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Subject: Constitutional Law

Topic: Commission on Appointment


Title: TeofistoGuingonavsNeptali Gonzales
G.R. No. 106971 March 1, 1993

Facts:
From March 1979 to March 1981, Clement David made several investments with the National
Savings and Loan Association. On March 21, 1981, the bank was placed under receivership by
the BangkoSentral. Upon Davids request, petitioners Guingona and Martin issued a joint
promissory note, absorbing the obligations of the bank. On July 17, 1981, they divided the
indebtedness. David filed a complaint for estafa and violation of Central Bank Circular No. 364
and related regulations regarding foreign exchange transactions before the Office of the City
Fiscal of Manila. Petitioners filed the herein petition for prohibition and injunction with a prayer
for immediate issuance of restraining order and/or writ of preliminary injunction to enjoin the
public respondents to proceed with the preliminary investigation on the ground that the
petitioners obligation is civil in nature.

Issue:
(1) Whether the contract between NSLA and David is a contract of depositor a contract of loan,
which answer determines whether the City Fiscal has the jurisdiction to file a case for estafa
(2) Whether there was a violation of Central Bank Circular No. 364

Ruling:
(1) 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. Hence, the relationship between the private respondent and the Nation
Savings and Loan Association is that of creditor and debtor; consequently, the ownership of the
amount deposited was transmitted to the Bank 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. While the Bank has the obligation to return the amount deposited, it has,
however, no obligation to return or deliver the same money that was deposited. And, the failure
of the Bank to return the amount deposited will not constitute estafa through misappropriation

punishable under Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to
civil liability over which the public respondents have no jurisdiction.

But 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 1(b) of Article 315 of the Revised
Penal Code, nevertheless any incipient criminal liability was deemed avoided, because when the
aforesaid bank was placed under receivership by the Central Bank, petitioners Guingona and
Martin 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 debtor-creditor relation between the petitioners and private respondent. Consequently,
the failure of the bank or petitioners Guingona and Martin 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. Moreover, while it is true that novation does not extinguish 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. In the case at bar, there is no dispute that petitioners
Guingona and Martin executed a promissory note on June 17, 1981 assuming the obligation of
the bank to private respondent David; while the criminal complaint for estafa was filed on
December 23, 1981 with the Office of the City Fiscal. Hence, it is clear that novation occurred
long before the filing of the criminal complaint with the Office of the City Fiscal. Consequently,
as aforestated, any incipient criminal liability would be avoided but there will still be a civil
liability on the part of petitioners Guingona and Martin to pay the assumed obligation.

(2) Petitioner Guingona merely accommodated the request of the Nation Savings and loan
Association in order to clear the bank draft through his dollar account because the bank did not
have a dollar account. Immediately after the bank draft was cleared, petitioner Guingona
authorized Nation Savings and Loan Association to withdraw the same in order to be utilized by
the bank for its operations. It is safe to assume that the U.S. dollars were converted first into
Philippine pesos before they were accepted and deposited in Nation Savings and Loan
Association, 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.

In 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 exchange transactions, We hold that the
public respondents acted without jurisdiction when they investigated the charges against the

petitioners. Consequently, 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 Ministry of Justice, would work great injustice to petitioners and would render meaningless
the proper administration of justice.

Held:
The Motions for Reconsideration are denied with finality. So ordered.

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