Wong vs. Wong

When the elements of Estafa are not established and the delivery of personal property was made pursuant to a contract, any civil liability arising therefrom is ex contractu, not ex delicto, and cannot be awarded in the criminal case; it must be claimed in a separate civil action. The extinction of the penal action does not automatically extinguish the civil action, but the civil liability deemed instituted with a criminal case pertains only to recovery ex delicto — liability arising from the same act or omission constituting the crime — and does not encompass liability arising from a contractual source of obligation.

Petitioner Alberto Wong was introduced to respondents Benny H. Wong and Estelita Wong — stockholders and officers of the travel agency Morning Star Travel & Tours, Inc. — through a mutual acquaintance, Roberto Collantes, sometime in the year 2000. Respondents were seeking additional funds to finance Morning Star's business operations. Petitioner initially extended financial assistance, and respondents issued postdated checks as payment for the loans, which were initially honored. Over time, respondents obtained larger sums, culminating in four postdated checks totaling ₱37,500,000.00, all of which were dishonored upon presentment for the reason "ACCOUNT CLOSED." An Information for Estafa under paragraph 2(d), Article 315 of the Revised Penal Code was thereafter filed against Spouses Wong and their co-accused Patrick Law.

Sometime in the year 2000, Roberto Collantes introduced petitioner Alberto Wong to respondents Benny H. Wong and Estelita Wong, who were stockholders and officers of the travel agency Morning Star Travel & Tours, Inc. Respondents were then seeking additional funds to finance Morning Star's business operations. Petitioner extended financial assistance, and respondents initially issued postdated checks as payment for the loans, which were honored upon presentment. After gaining petitioner's trust through these initial transactions, respondents convinced him to lend larger sums.

From March 2001 until April 2002, respondents received accumulated large amounts of money from petitioner. As payment, respondents issued four postdated checks totaling ₱37,500,000.00: three Union Bank checks (Nos. 0006112255, 0006129685, and 0006129686) dated January 23 and February 19, 2003, in the amounts of ₱24,000,000.00, ₱5,000,000.00, and ₱2,000,000.00, respectively, and one Banco de Oro check (No. 0014772) dated January 21, 2003, in the amount of ₱6,500,000.00. Upon presentment for payment, all four checks were dishonored for the reason "ACCOUNT CLOSED." An Information for Estafa under paragraph 2(d), Article 315 of the Revised Penal Code was thereafter filed against Spouses Wong and their co-accused Patrick Law, alleging that they drew and issued the checks well knowing they did not have sufficient funds, and that they failed and refused to cover the value of the checks notwithstanding due notice of dishonor.

When arraigned, Spouses Wong pleaded not guilty. Patrick Law failed to appear for his arraignment, prompting the RTC to issue a warrant of arrest against him. Trial ensued, with the prosecution presenting evidence that the loans were deposited directly to Morning Star's account and used to augment the corporation's financial needs. After the prosecution rested its case, Spouses Wong filed a Motion for Leave of Court to File Demurrer to Evidence, arguing that the prosecution failed to establish the element of fraud or deceit, that the checks were issued for pre-existing corporate obligations, that the loan was a corporate debt of Morning Star rather than a personal liability, and that it was not established who signed, drew, and issued the subject checks. The RTC granted the demurrer, finding no deceit, concluding that the checks were issued as guarantees for pre-existing obligations, and noting that petitioner parted with his money not because of the check issuances but out of liberality to help business partners of his friend Collantes. The RTC further found that the loans were presumably used for Morning Star's corporate affairs and that corporate debt is not synonymous with personal individual liability. The CA affirmed these findings, holding that the acquittal was based on the fact that the act or omission from which civil liability may arise did not exist.

