Topic Dissolution and winding up Digested by: Maleficent

Title of the Case BENJAMIN YU, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY LIMITED, WILLY CO,
RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-FU, respondents.

Doctrine (Syllabus)
- The dissolution of a partnership is not equivalent to its termination, the partnership continues to subsist until the winding up of affairs
- In the given case, the business of the old partnership was simply continued by the new one without the old partnership going through dissolution and winding
up of its business affairs. Such winding up constitutes, the payment of debts liquidating and distribution of net assets, and then the reassembling the said
assets.

Facts:
Benjamin Yu was the assistant General Manager of the Marble Quarrying & export business operated a registered partnership under the firm name “Jade Mountain
Products Co. Unlimited”
The General Partners are: Rhodora Bendal & Lea Bendal, while the Limited Partners are: Chui Shian Jeng, Chen Jo-fu and Yu chang, all citizens of China.

The business focused on exploiting marble deposits found on the land owned by the Spouses Cruz under a memorandum agreement. Yu, being the general manager was
incharge in operations, finances and overall supervision. Yu, was, however not paid the 4,000 pesos monthly but only received half of his wage and relied on the fact that
he shall be paid later when the partnership would start to gain more profits.

Subsequently, without his knowledge, the General partners and the limited partner Yu Chang sold their interest in the partnership to Willy Co & Emmauel Zapanta but
continued to use the old firm name. The main office was transferred from Makati to Mandaluyong and when Yu reported for work, he was not allowed to work by Willy
and Co.

Because of the circumstances, Yu then filed for Illegal Dismissal. Willy and Co however denied the charges and alleged that Yu was never actually an employee by the
present or the old partnership.

LA ruling: There was Illegal Dismissal

Willy & Co. Appealed
NLRC: There is no Illegal dismissal and that the new partnership Willy & Co. and Zapanta was under no obligation to absorb the obligations of the old partnership.
Benjamin Yu filed a petition for certiorari.

Benjamin Yu’s Argument: The partnership has a separate and distinct personality from each of the members and the independent legal personality subsists
notwithstanding the changes in the identity of partners, hence, his contract with Jade mountain remained unaffected.

Issue 1
1) Whether or not the Partnership which hired Yu as General Manager has been extinguished and replaced with a new partnership?

Issue 2 2) If yu has any right of employment under the circumstances

Ruling 1
1. The old partners had already sold 82% of their interest and such is enough to constitute that there was a new partnership. Further,
the withdrawal and retirement of the old partners who the interest further support this claim. However, this does not mean that
the old partnership has been terminated. The dissolution of a partnership is not equivalent to its termination, the partnership
continues to subsist until the winding up of affairs.

In the given case, the business of the old partnership was simply continued by the new one without the old partnership going
through dissolution and winding up of its business affairs. Such winding up constitutes, the payment of debts liquidating and
distribution of net assets, and then the reassembling the said assets.

Ruling 2 2. Because of the circumstances that happened, Both the old partners and the new partners are liable for the debts of the preceding
partnership. Under Art 1840, creditors of the old Jade mountain are also creditors of the new Jade mountain which continued the
business of the old one without liquidation of the partnership affairs. Hence, Benjamin Yu is entitled for his claims of unpaid
salaries.

However, there was no illegal dismissal in this case. Benjamin Yu was validly dismissed on the ground of redundancy as Willy
& Co. already hired a new general manager. There is, however, bad faith on the part of willy & co. because it did not notify Yu of
the termination, hence, the court awards moral damages to Benjamin Yu.

Dispositive Portion

3B 2019-2020: StratPlan for Prelims

 WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE COURSE, the Comment filed by private respondents is
treated as their Answer to the Petition for Certiorari, and the Decision of the NLRC dated 29 November 1990 is hereby NULLIFIED and SET
ASIDE. A new Decision is hereby ENTERED requiring private respondent Jade Mountain Products Company Limited to pay to petitioner
Benjamin Yu the following amounts:

(a) for unpaid wages which, as found by the Labor Arbiter, shall be computed at the rate of
P2,000.00 per month multiplied by thirty-six (36) months (November 1984 to December 1987)
in the total amount of P72,000.00;

(b) separation pay computed at the rate of P4,000.00 monthly pay multiplied by three (3) years of
service or a total of P12,000.00;

(c) indemnity for moral damages in the amount of P20,000.00;

(d) six percent (6%) per annum legal interest computed on items (a) and (b) above, commencing
on 26 December 1989 and until fully paid; and

(e) ten percent (10%) attorney's fees on the total amount due from private respondent Jade
Mountain.

Costs against private respondents.

SO ORDERED.

Keywords

3B 2019-2020: StratPlan for Prelims