Benjamin Yu v. National Labor Relations Commission & Jade Mountain ProductsCo. Ltd.

, Willy Co,
Rhodora Bendal, Lea Bendal, Chiu Shian Jeng and Chen Ho-Fu

G.R. No. 97212 June 30, 1993

Feliciano, J.

Facts:

Yu ex-Assistant General Manager of the marble quarrying and export business operated by a
registered partnership called Jade Mountain Products Co. Ltd. partnership was originally organized with
Bendals as general partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang as limited partners;
partnership business consisted of exploitinga marble deposit in Bulacan. Yu, as Assistant General
Manager, had a monthly salary of 4000. Yu, however, actually received only half of his stipulated salary,
since he had accepted the promise of the partners that the balance would be paid when the firm shall
have secured additional operating funds from abroad. Yu actually managed the operations and finances
of the business; he had overall supervision of the workers at the marble quarry in Bulacan and took
charge of the preparation of papers relating to the exportation of the firms products. general partners
Bendals sold and transferred their interests in the partnership to Co and Emmanuel Zapanta, partnership
was constituted solely by Co and Zapanta; it continued to use the old firm name of Jade Mountain Yu
dismissed by the new partners

Issues:

1. WON the partnership which had hired Yu as Asst. Gen. Manager had beenextinguished and replaced
by a new partnership composed of Co and Zapanta; 2. if indeed anew partnership had come into
existence, WON Yu could nonetheless assert his rights underhis employment contract with the old
partnership as against the new partnership

Held:

1. Yes. Changes in the membership of the partnership resulted in the dissolution of the old partnership
which had hired Yu and the emergence of a new partnership composedof Co and Zapanta.

Legal bases:

Art. 1828. The dissolution of a partnership is the change in the relation of thepartners caused by any
partner ceasing to be associated in the carrying on asdistinguished from the winding up of the business.

Art. 1830. Dissolution is caused:(1) without violation of the agreement between the partners;(b) by the
express will of any partner, who must act in good faith, when no definite termor particular undertaking is
specified;(2) in contravention of the agreement between the partners, where the circumstances donot
permit a dissolution under any other provision of this article, by the express will of anypartner at any
time;

No winding up of affairs in this case as contemplated in Art. 1829: on dissolution thepartnership is not
terminated, but continues until the winding up of partnership affairs iscompleted

the new partnership simply took over the business enterprise owned by the oldpartnership, and
continued using the old name of Jade Mountain Products CompanyLimited, without winding up the
business affairs of the old partnership, paying off its debts,liquidating and distributing its net assets, and
then re-assembling the said assets or mostof them and opening a new business enterprise

2. Yes. the new partnership is liable for the debts of the old partnership

Legal basis: Art. 1840 (see codal)

Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to hisemployment
with the previous partnership, against the new partnership

But Yu is not entitled to reinstatement. Reason: new partnership was entitled to appointand hire a new
gen. or asst. gen. manager to run the affairs of the business enterprisetake over. An asst. gen. manager
belongs to the most senior ranks of management and anew partnership is entitled to appoint a top
manager of its own choice and confidence. Thenon-retention of Yu did not constitute unlawful
termination.

The new partnership had itsown new General Manager, Co, the principal new owner himself. Yus old
position thus became superfluous or redundant.

Yu is entitled to separation pay at the rate of one months pay for each year of service thathe had
rendered to the old partnership, a fraction of at least 6 months being considered asa whole year