• Implied Institution of Civil Action: Petitioner invoked the principle that when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with it, such that the institution of the charge carries with it the institution of the action for recovery of civil liability.
• Acquittal on Reasonable Doubt Does Not Extinguish Civil Liability: Petitioner maintained that in case of an acquittal on reasonable doubt, the extinction of the criminal action does not carry with it the extinction of the civil action, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not exist.
• Absence of Deceit Does Not Mean Absence of Civil Obligation: Petitioner submitted that the mere absence of the element of deceit does not automatically absolve Spouses Wong from all civil liability arising from the offense charged, arguing that the absence of deceit does not translate to an absence of a civil obligation.
• Reliance on Precedent: Petitioner anchored his argument on Eusebio-Calderon vs. People, where the accused was acquitted of Estafa but found civilly liable for loans obtained, and on Sapiera vs. Court of Appeals, where the accused, though acquitted of Estafa, was adjudged liable for the unpaid value of checks signed by her.

• Acquittal Based on Non-Existence of the Act or Omission: Spouses Wong countered that their acquittal was based on the fact that "the act or omission from which the civil liability may arise did not exist," given the prosecution's failure to sufficiently establish the element of deceit in the crime of Estafa.
• Civil Liability Deemed Non-Existent: Respondents averred that their civil liability should be deemed non-existent by the nature of their acquittal, since the acquittal rested on a finding that the act or omission from which civil liability could arise did not exist.

• Civil Liability After Acquittal: Whether the CA erred when it failed to make a pronouncement as to the civil liability of Spouses Wong after their acquittal for Estafa.
• Remand for Determination of Civil Liability: Whether, if the CA could not make a finding as to civil liability, the matter should be remanded to the RTC for further proceedings to determine the civil liability of Spouses Wong.

• Civil Liability After Acquittal: No. The CA did not err in declining to pronounce on civil liability. Where the elements of Estafa are not established and the delivery of property was pursuant to a contract, any civil liability is ex contractu — not ex delicto — and is not the civil action deemed instituted with the criminal case.
• Remand for Determination of Civil Liability: No. Remand was unnecessary because the civil liability arising from the loan agreement is ex contractu, which must be claimed in a separate civil action, not in the criminal proceedings.

• Civil Liability After Acquittal: Article 10 of the RPC provides that every person criminally liable is also civilly liable, but the extinction of the penal action does not necessarily carry with it the extinction of the civil action. The rule that civil liability survives acquittal applies when (a) the acquittal is based on reasonable doubt, as only preponderance of evidence is required for civil liability; (b) the court declares that the liability of the accused is only civil; and (c) the civil liability does not arise from or is not based upon the crime of which the accused was acquitted. However, the more recent case of Dy vs. People clarified that the civil liability deemed instituted with a criminal case pertains only to recovery ex delicto — liability arising from the same act or omission constituting the crime. It does not include civil liability arising from a different source of obligation, such as a contract. Whenever the court finds that the elements of Estafa do not exist, it effectively declares that there is no crime and no act or omission constituting criminal fraud; civil liability ex delicto cannot be awarded because it cannot be sourced from something that does not exist. When the court further finds that the source of obligation is a contract — as in a contract of loan — that finding is completely inconsistent with the presence of Estafa. In Estafa, a person parts with money because of abuse of confidence or deceit; in a contract, a person willingly binds himself to give something or render service. In Estafa, failure to account for property received amounts to criminal fraud; in a contract, failure to comply is only a contractual breach. Thus, a finding that the source of obligation is a contract negates Estafa and means there is no civil liability ex delicto. In this case, the RTC found the element of deceit wanting and concluded the transaction was a pure loan. Applying Dy, the RTC did not err in declining to rule on the civil aspect, which arose from civil liability ex contractu and not ex delicto.
• Remand for Determination of Civil Liability: Because the civil liability arising from the loan agreement is ex contractu — arising from an entirely different source of obligation apart from an act or omission punished by law — it is not the type of civil action deemed instituted with the criminal case and must be filed separately. Remand to the RTC for further proceedings within the criminal case would therefore be improper. Petitioner's recourse lies in a separate civil action based on the contractual obligation.

