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 operatedby
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,
actuallyreceived only half of his stipulated salary, since he had accepted the
promise of thepartners that the balance would be paid when the firm shall have secured
additionaloperating funds from abroad. Yu actually managed the operations and finances of
thebusiness; he had overall supervision of the workers at the marble quarry in Bulacan andtook
charge of the preparation of papers relating to the exportation of the firm’s products.
 general partners Bendals sold and transferred their interests in the partnership to Co
andEmmanuel Zapanta
 partnership was constituted solely by Co and Zapanta; it continued to use the old firmname 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:

1. 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.
 o 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;
o 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
o 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)
o Yu is entitled to enforce his claim for unpaid salaries, as well as other claims relating to
his employment with the previous partnership, against the new partnershipBut 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.

o The new partnership had itsown new General Manager, Co, the principal new owner
himself. Yu’s old position thusbecame superfluous or redundant.

o Yu is entitled to separation pay at the rate of one month’s 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.