Moran v.

CA
Case Summary: On 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: 1) WON the Mariano Pecson is entitled to the P47,500 supposed expected profit due
to him.
2) WON Mariano Pecson is entitled to the P8,000 commission arising out of Pecsons
investment.
3) WON Mariano Pecson is entitled to the net profit of P6,000.00.

Law Applicable: Art: 2200.Indemnification for damages shall comprehend not only the
value of the loss suffered, but also that of the profits which the oblige failed to obtain.

Article 1797.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.

Decision: 1) No, Mariano Pecson is not entitled to the supposed P47, 500 expected
income. The court in Uy v. Puzon interpreted Art. 2200. The court awarded P2M
compensatory damages in the Uy case because there was a finding that the constructing
business is a profitable one and that the UP construction company derived some profits
from its contractors in the construction of roads and bridges despite its deficient capital. The
profits on two government contracts worth P2,327,335.76 were not speculative. In the
instant case, there is no evidence whatsoever that the partnership between the Peson and
Moran 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.
2) No, The partnership agreement stipulated that the petitioner would give the private
respondent a monthly commission of Pl,000.00 from April 15, 1971 to December 15, 1971
for a total of eight (8) monthly commissions. 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 in spite
of loss or failure of the venture. Since the venture was a failure, the private respondent is
not entitled to the P8,000.00 commission.

3) Yes, applying Art. 1797 the profit earned from the sale of the printed magazine should be
divided between the two partners. Since the business venture earned the net profit of
P6,000.00, both partners should receive P3,000. Furthermore, since Pecson contributed
P10k to the partnership but P4k was only used in printing, Moran should return the P6k.

Opinion: I agree with the courts decision in this case. It was able to deliver justice to both
the parties. An award of P47, 500 compensatory damages to Pecson would have been to
unconscionable on the part of Moran, since the profit was only speculative; Bearing in mind
that a magazine which features the delegates of the 1971 Constitutional Commission would
have not been so profitable. 1970s is a period in our history when the economy was in
rescission and the Philippines was slowly sinking in foreign debts. The purchasing power of
the Filipinos then were low and it would be very unlikely for them to consider buying this
magazine, since they would have likely prioritized spending their money on food, daily
needs and necessities of their family.