: No. He is only an employee and not a partner.
We hold that petitioner is an employee of private respondent Pacfor and that no partnership or co-ownership exists between the parties.
In a partnership, the members become co-owners of what is contributed to the firm capital and of all properties 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 a 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 Philippines. William Gleason, Pacfor’s president, established this fact when he said that Pacfor Philippines 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. (Arsenio T. Mendiola versus CA G.R. No. 159333, July 31, 2006.)
