DY vs.

PEOPLE
G.R. No. 189081, August 10, 2016, Jardeleza, J. | kam

SUMMARY: Glora Dy, former general manager of MCCI, was charged with estafa by the company through its president,
William Mandy. This is due to Dy’s alleged failure to pay for the company’s loan to ICBC, resulting to the bank’s
foreclosure on the company’s mortgaged properties.

Dy, petitioner, proposed to William Mandy (Mandy), President of MCCI, the purchase of a property owned by Pantranco. As
the transaction involved a large amount of money, Mandy agreed to obtain a loan from the International China Bank of
Commerce (ICBC). Petitioner represented that she could facilitate the approval of the loan. True enough, ICBC granted a loan
to MCCI in the amount of P20,000,000.00.

Mandy entrusted petitioner with the obligation to manage the payment of the loan.4 chanrobleslaw

In February 1999, MCCI received a notice of foreclosure over the mortgaged property due to its default in paying the loan
obligation.5 In order to prevent the foreclosure, Mandy instructed petitioner to facilitate the payment of the loan.

Mandy claims that he delivered the checks with the instruction that petitioner use the checks to pay the loan.7 Petitioner, on
the other hand, testified that she encashed the checks and returned the money to Mandy.

The RTC held that prosecution failed to prove the elements of estafa in this case. The lower courts (RTC & CA) further
held that a contract of loan was executed between Mandy and Dy, thus Dy is not liable of estafa. Despite the acquittal,
the lower courts still held Dy to be civilly liable for the total amount of checks (~P21 million) disbursed to her by
Mandy.

The SC held that when the acquittal is due to the absence of the crime committed, the civil action deemed
instituted with the criminal case cannot prosper because there is no delict from which any civil obligation may be
sourced. In this case, despite the findings of the lower courts, the SC held that there was no crime of estafa proven. Dy’s
liability of around P21 million arises from her contractual obligation (loan) to Mandy, which should be instituted in a
separate civil action as to not violate Dy’s constitutional right to due process. Petition GRANTED.

DOCTRINES:

Two kinds of acquittal: (1) because no crime was committed; (2) because prosecution failed to prove guilt beyond
reasonable doubt. The effect on the civil liability depends on why the accused was acquitted.
 In cases where the accused is acquitted on the ground that there is no crime, the civil action deemed
instituted with the criminal case cannot prosper precisely because there is no delict from which any civil
obligation may be sourced.
 This civil liability ex delicto may be recovered through a civil action which, under our Rules of Court, is deemed
instituted with the criminal action. While they are actions mandatorily fused, they are, in truth, separate actions
whose existences are not dependent on each other. Thus, civil liability ex delicto survives an acquittal in a
criminal case for failure to prove guilt beyond reasonable doubt.
 HOWEVER, the Rules of Court limits this mandatory fusion to a civil action for the recovery of civil liability
ex delicto. Where the civil liability is ex contractu (civil liability arising from a contract – like a contract of
loan), the court hearing the criminal case has no authority to award damages.

 The criminal liability and civil liability are separate and distinct. They may coexist but their existence is not
dependent on each other.

FACTS:
Petitioner: Gloria S. Dy
Respondents: People of the Philippines, Mandy Commodities Co., Inc. (MCCI) represented by its President William Mandy

 Gloria Dy was the former General Manager of Mandy Commodities Company, Inc. ( MCCI) . Among the businesses
wherein she assisted was the construction of the warehouses in their Numancia Property (property leased by
MCCI from PNB).
 In May 1996, Dy proposed to Mandy the purchase of a property owned by Pantranco. Mandy agreed to take a
P20million loan from International China Bank of Commerce (ICBC) secured by a chattel mortgage over the
warehouses in the Numancia Property. Dy was entrusted to manage the payment of the loan.
 February 1999 – A notice of foreclosure was received by MCCI. Around 25 checks amounting to ~P21million
was issued by MCCI (all payable to cash).
  Mandy delivered the checks to Dy. Mandy claims that he delivered the checks with the instruction that
petitioner use the checks to pay the loan. Dy, on the other hand, testified that she encashed the checks and
returned the money to Mandy.
 ICBC eventually foreclosed on the property as MCCI continued to default in its obligation. Mandy eventually
found out that not a check was paid to ICBC.

RTC
 Oct. 2002 – A complaint for Estafa was filed by MCCI, through Mandy, against Dy.
 The RTC Manila found that while petitioner admitted that she received the checks, the prosecution failed to
establish that she was under any obligation to deliver them to ICBC in payment of MCCI's loan.
 RTC found strength in Mandy’s admission that Mandy gave the checks to Dy with the agreement that Dy would
encash them. Then Dy would pay ICBC using her own checks.
 HELD: Mandy and petitioner entered into a contract of loan. Thus, it held that the prosecution failed to
establish an important element of the crime of estafa - misappropriation or conversion.
 Dy is acquitted but still ordered to pay the amount of checks (P21,706,281.00) to complainant.

CA
 Dy appealed. The CA said that it is settled that when an accused is acquitted on the basis of reasonable doubt,
courts may still find him or her civilly liable if the evidence so warrant. Preventing complainant from
recovering the amount of checks would constitute unjust enrichment. RTC affirmed. MR denied.

Now, petitioner argues that since she was acquitted for failure of the prosecution to prove all the elements of the crime
charged, there was therefore no crime committed. As there was no crime, any civil liability ex delicto cannot be
awarded.

ISSUE (HELD): WON petitioner should still be civilly liable for the crime of estafa when she has already been acquitted
for failure of the prosecution to prove all the elements of estafa? (NO)

RATIO DECIDENDI: The SC agrees with petitioner’s contention.

