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Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-66826 August 19, 1988 BANK OF THE PH L PP NE SLAN!

S, petitioner, vs. THE NTERME! ATE APPELLATE COURT "#$ %SHORNACK respondents. Pacis & Reyes Law Office for petitioner. rnesto T. !shornac", #r. for private respondent.

$ORT S, J.:

The ori%inal parties to this case &ere Ri'ald( T. !shornac" and the $o))ercial *an" and Trust $o)pan( of the Philippines +hereafter referred to as ,$OMTR-ST.,. In /012, the *an" of the Philippine Islands 3hereafter referred to as *PI absorbed $OMTR-ST throu%h a corporate )er%er, and &as substituted as part( to the case. Ri'ald( !shornac" initiated proceedin%s on #une 41,/056 b( filin% in the $ourt of 7irst Instance of Ri'al 8 $aloocan $it( a co)plaint a%ainst $OMTR-ST alle%in% four causes of action. 9cept for the third cause of action, the $7I ruled in favor of !shornac". The ban" appealed to the Inter)ediate :ppellate $ourt &hich )odified the $7I decision absolvin% the ban" fro) liabilit( on the fourth cause of action. The pertinent portions of the ;ud%)ent, as )odified, read< IN VI = O7 TH 7OR >OIN>, the $ourt renders ;ud%)ent as follo&s< /. Orderin% the defendant $OMTR-ST to restore to the dollar savin%s account of plaintiff 3No. 4?@A/20B the a)ount of -.S C/,222.22 as of October 45, /05? to earn interest to%ether &ith the re)ainin% balance of the said account at the rate fi9ed b( the ban" for dollar deposits under $entral *an" $ircular DADE 4. Orderin% defendant $OMTR-ST to return to the plaintiff the a)ount of -.S. CD,222.22 i))ediatel( upon the finalit( of this decision, &ithout interest for the reason that the said a)ount &as )erel( held in custod( for safe"eepin%, but &as not actuall( deposited &ith the defendant $OMTR-ST because bein% cash currenc(, it cannot b( la& be deposited &ith plaintiffs dollar account and

defendantFs onl( obli%ation is to return the sa)e to plaintiff upon de)andE 999 999 999 ?. Orderin% defendant $OMTR-ST to pa( plaintiff in the a)ount of P1,222.22 as da)a%es in the concept of liti%ation e9penses and attorne(Fs fees suffered b( plaintiff as a result of the failure of the defendant ban" to restore to his 3plaintiffsB account the a)ount of -.S. C/,222.22 and to return to hi) 3plaintiffB the -.S. CD,222.22 cash left for safe"eepin%. $osts a%ainst defendant $OMTR-ST. SO ORD R D. +Rollo, pp. A5@A1.. -ndaunted, the ban" co)es to this $ourt pra(in% that it be totall( absolved fro) an( liabilit( to !shornac". The latter not havin% appealed the $ourt of :ppeals decision, the issues facin% this $ourt are li)ited to the ban"Fs liabilit( &ith re%ard to the first and second causes of action and its liabilit( for da)a%es. /. =e first consider the first cause of action, On the dates )aterial to this case, Ri'ald( !shornac" and his &ife, Shirle( >orospe, )aintained in $OMTR-ST, Gue'on $it( *ranch, a dollar savin%s account and a peso current account. On October 45, /05?, an application for a dollar draft &as acco)plished b( Vir%ilio V. >arcia, :ssistant *ranch Mana%er of $OMTR-ST Gue'on $it(, pa(able to a certain Heovi%ilda D. Di'on in the a)ount of C/,222.22. In the application, >arcia indicated that the a)ount &as to be char%ed to Dollar Savin%s :cct. No. 4?@A/20, the savin%s account of the !shornac"sE the char%es for co))ission, docu)entar( sta)p ta9 and others totallin% P/5.A6 &ere to be char%ed to $urrent :cct. No. 4/2A6?@40, a%ain, the current account of the !shornac"s. There &as no indication of the na)e of the purchaser of the dollar draft. On the sa)e date, October 45,/05?, $OMTR-ST, under the si%nature of Vir%ilio V. >arcia, issued a chec" pa(able to the order of Heovi%ilda D. Di'on in the su) of -S C/,222 dra&n on the $hase Manhattan *an", Ne& Ior", &ith an indication that it &as to be char%ed to Dollar Savin%s :cct. No. 4?@A/20. =hen !shornac" noticed the &ithdra&al of -SC/,222.22 fro) his account, he de)anded an e9planation fro) the ban". In ans&er, $OMTR-ST clai)ed that the peso value of the &ithdra&al &as %iven to :tt(. rnesto !shornac", #r., brother of Ri'ald(, on October 45, /05? &hen he 3 rnestoB encashed &ith $OMTR-ST a cashierFs chec" for P1,A?2.22 issued b( the Manila *an"in% $orporation pa(able to rnesto. -pon consideration of the fore%oin% facts, this $ourt finds no reason to disturb the rulin% of both the trial court and the :ppellate $ourt on the first cause of action. Petitioner )ust be held liable for the unauthori'ed &ithdra&al of -SC/,222.22 fro) private respondentFs

