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G.R. No. 97212 June 30, 1993 Benjamin Yu v.


Facts: Yu ex-Assistant General Manager of the marble quarrying and export business operated by a registered partnership called Jade Mountain Products Co. Ltd. o partnership was originally organized with Bendals as general partners and Chin Shian Jeng, Chen Ho-Fu and Yu Chang as limited partners; partnership business consisted of exploiting a marble deposit in Bulacan Yu, as Assistant General Manager, had a monthly salary of 4000. Yu, however, actually received only half of his stipulated 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. Yu actually managed the operations and finances of the business; he had overall supervision of the workers at the marble quarry in Bulacan and took charge of the preparation of papers relating to the exportation of the firms products. o o general partners Bendals sold and transferred their interests in the partnership to Co and Emmanuel Zapanta partnership was constituted solely by Co and Zapanta; it continued to use the old firm name of Jade Mountain

Yu dismissed by the new partners

Issues: W/N the partnership which had hired Yu as Asst. Gen. Manager had been extinguished and replaced by a new partnership composed of Co and Zapanta; W/N if indeed a new partnership had come into existence, WON Yu could nonetheless assert his rights under his employment contract with the old partnership as against the new partnership

Held: Yes to both

Ratio: As to the First Issue Changes in the membership of the partnership resulted in the dissolution of the old partnership which had hired Yu and the emergence of a new partnership composed of Co and Zapanta.

Art. 1828. The dissolution of a partnership is the change in the relation of the partners caused by any partner ceasing to be associated in the carrying on as 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;

No winding up of affairs in this case as contemplated in Art. 1829: on dissolution the partnership is not terminated, but continues until the winding up of partnership affairs is completed

The new partnership simply took over the business enterprise owned by the old 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

As to the Second Issue The new partnership is liable for the debts of the old partnership as provided in Art. 1840 (see codal)

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 partnership

But Yu is not entitled to reinstatement. Reason: new partnership was entitled to appoint and hire a new gen. or asst. gen. manager to run the affairs of the business enterprise take over. An asst. gen. 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 Yu did not constitute unlawful termination. The new partnership had its own new General Manager, Co, the principal new owner himself. Yus old position thus became superfluous or redundant.

Yu is entitled to separation pay at the rate of one months pay for each year of service that he had rendered to the old partnership, a fraction of at least 6 months being considered as a whole year.

Deluao vs. Casteel Facts: Nicanor Casteel filed a total of 4 fishpond applications for a big tract of swampy land inDavao. After the first three having been unsuccessful, he filed a motion for reconsideration from the denial of the 3rd one, and while this was pending, he filed a fourth application following the district forester of the Bureau of Lands advise to do so. Casteel was the original occupant and applicant since before the last World War. o He wanted to preclude subsequent applicants from entering and spreading themselves within the area applied for by him, by expanding his occupation thereof by the construction of dikes and the cultivation of marketable fishes. o Thus, he borrowed money from the Deluaos to finance needed improvements for the fishpond, and was compelled by force of this circumstance to enter into the contract of partnership to divide the fishpond after the award (as provided in a letter dated November 15, 1949 of Casteel to Felipe Deluao). This, however, was all that the appellee spouses did. The appellant single-handedly opposed rival applicants who occupied portions of the fishpond area, and relentlessly pursued his claim to the said area up to the Office of the DANR Secretary, until it was finally awarded to him. There is here neither allegation nor proof that, without the financial aid given by the Deluaos in the amount of P27,000, the area would not have been awarded nor adjudicated to Casteel. This explains, perhaps, why the DANR Secretary did not find it equitable to award one-half of the fishpond to the appellee spouses despite their many appeals and motions for reconsideration. The appellees submit as their fourth proposition that there being no prohibition against joint applicants for a fishpond permit, the fact that Casteel and Deluao agreed to acquire the fishpond in question in the name of Casteel alone resulted in a trust by operation of law (citing art. 1452, Civil Code) in favor of the appellees as regards their one-half interest. Issue: of law Held: Ratio: A trust is the right, enforceable in equity, to the beneficial enjoyment of property the legal title to which is in another. However, since we held as illegal the second part of the contract of partnership between the parties to divide the fishpond between them after the award, a fortiori, no rights or obligations could have arisen therefrom. Inescapably, no trust could have resulted because trust is founded on equity and can never result from an act violative of the law. Art. 1452 of the Civil Code does not support the appellees' stand because it contemplates an agreement between two or more persons to purchase property capable of private ownership the legal title of which is to be taken in the name of one of No W/N the agreement between casteel and deluao to acquire the fishpond in question resulted in a trust by operation

them for the benefit of all. In the case at bar, the parties did not agree to purchase the fishpond, and even if they did, such is prohibited by law, a fishpond of the public domain not being susceptible of private ownership. The foregoing is also one reason why Gauiran vs. Sahagun (93 Phil. 227) is inapplicable to the case at bar. The subject matter in the said case is a homestead which, unlike a fishpond of the public domain the title to which remains in the Government, is capable of being privately owned. It is also noteworthy that in the said case, the Bureau of Lands was not apprised of the joint tenancy between the parties and of their agreement to divide the homestead between them, leading this Court to state the possibility of nullification of said agreement if the Director of lands finds out that material facts set out in the application were not true, such as the statement in the application that it "is made for the exclusive benefit of the applicant and not, either directly or indirectly, for the benefit of any other person or persons, corporations, associations or partnerships." In the case at bar, despite the presumed knowledge acquired by DANR administrative officials of the partnership to divide the fishpond between the parties, due largely to the reports made by the Deluaos, the latter's numerous appeals, motion for intervention and motions for reconsideration of the DANR Secretary's decisions in DANR cases 353 and 353-B, were all disregarded and denied.