Mendiola Vs CA 320 Scra 428 PDF

7/4/2016
SUPREME COURT REPORTS ANNOTATED VOLUME 497
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.
Partnership; 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; 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.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 coownership of, or joint interest in partnership property is absent in the relations
between petitioner and private respondent Pacfor. Petitioner is not a partowner of Pacfor Phils. William Gleason, private respondent Pacfors
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.
Labor Law; Employer-Employee Relationship; The principal
consideration is whether the employer has the right to control the manner of
doing the work, and it is not the actual exercise of the right by interfering
with the work, but the right to control, which constitutes the test of the
existence of an employer-employee relationship.
_______________
http://www.central.com.ph/sfsreader/session/00000155c36055149d3e0f08003600fb002c009e/t/?o=False
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* SECOND DIVISION.
347
VOL. 497, JULY 31, 2006
347
Mendiola vs. Court of Appeals
The power of control refers merely to the existence of the power, and not to
the actual exercise thereof. The principal consideration is whether the
employer has the right to control the manner of doing the work, and it is not
the actual exercise of the right by interfering with the work, but the right to
control, which constitutes the test of the existence of an employer-employee
relationship. In the case at bar, private respondent Pacfor, as employer,
clearly possesses such right of control. Petitioner, as private respondent
Pacfors resident agent in the Philippines, is, exactly so, only an agent of the
corporation, a representative of Pacfor, who transacts business, and accepts
service on its behalf.
Employer-Employee Relationship; Constructive Dismissals; Although
there is no reduction of the salary of petitioner, constructive dismissal is still
present because continued employment of petitioner is rendered, at the very
least, unreasonable.Although there is no reduction of the salary of
petitioner, constructive dismissal is still present because continued
employment of petitioner is rendered, at the very least, unreasonable. There is
an act of clear discrimination, insensibility or disdain by the employer that
continued employment may become so unbearable on the part of the
employee so as to foreclose any choice on his part except to resign from
such employment.
PETITION for review on certiorari of the decision and resolution of the

Court of Appeals.
The facts are stated in the opinion of the Court.
Felipe S. Velasquez for petitioner.
Vissia Concepcion C. Calderon for respondent Pacific Forest
Resources Phils., Inc.
PUNO,J.:
On appeal are the Decision1 and Resolution2 of the Court of Appeals,
dated January 30, 2003 and July 30, 2003, respec_______________
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1 CA Rollo, pp. 1058-1072.

2 Id., at p. 1105.
348
348
SUPREME COURT REPORTS ANNOTATED

tively, in CA-G.R. SP No. 71028, affirming the ruling3 of the National

Labor Relations Commission (NLRC), which in turn set aside the July
30, 2001 Decision4 of the labor arbiter. The labor arbiter declared illegal
the dismissal of petitioner from employment and awarded separation pay,
moral and exemplary damages, and attorneys fees.
The facts are as follows:
Private respondent Pacific Forest Resources, Phils., Inc. (Pacfor) is a
corporation organized and existing under the laws of California, USA. It
is a subsidiary of Cellulose Marketing International, a corporation duly
organized under the laws of Sweden, with principal office in Gothenburg,
Sweden.
Private respondent Pacfor entered into a Side Agreement on
Representative Office known as Pacific Forest Resources (Phils.), Inc.5
with petitioner Arsenio T. Mendiola (ATM), effective May 1, 1995,
assuming that Pacfor-Phils. is already approved by the Securities and
Exchange Commission [SEC] on the said date.6 The Side Agreement
outlines the business relationship of the parties with regard to the
Philippine operations of Pacfor. Private respondent will establish a Pacfor
representative office in the Philippines, to be known as Pacfor Phils, and
petitioner ATM will be its President. Petitioners 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.
On July 14, 1995, the SEC granted the application of private
respondent Pacfor for a license to transact business in the Philippines
under the name of Pacfor or Pacfor Phils.7 In its application, private
respondent Pacfor proposed to estab_______________
3 Id., at pp. 28-37.

