Case Summary (G.R. No. L-11840)
Grant of Power of Attorney
On May 31, 1940, Goquiolay executed a general power of attorney in favor of Tan Sin An. The instrument authorized him to manage partnership affairs, execute contracts, mortgage or sell real estate, borrow funds, and perform all acts “necessary to the proper conduction of the businesses.”
Acquisition and Mortgage of Properties
On formation date the partnership purchased three Davao lots subject to a ₱25,000 mortgage to La Urbana Sociedad, later consolidated with Tan Sin An’s ₱35,000 individual mortgage. The combined ₱52,282.80 obligation, with 8% interest, was secured by 49 parcels mortgaged to Banco Hipotecario, payable in 96 monthly installments.
Death of Partner and Probate Proceedings
Tan Sin An died June 26, 1942. His widow, Kong Chai Pin, and four minor children inherited. In March 1944 she was appointed administratrix of his estate. Creditors Yutivo Sons Hardware and Sing Yee & Cuan Co. paid the mortgage and later filed claims (approved February 1947) for reimbursement of advances, interest, and taxes as joint obligations of the partnership and the deceased.
Petition for Sale of Partnership Properties
March 29, 1949: Widow filed in probate court to sell all 49 parcels—partnership and conjugal—for settlement of the approved claims. The court authorized sale April 2, 1949, and she executed a deed of sale April 4, 1949, to Sycip and Lee for ₱37,000 cash plus assumption of the Yutivo and Sing Yee & Cuan claims.
Deeds of Sale and Transfers
In July 1949, Sycip and Lee conveyed the same 49 parcels to Insular Development Co., Inc. Goquiolay, upon learning of the deed, petitioned probate court July 25, 1949, to annul the sale as to his partnership share. Probate court annulled December 29, 1949; on appeal the Supreme Court remanded for new trial (June 30, 1953) for non-inclusion of indispensable parties.
Initiation of Litigation by Goquiolay
January 15, 1953: Goquiolay and the partnership filed a new suit in the Court of First Instance of Davao seeking annulment of the sale of the three partnership lots. He alleged that widow had no authority as managing partner, that co-partner consent was required, and that the transaction was fraudulent and undervalued.
Trial Court’s Decision
October 30, 1956: The trial court dismissed the complaint, finding that Kong Chai Pin succeeded as managing partner by virtue of the partnership articles and general power of attorney; that she had authority to sell to satisfy obligations; that Sycip and Lee acted in good faith; and that Goquiolay’s failure to oppose estopped him from attack.
Supreme Court’s Analysis on Management Rights
The Court held that the power of attorney and articles granted Tan Sin An a personal right of management that expired at his death. The clause continuing heirs in the firm related only to proprietary interests. Under Code of Commerce Article 222 heirs became partners unless they refused. Although heirs ordinarily become limited partners (Article 148), Kong Chai Pin chose to act as general partner by managing properties and executing the deed, thus waiving her limited status and assuming full liability.
Application of Estoppel and Third-Party Reliance
Strangers are entitled to assume that a managing partner has authority to bind the firm absent restrictive provisions. Under Articles 129 and 180 of the Code of Commerce, third parties need not inquire into internal agreements. Goquiolay’s seven-year acquiescence in the widow’s control estopped him from conten
...continue readingCase Syllabus (G.R. No. L-11840)
Facts of Formation and Capital Contribution
- May 29, 1940: Antonio C. Goquiolay and Tan Sin An establish a general commercial partnership for real estate dealings under the name “Tan Sin An and Antonio C. Goquiolay.”
- Partnership capital: ₱30,000 (₱18,000 by Goquiolay; ₱12,000 by Tan).
- Articles of co-partnership designate Tan Sin An as sole managing partner; Goquiolay barred from management but entitled to semiannual account examinations.
- Partnership term: 10 years, with express provision for continuation by heirs or assigns upon a partner’s death.
Power of Attorney and Managerial Authority
- May 31, 1940: Goquiolay grants Tan Sin An a broad, irrevocable power of attorney to manage partnership affairs for the partnership’s full term or life of its capital.
- Powers include executing contracts, mortgaging and pledging properties, buying and selling assets, borrowing, issuing promissory notes, and banking transactions in the partnership’s name.
Land Acquisitions and Financing
- May 29, 1940: Partnership acquires Lots 526, 441, and 521 of Davao, assuming a ₱25,000 mortgage to La Urbana Sociedad Mutua de Construcción y Préstamos.
- Concurrently, Tan Sin An individually acquires 46 additional parcels, mortgaging them for ₱35,000, with Yutivo & Co. advancing down payments and amortizations.
Consolidation of Mortgage Obligations
- September 25, 1940: Partnership and Tan consolidate obligations before Banco Hipotecario de Filipinas (successor to La Urbana).
- All 49 lots are mortgaged; total balance ₱52,282.80, 8% interest, payable in 96 equal monthly installments over 8 years, with joint and several liability.
Death of Managing Partner and Heirs’ Involvement
- June 26, 1942: Tan Sin An dies, survived by widow Kong Chai Pin and four minor children.
- Kong Chai Pin appointed administratrix of her husband’s intestate estate on March 18, 1944.
- 1946: Yutivo Sons Hardware Co. and Sing Yee & Cuan Co., Inc. file claims in probate for P62,415.91 and P54,310.13, respectively, as advances, interest, and taxes on the partnership and Tan’s obligations.
- Kong Chai Pin initially disclaims knowledge, then admits and obtains court approval of both claims.