G.R. No. L-60033 April 4, 1984 TEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, a ! TERESITA SANTOS, petitioners, vs.

T"E #IT$ FIS#AL OF MANILA, "ON. JOSE %. FLAMINIANO, ASST. #IT$ FIS#AL FELI&AR'O N. LOTA a ! #LEMENT 'A(I', respondents. Facts: Temporary restraining order was issued ordering the respondents to refrain from proceeding with the preliminary investigation. Private respondent Clement David filed a motion to lift restraining order which was denied in the resolution of this Court. The instant petition seeks to prohibit public respondents from proceeding with the preliminary investigation where petitioners were charged by private respondent Clement David, with estafa and violation of Central ank Circular !o. "#$ and related regulations regarding foreign e%change transactions. David invested with the !ation &avings and 'oan (ssociation )!&'(* the sum of P+,+$,,,$#.-. on nine deposits that David was induced into making the aforestated investments by /obert 0arshall an (ustralian national who was allegedly a close associate of petitioner 1uingona 2r., then !&'( President, petitioner 0artin, then !&'( 3%ecutive 4ice5President of !&'( and petitioner &antos, then !&'( 1eneral 0anager6 that on 0arch -+, +78+ ! '( was placed under receivership by the Central ank, so that David filed claims therewith for his investments and those of his sister6 that on 2uly --, +78+ David received a report from the Central ank that only P".,,8-+.7- of those investments were entered in the records of !&'(6 that, therefore, the respondents in 9.&. !o. 8+5"+7"8 misappropriated the balance of the investments, at the same time violating Central ank Circular !o. "#$ and related Central ank regulations on foreign e%change transactions6 that after demands, petitioner 1uingona 2r. paid only P-..,......, thereby reducing the amounts misappropriated to P7,7,.:8.+$ and ;&<:,,.......= Petitioners, 0artin and &antos, filed a >oint counter5affidavit )Petition, (nne%? ?* in which they stated the following. t.hqw =That 0artin became President of !&'( in 0arch +7:8 )after the resignation of 1uingona, 2r.* and served as such until @ctober "., +78., while &antos was 1eneral 0anager up to !ovember +78.6 that because !&'( was urgently in need of funds and at David?s insistence, his investments were treated as special5 accounts with interest above the legal rate, an recorded in separate confidential documents only a portion of which were to be reported because he did not want the (ustralian government to ta% his total earnings )nor* to know his total investments6 that all transactions with David were recorded e%cept the sum of ;&<+,,...... which was a personal loan of &antos6 that David?s check for

;&<,.,...... was cleared through 1uingona, 2r.?s dollar account because !&'( did not have one, that a draft of ;&<".,...... was placed in the name of one PaA /oces because of a pending transaction with her6 that the Philippine Deposit 9nsurance Corporation had already reimbursed David within the legal limits6 that ma>ority of the stockholders of !&'( had filed &pecial Proceedings !o. 8-5+#7, in the Court of First 9nstance to contest its )!&'(?s* closure6 that after !&'( was placed under receivership, 0artin e%ecuted a promissory note in David?s favor and caused the transfer to him of a nine and on behalf )7 +B-* carat diamond ring with a net value of P,+.,......6 and, that the liabilities of !&'( to David were civil in nature.= Petitioner, 1uingona, 2r., in his counter5affidavit )Petition, (nne%? C?* stated the following:t.hqw =That he had no hand whatsoever in the transactions between David and !&'( since he )1uingona 2r.* had resigned as !&'( president in 0arch +7:8, or prior to those transactions6 that he assumed a portion o6 the liabilities of !&'( to David because of the latter?s insistence that he placed his investments with !&'( because of his faith in 1uingona, 2r.6 that in a Promissory !ote dated 2une +:, +78+ )Petition, (nne% =D=* he )1uingona, 2r.* bound himself to pay David the sums of P##8.".:..+ and ;&<":,,..... in stated installments6 that he )1uingona, 2r.* secured payment of those amounts with second mortgages over two )-* parcels of land under a deed of &econd /eal 3state 0ortgage )Petition, (nne% =3=* in which it was provided that the mortgage over one )+* parcel shall be cancelled upon payment of one5half of the obligation to David6 that he )1uingona, 2r.* paid P-..,...... and tendered another P"..,...... which David refused to accept, hence, he )1uingona, 2r.* filed Civil Case !o. C5""8#, in the Court of First 9nstance of /iAal at CueAon City, to effect the release of the mortgage over one )+* of the two parcels of land conveyed to David under second mortgages.= (t the inception of the preliminary investigation before respondent 'ota, petitioners moved to dismiss the charges against them for lack of >urisdiction because David?s claims allegedly comprised a purely civil obligation which was itself novated. Fiscal 'ota denied the motion to dismiss )Petition, p. 8*. ut, after the presentation of David?s principal witness, petitioners filed the instant petition because: )a* the production of the Promisory !otes, anker?s (cceptance, Certificates of Time Deposits and &avings