4 Id., at pp. 118-139.
5 Id., at pp. 682-683.
6 Id., at p. 683.
7 Rollo, p. 63.
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349
VOL. 497, JULY 31, 2006
349
lish its representative office in the Philippines with the purpose of

monitoring and coordinating the market activities for paper products. It
also designated petitioner as its resident agent in the Philippines,
authorized to accept summons and processes in all legal proceedings, and
all notices affecting the corporation.8
In March 1997, the Side Agreement was amended through a
Revised Operating and Profit Sharing Agreement for the Representative
Office Known as Pacific Forest Resources (Philippines),9 where the
salary of petitioner was increased to $78,000 per annum. Both
agreements show that the operational expenses will be borne by the
representative office and funded by all parties as equal partners, while
the profits and commissions will be shared among them.
In July 2000, petitioner wrote Kevin Daley, Vice President for Asia of
Pacfor, seeking confirmation of his 50% equity of Pacfor Phils.10 Private
respondent Pacfor, through William Gleason, its President, replied that
petitioner is not a part-owner of Pacfor Phils. because the latter is merely
Pacfor-USAs representative office and not an entity separate and
_______________
8 Id., at p. 64.
9 CA Rollo, p. 684. Other terms of the revised agreement include:
a)ATM and Pacfor-USA shall jointly manage Pacfor Phils.
b)Pacfor-Phils. will earn commissions at 1.5% of F.O.B. value, the
computation of which shall be shown in a credit memo issued by
Cellmark/Pacfor.
c)Losses, if any, will be reimbursed by Cellmark/
Pacfor to ATM for ATMs share of the loss, for two consecutive years
beginning with the first year of loss.
d)The revised agreement shall take effect on January 1, 1997.
e)Cash paid to the representative office by Pacific Paper belongs to
Pacfor and will be held in trust by ATM.
10 Id., at p. 685.
350
350

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distinct from Pacfor-USA. Its simply a theoretical company with the

purpose of dividing the income 50-50.11 Petitioner presumably knew of
this arrangement from the 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.12
Petitioner claimed that he was all along made to believe that he was in
a joint venture with them. He alleged he would have been better off
remaining as an independent agent or representative of Pacfor-USA as
ATM Marketing Corp.13 Had he known that no joint venture existed, he
would not have allowed Pacfor to take the profitable business of his own
company, ATM Marketing Corp.14 Petitioner raised other issues, such as
the rentals of office furniture, salary of the employees, company car, as
well as commissions allegedly due him. The issues were not resolved,
hence, in October 2000, petitioner wrote Pacfor-USA demanding
payment of unpaid commissions and office furniture and equipment
rentals, amounting to more than one million dollars.15
On November 27, 2000, private respondent Pacfor, through counsel,
ordered petitioner to turn over to it all papers, documents, files, records,
and other materials in his or ATM Marketing Corporations possession
that belong to Pacfor or Pacfor Phils.16 On December 18, 2000, private
respondent Pacfor also required petitioner to remit more than three
hundred thousand-peso Christmas giveaway fund for clients of Pacfor
Phils.17 Lastly, private respondent Pacfor withdrew all
_______________
11 Rollo, p. 528.
12 Id., at p. 527.
13 Ibid.
14 Id., at p. 532.
15 Id., at p. 539.
16 Id., at p. 541.
17 Id., at p. 544.
351
VOL. 497, JULY 31, 2006
351
its offers of settlement and ordered petitioner to transfer title and turn
over to it possession of the service car.18
Private respondent Pacfor likewise sent letters to its clients in the
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Philippines, advising them not to deal with Pacfor Phils. In its letter to
Intercontinental Paper Industries, Inc., dated November 21, 2000,
private respondent Pacfor stated:
Until further notice, please course all inquiries and communications for
Pacific Forest Resources (Philippines) to:
Pacific Forest Resources
200 Tamal Plaza, Suite 200
Corte Madera, CA, USA 94925
(415) 927 1700 phone
(415) 381 4358 fax
Please do not send any communication to Mr. Arsenio Boy T. Mendiola or
to the offices of ATM Marketing Corporation at Room 504, Concorde
Building, Legaspi Village, Makati City, Philippines.19
In another letter addressed to Davao Corrugated Carton Corp.

(DAVCOR), dated December 2000, private respondent directed said
client to please communicate directly with us on any further questions
associated with these payments or any future business. Do not
communicate with [Pacfor] and/or [ATM].20
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.21 In a
memorandum to the employees of Pacfor Phils., dated January 29, 2001,
he stated:
_______________
18 Id., at p. 545.
19 CA Rollo, p. 829.
20 Id., at p. 828.
21 Rollo, pp. 546-550.
352
352

I received a letter from Pacific Forest Resources, Inc. demanding the

turnover of all records to them effective December 19, 2000. The company
records were turned over only on January 26, 2001. This means our jobs
with Pacific Forest were terminated effective December 19, 2000. I am
concerned about your welfare. I would like to help you by offering you to
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work with ATM Marketing Corporation.

