GUQUIOLAY vs SYCIP

FACTS:

Tan Sin An and Goquiolay entered into a general commercial partnership

known as “Tan Sin An &Goquiolay” for the purpose of real estate business. Under the
agreement, Tan Sin An shall be the sole managing partner of the partnership, while
Goquiolay shall have no voice or participation in its management.

Consequently, the partnership purchased 49 lots, which were later mortgaged

to “BancoHipotecario”.

Later, Tan Sin An died and was survived by his wife, Kong Chai Pin, who
apparently expressed her desire to act as managing partner in lieu of her deceased
husband. This is premised on the articles of co-partnership, which provided for the
heirs’ continuation of the partnership even after the death of the partners.

In the meantime, BancoHipotecariodemanded payment of the mortgage debt

from the partnership. But Sing Yee Cuan Hardware Co. assumed payment, and this
was further assumed by Respondents Washington Sycip and Betty Lee.

To relieve the partnership from said obligations, Kong Chai Pin, with approval of
the probate court, sold the 49 lots to Respondents Sycip and Lee.

Upon knowing this, surviving partner Goquiolay sought for the annulment of
the sale to respondents, alleging:

a. That Kong Chai Pin is not a partner; hence, the sale made by her is
void for lack of consent of the other partners; or

b. Granting that Kong may be partner, she is nothing more than a

limited partner, and as such was disqualified to manage the business.

ISSUE:

W/N Kong Chai Pin is authorized on selling the properties, as sole managing
partner in lieu of her deceased husband, even without the consent of the partners.

HELD:

YES. Although, the power of Tan Sin An as sole managing partner, which is
premised upon trust and confidence, was a mere personal right that should have been
terminated upon Tan’s demise; such right was not extinguished in this case based on
the FOLLOWING:

a. The articles of co-partnership specifically provided for the continuation

of the firm notwithstanding the death of one of the partners.
 b. Since the heir of the deceased (i.e. Kong Chai Pin) never repudiated or
refused to be bound by such agreement, Kong Chai Pin became an
individual partner

The contention of Goquiolay has no bearing in saying that Kong Chai Pin is
nothing more than a limited partner who is disqualified in managing a business. It is
well noted that Kong Chai Pin manifested her intent to be bound by the partnership
agreement not only as a limited partner, but as a general partner:

a. She managed and retained possession of the partnership properties;

b. She derived income therefrom until the properties were sold to

respondents;

c. She sold the properties in the name of the partnership .

By allowing her to retain control of the firm’s property from 1942 to 1949,
Goquiolay is estopped from denying Kong Chai Pin’s legal representation of the
partnership. Hence, Kong Chai Pin is a managing partner with the power to bind the
partnership by proper contracts.

IF QUESTIONED what about the sold properties by Kong Chai Pin, is it binding?

YES. Kong Chai Pin, as managing partner, can sell properties of the partnership
to respondents Sycip & Lee, even without consent of the co-partner.

ART. 180, CODE OF COMMERCE provides that even if a new

obligation was contracted against the express will of one of the
managing partners, it shall not be annulled for such reason, and it
shall produce its effects without prejudice to the responsibility of the
member/s who contracted it, for the damages they may have
caused to the common fund.

Although the partnership under consideration is a commercial partnership and,

therefore, to be governed by the Code of Commerce, the provisions of the old Civil Code
may apply:

ART. 165, OCC

“All the partners shall be considered agents, and whatever any one
of them may do individually shall bind the partnership; but each
one may oppose any act of the others before it has become legally
binding.”

In this case, as previously established, Kong Chai Pin acted as a managing

partner (or general partner). As such, she became an agent of the firm, with the
authority to bind the firm in any contracts involving partnership affairs (e.g. sale of
partnership realty).