1) The starting point: Nonpayment of a loan is generally NOT a crime

The Philippine Constitution provides that no person shall be imprisoned for debt (Art. III, Sec. 20). The classic application is simple: if you lent money and the borrower just didn’t pay, that is usually a civil problem (collection of sum of money), not a criminal one.

But that protection is not a “free pass.” Nonpayment becomes criminal when the law punishes the fraudulent or wrongful act connected to the transaction (deceit, abuse of confidence, misappropriation, issuance of worthless checks), not the “debt” itself.

So the practical question is:

Did the accused merely fail to pay a loan, or did the accused commit a separate wrongful act that the law defines as a crime?

2) Civil “unpaid loan” vs. criminal “estafa”: the core difference

A. Simple loan (mutuum)

In a true loan for consumption (mutuum), ownership of the money is transferred to the borrower. The borrower is obliged to return an equivalent amount, not the same bills/coins.

If the borrower spends the money, that is not misappropriation—it’s what borrowers do.
If the borrower fails to pay, it is normally breach of obligation → civil case for collection.

B. Estafa

Estafa is principally punished under Article 315 of the Revised Penal Code. What makes it criminal is typically:

Deceit at the beginning (fraud used to obtain money/property), or
Abuse of confidence / misappropriation (money/property received in trust or for a specific purpose, then converted).

A useful working rule:

Loan = “here’s money, pay me back later.” Trust/agency = “here’s money, use it for X / keep it for me / deliver it to Y.” Misusing the second can be estafa; failing to repay the first is usually civil.

3) Estafa under Article 315: the main forms that get confused with “unpaid loans”

Article 315 has multiple modes. The most relevant in “nonpayment” disputes are:

3.1 Estafa by misappropriation or conversion (Art. 315(1)(b))

This is the most commonly misused provision in loan quarrels.

Typical elements (simplified):

The accused received money/property:
- in trust, or
- on commission, or
- for administration, or
- under an obligation to deliver or return the same;
The accused misappropriated, converted, or denied receipt of it;
The act caused prejudice; and
There is a demand (demand helps show misappropriation, though cases treat demand as evidentiary rather than always strictly indispensable, depending on facts).

Key distinction from a loan: If the transaction is truly a loan, the recipient is not obliged to return the same money; ownership passed. That generally defeats the “received in trust/obligation to return the same” requirement.

Red flags for estafa (1)(b):

Money was handed to someone to buy something, pay a supplier, pay a government fee, remit to an employer, deliver to a third person, or hold for safekeeping, and the person used it for personal purposes.
The relationship looks like agent–principal, employee–employer remittance, broker, treasurer, collector, administrator, consignee, depositary, or trustee.

Common “not estafa” situations (often civil):

Pure loan with interest, promissory note, scheduled payments.
Investment losses where funds were actually placed at risk with consent and without a clear fiduciary obligation to return the same funds regardless of outcome (though fraud in soliciting “investments” can still be estafa under other modes).

3.2 Estafa by deceit (Art. 315(2)(a)-(c))

These cover fraudulent tricks used to obtain money/property.

(2)(a): using a false name or pretending to possess power, influence, qualifications, property, credit, agency, business, etc.
(2)(b): altering quality/quantity of things delivered, or other forms of deceit in delivery.
(2)(c): pretending to have certain property or credit to obtain money, etc. (depending on the exact statutory phrasing and how the deceit is characterized).

The centerpiece here is timing: The deceit must generally be prior to or simultaneous with the handing over of money/property—i.e., it induced the victim to part with it.

If the borrower was honest at the start but later became unable or unwilling to pay, that usually points away from estafa by deceit.

3.3 Estafa involving checks (Art. 315(2)(d))

This is where people often confuse BP 22 and estafa.

Under 315(2)(d), estafa may occur when someone:

issues a check in payment of an obligation,
knowing there are insufficient funds (or no credit),
and the check is dishonored,
with the check serving as part of the deceit that caused the victim to part with money/property.