Please let me know if you are interested.22
On the basis of the Side Agreement, petitioner insisted that he and

Pacfor equally own Pacfor Phils. Thus, it follows that he and Pacfor
likewise own, on a 50/50 basis, Pacfor Phils. office furniture and
equipment and the service car. He also reiterated his demand for unpaid
commissions, and proposed to offset these with the remaining Christmas
giveaway fund in his possession.23 Furthermore, he did not renew the
lease contract with Pulp and Paper, Inc., the lessor of the office premises
of Pacfor Phils., wherein he was the signatory to the lease agreement.24
On February 2, 2001, private respondent Pacfor placed petitioner on
preventive suspension and ordered him to show cause why no
disciplinary action should be taken against him. Private respondent Pacfor
charged petitioner with willful disobedience and serious misconduct for
his refusal to turn over the service car and the Christmas giveaway fund
which he applied to his alleged unpaid commissions. Private respondent
also alleged loss of confidence and gross neglect of duty on the part of
petitioner for allegedly allowing another corporation owned by
petitioners relatives, High End Products, Inc. (HEPI), to use the same
telephone and facsimile numbers of Pacfor, to possibly steal and divert
the sales and business of private respondent for HEPIs principal,
International Forest Products, a competitor of private respondent.25
_______________
22 Id., at p. 553.
23 Id., at pp. 546-550.
24 Id., at p. 560.
25 Id., at pp. 554-558.
353
VOL. 497, JULY 31, 2006
353
Petitioner denied the charges. He reiterated that he considered the

import of Pacfor President William Gleasons letters as a cessation of his
position and of the existence of Pacfor Phils. He likewise informed
private respondent Pacfor that ATM Marketing Corp. now occupies
Pacfor Phils. office premises,26 and demanded payment of his separation
pay.27 On February 15, 2001, petitioner filed his complaint for illegal
dismissal, recovery of separation pay, and payment of attorneys fees
with the NLRC.28
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In the meantime, private respondent Pacfor lodged fresh charges

against petitioner. In a memorandum dated March 5, 2001, private
respondent directed petitioner to explain why he should not be disciplined
for serious misconduct and conflict of interest. Private respondent
charged petitioner anew with serious misconduct for the latters alleged
act of fraud and misrepresentation in authorizing the release of an
additional peso salary for himself, besides the dollar salary agreed upon
by the parties. Private respondent also accused petitioner of disloyalty
and representation of conflicting interests for having continued using the
Pacfor Phils. office for operations of HEPI. In addition, petitioner
allegedly solicited business for HEPI from a competitor company of
private respondent Pacfor.29
Labor Arbiter Felipe Pati ruled in favor of petitioner, finding there was
constructive dismissal. By directing petitioner to turn over all office
records and materials, regardless of whether he may have retained
copies, private respondent Pacfor virtually deprived petitioner of his job
by the gradual diminution of his authority as resident manager. Petitioners
position as resident manager whose duty, among others, was to maintain
the security of its business transactions and
_______________
26 Id., at p. 560.
27 Id., at p. 561.
28 CA Rollo, p. 652.
29 Rollo, pp. 562-563.
354
354

communications was rendered meaningless. The dispositive portion of

the decision of the Labor Arbiter reads:
WHEREFORE, premises considered, judgment is hereby rendered
ordering herein respondents Cellmark AB and Pacific Forest Resources, Inc.,
jointly and severally to compensate complainant Arsenio T. Mendiola
separation pay equivalent to at least one month for every year of service,
whichever is higher (sic), as reinstatement is no longer feasible by reason of
the strained relations of the parties equivalent to five (5) months in the amount
of $32,000.00 plus the sum of P250,000.00; pay complainant the sum of
P500,000.00 as moral and exemplary damages and ten percent (10%) of the
amounts awarded as and for attorneys fees.
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All other claims are dismissed for lack of basis.

