Uy vs.

Puzon
G.R. No. L-19819 | October 26, 1977
CONCEPCION JR., J.

Article 1786: Every partner is a debtor of the partnership for whatever he may have promised to
contribute thereto.
He shall also be bound for warranty in case of eviction with regard to specific and determinate
things which he may have contributed to the partnership, in the same cases and in the same
manner as the vendor is bound with respect to the vendee. He shall also be liable for the fruits
thereof from the time they should have been delivered, without the need of any demand.

FACTS: Puzon entered a contract with the Government for the construction of a road and
bridges. He established a partnership with Uy as sub-contractor and “UP Construction
Company” was formed. They agreed to contribute capital of Php 50,000 each, however, Puzon
failed to do so. Later, Puzon entered a loan with the PNB and gave Uy Php 60,000 for
reimbursement of Uy’s contribution and Puzon’s contribution to the partnership capital. To
guarantee the payment of the loan, Puzon assigned to PNB all payments to be received on
account of the contracts with the Bureau of Public Highways for the construction without the
knowledge and consent of Uy.

As financial demands of the project increased, Uy called on Puzon to place his capital
contribution. Puzon failed to do so. Uy sent letters of demand to which Puzon replied that he is
not capable of putting additional capital. Puzon wrote UP Construction Company terminating
their subcontract agreement.

Uy was then not allowed in the office of UP Construction Company and his authority to deal
with BPH was revoked. Hence, he filed an action seeking the dissolution of the partnership and
payment of damages for the violation of the latter of the terms of their partnership agreement.
RTC found that Puzon failed to contribute his share in the capital. The court ordered the
dissolution of the partnership and Puzon to pay Uy a certain sum.

ISSUE: Whether or not Uy is entitled to the award of Php 200,000 as his share in the unrealized
profits of the partnership is proper.

RULING: Yes. The award as his share in the unrealized profits of the partnership is proper.
Under Article 2200 of the Civil Code, indemnification for damages shall comprehend not only
the value of the loss suffered, but also that of the profits which the obligee failed to obtain. In
other words, lucrum cessans is also a basis for indemnification. There is no doubt Uy failed to
make profits because of Puzon's breach of contract. The partnership showed some profits even
though the profit and loss statement showed net loss.
If the appellant did not remiss in his obligations as partner and as prime contractor of the
construction projects pursuant to the partnership and subcontract agreements, and considering the
fact that the total contract amount of these two projects is P2,327,335.76, it is reasonable to
expect that the partnership would have earned much more than the P334,255.61 The award,
therefore, made by the trial court of the amount of P200,000.00, as compensatory damages, is not
speculative, but based on reasonable estimate.