Case Digest: Gloria Dy v. People (G.R. No 189081)

Gloria Dy v. People of the Philippines | G.R. No. 189081 | August 10, 2016 | Topic: Liability ex delicto / ex contractu

FACTS:

• Dy, as the General Manager of Mandy Commodities Company, Inc. (MCCI) proposed to William Mandy (President of MCCI) to purchase a property for the company. To facilitate the purchase, the president obtained a loan from International China Bank of Commerce (bank), which was granted to the company in the amount of P20 million. 
• As security, MCCI executed a chattel mortgage over their warehouses. The president entrusted Dy to manage the payment of the loan. Later on, MCCI received a notice of foreclosure over the mortgaged property due to its default in paying. 
• In order to prevent the foreclosure, the president delivered to Dy, P21,706,281 worth of checks issued by MCCI, with the instruction that Dy shall use the checks to pay the loan. However, the president later discovered that the checks weren’t paid to the bank when the bank foreclosed the mortgaged property. MCCI, represented by the president, filed a Complaint-Affidavit for Estafa before Office of the City Prosecutor of Manila and an Information was filed against Dy before the Manila RTC.  
• The RTC acquitted Dy (because the prosecution failed to establish misappropriation or conversion which is an important element of the crime of estafa) but it still found Dy to be civilly liable for the amount of P21,706,281.00. Dy filed an appeal of the civil aspect of the decision with the CA. 
• The CA held that Dy’s acquittal does not necessarily absolve her of civil liability. 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. The evidence on record proves that Dy received the checks from MCCI and preventing the company from recovering the amount of the checks would constitute unjust enrichment. 
• Dy appealed further to the SC, arguing 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 and therefore, any civil liability ex delicto (civil liability from the criminal action) cannot be awarded.
  

ISSUE: Whether or not Dy should be civilly liable in the criminal case for estafa although she was acquitted for failure of the prosecution to prove all the elements of the crime charged? YES

RULING:
Our laws recognize a bright line distinction between criminal and civil liabilities. A crime is a liability against the state. It is prosecuted by and for the state. Acts considered criminal are penalized by law as a means to protect the society from dangerous transgressions. As criminal liability involves a penalty affecting a person's liberty, acts are only treated criminal when the law clearly says so. 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. Thus, while an act considered criminal is a breach of law against the State, our legal system allows for the recovery of civil damages where there is a private person injured by a criminal act. It is in recognition of this dual nature of a criminal act that our Revised Penal Code provides that every person criminally liable is also civilly liable. This is the concept of civil liability ex delicto.

This is echoed by the New Civil Code when it recognizes acts or omissions punished by law as a separate source of obligation in Art. 1157 and by Art. 30.

• Art. 30. When a separate civil action is brought to demand civil liability arising from a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of.

A criminal action requires proof of guilt beyond reasonable doubt while a civil action requires a lesser quantum of proof, that of preponderance of evidence. This distinction also agrees with the essential principle in our legal system that while a criminal liability carries with it a corresponding civil liability, they are nevertheless separate and distinct. In other words, these two liabilities may co-exist but their existence is not dependent on each other

In estafa, whenever the elements of estafa are not established, and that the delivery of any personal property was made pursuant to a contract, any civil liability arising from the estafa cannot be awarded in the criminal case. This is because the civil liability arising from the contract is not civil liability ex delicto, which arises from the same act or omission constituting the crime. Civil liability ex delicto is the liability sought to be recovered in a civil action deemed instituted with the criminal case.

The situation envisioned in the foregoing cases, as in this case, is civil liability ex contractu where the civil liability arises from an entirely different source of obligation. Therefore, it is not the type of civil action deemed instituted in the criminal case, and consequently must be filed separately. 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.

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. Thus, the rulings in the foregoing cases are consistent with the concept of fused civil and criminal actions, and the different sources of obligations under our laws.

Petitioner was acquitted by the RTC because of the absence of the element of misappropriation or conversion. The RTC, as affirmed by the CA, found that Mandy delivered the checks to Dy pursuant to a loan agreement. Clearly, there is no crime of estafa. There is no proof of the presence of any act or omission constituting criminal fraud. Thus, civil liability ex delicto cannot be awarded because there is no act or omission punished by law which can serve as the source of obligation. Any civil liability arising from the loan takes the nature of a civil liability ex contractu (civil liability arising from a contract). It does not pertain to the civil action deemed instituted with the criminal case.

The lower courts erred when they ordered petitioner to pay her civil obligation arising from a contract of loan in the same criminal case where she was acquitted on the ground that there was no crime. Any contractual obligation she may have must be litigated in a separate civil action involving the contract of loan.