(ccount allegedly showed that the transactions between David and !&'( were simple loans, i.e., civil obligations on the part of !&'( which were novated when 1uingona, 2r. and 0artin assumed them6 and )b* David?s principal witness allegedly testified that the duplicate originals of the aforesaid instruments of indebtedness were all on file with !&'(, contrary to David?s claim that some of his investments were not record )Petition, pp. 857*. Petitioners alleged that they did not e%haust available administrative remedies because to do so would be futile )Petition, p. 7* Dpp. +,"5+,:, rec.E. (s correctly pointed out by the &olicitor 1eneral, the sole issue for resolution is whether public respondents acted without >urisdiction when they investigated the charges )estafa and violation of C Circular !o. "#$ and related regulations regarding foreign e%change transactions* sub>ect matter of 9.&. !o. 8+5"+7"8. There is merit in the contention of the petitioners that their liability is civil in nature and therefore, public respondents have no >urisdiction over the charge of estafa. ( casual perusal of the December -", +78+ affidavit. complaint filed in the @ffice of the City Fiscal of 0anila by private respondent David against petitioners Teopisto 1uingona, 2r., (ntonio 9. 0artin and Teresita 1. &antos, together with one /obert 0arshall and the other directors of the !ation &avings and 'oan (ssociation, will show that from 0arch -., +7:7 to 0arch, +78+, private respondent David, together with his sister, Denise Fuhne, invested with the !ation &avings and 'oan (ssociation the sum of P+,+$,,,$#.-. on time deposits covered by ankers (cceptances and Certificates of Time Deposits and the sum of P+",,"+.7$ on savings account deposits covered by passbook nos. #5#"- and -75:$-, or a total of P+,+,7,.:8.+$ )pp. +,5+#, roc.*. 9t appears further that private respondent David, together with his sister, made investments in the aforesaid bank in the amount of ;&<:,,...... )p. +:, rec.*. 0oreover, the records reveal that when the aforesaid bank was placed under receivership on 0arch -+, +78+, petitioners 1uingona and 0artin, upon the reGuest of private respondent David, assumed the obligation of the bank to private respondent David by e%ecuting on 2une +:, +78+ a >oint promissory note in favor of private respondent acknowledging an indebtedness of Pl,""#,#+$..- and ;&<:,,...... )p. 8., rec.*. This promissory note was based on the statement of account as of 2une "., +78+ prepared by the private respondent )p. 8+, rec.*. The amount of indebtedness assumed appears to be bigger than the original claim because of the added interest and the inclusion of other deposits of private respondent?s sister in the amount of P++#,#+".-.. Thereafter, or on 2uly +:, +78+, petitioners 1uingona and 0artin agreed to divide the said indebtedness, and petitioner 1uingona e%ecuted another promissory note antedated to 2une +:, +78+ whereby he personally acknowledged an indebtedness of P##8,".:..+ )+B- of P+,""#,#+$..-* and ;&<":,,..... )+B- of ;&<:,,......* in favor of private respondent )p. -,, rec.*. The aforesaid promissory notes were