• Civil Liability Ex Delicto vs. Ex Contractu in Estafa Cases — The civil action deemed instituted with a criminal case pertains only to the recovery of civil liability ex delicto, which arises from the same act or omission constituting the crime. It does not include civil liability ex contractu, which arises from an entirely different source of obligation such as a contract. Whenever the elements of Estafa are not established and the delivery of personal property was made pursuant to a contract, any civil liability arising from the Estafa cannot be awarded in the criminal case. The finding that the source of obligation is a contract negates Estafa: in Estafa, a person parts with money because of deceit or abuse of confidence, whereas in a contract, a person willingly binds himself; in Estafa, failure to account amounts to criminal fraud, whereas in a contract, non-compliance is only a contractual breach. Civil liability ex contractu must be claimed in a separate civil action. This doctrine was drawn from Dy vs. People, which in turn relied on Pantig, Singson, and Manantan.
• Extinction of Penal Action Does Not Necessarily Extinguish Civil Action — The extinction of the penal action does not carry with it the extinction of the civil action, unless the extinction proceeds from a declaration in a final judgment that the fact from which the civil liability might arise did not exist. This rule applies when (a) the acquittal is based on reasonable doubt, as only preponderance of evidence is required for civil liability; (b) the court declares that the liability of the accused is only civil; and (c) the civil liability does not arise from or is not based upon the crime of which the accused was acquitted.

• "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." — This passage, quoted from Dy vs. People, articulates the controlling doctrine distinguishing civil liability ex delicto from ex contractu in Estafa cases and is the ratio decidendi applied in the present case.
• "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." — This passage explains why a finding that the transaction is contractual necessarily negates the crime of Estafa, thereby precluding any award of civil liability ex delicto in the criminal proceedings.
• "Civil liability ex delicto cannot be awarded as it cannot be sourced from something that does not exist." — This formulation captures the logical premise underlying the rule: where no crime exists, there is no act or omission that can serve as the source of civil liability ex delicto.

• Dy vs. People, et al., 792 Phil. 672 (2016) — Controlling precedent. The Court applied its doctrine that when the elements of Estafa are not established and delivery of property was pursuant to a contract, civil liability is ex contractu and cannot be awarded in the criminal case. This case clarified that the civil liability deemed instituted with a criminal action pertains only to recovery ex delicto.
• Eusebio-Calderon vs. People, 484 Phil. 87 (2004) — Cited by petitioner, where the accused was acquitted of Estafa but found civilly liable for loans obtained. The Court did not follow this case, instead applying the more recent doctrine in Dy.
• Sapiera vs. Court of Appeals, 373 Phil. 148 (1999) — Cited by petitioner, where the accused acquitted of Estafa was adjudged liable for the unpaid value of checks. The Court did not apply this case, favoring the Dy doctrine.
• Pantig and Singson — Cited within the Dy quotation as the cases whose rulings the Court adopted as the "better rule" for ascertaining civil liability in Estafa cases, consistent with the Civil Code and the Rules of Court.
• Manantan — Cited within the Dy quotation for the proposition that when there is no delict, civil liability ex delicto is out of the question, and any civil action must be based on grounds other than the delict complained of.
• Nissan Gallery-Ortigas vs. Felipe, 720 Phil. 828 (2013) — Cited for the general rule that the extinction of the penal action does not necessarily carry with it the extinction of the civil action.
• Alferez vs. People, et al., 656 Phil. 116 (2011) — Cited for the enumeration of circumstances under which civil liability survives acquittal.
• Mendoza vs. Alcala, 112 Phil. 929 (1961) — Cited for the principle that acquittal on reasonable doubt does not extinguish civil liability unless the acquittal is based on a declaration that the fact from which civil liability might arise did not exist.

• Article 10, Revised Penal Code — Provides that every person criminally liable is also civilly liable. The Court noted that the converse is not necessarily true: a person not found criminally liable may still be held civilly liable, as the extinction of the penal action does not carry with it the extinction of the civil action.
• Paragraph 2(d), Article 315, Revised Penal Code — Defines Estafa by means of postdated checks or issuance of checks without sufficient funds. The Information charged respondents under this provision, but the RTC found the element of deceit wanting and the transaction to be a pure loan.
• Section 1, Rule 111, Rules of Court — Provides that when a criminal action is instituted, the civil action for recovery of civil liability arising from the offense charged is impliedly instituted with it. The Court clarified, via Dy, that this implied institution pertains only to civil liability ex delicto, not ex contractu.

Perlas-Bernabe, S.A.J. (Chairperson), Hernando, Gaerlan, and Dimaampao, JJ., concurred.