14. Teofisto Guingona, Jr., Antonio L. Martin, and Teresita Santos vs. City Fiscal of 6.
6. Petitioners Guingona, Martin, and Santos moved to dismiss the charges against them for
Manila Hon. Jose B. Flaminiano, Asst. City Fiscal Felizardo N. Lota and Clement David
Doctrine: A bank time or savings deposit constitutes a simple loan, not a contract of deposit.
Non-payment of the said bank deposit does not constitute estafa.
Facts:
1. On December 23, 1981, private respondent David charged the petitioners Guingona,
Martin and Santos, together with Robert Marshall and the directors of Nation Savings and
Loan Association, Inc. (NSLA) estafa and violation of Central Bank Circular No. 364, and
related Central Bank regulations on foreign exchange transactions.
2. It was alleged that, from March 20, 1979 to March 1981, David invested with NSLA the
sum of P1,145,546.20 on time deposits, P13, 531.94 on savings account deposits (jointly
with her sister, Denise Kuhne), US$10,000 on time deposit, US$15,000 under a receipt
and guarantee of payment and US$50,000 under a receipt dated June 8, 1980 (all jointly
with Denise Kuhne).
3. David further alleged that he was induced into making the investments by Robert
Marshall, who was a close associate of petitioners Guingona (NSLA president), Martin
(Executive Vice Pres.), and Santos (General Manager). David received a report from
Central Bank that only P305,821.92 of those investments were entered in the records of
NSLA, and therefore, the petitioners misappropriated the balance of the investments, at the
same time violating CB Circular No. 364 and related CB regulations on foreign exchange
transactions; that after demands, petitioner Guingona paid only P200,000, thereby
reducing the amounts misappropriated to P959,078.14 and US$75,000.
4. Petitioners Martin and Santos in their affidavit, stated that, because NSLA was urgently in
need of funds and at David’s insistence, his investments were treated as special accounts
with interests above the legal rate, and recorded in separate confidential documents only a
portion of which were to be reported because he did not want the Australian government
to tax his total earnings; that all transactions with David were recorded, except the sum of
US$15,000 which was a personal loan of Santos; that David’s check for US$50,000.00
was cleared through Guingona, Jr.’s dollar account because NSLA did not have one, that a
draft of US$30,000.00 was placed in the name of one Paz Roces because of a pending
transaction with her; that the Philippine Deposit Insurance Corporation had already
reimbursed David within the legal limits; that majority of the stockholders of NSLA had
filed Special Proceedings to contest NSLA’s closure; that after NSLA was placed under
receivership, Martin executed a promissory note in David’s favor and caused the transfer
to him of a nine and one-half (91⁄2) carat diamond ring with a net value of P510,000.00;
and, that the liabilities of NSLA to David were civil in nature.
5. Petitioner Guingona, in his counter affidavit, stated that, he had no hand whatsoever in the
transactions between David and NSLA since he had resigned as NSLA president prior to
those transactions; that he assumed a portion of the liabilities of NSLA to David because
of the latter’s insistence that he placed his investments with NSLA because of his faith in
Guingona; that in a promissory note, he bound himself to pay David the sums of
P668,307.01 and US$37,500.00 in stated installments; that he secured payment of those
amounts with second mortgages over two (2) parcels of land under a deed of Second Real
Estate Mortgage in which it was provided that the mortgage over one (1) parcel shall be
cancelled upon payment of one-half of the obligation to David; that he paid P200,000.00
and tendered another P300,000.00 which David refused to accept, hence, he (Guingona,
Jr.) filed Civil Case No. Q-33865 in the Court of First Instance of Rizal at Quezon City, to
effect the release of the mortgage over one of the two parcels of land conveyed to David
under second mortgages.
lack of jurisdiction because David’s claim allegedly comprised a purely civil obligation
which itself was novated.
7. Fiscal Lota denied the petition. Petitioners filed a petition for prohibition and injunction
seeking to prohibit public respondents from proceeding with the preliminary investigation.
8. Petitioners alleged that the production of the promissory notes, banker’s acceptance,
certificates of time deposits and savings account showed that the transactions between
David and NSLA were simple loans.
Issue: W/N public respondents acted without jurisdiction when they investigated the charges
(estafa and violation of CB Circular No. 364 and related regulations regarding foreign
exchange transactions)?
Held: YES. The liability of the petitioners is civil in nature and therefore, public respondents
have no jurisdiction over the charge of estafa.
The records reveal that the bank was placed under receivership on March 21, 1981,
petitioners Guingona and Martin, upon the request David, assumed obligations of the bank by
executing a joint promissory note in favor of David acknowledging an indebtedness of
P1,336,614.02 and US$ 75,000. 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 P116,613.20.
Thereafter, or on July 17, 1981, petitioners Guingona and Martin agreed to divide
the said indebtedness, and petitioner Guingona executed another promissory note antedated to
June 17, 1981 whereby he personally acknowledged an indebtedness of P668,307.01 (1⁄2 of
P1,336,614.02) and US$37,500.00 (1⁄2 of US$75,000.00) in favor of private respondent (p. 25,
rec.). The aforesaid promissory notes were executed as a result of deposits made by Clement
David and Denise Kuhne with NSLA. 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 NSLA.
It must be pointed out that when private respondent David invested his money on
time 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, Article 1980 of the
New Civil Code provides that: “ Article 1980. Fixed, savings, and current deposits of money in banks
and similar institutions shall be governed by the provisions concerning simple loan.”
In Central Bank v Morfe, the Court ruled that: “It should be noted that fixed, savings,
and current deposits of money in banks and similar institutions are not true deposits. They are
considered simple loans and, as such, are not preferred credits.”
In Serrano v Central Bank, the Court declared that: “Bank deposits are in the nature of
irregular deposits. They are really loans because they earn interest. All kinds of bank deposits, whether
fixed, savings, or current are to be treated as loans and are to be covered by the law on loans. Current and
savings deposits are loans to a bank because it can use the same. The petitioner here in making time
deposits that earn interests with respondent Overseas Bank of Manila was in reality a creditor of the
respondent Bank and not a depositor. The respondent Bank was in turn a debtor of petitioner. Failure of
the respondent Bank to honor the time deposit is failure to pay its obligation as a debtor and not a
breach of trust arising from a depositary’s failure to return the subject matter of the deposit.”
Hence, the relationship between the private respondent and the NSLA 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.
In order that a person can be convicted of estafa through missappropriation, it must be proven
that he has the obligation to deliver or return the same money, goods or personal property
that he received. Petitioners had no such obligation to return the same money, which they
received from private respondents. This is so because as clearly 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 Articles 1933 and 1953 of the Civil Code:
Art. 1933.—By 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 time and return it, in which case the contract
is called a commodatum; or money or other consumable thing, upon the condition that the same amount of
the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
Commodatum is essentially gratuitous. Simple loan may be gratuitous or with a stipulation to
pay interest.
In commodatum the bailor retains the ownership of the thing loaned, while in simple loan,
ownership passes to the borrower.
Art. 1953.—A person who receives a loan of money or any other fungible thing acquires the
ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality.
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 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.
While as a rule, the prosecution in a criminal offense cannot be the subject of
prohibition and injunction, this court has recognized the resort to the extraordinary writs of
prohibition and injunction in extreme cases.

WHEREFORE, THE PETITION IS HEREBY GRANTED; THE TEMPORARY

RESTRAINING ORDER PREVIOUSLY ISSUED IS MADE PERMANENT. COSTS
AGAINST THE PRIVATE RESPONDENT. SO ORDERED.