SO ORDERED.30
Private respondent Pacfor appealed to the NLRC which ruled in its

favor. On December 20, 2001, the NLRC set aside the July 30, 2001
decision of the labor arbiter, for lack of jurisdiction and lack of merit.31 It
held there was no employer-employee relationship between the parties.
Based on the two agreements between the parties, it concluded that
petitioner is not an employee of private respondent Pacfor, but a full coowner (50/50 equity). The NLRC denied petitioners Motion for
Reconsideration.32
Petitioner was not successful on his appeal to the Court of Appeals.
The appellate court upheld the ruling of the NLRC.
Petitioners Motion for Reconsideration33 of the decision of the Court
of Appeals was denied.Hence, this appeal.34
Petitioner assigns the following errors:
_______________
30 Id., at p. 150.
31 Id., at pp. 231-240.
32 CA Rollo, pp. 333-335.
33 Id., at pp. 84-86.
34 Rollo, pp. 14-36.
355
VOL. 497, JULY 31, 2006
355

A.THE RESPONDENT COURT OF APPEALS COMMITTED
REVERSIBLE ERROR AND ABUSED ITS DISCRETION IN RENDERING
JUDGMENT AGAINST PETITIONER SINCE JURISDICTION HAS BEEN
ACQUIRED OVER THE SUBJECT MATTER OF THE CASE AS THERE
EXISTS EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE
PARTIES.
B.THE RESPONDENT COURT OF APPEALS COMMITTED
REVERSIBLE ERROR AND ABUSED ITS DISCRETION IN RULING
THAT JURISDICTION OVER THE SUBJECT MATTER CANNOT BE
WAIVED AND MAY BE ALLEGED EVEN FOR THE FIRST TIME ON
APPEAL OR CONSIDERED BY THE COURT MOTU PROP[R]IO.35
The first issue is whether an employer-employee relationship exists

between petitioner and private respondent Pacfor.
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Petitioner argues that he is an industrial partner of the partnership he

formed with private respondent Pacfor, and also an employee of the
partnership. Petitioner insists that an industrial partner may at the same
time be an employee of the partnership, provided there is such an
agreement, which, in this case, is the Side Agreement and the Revised
Operating and Profit Sharing Agreement. The Court of Appeals denied
the appeal of petitioner, holding that the legal basis of the complaint is
not employment but perhaps partnership, co-ownership, or independent
contractorship. Hence, the Labor Code cannot apply.
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 property that may be acquired
thereby and through the efforts of the members.36
_______________
35 Id., at p. 27.
36 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed.,
citing Nelson v. Abraham, 177 P.2d 931 (1947); Henry
356
356

The property or stock of the partnership forms a community of goods, a

common fund, in which each party has a proprietary interest.37 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.39 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 Pacfors 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.40
Besides, a corporation cannot become a member of a partnership in
the absence of express authorization by statute or charter.41 This doctrine
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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
_______________
v. Darnall, 246 Ill.App. 250 (1927), cited in Notes of Decisions, 7 U.L.A. 15 (1949).
citing Darden v. Cox, 123 So.2d 68 (1960).
38 Art. 1811 (1st par.).
39 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed.
40 Fortis v. Gutierrez Hermanos, 6 Phil. 100 (1906).
41 J.M. Tuason v. Bolanos, 95 Phil. 106 (1954); Esteban B. Bautista, Treatise on
Philippine Partnership Law, 1978 ed., citing 60 A.L.R.2d 917; 6 Fletcher,
Cyclopedia of Corporations, Sec. 2520 (1950).
357
VOL. 497, JULY 31, 2006
357
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.
Be that as it may, we hold that on the basis of the evidence, an
employer-employee relationship is present in the case at bar. The
elements to determine the existence of an employment relationship are: (a)
the selection and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employers power to control the
employees conduct. The most important element is the employers
control of the employees conduct, not only as to the result of the work to
be done, but also as to the means and methods to accomplish it.43
In the instant case, all the foregoing elements are present. First, it was
private respondent Pacfor which selected and engaged the services of
petitioner as its resident agent in the Philippines. Second, as stipulated in
their Side Agreement, private respondent Pacfor pays petitioner his salary
amounting to $65,000 per annum which was later increased to $78,000.
Third, private respondent Pacfor holds the power of dismissal, as may be
gleaned through the various memoranda
_______________
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citing 13 Am.Jur. 830; 60 A.L.R.2d 913.
43 Sy v. Court of Appeals, G.R. No. 142293, February 27, 2003, 398 SCRA 301,
citing Caurdanetaan Piece Work ers Union v. Laguesma, 286 SCRA 401, 420
(1998); Maraguinot, Jr. v. National Labor Relations Commission, 284 SCRA 539,
552 (1998); APP Mutual Benefit Association, Inc. v. National Labor Relations
Commission, 267 SCRA 47, 57 (1997); Aurora Land Projects Corp. v. National
Labor Relations Commission, 266 SCRA 48, 59 (1997); Encyclopedia Britannica
(Phils.), Inc. v. National Labor Relations Commission, 264 SCRA 1, 6-7 (1996).
358
358

