Goquiolay v SyCip et al L-11840 (1963)

Petitioner: Antonio Goquilay (Managing partner)

Respondent: Washington SyCip and Betty Lee et al; Creditors of the partnership

Doctrine: Generally, the heir of a deceased managing partner only acquires the status of a limited partner for his own protection. By
way of exception, such heir may elect to acquire that status of a collective or general partner. In this case, Kong Chai Pin acquired the
status of general partner by estoppel when petitioner authorized her to manage the partnership properties.

Facts

1. Petitioner and Tan Sin An formed a partnership engaged in the buying and selling of real estate
2. According to the articles of the co-partnership, in case of death of one of the partners, his heirs or assignees would
succeed/represent him.
3. The partnership obtained real properties as well as debts
4. When Tan Sin An died, his wife Kong Chai Pin succeeded him
5. Kong Chai Pin requested authority from petitioner to manage the partnership properties and was granted immediately
6. When the Tan Sin Ans intestate proceedings commenced, several creditors filed claims against the estate, contending that
they are creditors of the deceased as well as the partnership
7. To satisfy such debts, Kong Chai Pin gave the creditors authority to sell partnership properties
8. Hence, partnership properties were sold to satisfy the claims of the creditors
9. Petitioner filed an action to rescind the sale on the ground that Kong Chai Pin had no authority to sell such properties,
because ordinarily, the heirs of a deceased partner acquire only the status of a limited partner. Hence, not being a general
partner, she has no power to dispose the partnership properties but only to administer the same.
10. The court ruled in against petitioner in 1960; hence, this motion for reconsideration (1963)

Issue: Whether or not Kong Chai Pin, wife of the deceased managing partner had authority to sell partnership properties on the ground
that she did not acquire the status of a general partner but only that of a limited partner

Held:

1. YES. Generally, the heir of a deceased partner only becomes a limited partner for his own protection. By way of exception,
such heir may elect to become a collective or general partner. In this case, Kong Chai Pin acquired the status of general
partner by estoppel when petitioner authorized her to manage the partnership properties.

Dissent of Justice Angelo Bautista:

1. Rescission/annulment must be granted based on the following grounds:

a. General partnership by estoppel cannot set in because of insufficient proof of Kong Chai Pins acts of management
after the alleged authorization by petitioner.
b. Mere acceptance of inheritance by the heir does not automatically make him or her a general partner. To obtain such
status, such heir must make a declaration that he or she is entering the partnership as a gen0eral partner. Otherwise,
such heir shall only be considered as a limited partner; unless it is expressly provided in the will of the deceased
partner that the moment the heir accepts the condition of entering the partnership, he/she automatically becomes a
general partner.
c. A limited partner cannot sell or dispose partnership properties
d. Assuming arguendo that she became a general partner, she cannot sell the partnership properties without the
authority of the other partner. Such sale is invalid for having been performed in excess of authority