MORAN v.

CA

FACTS:

II. WON CA GRIEVOUSLY ERRED IN HOLDING PETITIONER ISABELO

C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN
THE SUM OF P8,000, AS SUPPOSED COMMISSION IN THE
PARTNERSHIP ARISING OUT OF PECSON'S INVESTMENT.

In February 1971, Isabelo Moran and Mariano Pecson entered

into a partnership agreement where they agreed to contribute
P15k each for the purpose of printing 95k posters of the delegates
to the then 1971 Constitutional Commission.

III. WON CA GRIEVOUSLY ERRED IN HOLDING PETITIONER ISABELO

C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN
THE SUM OF P7,000 AS A SUPPOSED RETURN OF INVESTMENT IN
A MAGAZINE VENTURE.

Moran shall be in charge in managing the printing of the posters.

IV. ASSUMING WITHOUT ADMITTING THAT PETITIONER IS AT ALL

LIABLE FOR ANY AMOUNT, THE HONORABLE COURT OF APPEALS
DID NOT EVEN OFFSET PAYMENTS ADMITTEDLY RECEIVED BY
PECSON FROM MORAN.

It was further agreed that Pecson will receive a commission of P1k

a month starting from April 1971 to December 1971;
That the partnership is to be liquidated on December
15, 1971.
Pecson partially fulfilled his obligation to the partnership when he
issued P10k in favor of the partnership.

V. WON CA GRIEVOUSLY ERRED IN NOT GRANTING THE

PETITIONER'S COMPULSORY COUNTERCLAIM FOR DAMAGES.
HELD: No.
I.

He gave the P10k to Moran as the managing partner.

Moran however did not add anything and, instead, he only used
P4k out of the P10k in printing 2,000 posters.
He only printed 2,000 posters because he felt that printing all 95k
posters is a losing venture because of the delay by the COMELEC
in announcing the full delegates.

The rule is, when a partner who has undertaken to contribute a

sum of money fails to do so, he becomes a debtor of the
partnership for whatever he may have promised to contribute
(Art. 1786, Civil Code) and for interests and damages from the
time he should have complied with his obligation (Art. 1788, Civil
Code).
The award of P47.5k for unrealized profit is speculative.

All the posters were sold for a total of P10k.

Pecson sued Moran:
Private respondent Pecson filed with the Court of First Instance of
Manila an action for the recovery of a sum of money and alleged
in his complaint three (3) causes of action, namely: (1) on the
alleged partnership agreement, the return of his contribution of
P10,000.00, payment of his share in the profits that the
partnership would have earned, and, payment of unpaid
commission; (2) on the alleged promissory note, payment of the
sum of P20,000.00; and, (3) moral and exemplary damages and
attorney's fees.

In the instant case, there is no evidence whatsoever that the

partnership between the Moran and Pecson would have been a
profitable venture (because base on the circumstances then i.e.
the delay of the COMELEC in proclaiming the candidates, profit is
highly unlikely).
In fact, it was a failure doomed from the start. There is therefore
no basis for the award of speculative damages in favor of Pecson.
Further, there is mutual breach in this case, Pecson only gave
P10k instead of P15k while Moran gave nothing at all. He further
failed to comply with the agreement to print 95,000 copies of the
posters. Instead, he printed only 2,000 copies.

TC: The trial court ordered Moran to pay Pecson damages.

Article 1797 of the Civil Code provides:
CA: The Court of Appeals affirmed the decision of the trial court
but modified the same as it ordered Moran to pay P47.5k for
unrealized profit; P8k for Pecsons monthly commissions; P7k as
return of investment because the venture never took off; plus
interest.

The losses and profits shall be distributed in

conformity with the agreement. If only the
share of each partner in the profits has
been agreed upon, the share of each in the
losses shall be in the same proportion.

ISSUE:
I. WON CA GRIEVOUSLY ERRED IN HOLDING PETITIONER ISABELO
C. MORAN, JR. LIABLE TO RESPONDENT MARIANO E. PECSON IN
THE SUM OF P47,500 AS THE SUPPOSED EXPECTED PROFITS DUE
HIM.

Being a contract of partnership, each partner must share in the

profits and losses of the venture. That is the essence of a
partnership. And even with an assurance made by one of the
partners that they would earn a huge amount of profits, in the
absence of fraud, the other partner cannot claim a right to
recover the highly speculative profits.

II.
As for the P8k monthly commission, this is without basis.
The agreement does not state the basis of the commission.
The payment of the commission could only have been predicated
on relatively extravagant profits.
The parties could not have intended the giving of a commission
inspite of loss or failure of the venture.
Since the venture was a failure, Pecson is not entitled to the P8k
commission.

III.
As for the P7k award as return for Pecsons investment, the CA
erred in his ruling too.
Though the venture failed, it did took off the ground as evidenced
by the 2,000 posters printed.
Hence, return of investment is not proper in this case. As already
mentioned, there are risks in any business venture and the failure
of the undertaking cannot entirely be blamed on the managing
partner alone, specially if the latter exercised his best business
judgment, which seems to be true in this case.
Moran must however return the unused P6k of Pecsons
contribution to the partnership plus P3k representing Pecsons
profit share in the sale of the printed posters. Computation of P3k
profit share is as follows: (P10k profit from the sale of the 2,000
posters printed) (P4k expense in printing the 2k posters) = (P6k
profit); Profit 2 = P3k each.