TEOFISTO GUINGONA, JR., ANTONIO MARTIN, and TERESITA SANTOS v.

CITY FISCAL FLAMINIANO, ASST. CITY FISCAL LOTA and CLEMENT DAVID

1984 / Makasiar

David invested several deposits with the Nation Savings and Loan Association [NSLA]. He said that he
was induced into making said investments by an Australian national who was a close associate of the
petitioners [NSLA officials]. On March 1981, NSLA was placed under receivership by the Central Bank, so
David filed claims for his and his sister’s investments.

On June 1981, Guingona and Martin, upon David’s request, assumed the bank’s obligation to David by
executing a joint promissory note. On July 1981, David received a report that only a portion of his
investments was entered in the NSLA records.

On December 1981, David filed I.S. No. 81-31938 in the Office of the City Fiscal, which case was assigned
to Asst. City Fiscal Lota for preliminary investigation. David charged petitioners with estafa and violation
of Central Bank Circular No. 364 and related regulations on foreign exchange transactions.

Petitioners moved to dismiss the charges against them for lack of jurisdiction because David's claims
allegedly comprised a purely civil obligation, but the motion was denied. After the presentation of
David's principal witness, petitioners filed this petition for prohibition and injunction because:

a. The production of various documents showed that the transactions between David and NSLA were
simple loans (civil obligations which were novated when Guingona and Martin assumed them)

b. David's principal witness testified that the duplicate originals of the instruments of indebtedness
were all on file with NSLA.

A TRO was issued ordering the respondents to refrain from proceeding with the preliminary
investigation in I.S. No. 81-31938.

Petitioners’ liability is civil in nature, so respondents have no jurisdiction over the estafa charge. TRO
CORRECTLY ISSUED.

GENERAL RULE: Criminal prosecution may not be blocked by court prohibition or injunction.

EXCEPTIONS

1. For the orderly administration of justice

2. To prevent the use of the strong arm of the law in an oppressive and vindictive manner
3. To avoid multiplicity of actions

4. To afford adequate protection to constitutional rights

5. In proper cases, because the statute relied upon is unconstitutional or was held invalid

When David invested his money on time and savings deposits with NSLA, the contract that was
perfected was a contract of simple loan or mutuum and not a contract of deposit. The relationship
between David and NSLA is that of creditor and debtor. While the Bank has the obligation to return the
amount deposited, it has no obligation to return or deliver the same money that was deposited. NSLA’s
failure to return the amount deposited will not constitute estafa through misappropriation, but it will
only give rise to civil liability over which the public respondents have no jurisdiction.

Considering that petitioners’ liability is purely civil in nature and that there is no clear showing that they
engaged in foreign exchange transactions, public respondents acted without jurisdiction when they
investigated the charges against the petitioners. Public respondents should be restrained from further
proceeding with the criminal case for to allow the case to continue would work great injustice to
petitioners and would render meaningless the proper administration of justice.

Even granting that NSLA’s failure to pay the time and savings deposits would constitute a violation of
RPC 315, paragraph 1(b), any incipient criminal liability was deemed avoided. When NSLA was placed
under receivership, Guingona and Martin assumed the obligation to David, thereby resulting in the
novation of the original contractual obligation. The original trust relation between NSLA and David was
converted into an ordinary debtor-creditor relation between the petitioners and David. While it is true
that novation does not extinguish criminal liability, it may prevent the rise of criminal liability as long as
it occurs prior to the filing of the criminal information in court.

COMPAÑIA AGRICOLA DE ULTRAMAR vs. VICENTE NEPOMUCENO

Facts: The registered partnerships, Mariano Velasco & Co., Mariano Velasco, Sons, & Co., and Mariano
Velasco & Co were, on petition of the creditors, declared insolvent by the CFI of Manila.

Compania Agricola de Ultramar filed a claim against one of the insolvents Mariano Velasco & Co.,
claiming the sum of P10,000, with the agreed interest thereon at the rate of 6 per cent per annum from
April 5, 1918, until its full payment was a deposit with said Mariano Velasco & Co. and asked the court to
declare it a preferred claim.

The assignee of the insolvency answered the claim by interposing a general denial. The court rendered a
decision declaring that the alleged deposit was a preferred claim for the sum mentioned. From this
decision the assignee appealed.

The evidence presented by the claimant Compania Agricola de Ultramar consisted of a receipt in writing,
and the testimony of Jose Velasco who was manager of Mariano Velasco & Co. at the time the note was
executed. The receipt stated: Received from the "Compania Agricola de Ultramar" the sum of ten
thousand Philippine pesos as a deposit at the interest of six per cent annually, for the term of three
months from date. In his testimony, Jose Velasco stated that his signature on the receipt was authentic
and that he received the said sum of P10,000 from the appellee and deposited it with the bank in the
current account of Mariano Velasco & Co.

Issue: Whether or not the said claim is a deposit or a loan.

Ruling: In the case of Gavieres vs. De Tavera, very similar to the present case, this court held that the
transaction was a loan and not a deposit. Although in the document in question a deposit is spoken of,
nevertheless from an examination of the entire document it clearly appears that the contract was a loan
and that such was the intention of the parties. The obligation of the depository to pay interest at the
rate of 6 per cent to the depositor suffices to cause the obligation to be considered as a loan and makes
it likewise evident that it was the intention of the parties that the depository should have the right to
make use of the amount deposited, since it was stipulated that the amount could be collected after
notice of two months in advance. Such being the case, the contract lost the character of a deposit and
acquired that of a loan.

Appellee argues that it is at least an "irregular deposit." This argument is sufficiently answered in the
case of Rogers vs. Smith, Bell & Co. “Manresa states that there are three points of difference between a
loan and an irregular deposit.

The first difference which he points out consists in the fact that in an irregular deposit the only benefit is
that which accrues to the depositor, while in a loan the essential cause for the transaction is the
necessity of the borrower. The contract in question did not also fulfill the third requisite indicated by
Manresa, which is, that in an irregular deposit, the depositor can demand the return of the article at any
time, while a lender is bound by the provisions of the contract and cannot seek restitution until the time
for payment, as provided in the contract, has arisen. In the present case, the transaction in question was
clearly not for the sole benefit of the Compania Agricola de Ultramar; it was evidently for the benefit of
both parties. Neither could the alleged depositor demand payment until the expiration of the term of
three months. For the reasons stated, the appealed judgment is reversed.