Does non-payment of loan constitute the crime of estafa?

No. In order to constitute the crime of Estafa, it is essential to prove that the accused acquired both material or physical possession and juridical possession of the money received.

* What is Juridical Possession? It gives the transferee a right over the money (or thing) transferred and this he or she may set up even against the owner. (Benabaye v. People, G.R. No. 203466)

Mere receipt of money does not establish material and juridical possession.

In a loan contract, ownership over the money is vested in the debtor. Being the owner, he can dispose of the money for whatever purpose he or she may deem proper. Article 315 (1) (b) or Estafa with Abuse of Confidence does not apply when the contract between the accused and the victim has the effect of transferring to the former the ownership of the thing received.

Thus, he cannot be accused of misappropriation since, as the owner of the money received, he could dispose of the same in a manner he may desire. Failure to return the money loaned will only give rise to civil liability.

(Bautista v. People, G.R. No. 233218)