e%ecuted as a result of deposits made by Clement David and Denise Fuhne with the !ation &avings and 'oan (ssociation. Furthermore, the various pleadings and documents filed by private respondent David, before this Court indisputably show that he has indeed invested his money on time and savings deposits with the !ation &avings and 'oan (ssociation. 9t must be pointed out that when private respondent David invested his money on nine. and savings deposits with the aforesaid bank, the contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit. Thus, (rticle +78. of the !ew Civil Code provides that:t.hqw (rticle +78.. Fi%ed, savings, and current deposits of5money in banks and similar institutions shall be governed by the provisions concerning simple loan. 9n the case of Central Bank of the Philippines vs. Morfe )#" &C/( ++$,++7 D+7:,E, He said:t.hqw 9t should be noted that fi%ed, savings, and current deposits of money in banks and similar institutions are hat true deposits. are considered simple loans and, as such, are not preferred credits )(rt. +78. Civil Code6 9n re 'iGuidation of 0ercantile atik of China Tan Tiong Tick vs. (merican (pothecaries Co., ## Phil $+$6 Pacific Coast iscuit Co. vs. Chinese 1rocers (ssociation #, Phil. ":,6 Fletcher (merican !ational ank vs. (ng Chong ;0 ## PH' "8,6 Pacific Commercial Co. vs. (merican (pothecaries Co., #, Phi' $-76 1opoco 1rocery vs. Pacific Coast iscuit C@.,#, Phil. $$"*.= This Court also declared in the recent case of Serrano vs. Central Bank of the Philippines )7# &C/( +.- D+78.E* that:t.hqw ank deposits are in the nature of irregular deposits. They are really ?loans because they earn interest. (ll kinds of bank deposits, whether fi%ed, savings, or current are to be treated as loans and are to be covered by the law on loans )(rt. +78. Civil Code 1ullas vs. Phil. !ational ank, #- Phil. ,+7*. Current and savin deposits! are loans to a "ank "e#ause it #an use the same. The petitioner here in making time deposits that earn interests will respondent @verseas ank of 0anila was in reality a creditor of the respondent ank and not a depositor. The respondent ank was in turn a debtor of petitioner. $ailure of the respondent Bank to honor the time deposit is failure to pa% its o"li ation as a de"tor and not a "rea#h of trust arisin from a depositar%&s failure to return the su"'e#t matter of the deposit )3mphasis supplied*. Ience, the relationship between the private respondent and the !ation &avings and 'oan (ssociation is that of creditor and debtor6 conseGuently, the ownership of the amount deposited was transmitted to the ank upon the perfection of the contract and it can make use of the amount deposited for its banking operations, such as to

pay interests on deposits and to pay withdrawals. Hhile the ank has the obligation to return the amount deposited! it has, however, no obligation to return or deliver the same mone% that was deposited. (nd, the failure of the ank to return the amount deposited will not constitute estafa through misappropriation punishable under (rticle "+,, par. l)b* of the /evised Penal Code, but it will only give rise to civil liability over which the public respondents have no5 >urisdiction. H3 have already laid down the rule that:t.hqw 9n order that a person can be convicted under the above5Guoted provision, it must "e proven that he has the o"li ation to deliver or return the some mone%! oods or personal propert% that he re#eived Petitioners had no such obligation to return the same money, i.e., the bills or coins, which they received from private respondents. This is so because as clearly as stated in criminal complaints, the related civil complaints and the supporting sworn statements, the sums of money that petitioners received were loans. The nature of simple loan is defined in (rticles +7"" and +7," of the Civil Code.t.hqw =(rt. +7"". J y the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time5 and return it, in which case the contract is called a commodatum6 or money or other #onsuma"le thin ! upon the #ondition that the same amount of the same kind and qualit% shall he paid in whi#h #ase the #ontra#t is simpl% #alled a loan or mutuum. =Commodatum is essentially gratuitous. =&imple loan may be gratuitous or with a stipulation to pay interest. =9n commodatum the bailor retains the ownership of the thin loaned while in simple loan! ownership passes to the "orrower. =(rt. +7,". J ( person who receives a loan of money or any other fungible thing acGuires the ownership thereof, and is bound to pay to the creditor an eGual amount of the same kind and Guality.= (t #an "e readil% noted from the a"ove)quoted provisions that in simple loan *mutuum+! as #ontrasted to #ommodatum the "orrower a#quires ownership of the mone%! oods or personal propert% "orrowed Bein the owner! the "orrower #an dispose of the thin "orrowed *,rti#le -./! Civil Code+ and his a#t will not "e #onsidered misappropriation thereof& )Kam vs. 0alik, 7$ &C/( "., "$ D+7:7E6 3mphasis supplied*.