dollar account. In its desperate atte)pt to ;ustif( its act of &ithdra&in% fro) its depositorFs savin%s account, the ban" has adopted inconsistent theories. 7irst, it still )aintains that the peso value of the a)ount &ithdra&n &as %iven to :tt(. rnesto !shornac", #r. &hen the latter encashed the Manilaban" $ashierFs $hec". :t the sa)e ti)e, the ban" clai)s that the &ithdra&al &as )ade pursuant to an a%ree)ent &here !shornac" alle%edl( authori'ed the ban" to &ithdra& fro) his dollar savin%s account such a)ount &hich, &hen converted to pesos, &ould be needed to fund his peso current account. If indeed the peso eJuivalent of the a)ount &ithdra&n fro) the dollar account &as credited to the peso current account, &h( did the ban" still have to pa( rnestoK :t an( rate, both e9planations are unavailin%. =ith re%ard to the first e9planation, petitioner ban" has not sho&n ho& the transaction involvin% the cashierFs chec" is related to the transaction involvin% the dollar draft in favor of Di'on financed b( the &ithdra&al fro) Ri'ald(Fs dollar account. The t&o transactions appear entirel( independent of each other. Moreover, rnesto !shornac", #r., possesses a personalit( distinct and separate fro) Ri'ald( !shornac". Pa()ent )ade to rnesto cannot be considered pa()ent to Ri'ald(. :s to the second e9planation, even if &e assu)e that there &as such an a%ree)ent, the evidence do not sho& that the &ithdra&al &as )ade pursuant to it. Instead, the record reveals that the a)ount &ithdra&n &as used to finance a dollar draft in favor of Heovi%ilda D. Di'on, and not to fund the current account of the !shornac"s. There is no proof &hatsoever that peso $urrent :ccount No. 4/2@A6?@40 &as ever credited &ith the peso eJuivalent of the -SC/,222.22 &ithdra&n on October 45, /05? fro) Dollar Savin%s :ccount No. 4?@A/20. 4. :s for the second cause of action, the co)plaint filed &ith the trial court alle%ed that on Dece)ber 1, /05?, !shornac" entrusted to $OMTR-ST, thru >arcia, -S CD,222.22 cash 3popularl( "no&n as %reenbac"sB forsafekeeping, and that the a%ree)ent &as e)bodied in a docu)ent, a cop( of &hich &as attached to and )ade part of the co)plaint. The docu)ent reads< Ma"ati $able :ddress< Philippines ,$OMTR-ST, $OMM R$I:H *:NL :ND TR-ST $OMP:NI of the Philippines Gue'on $it( *ranch Dece)ber 1, /05?

22 &as properl( credited to !shornac"Fs current account at prevailin% conversion rates.042. it is clai)ed. >:R$I: It &as also alle%ed in the co)plaint that despite de)ands.22 &ere deposited to his current account per deposit slip also acco)plished b( >arcia.22 &ere deposited to !shornac"Fs current account per deposit slip acco)plished b( >arciaE the re)ainin% -SC/. /05? and the peso proceeds a)ountin% to P/A.22B for safe"eepin%. the second cause of action &as based on an actionable docu)ent. !SHORN:$L MNOR MRS SHIRH I . In short.22 &as sold on 7ebruar( D.222 &as credited to !shornac"Fs peso current account at prevailin% conversion rates.D?2. the ban" cannot be liable under the contract. It &as therefore incu)bent . /05? !shornac" indeed delivered to the ban" -S CD. /056 and the peso proceeds a)ountin% to P1. &hich ban"s do not enter into. /056.222. an i)portant point &hich arises on the pleadin%s. *PI no& posits another %round to defeat private respondentFs clai). The second cause of action is based on a docu)ent purportin% to be si%ned b( $OMTR-ST. RI!:HDI T. :side fro) assertin% that the -SCD. the ban" refused to return the )one(. It )ust be e)phasi'ed that $OMTR-ST did not den( specificall( under oath the authenticit( and due e9ecution of the above instru)ent.B VIR>IHIO V. it &as established that on Dece)ber 1. *efore &e %o into the nature of the contract entered into. It no& ar%ues that the contract e)bodied in the docu)ent is the contract of depositu) 3as defined in :rticle /064. $OMTR-ST e9plained that the su) &as disposed of in this )anner< -SC4.222. In its ans&er.222.MR.222 for safe"eepin%. Durin% trial. !SHORN:$L SirNMada)< =e ac"no&led%ed 3sicB havin% received fro) (ou toda( the su) of -S DOHH:RS< THR THO-S:ND ONHI 3-SCD. Hence. The ban" alle%es that >arcia e9ceeded his po&ers &hen he entered into the transaction. and the obli%ation is purel( personal to >arcia. Ne& $ivil $odeB.22 &as sold on Dece)ber 40.222. =hen he reJuested the return of the )one( on Ma( /2. a cop( of &hich docu)ent &as attached to the co)plaint. Received b(< 3S%d. $OMTR-ST averred that the -SCD. )ust be considered.

