#27 ISABELO MORAN V.

COURT OF APPEALS and MARIANO PECSON

October 31, 1984

FACTS: Mariano Pecson and Isabelo Moran agreed to contribute Php 15,000 each for the printing of
95,000 posters to be sold at Php 2.00 each which features the delegate to the 1971 Constitutional
Convetion. The agreement also contain that Mariano will receive a commission of Php 1,000 a month
from April 15, 1971 to December 15, 1971 and at the end of December 15, 1971 a liquidation will be
made. Mariano only gave Php 1,000 for which Isabelo issued a receipt. Only 2,000 copies were printed
which was sold at the price of Php 5.00 each. On May 28, 1971, Isabelo executed a promissory note of
Php 2,000 payable to Mariano. Mariano filed an action for recovery of sum of money with the Court of
First Instance which ordered Isabelo to pay Mariano Php 17,000. On appeal, the Court of Appeals
rendered decision ordering Isabelo to pay Mariano the following: a) Php 47,500, amount which could
have accrued to Mariano under the agreement; and b) Php 8,000 which is the agreed commission.

ISSUE: Whether the amount of Php 47,500 and Php 8,000 is valid

RULING: No, the amount is highly speculative. As a rule, 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 which in this case there was mutual breach when Mariano failed to contribute
his balance of Php 5,000 and on the part of Isabelo the printing of the agreed copies. There is no
evidence that the partnership between Mariano and Isabelo would have a profitable venture. The
failure of the Commission on election to proclaim the 320 candidates of the Constitutional Convention
on time was a major factor which cause the non-printing of the agreed 95,000 copies. Therefore, there
is no basis of the award of speculative damages. Being a contract of partnership, each partner must
share in profit and losses of the partnership. And even with an assurance made by one partner that they
would earn a huge amount of profit, in the absence of fraud, the other partner cannot claim a right to
recover such speculative profits.

The agreement does not state the basis of the commission. The payment of the commission
could only be predicated on relative extravagant profits. The parties could not have intended the giving
of a commission inspite of loss or failure of the venture. Since the venture is a failure the commission
has no basis
#62 GREGORIO MAGDUSA ET. AL V. GERUNDIO ALBARAN ET.AL

June 30, 1962

FACTS: Gregorio Magdusa, Gerundio Albaran, Pascual Albaran, Zosimo Albaran, Telefoso Bebero with
various other person verbally formed a partnership de facto for the sale of general merchandize in
Surigao, Surigao. Gregorio contributed Php 2,000 and the others their labor with the agreement that
25% of their net profit shall be added to the original capital and 75% thereof would be divided among
the members. Sometime in 1953 and 1954, Gerundio Albaran, Pascual Albaran, Zosimo Albaran, and
Telefoso Bebero expressed their desire to withdraw from the partnership which Gregorio computed
their share but upon demand for payment of share Gregorio did not accede which cause the filing of a
complaint in the Court of First Instance (CFI) in Bohol. The CFI dismissed the complaint on ground of
failure to implead the other partners. However, on appeal, the Court of Appeals ruled that the other
parties have no interest in the case and ruled that the case was not for the dissolution of the partnership
but an action for recovery of sum of money and that the liability is personal to Gregorio and not against
the partnership. The partnership is impleaded only as an alternative defendant.

ISSUE:

a. whether a partner can get his share without dissolution

b. whether Gregorio is personally liable

RULING:

a. No, a partner’s share cannot be returned without first dissolving and liquidating the partnership, for
the return is dependent on the discharge of the creditors, whose claim enjoys preference over those of
the partners; unless a proper accounting and liquidation of the partnership affairs is first had, the capital
share of the retiring partners, cannot be repaid, for the firm’s outside creditors have preference over
the assets of the enterprise and the firm’s property cannot be diminished to their prejudice.

b. No, Gregorio cannot be held personally liable for the payment of partner’s shares, for he does not
hold them except as a manager of, or trustee for, the partnership. It is the partnership that must refund
the share of the retiring partners.