79 PO YENG CHEO vs. LIM KA YAM (December 9, 1922 STREET, J.

)
When a member of a partnership dies, the duty of liquidating its affair devolves upon the
surviving member/s of the firm, not upon the legal representative of the deceased partner.

Facts:
The plaintiff Po Yeng Cheo is the sole heir of one Po Gui Yao (deceased). He inherited the
interest left by Po Gui Yao in the business Kwong Cheong Tay. It is a mercantile partnership in
Manila, with a capitalization of P160,000, engaged in the import and export trade. After the death
of Po Gui Yao, among the seven persons interested therein as partners are Po Yeng Cheo and the
manager Lim Ka Yam, the original defendant.
Among the properties pertaining to Kwong Cheong Tay were ten shares of a total value of
P10,000 in Yut Siong Chyip Konski (Yut Siong) and certain shares of P1,000 in the Manila Electric
Railroad and Light Company (Manila Electric). In the year 1910 Kwong Cheong Tay ceased to do
business. Lim Ka Yam appears at no time to have submitted to the partners any formal liquidation
of the business, though repeated demands to that effect have been made upon him by the plaintiff.
The trial judge rendered judgment in favor of Po Yeng Cheo, to recover of the defendant
Lim Yock Tock, as administrator of Lim Ka Yam (died during the pendency of the case) sum of
P60,000 (interest of the plaintiff in the capital) and an estimated at P11,000 from the proportional
interest in shares of the Yut Siong and Manila Electric.

Issue:
WON the award in favor of Po Yeng Cheo is proper (NO)

Ruling:
It was erroneous to give judgment in favor of the plaintiff to the extent of his share of the
capital of Kwong Cheong Tay. The managing partner of a mercantile enterprise is not a debtor to
the shareholders for the capital embarked by them in the business; and he can only be made liable
for the capital when, upon liquidation of the business, there are found to be assets in his hands
applicable to capital account.
Also, it is well settled that when a member of a partnership dies, the duty of liquidating its
affair devolves upon the surviving member/s of the firm, not upon the legal representative of the
deceased partner. Upon the death of Lim Ka Yam, it therefore became the duty of his surviving
associates to take the proper steps to settle the affairs of the firm, and any claim against him, or his
estate, for a sum of money due to the partnership by reason of any misappropriation of its funds
by him, or for damages resulting from his wrongful acts, should be prosecuted against his estate
in administration in the manner under the Code of Civil Procedure.
Moreover, when it appears that the property pertaining to Kwong Cheong Tay are in the
possession of the deceased partner, the proper step for the surviving associates to take would be to
make application to the court having charge to the administration to require the administrator to
surrender such property.