Dy Vs People, GR 189081, (Aug.

10, 2016) petitioner assisted MCCI in its business involving

several properties. One such business pertained
DOCTRINE: The Due Process Clause of the to the construction of warehouses over a
Constitution dictates that a civil liability arising property (Numancia Property) that MCCI leased
from a contract must be litigated in a separate from the Philippine National Bank (PNB).
civil action. xxx. In a situation where a court (in a Sometime in May 1996, in pursuit of MCCI's
fused action for the enforcement of criminal and business, petitioner proposed to William Mandy
civil liability) may validly order an accused- (Mandy), President of MCCI, the purchase of a
respondent to pay an obligation arising from a property owned by Pantranco. As the transaction
contract, a person’s right to be notified of the involved a large amount of money, Mandy
complaint, and the right to have the complaint agreed to obtain a loan from the International
dismissed if there is no cause of action, are China Bank of Commerce (ICBC). Petitioner
completely defeated. In this event, the accused- represented that she could facilitate the
respondent is completely unaware of the nature approval of the loan. True enough, ICBC granted
of the liability claimed against him or her at the a loan to MCCI in the amount of P20,000,000.00,
onset of the case. The accused-respondent will evidenced by a promissory note. As security,
not have read any complaint stating the cause of MCCI also executed a chattel mortgage over the
action of an obligation arising from a contract. warehouses in the Numancia Property. Mandy
All throughout the trial, the accused-respondent entrusted petitioner with the obligation to
is made to believe that should there be any civil manage the payment of the loan.4chanrobleslaw
liability awarded against him or her, this liability
is rooted from the act or omission constituting In February 1999, MCCI received a notice of
the crime. The accused-respondent is also foreclosure over the mortgaged property due to
deprived of the remedy of having the complaint its default in paying the loan obligation.5 In
dismissed through a motion to dismiss before order to prevent the foreclosure, Mandy
trial. In a fused action, the accused-respondent instructed petitioner to facilitate the payment of
could not have availed of this remedy because the loan. MCCI, through Mandy, issued 13 Allied
he or she was not even given an opportunity to Bank checks and 12 Asia Trust Bank checks in
ascertain what cause of action to look for in the varying amounts and in different dates covering
initiatory pleading. In such a case, the accused- the period from May 18, 1999 to April 4, 2000.6
respondent is blindsided. He or she could not The total amount of the checks, which were all
even have prepared the appropriate defenses payable to cash, was P21,706,281.00. Mandy
and evidence to protect his or her interest. This delivered the checks to petitioner. Mandy claims
is not the concept of fair play embodied in the that he delivered the checks with the instruction
Due Process Clause. It is a clear violation of a that petitioner use the checks to pay the loan.7
person’s right to due process. Petitioner, on the other hand, testified that she
encashed the checks and returned the money to
The Facts Mandy.8 ICBC eventually foreclosed the
mortgaged property as MCCI continued to
Petitioner was the former General Manager of default in its obligation to pay. Mandy claims
MCCL. In the course of her employment, that it was only at this point in time that he

Page 1 of 4 Dy Vs People, GR 189081, (Aug. 10, 2016)

discovered that not a check was paid to Petitioner filed an appeal15 of the civil aspect of
ICBC.9chanrobleslaw the RTC Decision with the CA. In the Assailed
Decision,16 the CA found the appeal without
Thus, on October 7, 2002, MCCI, represented by merit. It held that the acquittal of petitioner
Mandy, filed a Compiamt-Affidavit for Estafa10 does not necessarily absolve her of civil liability.
before the Office of the City Prosecutor of The CA said that it is settled that when an
Manila. On March 3, 2004, an Information11 was accused is acquitted on the basis of reasonable
filed against petitioner before the Regional Trial doubt, courts may still find him or her civilly
Court (RTC) Manila. liable if the evidence so warrant. The CA
explained that the evidence on record
adequately prove that petitioner received the
After a full-blown trial, the RTC Manila rendered checks as a loan from MCCI. Thus, preventing the
a decision12 dated November 11, 2005 (RTC latter from recovering the amount of the checks
Decision) acquitting petitioner. The RTC Manila would constitute unjust enrichment. Hence, the
found that while petitioner admitted that she Assailed Decision ruled
received the checks, the prosecution failed to WHEREFORE, in view of the foregoing, the
establish that she was under any obligation to appeal is DENIED. The Decision dated November
deliver them to ICBC in payment of MCCFs loan. 11, 2005 of the Regional Trial Court, Manila,
The trial court made this finding on the strength Branch 33 in Criminal Case No. 04-224294 which
of Mandy's admission that he gave the checks to found Gloria Dy civilly liable to William Mandy is
petitioner with the agreement that she would AFFIRMED.
encash them. Petitioner would then pay ICBC
using her own checks. The trial court further SO ORDERED.17chanroblesvirtuallawlibrary
made a finding that Mandy and petitioner The CA also denied petitioner's motion for
entered into a contract of loan.13 Thus, it held reconsideration in a resolution18 dated August
that the prosecution failed to establish an 3, 2009.
important element of the crime of estafa—
misappropriation or conversion. However, while Hence, this Petition for Review on Certiorari
the RTC Manila acquitted petitioner, it ordered (Petition). Petitioner argues that since she was
her to pay the amount of the checks. The acquitted for failure of the prosecution to prove
dispositive portion of the RTC Decision states — all the elements of the crime charged, there was
WHEREFORE, the prosecution having failed to therefore no crime committed.19 As there was
establish the guilt of the accused beyond no crime, any civil liability ex delicto cannot be
reasonable doubt, judgment is hereby rendered awarded.
ACQUITTING the accused of the offense charged.
With costs de officio. ISSUE: WON THERE WAS A VIOLATION OF DUE
PROCESS.
The accused is however civilly liable to the
complainant for the amount of P21,706,281.00. HELD:
Violation of Due Process
SO ORDERED.14chanroblesvirtuallawlibrary