In the past. . Section 1.upon the ban" to specificall( den( under oath the due e9ecution of the docu)ent. this $ourt had occasion to e9plain the reason behind this procedural reJuire)ent. 6DA. be readil( appreciated. or had acJuiesced in a contract and retained the benefit supposed to have been conferred b( it. and the proof of it usuall( is not readil( accessible to the stran%er &ho deals &ith the corporation on the faith of the ostensible authorit( e9ercised b( so)e of the corporate officers. $os 44 N.. to state such defense in its ans&er. International *an"in% $orporation. Merchant v. +Ibid.*. Orientalist $o. . or Juestionin% the authorit( of >arcia to bind the ban".. to enter into the contract in Juestion. Michi%an Southern and N. In dealin% &ith corporations the public at lar%e is bound to rel( to a lar%e e9tent upon out&ard appearances. D1 Phil. +Ra)ire' v. Hence. &as ever filed. D/A 3/026B. is to cast corporations in so perfect a )old that trans%ressions and &ron%s b( such artificial bein%s beco)e i)possible +*issell v.ected for another reason. in a case &here an officer of a corporation has )ade a contract in its na)e.I. the corporation &ill be bound. If a )an is found actin% for a corporation &ith the e9ternal indicia of authorit(.. The distinction bet&een po&er and ri%ht is no )ore to be lost si%ht of in respect to artificial than in respect to natural persons..R.. even &ithout the proper alle%ation or proof that the corporation has not authori'ed nor ratified the officerFs act. It is therefore reasonable. &e thin". =hether a particular officer actuall( possesses the authorit( &hich he assu)es to e9ercise is freJuentl( "no&n to ver( fe&. an( person. PetitionerFs ar%u)ent )ust also be re. or den(in% the ban"Fs capacit( to enter into the contract. that the corporation should be reJuired. The reason for the rule enunciated in the fore%oin% authorities &ill. if it denies his authorit(. The practical effect of absolvin% a corporation fro) liabilit( ever( ti)e an officer enters into a contract &hich is be(ond corporate po&ers. *( this )eans the plaintiff is apprised of the fact that the a%entFs authorit( is contestedE and he is %iven an opportunit( to adduce evidence sho&in% either that the authorit( e9isted or that the contract &as ratified and approved. not&ithstandin% the actual authorit( )a( never have been %ranted . the ban" is dee)ed to have ad)itted not onl( >arciaFs authorit(. . )a( usuall( rel( upon those appearancesE and if it be found that the directors had per)itted the a%ent to e9ercise that authorit( and thereb( held hi) out as a person co)petent to bind the corporation.. not havin% notice of &ant of authorit(. if it desired< 3/B to Juestion the authorit( of >arcia to bind the corporationE and 34B to den( its capacit( to enter into such contract. and 7ernande'. 6 Phil.I 4?1 3/162B. No s&orn ans&er den(in% the due e9ecution of the docu)ent in Juestion. but also the ban"Fs po&er. as prescribed under Rule 1. 6A?@ 6A6 3/0/1B. +See.To sa( that a corporation has no ri%ht to do unauthori'ed acts is onl( to put forth a ver( plain truis) but to sa( that such bodies have no po&er or capacit( to err is to i)pute to the) an e9cellence &hich does not belon% to an( created e9istence &ith &hich &e are acJuainted..