it issued against petitioner, placing the latter on preventive suspension

while charging him with various offenses, including willful disobedience,
serious misconduct, and gross neglect of duty, and ordering him to show
cause why no disciplinary action should be taken against him.
Lastly and most important, private respondent Pacfor has the power
of control over the means and method of petitioner in accomplishing his
work.
The power of control refers merely to the existence of the power, and
not to the actual exercise thereof. The principal consideration is whether
the employer has the right to control the manner of doing the work, and it
is not the actual exercise of the right by interfering with the work, but the
right to control, which constitutes the test of the existence of an employeremployee relationship.44 In the case at bar, private respondent Pacfor, as
employer, clearly possesses such right of control. Petitioner, as private
respondent Pacfors resident agent in the Philippines, is, exactly so, only
an agent of the corporation, a representative of Pacfor, who transacts
business, and accepts service on its behalf.
This right of control was exercised by private respondent Pacfor
during the period of November to December 2000, when it directed
petitioner to turn over to it all records of Pacfor Phils.; when it ordered
petitioner to remit the Christmas giveaway fund intended for clients of
Pacfor Phils.; and, when it withdrew all its offers of settlement and
ordered petitioner to transfer title and turn over to it the possession of the
service car. It was also during this period when private respondent Pacfor
sent letters to its clients in the Philippines, particularly Intercontinental
Paper Industries, Inc. and DAVCOR, advising them not to deal with
petitioner and/or Pacfor Phils. In its letter to DAVCOR, private
respondent
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_______________
44 Feati University v. Bautista, G.R. No. L-21278, December 27, 1966, 18 SCRA
1191, 1217, citing Amalgamated Roofing Co. v. Travelers Ins. Co., 133 N.E. 259,
261; 300 Ill. 487.
359
VOL. 497, JULY 31, 2006
359
Pacfor replied to the clients request for an invoice payment extension,

and formulated a revised payment program for DAVCOR. This is one
unmistakable proof that private respondent Pacfor exercises control over
the petitioner.
Next, we shall determine if petitioner was constructively dismissed
from employment.
The evidence shows that when petitioner insisted on his 50% equity in
Pacfor Phils., and would not quit however, private respondent Pacfor
began to systematically deprive petitioner of his duties and benefits to
make him feel that his presence in the company was no longer wanted.
First, private respondent Pacfor directed petitioner to turn over to it all
records of Pacfor Phils. This would certainly make the work of petitioner
very difficult, if not impossible. Second, private respondent Pacfor
ordered petitioner to remit the Christmas giveaway fund intended for
clients of Pacfor Phils. Then it ordered petitioner to transfer title and turn
over to it the possession of the service car. It also advised its clients in the
Philippines, particularly Intercontinental Paper Industries, Inc. and
DAVCOR, not to deal with petitioner and/or Pacfor Phils. Lastly, private
respondent Pacfor appointed a new resident agent for Pacfor Phils.45
Although there is no reduction of the salary of petitioner, constructive
dismissal is still present because continued employment of petitioner is
rendered, at the very least, unreasonable.46 There is an act of clear
discrimination, insensibility or disdain by the employer that continued
employment may become so unbearable on the part of the employee so
as to foreclose any choice on his part except to resign from such
employment.47
_______________
45 CA Rollo, pp. 724-733.

46 Philippine Japan Active Carbon Corp. v. National Labor Relations
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Commission, G.R. No. 83239, March 8, 1989, 171 SCRA 164.