Civil liability arising from a crime

 A crime is a liability against the state. It is prosecuted by and for the state.
 On the other hand, civil liabilities take a less public and more private nature. Civil liabilities are claimed
through civil actions as a means to enforce or protect a right or prevent or redress a wrong.
 Nevertheless, our jurisdiction recognizes that a crime has a private civil component. It is in recognition of this
dual nature of a criminal act that our RPC provides that every person criminally liable is also civilly liable. This
is the concept of civil liability ex delicto.
 This is reinforced by Article 30 of the same code which refers to the filing of a separate civil action to demand
civil liability arising from a criminal offense. The RPC fleshes out this civil liability in Article 104 which states
that it includes restitution, reparation of damage caused and indemnification for consequential damages.

Difference between civil and criminal proceedings

 Quantum of proof needed: guilty beyond reasonable doubt for criminal proceedings; only preponderance “the
quality or fact of being greater in number, quantity, or importance” of evidence in civil proceedings (This is why the
civil liability may still survive even after the accused is acquitted due to the prosecution’s failure to prove that
the accused’s guilt is beyond reasonable doubt.)
 The criminal liability and civil liability are separate and distinct. They may coexist but their existence is not
dependent on each other.

Two kinds of acquittal and its effect on the civil liability

 Based on Manantan vs. CA –
(1) an acquittal on the ground that the accused is not the author of the act or omission complained of – no
crime was committed: There being no delict, it follows that there is no civil liability ex delicto. This is
what is contemplated by ROC Rule 111.
(2) an acquittal based on reasonable doubt of the accused – This is what is contemplated in NCC Art. 29. In this
case, even if the guilt of the accused has not been satisfactorily established, he is not exempt from civil
liability which may be proved by preponderance of evidence only.

Civil Liability Ex Delicto in Estafa Cases – jurisprudence shows two different judgments of the Supreme Court.
 Elements of estafa (RPC Art. 315):
(1) That the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and
(2) That damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.

The essence of the crime is the unlawful abuse of confidence or deceit in order to cause damage. The SC disagrees with
the lower courts that Dy was only acquitted because of reasonable doubt.

Dismissal of civil action because there

was no estafa (THIS IS THE BETTER RULE, Granting of civil action even when there was no estafa
ACCORDING TO SC.)
 People vs. Pantig - The liability of the Jurisprudence changed in latter years (earlier yung cases sa left side):
defendant for the return of the amount so  Eusebio-Calderon vs. People - this Court affirmed the finding of the CA that
received arises from a civil contract, not Calderon did not employ trickery or deceit in obtaining money from the
from a criminal act, and may not be private complainants, instead, it concluded that the money obtained was
enforced in the criminal case undoubtedly loans for which [Calderon] paid interest. Thus, this Court
upheld Calderon’s acquittal of estafa, but found her civilly liable for the
 People vs. Singson - The evidence [was] principal amount borrowed from the private complainants.
not sufficient to establish the existence of
fraud or deceit on the part of the accused.  People vs. Cuyugan - SC acquitted Cuyugan of estafa for failure of the
x x x And when there is no proven deceit prosecution to prove fraud. We held that the transaction between Cuyugan
or fraud, there is no crime of estafa. and private complainants was a loan to be used by Cuyugan in her business.
Thus, this Court ruled that Cuyugan has the obligation, which is civil in
character, to pay the amount borrowed.

SC: We hold that the better rule in ascertaining civil liability in estafa cases is that pronounced in Pantig and Singson.
The rulings in these cases are more in accord with the relevant provisions of the Civil Code, and the Rules of Court. They
are also logically consistent with this CourtÊs pronouncement in Manantan.

This is necessarily so because whenever the court makes a finding that the elements of estafa do not exist, it
effectively says that there is no crime. There is no act or omission that constitutes criminal fraud. Civil liability
ex delicto cannot be awarded as it cannot be sourced from something that does not exist.

Estafa vs. Contract of Loan

 When the court finds that the source of obligation is in fact, a contract, as in a contract of loan, it takes a
position completely inconsistent with the presence of estafa.
 In estafa, a person parts with his money because of abuse of confidence or deceit. In a contract, a person
willingly binds himself or herself to give something or to render some service.
 In estafa, the accused's failure to account for the property received amounts to criminal fraud. In a contract, a
party's failure to comply with his obligation is only a contractual breach. Thus, any finding that the source of
obligation is a contract negates estafa.
 The finding, in turn, means that there is no civil liability ex delicto.

In Dy's case, the civil liability arises out of contract - a different source of obligation apart from an act or omission
punished by law ·and must be claimed in a separate civil action.

DISPOSITIVE: Petition GRANTED. CA decision REVERSED. This is however, without prejudice to any civil action which
may be filed to claim civil liability arising from the contract [of loan, in this case].

OTHER NOTES:
 Dayap vs. Sendiong: The extinction of the penal action does not carry with it the extinction of the civil liability
where:
a) the acquittal is based on reasonable doubt as only preponderance of evidence is required;
b) the court declares that the liability of the accused is only civil; and
c) the civil liability of the accused does not arise from or is not based upon the crime of which the accused
is acquitted.
However, the civil action based on delict may be deemed extinguished if mere is a finding on the final
judgment in the criminal action that the act or omission from which the civil liability may arise did not exist
or where the accused did not commit the acts or omission imputed to him.

 Violation of Due Process – The SC also mentioned of the violation of due process that will occur if Dy was
made to pay for the amount due to her contractual obligation to Mandy. What is indicated in the information
for the crime of estafa is the acts committed constituting such crime. If she was made to pay the amount due to
a different source of obligation, which in this case, is a contract of loan, then she was not sufficiently informed
of the nature of the charges against her. The Due Process Clause of the Constitution dictates that a civil
liability arising from a contract must be litigated in a separate civil action.