No.

23

Benjamin Yu vs. National Labor Relations Commission (NLRC)

FACTS:
Petitioner Yu was hired as the Assistant General Manager of Jade Mountain Products
Company Limited primarily responsible for the overall operations of marble quarrying
and export business of said partnership. He was hired by a virtue of a Partnership
Resolution in 1985 with a monthly salary of P4,000.00. Initially he received only half of
his stipulated monthly salary and was promised by the partners that the balance would
be paid upon securing additional operating funds from abroad. However, in 1988
without his knowledge the general partners as well as one of the limited partners sold
and transferred their interest to Willy Co and Emmanuel Zapanta. Thus the new major
partners decided to transfer the firms main office but opted to continue the operation of
the old partnership under its old firm name and with all its employees and workers
except for the petitioner. Upon knowing of the changes in the partnership, petitioner
went to the new main office to meet the new partners and demand the payment of his
unpaid salaries, but the latter refused to pay him and instead informed him that since he
bought the business from the original partners, it was for him to decide whether or not
he was responsible for the obligations of the old partnership including petitioners unpaid
salaries. Hence, petitioner was dismissed from said partnership.

ISSUES:
Whether the partnership which had hired the petitioner as Asst. General Manager had
been extinguished and replaced by a new partnership composed of Willy Co and
Emmanuel Zapanta.
Whether petitioner could assert his rights under his employment contract as against the
new partnership

HELD:
Yes. The legal effect of the changes in the membership of the partnership was the
dissolution of the old partnership which had hired the petitioner in 1984 and the
emergence of the new firm composed of Willy Co and Emmanuel Zapanta in 1988. This
is based on the following provisions:
Art. 1828. The dissolution of partnership is the change in the relation of the partners
caused by any partner ceasing to be associated in the carrying on as a distinguished 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
term or particular undertaking is specified.
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;

However, the legal consequence of dissolution of a partnership do not automatically

result in the termination of the legal personality of the old partnership as according to
Art. 1829, on dissolution of the partnership is not terminated, but continues until the
winding up of the partnership affairs is completed. The new partnership simply
continued the operations of the old partnership under its old firm name without winding
up the business affairs of the old partnership.
2. Yes. Under Art. 1840, creditors of the old partnership are also creditors of the new
partnership which continued the business of former without liquidation of the
partnership affairs. Thus, creditor of the old Jade Mountain, such as the petitioner is
entitled to enforce his claim for unpaid salaries, as well as other claims relating to his
employment with the old partnership against the new Jade Mountain.