G.R. No.

L-60033 April 4, 1984

TEOFISTO GUINGONA, JR. vs. THE CITY FISCAL OF MANILA

Private respondent David filed a complaint in the Office of the City Fiscal of Manila. David charged petitioners (with one Robert
Marshall and the directors of the Nation Savings and Loan Association, Inc. (NSLA) with estafa and violation of CB Circular
No. 364 and related Central Bank regulations on foreign exchange transactions, allegedly committed as follows:

From March 20, 1979 to March, 1981, David invested with the NSLA the sum of P1,145,546.20 on nine deposits,
P13,531.94 on savings account deposits (jointly with his sister, Denise Kuhne), US$10,000.00 on time deposit,
US$15,000.00 under a receipt and guarantee of payment and US$50,000.00 under a receipt dated June 8, 1980 (au
jointly with Denise Kuhne).

That David was induced into making the aforestated investments by Robert Marshall an Australian national who was
allegedly a close associate of petitioner Guingona Jr., then NSLA President, petitioner Martin, then NSLA Executive
Vice-President of NSLA and petitioner Santos, then NSLA General Manager; that on March 21, 1981 NSLA was
placed under receivership by the Central Bank, so that David filed claims therewith for his investments and those of
his sister; that David received a report from the Central Bank that only P305,821.92 of those investments were
entered in the records of NSLA; that, therefore, the petitioners misappropriated the balance of the investments, at
the same time violating CB Circular No. 364 and related Central Bank regulations on foreign exchange transactions;
that after demands, petitioner Guingona Jr. paid only P200,000.00, thereby reducing the amounts misappropriated to
P959,078.14 and US$75,000.00.

Petitioners, Martin and Santos, filed a joint counter-affidavit in which they stated the following:ê

That because NSLA was urgently in need of funds and at David's insistence, his investments were treated as
special- 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 Australian government to tax his total
earnings (nor) to know his total investments; that all transactions with David were recorded; that David's check for
US$50,000.00 was cleared through Guingona, Jr.'s dollar account because NSLA did not have one, 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 on behalf (9 1/2) carat diamond ring with a net value of P510,000.00; and, that the liabilities of NSLA to
David were civil in nature.

Petitioner, Guingona, Jr., in his counter-affidavit stated the following:têñ.£îhqwâ£

That he had no hand whatsoever in the transactions between David and NSLA since he (Guingona Jr.) 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, Jr.; that in a
Promissory Note, he (Guingona, Jr.) bound himself to pay David the sums of P668.307.01 and US$37,500.00 in
stated instalments; that he (Guingona, Jr.) secured payment of those amounts.

At the inception of the preliminary investigation before respondent Lota, petitioners moved to dismiss the charges against them
for lack of jurisdiction because David's claims allegedly comprised a purely civil obligation which was itself novated. Fiscal Lota
denied the motion to dismiss.

But, after the presentation of David's principal witness, petitioners filed the instant petition because: (a) the production of the
Promisory Notes, Banker's Acceptance, Certificates of Time Deposits and Savings Account allegedly showed that the
transactions between David and NSLA were simple loans, i.e., civil obligations on the part of NSLA which were novated
when Guingona, Jr. and Martin assumed them;

ISSUE: What is the nature of obligation of NSLA with David? Does the Manila Fiscal have the jurisdiction to the case? CIVIL in
nature; NO.

HELD: There is merit in the contention of the petitioners that their liability is civil in nature and therefore, public respondents
have no jurisdiction over the charge of estafa.

A casual perusal of the affidavit complaint filed by David against petitioners will show that from he, together with his sister,
Denise Kuhne, invested with the NSLA on time deposits covered by Bankers Acceptances and Certificates of Time Deposits
and on savings account deposits covered by a passbook. It appears further that private respondent David, together with his
sister, made investments in the aforesaid bank in the amount of US$75,000.00.

Moreover, the records reveal that when the aforesaid bank was placed under receivership, petitioners Guingona and Martin,
upon the request of private respondent David, assumed the obligation of the bank to private respondent David by executing a
joint promissory note in favor of private respondent acknowledging an indebtedness of Pl,336,614.02 and US$75,000.00 . This
promissory note was based on the statement of account prepared by the David.

Thereafter, 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 and
US$37,500.00 (1/2 of US$75,000.00) in favor of private respondent. The aforesaid promissory notes were executed as a result
of deposits made by Clement David and Denise Kuhne with the Nation Savings and Loan Association.

Furthermore, the various pleadings and documents filed by 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 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,
Article 1980 of the New Civil Code provides that:têñ.£îhqwâ£

Article 1980. Fixed, savings, and current deposits of-money in banks and similar institutions shall be
governed by the provisions concerning simple loan.

In the case of Central Bank of the Philippines vs. Morfe, We said:têñ.£îhqwâ£

It should be noted that fixed, 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.

This Court also declared in the recent case of Serrano vs. Central Bank of the Philippines 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 (Art. 1980 Civil Code Gullas vs. Phil. National Bank, 62 Phil. 519). Current and saving
deposits, are loans to a bank because it can use the same. The petitioner here in making time deposits
that earn interests will 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
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.

WE have already laid down the rule that:

In order that a person can be convicted under the above-quoted provision, it must be proven that he has
the obligation to deliver or return the some money, goods or personal property that he received. 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 Articles 1933 and 1953 of the Civil Code.têñ.£îhqwâ£

"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 he 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."
 It can be readily noted from the above-quoted provisions that in simple loan (mutuum), as contrasted to
commodatum the borrower acquires ownership of the money, goods or personal property
borrowed. Being the owner, the borrower can dispose of the thing borrowed (Article 248, Civil Code) and
his act will not be considered misappropriation thereof.

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.

Petitioners herein were likewise charged with violation of Section 3 of Central Bank Circular No. 364 and other related
regulations regarding foreign exchange transactions by accepting foreign currency deposit in the amount of US$75,000.00
without authority from the Central Bank. They contend however, that the US dollars intended by respondent David for deposit
were all converted into Philippine currency before acceptance and deposit into Nation Savings and Loan Association.

Petitioners' contention is worthy of behelf for the following reasons:

1. It 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 US$50,000.00 with the NSLA, the same had to be cleared first and converted into Philippine currency.
Accordingly, the bank draft was endorsed by respondent David to petitioner Guingona, who in turn deposited it to his dollar
account with the Security Bank and Trust Company. Petitioner Guingona merely accommodated the request of the NSLA in
order to clear the bank draft through his dollar account because the bank did not have a dollar account.

2. It is safe to assume that the U.S. dollars were converted first into Philippine pesos before they were accepted and
deposited in NSLA.

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.