G.R. No. L-11840; July 26, 1960
ANTONIO C. GOQUIOLAY and THE PARTNERSHIP “TAN SIN AN and ANTONIO C. GOQUIOLAY”, plaintiffs-appellants, vs. WASHINGTON Z. SYCIP, ET AL., defendants-appellees.

FACTS

On May 29, 1940, Tan Sin An and Antonio C. Goquiolay formed a general commercial partnership named “Tan Sin An and Antonio C. Goquiolay” for dealing in real estate, with a capital of P30,000. The Articles of Co-Partnership stipulated that Tan Sin An was the sole managing partner, with exclusive management of partnership affairs, and that Goquiolay, as co-partner, would have no voice in management. The partnership term was ten years. The articles also provided that upon the death of any partner before the term’s expiration, the partnership would not be dissolved but would continue, with the deceased partner represented by his heirs or assigns. On May 31, 1940, Goquiolay executed a general power of attorney in favor of Tan Sin An, granting him broad managerial powers, including the power to sell partnership properties.
On May 29, 1940, the partnership purchased three parcels of land (Lots Nos. 526, 441, and 521 of Davao), assuming a mortgage obligation to “La Urbana.” Tan Sin An, individually, purchased 46 other parcels. These obligations were later consolidated into a single mortgage in favor of Banco Hipotecario de Filipinas, secured by all 49 lots, with the partnership and Tan Sin An bound jointly and severally.
Tan Sin An died on June 26, 1942, leaving his widow, Kong Chai Pin, and four minor children as heirs. Kong Chai Pin was appointed administratrix of his estate. The mortgage debts were paid in March 1944 by Sing Yee and Cuan, Co., Inc., upon request of Yutivo Sons Hardware Co., and the mortgage was cancelled. These companies later filed claims in Tan Sin An’s intestate proceedings for the amounts advanced.
On March 29, 1949, Kong Chai Pin, as administratrix and as a managing partner of the plaintiff partnership, petitioned the probate court for authority to sell all 49 parcels to Washington Z. Sycip and Betty Y. Lee to settle the debts. The court approved, and a deed of sale was executed on April 4, 1949. Sycip and Lee later transferred the properties to Insular Development Co., Inc.
Antonio Goquiolay, the surviving partner, sought to annul the sale concerning the partnership’s three lots. The lower court dismissed his complaint.

ISSUE

Whether Kong Chai Pin, as an heir of the deceased managing partner Tan Sin An, validly succeeded to his position as sole managing partner and had the authority, without the consent of the surviving partner Goquiolay, to sell the partnership properties to pay partnership debts.

RULING

The Supreme Court affirmed the lower court’s dismissal of the complaint, upholding the validity of the sale. The Court ruled that upon Tan Sin An’s death, his heirs succeeded to his interest in the partnership, including his position as sole managing partner, by virtue of the express provision in the Articles of Co-Partnership that the partnership would continue and the deceased partner would be represented by his heirs. The general power of attorney executed by Goquiolay in favor of Tan Sin An was deemed coupled with an interest and survived Tan Sin An’s death, inuring to the benefit of his successor, Kong Chai Pin. As the sole managing partner, Kong Chai Pin had the authority, under the broad powers granted by the articles and the power of attorney, to sell the partnership properties to pay legitimate partnership debts. The consent of the limited partner, Goquiolay, was not necessary for such an act undertaken in the regular course of partnership business and for its benefit. The sale was therefore valid.