Goquiolay v. Sycip, G.R. No.

L-11840, December 10, 1963

PARTNERS: Goquiolay
TAN SIN AN
WIDOW OF TAN SIN Kong Chai Pin

FACTS: Tan Sin An, a partner in a partnership engaged in the real estate business,
died. The articles of co-partnership expressly stipulated 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 (Art. XII, Articles of Co-
Partnership).

Kong Chai Pin, widow of the deceased partner Tan Sin An, sought the authority of
Goquiolay, the surviving partner, to manage partnership property. Subsequently, Kong
Chai Pin sold lands belonging to the partnership to third persons (Washington Sycip
and Betty Lee).

Goquiolay questioned the validity of the sale. He argued that Kong Chai Pin never
became more than a limited partner, hence, incapacitated by law to manage the
affairs of partnership, and the authority given by him was only to manage the
property, and it did not include the power to alienate

ISSUE:

1. Is Kong Chai Pin a general or a limited partner?

2. Whether or not the act of Kong Chai Pan (widow of the deceased partner Tan
Sin An) is valid?

RULING:

1. Kong Chai Pin is a general partner. By seeking authority to manage partnership

property, Tan Sin An's widow showed that she desired to be considered
a general partner. By authorizing the widow to manage partnership property
(which a limited partner could not be authorized to do), Goquiolay recognized
her as such partner, and is now in estoppel to deny her position as a general
partner, with authority to administer and alienate partnership property.

Furthermore, the contractual stipulation in the articles of partnership did not

provide that the heirs of the deceased would be merely  limited partners; on the
contrary, they expressly stipulated that in case of death of either partner " the
co-partnership ... will have to be continued " with the heirs or assigns . It certainly
could not be continued if it were to be converted from a general partnership into
a limited partnership, since the difference between the two kinds of associations
is fundamental; and specially because the conversion into a limited association
would have the heirs of the deceased partner without a share in the
 management. Hence, the contractual stipulation does actually contemplate that
the heirs would become general partners rather than limited ones.

2. Yes. The Sale conducted by Kong Chai Pin is valid. Where the partnership
business is to deal in merchandise and goods, i.e., movable property, the sale of
its real property (immovables) is not within the ordinary powers of a partner,
because it is not in line with the normal business of the firm. But where the
express and avowed purpose of the partnership is to buy and sell real estate (as
in the present case), the immovables thus acquired by the firm form part of its
stock-in-trade, and the sale thereof is in pursuance of partnership purposes,
hence within the ordinary powers of the partner. Since the sale by Kong Chai
Pin was in conformity with the express objective of the partnership, "to
engage ... in buying and selling real estate" (Art. IV, No. 1 Articles of
Copartnership), it cannot be maintained that the sale was made in excess of her
power as general partner.