Rojas v. Maglana
National Labor Relations Commission & Jade
Facts:
Maglana and Rojas executed their Articles of Co-Partnership called
Eastcoast Development Enterprises (EDE). It was a partnership with
an indefinite term of existence. Maglana shall manage the business
affairs while Rojas shall be the logging superintendant and shall
manage the logging operation. They shall share in all profits and
loss equally. Due to difficulties encountered they decided to avail
of the sources of Pahamatong as industrial partners. They again
executed their Articles of Co-Partnership under EDE. The term is 30
years. After sometime Pamahatong sold his interest to Maglana and
Rojas including equipment contributed. After withdrawal of
Pamahatong, Maglana and Rojas continued the partnership. After 3
months, Rojas entered into a management contract with another
logging enterprise. He left and abandoned the partnership. He even
withdrew his equipment from the partnership and was transferred
to CMS. He never told Maglana that he will not be able to comply
with the promised contributions and he will not work as logging
superintendent. Maglana then told Rojas that the latter share will
just be 20% of the net profits. Rojas took funds from the partnership
more than his contribution. Thus, Maglana notified Rojas that he
dissolved the partnership.
Issue: What is the nature of the partnership and legal relationship
of Maglana and Rojas after Pahamatong retired from the second
partnership
Ruling:
It was not the intention of the partners to dissolve the first
partnership, upon the constitution of the second one, which they
unmistakably called additional agreement. Otherwise stated even
during the existence of the second partnership, all business
transactions were carried out under the duly registered articles. No
rights and obligations accrued in the name of the second
partnership except in favor of Pahamatong which was fully paid by
the duly registered partnership.
Benjamin Yu v.
Mountain Products Co. Ltd., Willy Co, Rhodora Bendal, Lea
Bendal, Chiu Shian Jeng and Chen Ho-Fu
G.R. No. 97212 June 30, 1993
Feliciano, J.
Facts:
Yu ex-Assistant General Manager of the marble quarrying
and export business operated by a registered partnership called
Jade Mountain Products Co. Ltd.
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.
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: 1. WON the partnership which had hired Yu as Asst. Gen.
Manager had been extinguished and replaced by a new partnership
composed of Co and Zapanta; 2. 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: 1. Yes. 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.
Legal bases:
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
2. Yes. the new partnership is liable for the debts of the old
partnership
Legal basis: 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.
Najim v De Mesa
September 21, 1987| Limited Partnership
Digester: Anna Mickaella Lingat
SUMMARY: Levi De Mesa, Khalid Najim, and James Greenberg are
partners of the limited partnership International Skill Development
Co. Ltd, engaged in the business of labor recruitment and
placement for overseas employment. De Mesa is a general partner,
while Najim and Greenberg are limited partners. Najim wrote De
Mesa a letter of formal notice of his withdrawal from their
partnership on the alleged ground of repeated failure of De Mesa to
account for his management of the partnership. Najim also caused
the publication in a newspaper and sent notice to their clients of
the dissoluation of the partnership. Najim then filed a Petition for
Dissolution with injunction enjoining De Mesa and Greenberg from
continuing with the business. SEC held that the withdrawal of
limited partner Najim did not dissolve the partnership. NCC only
provides that the withdrawal of a general partner, not a limited
partner, operates the dissolution of the partnership (Art 1860). The
Articles of Partnership also provides for the non-dissolution and
continuation of the business. Najim also failed to prove his
allegations, while De Mesa was able to show that Najim has actively
participated in the business. Najim acted in bad faith in publishing
in newspaper and notifying the clients of the dissolution of the
partnership prior to his filing of the petition for dissolution with
the SEC.
DOCTRINE: The withdrawal of a general partner, not a limited
partner, in a limited partnership, that operates the dissolution of
the partnership. The dissolution can even be prevented, if the
business of the partnership is continued by the remaining general
partners.
There is no provision in NCC which provides that a withdrawal or
retirement of a limited partner/s shall dissolve a limited
partnership. However, there is a provision which states that the
retirement, death, insolvency, insanity, or civil interdiction of a
general partner dissolves the partnership, unless the business is
continued by the remaining parties: (1) under a right so to do stated
in the certificate; or (2) With the consent of all members, Art 1860.