Practical distinction:

If the check was given to obtain money/property at the time of the transaction (e.g., “give me goods now, here’s my check”), and it bounces, the bounced check may be evidence of deceit at inception → possible estafa (plus possibly BP 22).
If the check was given merely for a pre-existing debt (e.g., “I already owe you from months ago; here’s a check as payment”), many disputes lean toward BP 22 rather than estafa because the creditor did not part with anything new on the faith of the check. Estafa still depends heavily on proving deceit that induced delivery.

4) Batas Pambansa Blg. 22 (BP 22): the “bouncing check” law (often paired with loan disputes)

BP 22 is not estafa, but it’s the most common criminal case arising from “unpaid obligations,” including loan payments.

4.1 What BP 22 punishes

BP 22 punishes the act of making/issuing a check that is dishonored for insufficiency of funds (or credit), subject to statutory conditions.

It is commonly treated as a malum prohibitum offense: the focus is the issuance of the worthless check, not necessarily proving classic fraud elements the way estafa does.

4.2 Typical requirements you’ll see in practice

While details vary by factual setting, BP 22 litigation often turns on:

The check was issued;
It was dishonored for insufficiency of funds (or similar reasons covered by the law);
The issuer received notice of dishonor; and
The issuer failed to pay the amount (or make arrangements) within the statutory window often invoked in practice (commonly discussed as five banking days from notice).

Why notice matters: It is central to establishing statutory presumptions and fairness (i.e., the issuer is informed and given a short chance to cover).

4.3 BP 22 vs. constitutional “no imprisonment for debt”

Courts have historically treated BP 22 as punishing the issuance of a worthless check, not the mere failure to pay a debt—hence it is typically viewed as not violating the constitutional prohibition.

5) PD 1689: when estafa becomes “large-scale” (swindling) with heavier penalties

Presidential Decree No. 1689 increases penalties for certain estafa or similar frauds:

when committed by a syndicate, or
on a large scale.

This often appears in scams masquerading as “investments,” “pyramiding,” “lending/financing,” “trading,” or “double-your-money” schemes—especially where multiple victims are induced by similar deceit.

6) Amount matters: RA 10951 and the updated value brackets for estafa penalties

RA 10951 adjusted the value thresholds in the Revised Penal Code (including those relevant to estafa’s graduated penalties). In estafa cases, the amount of damage influences:

the penalty range, and
indirectly, matters like prescription and bail considerations in practice.

Bottom line: In modern estafa charging, the prosecutor/court will pay close attention to the amount involved, because Article 315 penalties step up by brackets.

7) A decision guide: “Is this just an unpaid loan, or potentially estafa/BP 22?”

Step 1: What was the agreement in substance?

A. Loan (mutuum) indicators

“Borrow,” “utang,” “pautang,” “loan”
promissory note, amortization schedule
interest
borrower free to use money for any purpose
obligation is to return equivalent amount later

→ Usually civil if unpaid.

B. Trust/agency/administration indicators

“Hold this money for me”
“Use this only to pay X”
“Buy Y with this”
“Remit/turn over to Z”
“Return the same amount immediately after doing X”
receipts show “for deposit,” “for remittance,” “for purchase,” “for safekeeping”

→ Misuse can support estafa (315(1)(b)).

Step 2: Was there deceit at the start?

false identity, fake collateral, fake documents
misrepresented ownership, authority, business, capacity, licensing
“Borrower” induced lender to hand over money due to a lie

→ Possible estafa by deceit.

Step 3: Was a check involved?

check bounced

→ Consider BP 22. → Consider estafa (315(2)(d)) if the check was part of deceit that induced the giving of money/property.

8) Evidence patterns that make or break these cases

For a complainant (lender/victim), what typically strengthens criminal framing

Clear proof the accused received money for a specific purpose and had an obligation to deliver/return it (not just “pay later”).
Proof of conversion: spending for personal use, refusal to account, denial of receipt, inconsistent explanations.
Demand and refusal/failure to return (letters, messages, recorded acknowledgments).
Proof of deceit at inception: false documents, false representations, witnesses, admissions.
In check cases: proof of dishonor + notice of dishonor + failure to make good.

What tends to weaken a criminal case (and push it to civil)

Written contract clearly labeled as loan with terms, interest, maturity.
Communications show the lender knew it was a loan risk (“okay kahit matagal,” “kahit hulugan,” “basta umutang ka”).
Partial payments consistent with a debtor-creditor relationship.
No proof of a duty to return the same money or to apply funds to a specific task.
In deceit theories: the “lie” is vague, opinion-like, or made after the money was already given.

