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Estafa Partnership

This document summarizes two doctrines related to partnerships and liability for misappropriated funds - the Clarin and Liwanag doctrines. The Clarin doctrine establishes that partners are not criminally liable for estafa if money received by the partnership is misappropriated, only civilly liable. However, the Liwanag doctrine found partners could be liable for estafa if money was received for a specific purpose and then misappropriated. The document also discusses the differences between partnerships, loans, and investment contracts.

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Ryan Acosta
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1K views2 pages

Estafa Partnership

This document summarizes two doctrines related to partnerships and liability for misappropriated funds - the Clarin and Liwanag doctrines. The Clarin doctrine establishes that partners are not criminally liable for estafa if money received by the partnership is misappropriated, only civilly liable. However, the Liwanag doctrine found partners could be liable for estafa if money was received for a specific purpose and then misappropriated. The document also discusses the differences between partnerships, loans, and investment contracts.

Uploaded by

Ryan Acosta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
  • Estafa Partnership: Examines the legal implications of estafa in partnerships, focusing on case studies and specific doctrines including Clarin and Liwanag Doctrines.
  • Partnership vs. Investment Contract: Explores the legal differences between partnerships and investment contracts, detailing the obligations and rights under civil code.

Estafa Partnership

Clarin Doctrine

United States v. Clarin: partners are not liable for estafa of money or property received for the
partnership when the business commenced and profits accrued." (U.S. vs. Clarin, 17 P[h]il. 85).

"failure of a partner to account for partnership funds may give rise to a civil obligation only not estafa."
(People vs. Alegre, Jr., C.A. 48 O.G. 5341) x x x

In Clarin, four individuals entered into a contract of partnership for the business of buying and selling
mangoes. When one of the partners demanded from the other three the return of his monetary
contribution, this Court ruled that "the action that lies with the [capitalist] partner x x x for the recovery
of his money is not a criminal action for estafa, but a civil one arising from the partnership contract for a
liquidation of the partnership and a levy on its assets, if there should be any."[41] Simply put, if a
partner demands his money back, the duty to return the contribution does not devolve on the other
partners; the duty now belongs to the partnership itself as a separate and distinct personality.

Liwanag Doctrine

xxx even assuming that a contract of partnership was indeed entered into by and between the parties,
we have ruled that when money or property have been received by a partner for a specific purpose
(such as that obtaining in the instant case) and he later misappropriated it, such partner is guilty of
estafa. (Liwanag vs. CA, G.R. No. 114398, October 24, 1997)

In 1997, a case with similar circumstances was decided differently. In Liwanag v. Court of Appeals,[42]
three individuals entered into a contract of partnership for the business of buying and selling cigarettes.
They agreed that one would contribute money to buy the cigarettes while the other two would act as
agents in selling. When the capitalist partner demanded from the industrial partners her monetary
contribution because they stopped informing her of business updates, this time, this Court held the
industrial partners liable for estafa.

In Liwanag, this Court held:

Thus, even assuming that a contract of partnership was indeed entered into by and between the
parties, we have ruled that when money or property [had] been received by a partner for a specific
purpose (such as that obtaining in the instant case) and he later misappropriated it, such partner is
guilty of estafa.[43] (Emphasis supplied)
By the 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.

[CIVIL CODE, Article 1767.]

Partnership vs investment contract

A partnership, a simple contract of loan, and an investment contract carry peculiar definitions and are
governed by pertinent laws. The existence of a partnership, simple loan, or an investment contract
should not, therefore, be inferred lightly, especially where any of its requisite elements are lacking.
[Santiago vs Spouses Garcia, G.R. No. 228356, March 09, 2020]

An investment contract is defined in the Amended Implementing Rules and Regulations of R.A. No. 8799
as a "contract, transaction or scheme (collectively ‘contract’) whereby a person invests his money in a
common enterprise and is led to expect profits primarily from the efforts of others."

It established a test to determine whether a transaction falls within the scope of an "investment
contract." Known as the Howey Test, it requires a transaction, contract, or scheme whereby a person (1)
makes an investment of money, (2) in a common enterprise, (3) with the expectation of profits, (4) to be
derived solely from the efforts of others. [Power Homes Unlimited v. SEC, G.R. No. 164182, February 26,
2008]

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