Case Summary (G.R. No. L-5840)
Facts and Charging Information
Larin claimed that although the business generated profits amounting to P203, Tarug, Clarin, and Guzman failed to deliver Larin's rightful share of the profits and did not account for the capital. Consequently, Larin filed a complaint charging the crime of estafa against Eusebio Clarin, accusing him of appropriating both the initial capital and Larin's share of the profits totaling P15.50. Tarug and Guzman appeared as witnesses, assuming joint responsibility with Clarin.
Trial Court Ruling
The Court of First Instance of Pampanga convicted Eusebio Clarin, sentencing him to six months of arresto mayor, accessory penalties, and ordered him to return the P172 capital plus P30.50 as profit share. The court also provided for subsidiary imprisonment in case of insolvency and imposed costs against Clarin. Clarin appealed this decision.
Legal Issue: Nature of the Agreement and Applicability of Estafa
The appellate court analyzed the nature of the agreement among the parties, recognizing it as a partnership contract under Article 1665 of the Civil Code, which establishes that when two or more persons contribute money or property to a common fund with the intention to divide the profits, a partnership is formed. Larin’s P172 was considered capital invested in this partnership, conferring on him rights to the profits and underlying interest in the business.
Partnership Obligations and Civil Remedies
The Court observed that since the capital belonged to the partnership as a whole, the return or accounting of this capital should come from the partnership entity or through the partner who actually received it, identified as Pedro Tarug in this instance. Importantly, any action to recover the capital or profit shares should be a civil one for dissolution and liquidation of the partnership rather than a criminal action for estafa.
Interpretation of Penal Code Provision on Estafa
Article 535, No. 5 of the Penal Code penalizes one who appropriates money or property received in certain fiduciary capacities, including deposits or commissions that obligate the return of the exact same item or money. However, this provision does not extend to money invested in a partnership, where ownersh
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Facts of the Case
- Pedro Larin delivered P172 to Pedro Tarug intending that Tarug, together with Eusebio Clarin and Carlos de Guzman, would engage in the buying and selling of mangoes.
- Larin entered into an agreement with these three men to share profits equally between himself and the three, serving as partners in this business venture.
- The three individuals—Tarug, Clarin, and Guzman—did conduct trade in mangoes, generating a total of P203.
- Despite the profits, the three did not comply with the contractual terms by failing to deliver Larin his half of the profits (amounting to P15.50) nor did they give an accounting of the capital.
- Larin accused them of estafa (swindling) due to the alleged misappropriation of the invested capital and profits.
- The provincial fiscal filed charges solely against Eusebio Clarin, accusing him of appropriating the P172 capital and Larin’s share of the profits.
- Pedro Tarug and Carlos de Guzman appeared as witnesses and initially assumed the facts implicated all three men collectively.
- The trial court sentenced Clarin to six months’ arresto mayor, accessory penalties, restitution of the P172 capital, payment of P30.50 as Larin’s share of the profits, and costs, with subsidiary imprisonment as a penalty if unable to pay.
Issues Presented
- Whether the alleged misappropriation by Clarin constituted the crime of estafa under the applicable penal provisions.
- Whether the relationship among Larin, Tarug, Clarin, and Guzman created a partnership contract under the Civil Code.
- Whether a criminal action for estafa was the appropriate remedy or if the dispute belonged to civil law concerning partnership liabilities.
Legal Principles and Applicable Law
- The existence of a partnership is established when two or more persons contribute money, property, or industry to a common fund intending to share profits—a contract explicitly defined in Article 1665 of the Civil Code.
- The partner who furnishes the capital enters into the ventur