9) Common real-world scenarios (how they’re usually analyzed)

Scenario A: “I lent my friend ₱200,000. He promised to pay. Now he won’t.”

Default: civil collection.
Criminal only if: you can show qualifying deceit or that the money wasn’t a loan but was entrusted for a specific purpose.

Scenario B: “I gave ₱200,000 to someone to pay my supplier/import fees. He used it for himself.”

Often fits estafa (315(1)(b)) if receipt was in trust/administration and there was conversion.

Scenario C: “I gave money as ‘investment’; they promised guaranteed returns and showed fake trading results.”

Could be estafa by deceit (and possibly PD 1689 if large-scale/syndicated), depending on proof that representations were fraudulent and induced the giving.

Scenario D: “Borrower issued a postdated check as security for the loan; it bounced.”

BP 22 is commonly pursued if statutory requirements are met.
Estafa (315(2)(d)) depends on whether the check was used as deceit that caused you to part with money/property (timing and inducement are crucial).

Scenario E: “Employer’s cashier collected payments but did not remit.”

Often charged as estafa (315(1)(b)) (fiduciary/administration/remittance duty), depending on the role and evidence.

10) Procedure overview: what typically happens in practice

10.1 For estafa and BP 22

Complaint-affidavit filed with the prosecutor (Office of the City/Provincial Prosecutor).
Respondent’s counter-affidavit.
Resolution: dismissal or finding of probable cause.
If probable cause: Information filed in court; case proceeds to arraignment, pre-trial, trial.

10.2 Civil liability and criminal cases can overlap

In many criminal cases, civil liability is implied (civil liability ex delicto).
Rules on whether a separate civil action can proceed, be suspended, or be deemed included depend on the procedural posture and the nature of the civil claim.

11) Defenses and pitfalls (both sides)

11.1 Common defenses in “estafa disguised as unpaid loan”

The transaction was a pure loan (mutuum); ownership transferred; no trust duty to return the same money.
No deceit at inception; inability to pay arose later.
The complainant assumed business risk; allegations are contractual.
Demand was not made (where demand is important to show conversion), or evidence of conversion is lacking.

11.2 Common defenses in BP 22

No proper notice of dishonor (often heavily litigated).
Check was not issued “to apply on account or for value” in the manner alleged (fact-specific).
Payment/arrangement was made within the statutory period after notice (fact-specific).
Signature/issuance issues, authority issues, or bank-related anomalies (rare but possible).

11.3 Pitfalls for complainants

Filing estafa to “pressure payment” when facts are plainly a loan can backfire (dismissal, exposure to counterclaims, and credibility issues).
In check cases, skipping the evidentiary basics (dishonor documents, notice proof) weakens BP 22.

11.4 Pitfalls for debtors/respondents

Casual admissions in chat (“Oo ginastos ko yung pinapahawak mo”) can be devastating in estafa (1)(b).
Ignoring notice of dishonor and not making arrangements quickly can harden BP 22 exposure.

12) Practical drafting: how to document transactions so the correct legal character is clear

If it is truly a loan

State “loan/utang/mutuum,” principal amount, interest (if any), maturity, payment schedule.
Acknowledge borrower’s freedom to use funds.
Clarify remedies: demand, acceleration, collection, attorney’s fees (if agreed).

If it is entrustment for a purpose

Use explicit words: “in trust,” “for administration,” “for remittance,” “for purchase of ___,” “to deliver to ___.”
Require liquidation/accounting by date.
Issue receipts indicating purpose.

Clear documentation often determines whether a dispute stays civil or becomes criminal.

13) Quick summary rules that usually hold

Unpaid loan ≠ estafa by default. It is typically civil.
Estafa needs more than nonpayment: usually deceit at the start or misappropriation of funds received in trust/for a specific purpose.
BP 22 targets bounced checks, which can arise even from ordinary loan payments, and it has its own technical requirements (especially notice and dishonor proof).
The “correct label” depends on the true nature of the obligation, not the angry party’s description.