ut even granting that the failure of the bank to pay the time and savings deposits of private respondent David would constitute a violation of paragraph +)b* of (rticle "+, of the /evised Penal Code, nevertheless any incipient criminal liability was deemed avoided, because when the aforesaid bank was placed under receivership by the Central ank, petitioners 1uingona and 0artin assumed the obligation of the bank to private respondent David, thereby resulting in the novation of the original contractual obligation arising from deposit into a contract of loan and converting the original trust relation between the bank and private respondent David into an ordinary debtor5 creditor relation between the petitioners and private respondent. ConseGuently, the failure of the bank or petitioners 1uingona and 0artin to pay the deposits of private respondent would not constitute a breach of trust but would merely be a failure to pay the obligation as a debtor. 0oreover, while it is true that novation does not e%tinguish criminal liability, it may however, prevent the rise of criminal liability as long as it occurs prior to the filing of the criminal information in court. Thus, in 0on1ales vs. Serrano ) -, &C/( #$, #7 D+7#8E* He held that:t.hqw (s pointed out in People vs. 2er%, novation prior to the filing of the criminal information J as in the case at bar J may convert the relation between the parties into an ordinary creditor5debtor relation, and place the complainant in estoppel to insist on the original transaction or =cast doubt on the true nature= thereof. (gain, in the latest case of 3n vs. Court of ,ppeals )'5,8$:#, +-$ &C/( ,:8, ,8.5 ,8+ D+78"E *, this Court reiterated the ruling in People vs. 2er% ) +. &C/( -$$ D+7#$E *, declaring that:t.hqw The novation theory may perhaps apply prior to the filling of the criminal information in court by the state prosecutors because up to that time the original trust relation may be converted by the parties into an ordinary creditor5debtor situation, thereby placing the complainant in estoppel to insist on the original trust. ut after the >ustice authorities have taken cogniAance of the crime and instituted action in court, the offended party may no longer divest the prosecution of its power to e%act the criminal liability, as distinguished from the civil. The crime being an offense against the state, only the latter can renounce it )People vs. 1ervacio, ,$ @ff. 1aA. -8786 People vs. 4elasco, $- Phil. :#6 ;.&. vs. 0ontanes, 8 Phil. #-.*. 9t may be observed in this regard that novation is not one of the means recogniAed by the Penal Code whereby criminal liability can be e%tinguished6 hence, the role of novation may only be to either prevent the rise of criminal habihty or to cast doubt on the true nature of the original basic transaction, whether or not it was such that its breach would not give rise to penal responsibility, as when money loaned is made to appear as a deposit, or other similar disguise is resorted to )cf. (beto vs. People, 7. Phil. ,8+6 ;.&. vs. 4illareal, -: Phil. $8+*.

9n the case at bar, there is no dispute that petitioners 1uingona and 0artin e%ecuted a promissory note on 2une +:, +78+ assuming the obligation of the bank to private respondent David6 while the criminal complaint for estafa was filed on December -", +78+ with the @ffice of the City Fiscal. Ience, it is clear that novation occurred long before the filing of the criminal complaint with the @ffice of the City Fiscal. ConseGuently, as aforestated, any incipient criminal liability would be avoided but there will still be a civil liability on the part of petitioners 1uingona and 0artin to pay the assumed obligation. Petitioners herein were likewise charged with violation of &ection " of Central ank Circular !o. "#$ and other related regulations regarding foreign e%change transactions by accepting foreign currency deposit in the amount of ;&<:,,...... without authority from the Central ank. They contend however, that the ;& dollars intended by respondent David for deposit were all converted into Philippine currency before acceptance and deposit into !ation &avings and 'oan (ssociation. Petitioners? contention is worthy of behelf for the following reasons: +. 9t appears from the records that when respondent David was about to make a deposit of bank draft issued in his name in the amount of ;&<,.,...... with the !ation &avings and 'oan (ssociation, the same had to be cleared first and converted into Philippine currency. (ccordingly, the bank draft was endorsed by respondent David to petitioner 1uingona, who in turn deposited it to his dollar account with the &ecurity ank and Trust Company. Petitioner 1uingona merely accommodated the reGuest of the !ation &avings and loan (ssociation in order to clear the bank draft through his dollar account because the bank did not have a dollar account. 9mmediately after the bank draft was cleared, petitioner 1uingona authoriAed !ation &avings and 'oan (ssociation to withdraw the same in order to be utiliAed by the bank for its operations. -. 9t is safe to assume that the ;.&. dollars were converted first into Philippine pesos before they were accepted and deposited in !ation &avings and 'oan (ssociation, because the bank is presumed to have followed the ordinary course of the business which is to accept deposits in Philippine currency only, and that the transaction was regular and fair, in the absence of a clear and convincing evidence to the contrary )see paragraphs p and q! &ec. ,, /ule +"+, /ules of Court*. ". /espondent David has not denied the aforesaid contention of herein petitioners despite the fact that it was raised. in petitioners? reply filed on 0ay :, +78- to private respondent?s comment and in the 2uly -:, +78- reply to public respondents? comment and reiterated in petitioners? memorandum filed on @ctober "., +78-, thereby adding more support to the conclusion that the ;&<:,,...... were really converted into Philippine currency before they were accepted and deposited into !ation &avings and 'oan (ssociation. Considering that this might adversely affect his case, respondent David should have promptly denied petitioners? allegation. 9n conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no clear showing that they engaged in foreign e%change transactions, He hold that the public respondents acted without >urisdiction when

