G.R. No. 97212. June 30, 1993.* BENJAMIN YU, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HO-FU, respondents.

Labor Law; Corporation Law; Partnership; Court agrees with the result reached by the NLRC that the legal effect of the changes in the membership of the partnership was the dissolution of the old partnership.—In respect of the first issue, we agree with the result reached by the NLRC, that is, 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. Same; Same; Same; Occurrence of events which precipitate the legal consequence of dissolution of a partnership do not automatically result in the termination of the legal personality of the old partnership.—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 Same; Same; Same; The legal personality of the expiring partnership persists for the limited purpose of winding up and closing of the affairs of the partnership.—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. In the case at bar, it is important to underscore the fact that the business of the old partnership was simply continued by the new partners, without the old partnership undergoing the procedures relating to dissolution and winding up of its business affairs. In other words, the new partnership simply took over the business enterprise owned by the preceding partnership, and continued using the old name of Jade Mountain Products Company Limited, without winding up the business affairs of the old partnership, paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets or most of them and opening a new business enterprise. Same; Same; Same; A withdrawing partner remains liable to a third party creditor of the old partnership.—What is important for present purposes is that, under the above described situation, not only the retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which continued the business of the old, dissolved, one, are liable for the debts of the preceding partnership. 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. Same; Same; Same; 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.— 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. Same; Same; Same; The new partnership is entitled to appoint and hire a new general or assistant general manager to run the affairs of the business enterprise taken over.—It is at the same time also evident to the Court that the new partnership was entitled to appoint and hire a new general or assistant general manager to run the affairs of the business enterprise taken over. An assistant general manager belongs to the most senior ranks of management and a new partnership is entitled to appoint a top manager of its own choice and confidence. The non-retention of Benjamin Yu as Assistant General Manager did not therefore constitute unlawful termination, or termination without just or authorized cause. We think that the precise authorized cause for termination in the case at bar was redundancy.