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WHAT IS THE LIABILITY OF A PARTNER IN ESTAFA?

May a partner be held liable for estafa by his co-partners? Looking at the elements of estafa, the normal

answer should be yes however, a long line of Supreme Court decided cases say otherwise.

In a Contract of Partnership, two or more persons bind themselves to contribute money, property,

or industry to a common fund, with the intention of dividing the profits among themselves. Once a

partnership is formed, it becomes a new person, one with identity that is separate from the persons

forming the partnership. If a person enters into a partnership, he invests his money or property in the

risks or benefits of the partnership. So, if a person wants his contribution back, it is not the obligation

of the other partners to return his contribution; it is now the partnerships duty to do so. The action

that is available to a partner who wishes to recover his capital is not estafa but a civil action against the

partnership.

This was the doctrine laid down in the case of United States vs. Eusebio Clarin, GR No. 5840, which was

decided by the Supreme Court in September 17, 1910. In this case, Pedro Larin entered into a contract

of Partnership with Pedro Tarug, Eusebio Clarin and Carlos De Guzman for the business of buying and

selling mangoes. Pedro Tarug, Eusebio, and Carlos were able to obtain profit but they were not able to

give Pedro Larin half of the profit, as agreed upon, and they did not give him an accounting of Larins

capital. So, Larin filed a case of estafa against his three co-partners. The Supreme Court dismissed the

complaint for estafa, but they allowed Larin to file a civil action.

In 1997, an almost similar situation occurred. In the case of Carmen Liwanag vs. CA and the People

of the Philippines, G.R. No. 114398, Carmen Liwanag and Isidora Rosales entered into a contract of

partnership wherein Rosales contributed P536, 650.00 for the purpose of buying cigarettes to be sold by

them. After some time, Liwanag suddenly stopped informing Rosales of the updates of their business.

Because of this, Rosales filed a case of estafa against Liwanag. In this case, the Suprece Court held

Liwanag liable for estafa.

What is the Difference Between the Two Cases?

In the first case, US vs. Clarin, the capital contributed by Larin was for the general purpose of forming

a partnership; while in the second case, Liwanag vs. CA and People of the Philippines, the money

contributed by Rosales was for the specific purpose of buying cigarettes.

It should be noted that as a general rule, if a partner wants to recover the capital he has contributed to

the partnership, he can only do so by a civil action and not by filing an estafa case. The exception to this

is when the money contributed is for a specific purpose. In this case, if the money was not applied to

such specific purpose, instead it was misappropriated, then the partner who misappropriated should be

held liable for estafa

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Is there a crime of Estafa in Partnership?

In US vs. Clarin, GR No. 5840, the capital contributed by Clarin was for the general purpose of

forming a partnership; while in the case of Liwanag vs. CA, G.R. No. 114398, the money

contributed by Rosales was for the specific purpose of buying cigarettes.

As a general rule, if a partner wants to recover the capital he has contributed to the partnership,

he can only do so by a civil action and not by filing an Estafa case. The exception to this is when

the money contributed is for a specific purpose. If the money was not applied to such specific

purpose, instead it was misappropriated, then the partner who misappropriated should be held

liable for Estafa.

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United States vs. Eusebio Clarin, GR No. 5840

In this case, Pedro Larin entered into a contract of Partnership with Pedro Tarug,

Eusebio Clarin and Carlos De Guzman for the business of buying and selling mangoes. Pedro

Tarug, Eusebio, and Carlos were able to obtain profit but they were not able to give Pedro Larin

half of the profit, as agreed upon, and they did not give him an accounting of Larins capital. So,

Larin filed a case of estafa against his three co-partners. The Supreme Court dismissed the

complaint for Estafa, but they allowed Larin to file a civil action.

Carmen Liwanag vs. Court of Appeals, G.R. No. 114398

In this case, Carmen Liwanag and Isidora Rosales entered into a contract of partnership

wherein Rosales contributed P536, 650.00 for the purpose of buying cigarettes to be sold by

them. After some time, Liwanag suddenly stopped informing Rosales of the updates of their

business. Rosales filed a case of estafa against Liwanag because of this. In this case, the

Supreme Court held Liwanag liable for Estafa.