AGENCY TRUST AND PARTNERSHIP | YU VS. NLRC, 224 SCRA 75, JUNE 30, 1993
YU VS. NLRC,
224 SCRA 75, JUNE 30, 1993
TOPIC/DOCTRINE
In Singson, et al. v. Isabela Saw Mill, et al., the Court held that under facts very similar to those in the case at bar, a withdrawing partner remains liable to a third party creditor of the old partnership. The liability of the new partnership, upon the other hand, in the set of circumstances obtaining in the case at bar, is established in Article 1840 of the Civil Code.
FACTS
Petitioner
Benjamin Yu was formerly the Assistant General Manager of the marble quarrying
and export business operated by a registered partnership with the firm name of
“Jade Mountain Products Company Limited” (“Jade Mountain”). The partnership was
originally organized on 28 June 1984 with Lea Bendal and Rhodora Bendal as
general partners and Chiu Shian Jeng, Chen Ho-Fu and Yu Chang, all citizens of
the Republic of China (Taiwan), as limited partners. The partnership
business consisted of exploiting a marble deposit found on land owned by the
Sps. Ricardo and Guillerma Cruz, situated in Bulacan Province.
According
to petitioner Yu, however, he actually received only half of his stipulated
monthly 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.
Sometime in
1988, without the knowledge of Benjamin Yu, the general partners Lea Bendal and
Rhodora Bendal sold and transferred their interests in the partnership to
private respondent Willy Co and to one Emmanuel Zapanta. Mr. Yu Chang, a
limited partner, also sold and transferred his interest in the partnership to
Willy Co. Between Mr. Emmanuel Zapanta and himself, private respondent Willy Co
acquired the great bulk of the partnership interest. The partnership now constituted
solely by Willy Co and Emmanuel Zapanta continued to use the old firm name of
Jade Mountain.
The actual
operations of the business enterprise continued as before. All the employees of
the partnership continued working in the business, all, save petitioner
Benjamin Yu as it turned out. Petitioner was in fact not allowed to work
anymore in the Jade Mountain business enterprise. His unpaid salaries remained
unpaid.
ISSUE
Whether Benjamin
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 Jade Mountain.
RULING
Yes.
The court
ruled that in the ordinary course of events, the
legal personality of the expiring partnership persists for the limited purpose
of winding up and closing of the affairs of the partnership (Article 1829). In Singson, et al. v. Isabela Saw
Mill, et al., the Court held that under facts very similar to
those in the case at bar, a withdrawing partner remains liable to a third party
creditor of the old partnership. The liability of the new partnership, upon the other
hand, in the set of circumstances obtaining in the case at bar, is established
in Article 1840 of the Civil Code.
Here, the
court ruled 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. Under Article 1840 above,
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. Indeed, a creditor of the old Jade Mountain, like
petitioner Benjamin Yu in respect of his claim for unpaid wages, is entitled to
priority vis-a-vis any claim of any retired or previous partner insofar as such
retired partner’s interest in the dissolved partnership is concerned.
