Civil Law,  Legally Yours

Yu v. NLRC and Jade Mountain

Yu v. NLRC and Jade Mountain

G.R. No. 97212; June 30, 1993


Lea Bendal and Rhodora Bendal (as general partners), and Jeng, Chen Ho-Fu and Yu Chang as limited partners, operated a registered partnership in the name of Jade Mountain engaged in the business of quarrying and exporting marble. Yu was the Assistant General Manager who had a monthly salary of P4, 000.00 – with only half of his salary being paid so far. After some time, all the said partners sold their shares to Co and Zapanta. Unfortunately, Yu remained to be unpaid and was not retained by Co and Zapanta. Thus, he approached the two to be reinstated and to be paid salary. However, the two averred that they were not obliged to either reinstate nor pay Yu since a new partnership was formed. Thus, Yu filed for illegal dismissal and recovery of unpaid salaries. The Labor Arbiter approved his claim. However, the NLRC reversed the decision holding that a new partnership was indeed formed and that due to the new partnership, Jade Mountain was not obliged to retain Yu, and that the latter should seek payment from the old partners.


  1. Was the old partnership dissolved?
  2. May Yu recover his unpaid salary from the new partners
  3. May Yu be reinstated


  1. No, the old partnership was not dissolved. The Court held that Art. 1828 provides that a partnership may be dissolved by a change in partners in relation to the rules of Art. 1830. However, Art. 1828 provides that the legal personality of the expiring partnership persists for the limited purpose of winding up and closing of the affairs of the partnership – such as the payment of its debts, liquidation, and distribution of the new assets, and the assets being reassembled to open a new business enterprise. In this case, the debt Jade Mountain owed to Yu was still unpaid. Thus, the legal personality of the old partnership is not terminated. The business of the old partnership was simply continued by the new partners, without the old partnership undergoing procedures relating to the dissolution and winding up of its business affairs.
  2. Yes, Yu may still recover his unpaid salary from the new partners. The Court held that under Art. 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 the partnership affairs. Thus, Yu may claim from the new Jade Mountain. Furthermore, he may also claim from the old creditors as well.
  3. No, Yu may not be reinstated under the new partnership. The Court held that the new partnership was entitled to appoint another manager in place of Yu to run the affairs of the business. The non-retention of Yu cannot be considered unlawful termination or termination without just cause.

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