FACTS:
Levi de Mesa registered a business name under the style
International Skill Development Co. Ltd. (Philippines).
De Mesa, together with Khalid Najim and James Greenberg,
formed and organized a limited partnership known as the
International Skill Develoment Co. Ltd. using De Mesas tradename
for the purpose of establishing a local and development firm.
o Term of partnership: 10 years from the execution of
agreement
o Capital of partnership: P150,000
Levi De Mesa P112,500
Khalid Najim P18,750
James Greenberg P18,750
o De Mesa is the general partner, while Najim and Greenberg
are the limited partners.
o Articles of Partnership was duly registered with SEC
o The partnership is engaged in the business of labor
recruitment and placement for overseas employment and has
subsisting contracts with foreign clients duly approved and
accredited by POEA and DOLE.
Najim wrote De Mesa a letter of formal notice of his
withdrawal from their partnership on the alleged ground of
repeated failure of De Mesa to account for his management of the
partnership. De Mesa replied and denied the accusation against
him.
Najim issued notice to the public through a newspaper
advertisement that the partnership has been dissolved. He also sent
letters to client informing them of the alleged dissolution.
Najim filed a Petition for Dissolution with a prayer for
injunction enjoining De Mesa and Greenberg from continuing with
the partnership business.
De Mesa filed a petition with SEC for the continuation of the
partnership. He also sent a letter to SEC informing it of the
withdrawal of Najim as a partner.
RULING: Petition for dissolution with injuction is dismissed for lack
or merit. Najim is perpetually enjoined from causing publication
and making representations about the dissolution of the
partnership.
Whether the withdrawal of limited partner Najim dissolved the
partnership? - NO
Limited Partnerships are governed by provisions of the
NCC, Chapter 4, Arts. 1843 to 1866 and the related Rules and
Regulations of the SEC.
There is no provision in NCC which provides that a
withdrawal or retirement of a limited partner/s shall dissolve a
limited partnership.
However, there is a provision which states that the
retirement, death, insolvency, insanity, or civil interdiction of a
general partner dissolves the partnership, unless the business is
continued by the remaining parties: (1) under a right so to do stated
in the certificate; or (2) With the consent of all members, Art 1860.
Therefore, the withdrawal of a general partner, not a limited
partner, in a limited partnership, that operates the dissolution of
the partnership. The dissolution can even be prevented, if the
business of the partnership is continued by the remaining general
partners.
As applied in this case:
The withdrawal of Najim, who is a limited partner, did not
dissolve the partnership, especially do that the remaining partners
De Mesa and Greenberg choose to continue the partnership.
The non-dissolution and continuation of the partnership by
the remaining partners: De Mesa and Greenberg is, also buttressed
and authorized by the Articles of Partnership of International Skill
Development Co. Ltd. under Article 9, which states:
o "ARTICLE 9. That if during the term of the partnership, any
of the partners shall die, the partnership shall continue among the
surviving partners, unless one of the latter expressly requests for
dissolution in which case the Articles shall be amended
accordingly."
Whether an Amendment to the Articles of Partnership for continuation of
the business operations of the said limited partnership be allowed to be
registered? - YES
The intention of the remaining partners, De Mesa and Greenberg,
to continue with the limited partnership must be allowed by amending the
Articles of Partnership.
The amendment certificate to be filed with the SEC may either be
for the continuation of the said partnership by the remaining partners or
the addition of another limited partner or general partner, with the consent
of the original partners, De Mesa and Greenberg (Art 1849 and 1850)
Najim failed to substantiate his claim that De Mesa failed to
properly account for the management of the partnership. On the other hand,
De Mesa explained in his testimony that he has furnished Najim with copies
of the quarterly financial statements of the partnership, and that Najim
actively participated in the management of the partnership and was even a
signatory to the checks that were issued in the course of its operations.
Najim acted in bad faith considering he fact that he caused the
publication in the newspaper of notices on the alleged dissolution and
notice to the clients prior to his filing of complaint for dissolution. His
publication that his withdrawal from the partnership has automatically
dissolved the partnership, causing tremendous damages to business
operations and transactions particularly abroad is unwarranted.