G.R. No. L-59956, 31 October 1984

FACTS:

Petitioner was ordered by CA to issue the private respondent, based on their contract of partnership, his investment in the venture, what he could have earned as commissions, and what he could have earned as profits from their business venture.

Hence this petition.

ISSUE:

Is the petitioner obligated to pay his partner regardless of the business’ outcome?

RULING:

No, he is not.

Article 1797 of the Civil Code provides:

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.

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.

There are risks in any business venture and the failure of the undertaking cannot entirely be blamed on the managing partner alone, especially if the latter exercised his best business judgment.

*Case digest by Roger Angielo V. Atenta, LLB-4, Andres Bonifacio Law School, SY 2019-2020