47 Unicorn Safety Glass, Inv. v. Basarte, G.R. No. 154689, November 25, 2004,
444 SCRA 287.
360
360

The harassing acts of the private respondent are unjustified. They

were undertaken when petitioner sought clarification from the private
respondent about his supposed 50% equity on Pacfor Phils. Private
respondent Pacfor invokes its rights as an owner. Allegedly, its issuance
of the foregoing directives against petitioner was a valid exercise of
management prerogative. We remind private respondent Pacfor that the
exercise of management prerogative is not absolute. By its very nature,
encompassing as it could be, management prerogative must be exercised
in good faith and with due regard to the rights of laborverily, with the
principles of fair play at heart and justice in mind. The exercise of
management prerogative cannot be utilized as an implement to circumvent
our laws and oppress employees.48
As resident agent of private respondent corporation, petitioner
occupied a position involving trust and confidence. In the light of the
strained relations between the parties, the full restoration of an
employment relationship based on trust and confidence is no longer
possible. He should be awarded separation pay, in lieu of reinstatement.
IN VIEW WHEREOF, the petition is GRANTED. The Court of
Appeals January 30, 2003 Decision in CA-G.R. SP No. 71028 and
July 30, 2003 Resolution, affirming the December 20, 2001 Decision of
the National Labor Relations Commission, are ANNULED and SET
ASIDE. The July 30, 2001 Decision of the Labor Arbiter is
REINSTATED with the MODIFICATION that the amount of
P250,000.00 representing an alleged increase in petitioners salary shall
be deducted from the grant of separation pay for lack of evidence.
SO ORDERED.
Sandoval-Gutierrez, Corona, Azcuna and Garcia, JJ., concur.
_______________
48 Ibid.
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SUPREME COURT REPORTS ANNOTATED VOLUME 497

G.R. No. 159333.July 31, 2006.*

ARSENIO T. MENDIOLA, petitioner, vs. COURT OF APPEALS,

SUPREME COURT REPORTS ANNOTATED VOLUME 497

VOL. 497, JULY 31, 2006

Mendiola vs. Court of Appeals

PETITION for review on certiorari of the decision and resolution of the

SUPREME COURT REPORTS ANNOTATED VOLUME 497

1 CA Rollo, pp. 1058-1072.

SUPREME COURT REPORTS ANNOTATED

tively, in CA-G.R. SP No. 71028, affirming the ruling3 of the National

3 Id., at pp. 28-37.

SUPREME COURT REPORTS ANNOTATED VOLUME 497

VOL. 497, JULY 31, 2006

Mendiola vs. Court of Appeals

lish its representative office in the Philippines with the purpose of

SUPREME COURT REPORTS ANNOTATED

SUPREME COURT REPORTS ANNOTATED VOLUME 497

distinct from Pacfor-USA. Its simply a theoretical company with the

VOL. 497, JULY 31, 2006

Mendiola vs. Court of Appeals

SUPREME COURT REPORTS ANNOTATED VOLUME 497

In another letter addressed to Davao Corrugated Carton Corp.

SUPREME COURT REPORTS ANNOTATED

I received a letter from Pacific Forest Resources, Inc. demanding the

SUPREME COURT REPORTS ANNOTATED VOLUME 497

work with ATM Marketing Corporation.

On the basis of the Side Agreement, petitioner insisted that he and

VOL. 497, JULY 31, 2006

Mendiola vs. Court of Appeals

Petitioner denied the charges. He reiterated that he considered the

SUPREME COURT REPORTS ANNOTATED VOLUME 497

In the meantime, private respondent Pacfor lodged fresh charges

SUPREME COURT REPORTS ANNOTATED

communications was rendered meaningless. The dispositive portion of

SUPREME COURT REPORTS ANNOTATED VOLUME 497

All other claims are dismissed for lack of basis.

Private respondent Pacfor appealed to the NLRC which ruled in its

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Mendiola vs. Court of Appeals

The first issue is whether an employer-employee relationship exists

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Petitioner argues that he is an industrial partner of the partnership he

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The property or stock of the partnership forms a community of goods, a

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is based on the following considerations: (1) that the mutual agency

VOL. 497, JULY 31, 2006

Mendiola vs. Court of Appeals

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42 Esteban B. Bautista, Treatise on Philippine Partnership Law, 1978 ed.,

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it issued against petitioner, placing the latter on preventive suspension

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Mendiola vs. Court of Appeals

Pacfor replied to the clients request for an invoice payment extension,

45 CA Rollo, pp. 724-733.

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Commission, G.R. No. 83239, March 8, 1989, 171 SCRA 164.

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The harassing acts of the private respondent are unjustified. They