they investigated the charges against the petitioners. ConseGuently, public respondents should be restrained from further proceeding with the criminal case for to allow the case to continue, even if the petitioners could have appealed to the 0inistry of 2ustice, would work great in>ustice to petitioners and would render meaningless the proper administration of >ustice. Hhile as a rule, the prosecution in a criminal offense cannot be the sub>ect of prohibition and in>unction, this court has recogniAed the resort to the e%traordinary writs of prohibition and in>unction in e%treme cases, thus: t.hqw @n the issue of whether a writ of in>unction can restrain the proceedings in Criminal Case !o. "+$., the general rule is that =ordinarily, criminal prosecution may not be blocked by court prohibition or in>unction.= 3%ceptions, however, are allowed in the following instances:t.hqw =+. for the orderly administration of >ustice6 =-. to prevent the use of the strong arm of the law in an oppressive and vindictive manner6 =". to avoid multiplicity of actions6 =$. to afford adeGuate protection to constitutional rights6 =,. in proper cases, because the statute relied upon is unconstitutional or was held invalid= ) Primicias vs. 0unicipality of ;rdaneta, Pangasinan, 7" &C/( $#-, $#75$:. D+7:7E6 citing /amos vs. Torres, -, &C/( ,,: D+7#8E6 and IernandeA vs. (lbano, +7 &C/( 7,, 7# D+7#:E*. 'ikewise, in 4ope1 vs. 5he Cit% 6ud e! et al. ) +8 &C/( #+#, #-+5#-- D+7##E*, He held that:t.hqw The writs of certiorari and prohibition, as e%traordinary legal remedies, are in the ultimate analysis, intended to annul void proceedings6 to prevent the unlawful and oppressive e%ercise of legal authority and to provide for a fair and orderly administration of >ustice. Thus, in 7u 8on 9n vs. 5rinidad, $: Phil. "8,, He took cogniAance of a petition for certiorari and prohibition although the accused in the case could have appealed in due time from the order complained of, our action in the premises being based on the public welfare policy the advancement of public policy. 9n :ima%u a vs. $a'ardo! $" Phil. ".$, He also admitted a petition to restrain the prosecution of certain chiropractors although, if convicted, they could have appealed. He gave due course to their petition for the orderly administration of >ustice and to avoid possible oppression by the strong arm of the law. (nd in ,revalo vs. 2epomu#eno, #" Phil. #-:, the petition for certiorari challenging the

trial court?s action admitting an amended information was sustained despite the availability of appeal at the proper time. HI3/3F@/3, TI3 P3T9T9@! 9& I3/3 K 1/(!T3D6 TI3 T30P@/(/K /3&T/(9!9!1 @/D3/ P/349@;&'K 9&&;3D 9& 0(D3 P3/0(!3!T. C@&T& (1(9!&T TI3 P/94(T3 /3&P@!D3!T.