CASE NO 11
Yu vs NLRC , G.R. No. 97212, June 30, 1993
Feliciano, J.
Facts:
Petitioner Benjamin Yu used to be the Assistant General Manager of the marble quarrying and export
business operated by a
registered partnership named under Jade Mountain. The partnership was originally organized with
Bendals as general manager
and three (3) limited partners (Chin Shian Jeng, Chen Ho-Fu and Yu Chang). Petitioner Yu, as assistant
general manager,
received monthly salary. However, he actually received only half of his stipulated salary with 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. The majority of the founding partners sold their interests in
said partnership to Willy
Co and Emmanuel Zapanta without Yu’s knowledge. A new partnership was constituted solely by Co and
Zapanta and it
continued to use the old firm name of Jade Mountain. Thus, Yu filed a complaint for illegal dismissal,
recovery of unpaid wages
and damages.
Issues:
(1) WON the partnership which had hired petitioner Yu as Assistant General Manager had been
extinguished and replaced by
a new partnerships composed of Willy Co and Emmanuel Zapanta; and
(2) if indeed a new partnership had come into existence, WON petitioner Yu could nonetheless assert his
rights under his
employment contract as against the new partnership.
Held:
(1) Yes. The SC held that the legal effect of the changes in the membership of the partnership was the
dissolution of the old
partnership which had hired petitioner in 1984 and the emergence of a new firm composed of Willy Co
and Emmanuel
Zapanta in 1987.
Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any
partner ceasing to
be associated in the carrying on as distinguished from the winding up of the business. (Emphasis
supplied)
Art. 1830. Dissolution is caused:
(1) without violation of the agreement between the partners; xxx xxx xxx
(b) by the express will of any partner, who must act in good faith, when no definite term or particular
undertaking is
specified; xxx xxx xxx
(2) in contravention of the agreement between the partners, where the circumstances do not permit a
dissolution under
any other provision of this article, by the express will of any partner at any time; xxx xxx xxx (Emphasis
supplied)
(2) Yes. The occurrence of events which precipitate the legal consequence of dissolution of a partnership
do not, however,
automatically result in the termination of the legal personality of the old partnership. Article 1829 of the
Civil Code states that:
[o]n dissolution the partnership is not terminated, but continues until the winding up of partnership
affairs is
completed.
Art. 1840. In the following cases creditors of the dissolved partnership are also creditors of the person or
partnership
continuing the business:
(1) When any new partner is admitted into an existing partnership, or when any partner retires and
assigns (or the
representative of the deceased partner assigns) his rights in partnership property to two or more of the
partners, or to one or
more of the partners and one or more third persons, if the business is continued without liquidation of
the partnership affairs;
(2) When all but one partner retire and assign (or the representative of a deceased partner assigns) their
rights in partnership
property to the remaining partner, who continues the business without liquidation of partnership
affairs, either alone or with
others;
(3) When any Partner retires or dies and the business of the dissolved partnership is continued as set
forth in Nos. 1 and 2 of
this Article, with the consent of the retired partners or the representative of the deceased partner, but
without any assignment
of his right in partnership property;
(4) When all the partners or their representatives assign their rights in partnership property to one or
more third persons who
promise to pay the debts and who continue the business of the dissolved partnership;
(5) When any partner wrongfully causes a dissolution and remaining partners continue the
businessunder the provisions of
article 1837, second paragraph, No. 2, either alone or with others, and without liquidation of the
partnership affairs;
(6) When a partner is expelled and the remaining partners continue the business either alone or with
others without
liquidation of the partnership affairs;
The liability of a third person becoming a partner in the partnership continuing the business, under this
article, to the creditors
of the dissolved partnership shall be satisfied out of the partnership property only, unless there is a
stipulation to the contrary.
When the business of a partnership after dissolution is continued under any conditions set forth in this
article the creditors of
the retiring or deceased partner or the representative of the deceased partner, have a prior right to any
claim of the retired
partner or the representative of the deceased partner against the person or partnership continuing the
business on account of
the retired or deceased partner's interest in the dissolved partnership or on account of any
consideration promised for such
interest or for his right in partnership property.
Nothing in this article shall be held to modify any right of creditors to set assignment on the ground of
fraud . xxx xxx xxx
(Emphasis supplied)
Ruling: the petition for certiorari is GRANTED DUE COURSE.
