Goquiolay v.

Sycip
GR No. L-11840 July 26, 1960

Facts:
(Direct appeal from the decision of the Court of First Instance of Davao.)

On May 29, 1940, Tan Sin An and Antonio C. Goquiolay entered into a general commercial
partnership under the partnership name "Tan Sin An and Antonio C. Goquiolay", for the purpose
of dealing in real estate. The partnership had a capital of P30,000.00, P18,000.00 of which was
contributed by Goquiolay and P12,000.00 by Tan Sin An. The agreement lodged upon Tan Sin An
the sole management of the partnership affairs, stipulating that: (a)The co-partnership shall be
composed of said Tan Sin An as sole managing and partner, and Antonio C. Goquiolay as co-
partner; (b) The affairs of the co-partnership shall be managed exclusively by the managing and
partner or by his authorized agent; (c)The co-partner shall have no voice or participation in the
management of the affairs of the co-partnership; but he may examine its accounts once every six
months at any time during ordinary business hours.
The lifetime of the partnership was fixed at ten years and also that in the event of the death
of any of the partners at any time before the expiration of said term, the co-partnership shall not
be dissolved but will have to be continued and the deceased partner shall be represented by his
heirs or assigns in said co-partnership. However, the partnership could be dissolved and its affairs
liquidated at any time upon mutual agreement in writing of the partners.
Goquiolay executed a GPA in favor of Tan Sin An. The plaintiff partnership purchased 3
parcels of land which was mortgaged to “La Urbana” as payment of P25,000. Another 46 parcels
of land were purchased by Tan Sin An in his individual capacity which he assumed payment of a
mortgage debt for P35K. A down payment and the amortization were advanced by Yutivo and Co.
The two obligations were consolidated in an instrument executed by the partnership and Tan Sin
An, whereby the entire 49 lots were mortgaged in favor of “Banco Hipotecario”Tan Sin An died
leaving his widow, Kong Chai Pin and four minor children. The widow subsequently became the
administratrix of the estate. Repeated demands were made by Banco Hipotecario on the
partnership and on Tan Sin An. Defendant Sing Yee, upon request of defendant Yutivo Sons , paid
the remaining balance of the mortgage debt, the mortgage was cancelled Yutivo Sons and Sing
Yee filed their claim in the intestate proceedings of Tan Sin An for advances, interest and taxes
paid in amortizing and discharging their obligations to “La Urbana” and “Banco Hipotecario.”
Kong Chai Pin filed a petition with the probate court for authority to sell all the 49 parcels of
land. She then sold it to Sycip and Lee in consideration of P37K and of the vendees assuming
payment of the claims filed by Yutivo Sons and Sing Yee. Later, Sycip and Lee executed in favor of
Insular Development a deed of transfer covering the 49 parcels of land.When Goquiolay learned
about the sale to Sycip and Lee, he filed a petition in the intestate proceedings to set aside the
order of the probate court approving the sale in so far as his interest over the parcels of land sold
was concerned.

Lower Courts’ Ruling:

RTC: The trial court sustained the validity of the sale on the ground that under the provisions of
the articles of partnership allowing the heirs of the deceased partner to represent him in the
partnership after his death Kong Chai Pin became a managing partner, this being the capacity
held by Tan Sin An when he died.

Issue: Whether or not the consent of the other partners was necessary to perfect the sale of the
partnership properties to Washington Sycip and Betty Lee.

Held:
No. Strangers dealing with a partnership have the right to assume, in the absence of
restrictive clauses in the co-partnership agreement, that every general partner has power to bind
the partnership, specially those partners acting with ostensible authority.
We are not unaware of the provision of Article 129 of the Code of Commerce to the effect
that if the management of the general partnership has not been limited by special agreement to
any of the members, all shall have the power to take part in the direction and management of
the common business, and the members present shall come to an agreement for all contracts or
obligations which may concern the association. This obligation is one imposed by law on the
partners among themselves, that does not necessarily affect the validity of the acts of a partner,
while acting within the scope of the ordinary course of business of the partnership, as regards
third persons without notice. The latter may rightfully assume that the contracting partner was
duly authorized to contract for and in behalf of the firm and that, furthermore, he would not
ordinarily act to the prejudice of his co-partners.
The regular course of business procedure does not require that each time a third person
contracts with one of the managing partners, he should inquire as to the latter's authority to do
so, or that he should first ascertain whether or not the other partners had given their consent
thereto. The records fail to disclose that appellant Goquiolay made any opposition to the sale of
the partnership realty to Sycip and Lee; on the contrary, it appears that he (Goquiolay) only
interposed his objections after the deed of conveyance was executed and approved by the
probate court, and, consequently, his opposition came too late to be effective.