Page 2 of 4 Dy Vs People, GR 189081, (Aug. 10, 2016)

We further note that the evidence on record
never fully established the terms of this loan In general terms, procedural due process means
contract. As the trial before the RTC Manila was the right to notice and hearing.56 More
focused on proving estafa, the loan contract was, specifically, our Rules of Court provides for a set
as a consequence, only tangentially considered. of procedures through which a person may be
This provides another compelling reason why the notified of the claims against him or her as well
civil liability arising from the loan should be as methods through which he or she may be
instituted in a separate civil case. A civil action given the adequate opportunity to be heard.
for collection of sum of money filed before the
proper court will provide for a better venue The Rules of Court requires that any person
where the terms of the loan and other relevant invoking the power of the judiciary to protect or
details may be received. While this may enforce a right or prevent or redress a wrong57
postpone a warranted recovery of the civil must file an initiatory pleading which embodies a
liability, this Court deems it more important to cause of action,58 which is defined as the act or
uphold the principles underlying the inherent omission by which a party violates a right of
differences in the various sources of obligations another.59 The contents of an initiatory pleading
under our law, and the rule that fused actions alleging a cause of action will vary depending on
only refer to criminal and civil actions involving the source of the obligation involved. In the case
the same act or omission. These legal tenets play of an obligation arising from a contract, as in this
a central role in this legal system. A confusion of case, the cause of action in an initiatory pleading
these principles will ultimately jeopardize the will involve the duties of the parties to the
interests of the parties involved. Actions focused contract, and what particular obligation was
on proving estafa is not the proper vehicle to breached. On the other hand, when the
thresh out civil liability arising from a contract.52 obligation arises from an act or omission
The Due Process Clause of the Constitution constituting a crime, the cause of action must
dictates that a civil liability arising from a necessarily be different. In such a case, the
contract must be litigated in a separate civil initiatory pleading will assert as a cause of action
action. the act or omission of respondent, and the
specific criminal statute he or she violated.
Section 1 of the Bill of Rights states that no Where the initiatory pleading fails to state a
person shall be deprived of property without due cause of action, the respondent may file a
process of law. This provision protects a person's motion to dismiss even before trial.60 These
right to both substantive and procedural due rules embody the fundamental right to notice
process. Substantive due process looks into the under the Due Process Clause of the
validity of a law and protects against Constitution.
arbitrariness.53 Procedural due process, on the
other hand, guarantees procedural fairness.54 It In a situation where a court (in a fused action for
requires an ascertainment of "what process is the enforcement of criminal and civil liability)
due, when it is due, and the degree of what is may validly order an accused-respondent to pay
due."55 This aspect of due process is at the heart an obligation arising from a contract, a person's
of this case. right to be notified of the complaint, and the

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right to have the complaint dismissed if there is coupled with an accused-respondent's inability
no cause of action, are completely defeated. In to adequately prepare his or her defense
this event, the accused-respondent is completely because of lack of adequate notice of the claims
unaware of the nature of the liability claimed against him or her—prevents the accused-
against him or her at the onset of the case. The respondent from having any right to a
accused-respondent will not have read any meaningful hearing. The right to be heard under
complaint stating the cause of action of an the Due Process Clause requires not just any kind
obligation arising from a contract. All throughout of an opportunity to be heard. It mandates that a
the trial, the accused-respondent is made to party to a case must have the chance to be heard
believe that should there be any civil liability in a real and meaningful sense. It does not
awarded against him or her, this liability is require a perfunctory hearing, but a court
rooted from the act or omission constituting the proceeding where the party may adequately
crime. The accused-respondent is also deprived avail of the procedural remedies granted to him
of the remedy of having the complaint dismissed or her. A court decision resulting from this falls
through a motion to dismiss before trial. In a short of the mandate of the Due Process Clause.
fused action, the accused-respondent could not
have availed of this remedy because he or she Indeed, the language of the Constitution is clear.
was not even given an opportunity to ascertain No person shall be deprived of property without
what cause of action to look for in the initiatory due process of law. Due Process, in its
pleading. In such a case, the accused-respondent procedural sense, requires, in essence, the right
is blindsided. He or she could not even have to notice and hearing. These rights are further
prepared the appropriate defenses and evidence fleshed out in the Rules of Court. The Rules of
to protect his or her interest. This is not the Court enforces procedural due process because,
concept of fair play embodied in the Due Process to repeat the words of this Court in Secretary of
Clause. It is a clear violation of a person's right to Justice v. Lantion, it provides for "what process is
due process. due, when it is due, and the degree of what is
due."64 A court ordering an accused in a fused
The Rules of Court also allows a party to a civil action to pay his or her contractual liability
action certain remedies that enable him or her to deprives him or her of his or her property
effectively present his or her case. A party may without the right to notice and hearing as
file a cross-claim, a counterclaim or a third-party expressed in the procedures and remedies under
complaint.61 The Rules of Court prohibits these the Rules of Court. Thus, any court ruling
remedies in a fused civil and criminal case.62 The directing an accused in a fused action to pay civil
Rules of Court requires that any cross-claim, liability arising from a contract is one that
counterclaim or third-party complaint must be completely disregards the Due Process Clause.
instituted in a separate civil action.63 In a legal This ruling must be reversed and the
regime where a court may order an accused in a Constitution upheld.
fused action to pay civil liability arising from a
contract, the accused-respondent is completely
deprived of the remedy to file a cross-claim, a
counterclaim or a third-party complaint. This—

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