Yu Vs NLRC (Liability of Person/Partnership Continuing the Business)

Petitioner Benjamin Yu was formerly the assistant manager of Jade Mountain Products Company Limited engaged in marble quarrying and export business operated by a registered partnership originally organized with Lea Bendal and Rhodora Bendal as general partners and Chiu Shian Jeng, Chen Ho-Fu and Yu Chang as limited partners.

The partnership business consisted of exploiting a marble deposit found on land owned by the Sps Cruz under a Memorandum of Agreement.

Petitioner was hired by virtue of the partnership resolution as assistant manager with a salary of 4,000 pesos from which according to petitioner he only received half and had accepted the promise of the partners that the balance would be paid when the firm shall secure addiditonal operating funds from abroad.

Petitioner manage the operations and finances of the business. Without the knowledge of the petitioner, the partners sold and transferred their interest in the

partnership to private respondent Willy Co and Emmanuel Zapanta. The partnership solely constitute of Co and Zapanta and moved their main office from Makati to Mandaluyong.

All employees of the partnership continued working in the business except for petitioner. When Petitioner reported to the mandaluyong office, he was informed by respondent Co that it was for

him to decide whether or not he was responsible for the obligation of the old partnership including petitioner’s unpaid salary and that petitioner was not allowed to work anymore in Jade Mountain Business enterprise.

Petitioner Yu file a complaint for illegal dismissal and recovery of unpaid salaries against the respondents, the complaint was denied the respondents contending that Petitioner was never hired as the employee of the present or new partnership.

Labor Arbiter decided in favor of petitioner while NLRD reverse the decision of the Labor Arbiter.

Issue: W/N the New partnership consisting of Respondent Co and Zapanta is responsible for the unpaid salaries of the petitioner?

Ruling: Yes the new partnership is liable

The occurrence of the event from which the old partner sold their interest to the new partners was enough to constitute a new partnership but instead of dissolution and winding up the partnership affairs, the new partnership simply took over the business enterprise owned by the preceding partnership.

It is not only the retiring partners but also the new partnership itself which continued the business of the old, dissolved, one or liable for the debts of the preceding partnership.

Under Article 1840, the creditors of the Old Jade Mountain are also the creditors of the new Jade Mountain which continued the business of the old one without liquidation of he partnership affairs.

Thus Benjamin Yu in respect to his claim for unpaid wages, is entitled to priority vis-à-vis any claim of any retired or previous partner insofar as such retired partner’s intrest in the dissolved partnership is concerned. Petitioner is entitled to eforce his claim for unpaid salaries as well as other claim relating to his employment with the previous partnership against the new Jade Mountain.

Petitioner should be considered redundant as for his employment and should be paid separation pay.