Guingona v.

City Fiscal Flaminiano

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.