ISABELO MORAN, JR.

, petitioner
Versus
THE HON. COURT OF TAX APPEALS AND MARIANO E.
PECSON, respondents
G.R. No. L-59956 October 31, 1984

Facts:
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. Moran shall be in charge in managing the
printing of the posters. 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. 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. All the posters
were sold for a total of P10k. Pecson sued Moran. The trial court ordered
Moran to pay Pecson damages. 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.
Issue:
Whether or not the respondent judgment is correct
Decision:
No. The award of P47.5k for unrealized profit is speculative. 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. In this case, there was mutual breach. Private respondent failed to give
his entire contribution in the amount of P15,000.00. He contributed only
P10,000.00. The petitioner likewise failed to give any of the amount
expected of him. He further failed to comply with the agreement to print
95,000 copies of the posters. Instead, he printed only 2,000 copies. There is
no evidence whatsoever that the partnership between the petitioner and the
private respondent would have been a profitable venture. In fact, it was a
failure doomed from the start. There is therefore no basis for the award of
speculative damages in favor of the private respondent. 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.