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

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.
.
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.