222. in. The docu)ent &hich e)bodies the contract states that the -SCD. shall OT be effected. &e no& deter)ine the correct nature of the contract. deposit accounts 3de)and. &here applicable their e9portation and i)portation. partnership. !shornac" de)anded the return of the )one( on Ma( /2. or &ith ban"s or ban"in% institutions located in the Philippines. includin% !oney. fir). or if pa(able abroad. drafts. all debts. bullions ban" drafts. includin% its enforceabilit(. chec"s. /064.22 &as received b( the ban" for safe"eepin%. coupons. 42. The above arran%e)ent is that contract defined under :rticle /064. If the safe"eepin% of the thin% delivered is not the principal purpose of the contract. liens or other ri%hts in the nature of securit(. financial bro"ers and invest)ent houses. stoc"s. : deposit is constituted fro) the )o)ent a person receives a thin% belon%in% to another. )ort%a%es. Restrictions on >old and 7orei%n 9chan%e Transactions. ban"s. pled%es. The subseJuent acts of the parties also sho& that the intent of the parties &as reall( for the ban" to safel( "eep the dollars and to return it to !shornac" at a later ti)e. and its le%al conseJuences. notes. ti)e and savin%sB. The circular provides< 999 999 999 4. pro)ul%ated on Dece)ber 0. irrespective of the currenc( in &hich the( are e9pressed. &hich &as in force at the ti)e the parties entered into the transaction involved in this case. bonds. branch office. Transactions in the assets described belo& and all dealin%s in the) of &hatever nature. e9cept &ith respect to deposit accounts included in sub@ para%raphs 3bB and 3cB of this para%raph. /0A0. association. or &ith ban"s . Note that the ob. &hich reads< :rt. Thus. &ith the obli%ation of safel( "eepin% it and of returnin% the sa)e. e"pressed in foreign c#rrencies. /056. and belon%in% to an( person. ban" acceptances. &hen such deposit accounts are o&ned b( and in the na)e of. or over five )onths later. co)pan( or other unincorporated bod( or corporation residin% or located &ithin the PhilippinesE 3bB :n( and all assets of the "inds included andNor described in subpara%raph 3aB above. Ne& $ivil $ode.Havin% deter)ined that >arciaFs act of enterin% into the contract binds the corporation. indebtedness or obli%ations. provided the( are held throu%h. there is no deposit but so)e other contract. in. Hence. 3aB :n( and all assets. &hether or not held throu%h.ect of the contract bet&een !shornac" and $OMTR-ST &as forei%n e9chan%e. includin%. a%enc(. debentures. the transaction &as covered b( $entral *an" $ircular No.

&ho acJuires on and after the date of this $ircular forei%n e9chan%e shall not. fir) or corporation. association. liens or other ri%hts in the nature of securit( e9pressed in forei%n currencies. branch office. of forei%n e9chan%e the afore)entioned persons and entities shall sell such forei%n e9chan%e to desi%nated a%ents of the $entral *an". partnership. fir). a%enc(. forei%n or do)estic. co)pan( or other unincorporated bod( or corporation shall be sold to the authori'ed a%ents of the $entral *an" b( the recipients within one b#siness day following the receipt of s#ch foreign e"change. co)pan( or other unincorporated bod( or corporation not residin% or located &ithin the PhilippinesE 3cB :n( and all assets e9istent &ithin the Philippines includin% )one(. &ho bein% bound to the observance thereof. 999 999 999 Para%raph A 3aB above &as )odified b( Section 6 of $entral *an" $ircular No. Re%ulations on 7orei%n 9chan%e. pled%es. pro)ul%ated on Nove)ber 46. nor dela( ta"in% o&nership thereof e9cept as such dela( is custo)ar(E Provided. fir). residin% or located &ithin the Philippines. unless licensed b( the $entral *an". :n( person. irrespective of the currenc( in &hich the( are e9pressed. 41/. :ll receipts of forei%n e9chan%e b( an( person.oinedE and an( person. stoc". notes. branch office. fir). partnership. 999 999 999 1. &hich belon% to an( person. or receivin% pa()ent. a%enc(. Strict observance of the provisions of this $ircular is en. shall be s#b'ect to the penal sanctions pro(ided in the %entral &ank $ct. bro"ers and invest)ent houses. 3aB $ll receipts of foreign e"change shall be sold daily to the %entral &ank b( those authori'ed to deal in forei%n e9chan%e.or ban"in% institutions. nor receive less than its full value. debentures. and belon%in% to an( person. a%enc(. ban" acceptances. )ort%a%es. bullions. re%ulations or directives as )a( hereafter be issued in i)ple)entation of this $ircular. association. ban" drafts. or if pa(able abroad. financial securities co))onl( dealt in b( ban"ers. dispose of such forei%n e9chan%e in &hole or in part. branch office. a%enc(. association. shall fail or refuse to co)pl( &ith. co)pan( or other unincorporated bod( or corporation. further. all debts. bonds. indebtedness or obli%ations. /060 b( li)itin% its . coupons. co)pan( or other unincorporated bod( or corporation residin% or located &ithin the Philippines. or of such other rules. 999 999 999 A. fir). drafts. chec"s. partnership. association. and e9istent &ithin the Philippines. or abide b(. branch office. or shall violate the sa)e. partnership. That &ithin one da( upon ta"in% o&nership.

the contract of deposit#! &ould never have been entered into at all.. Jr. =e thus rule that !shornac" cannot recover under the second cause of action. The a&ard is sustained. Petitioner is ordered to restore to the dollar savin%s account of private respondent the a)ount of -SC/. Petitioner is further ordered to pa( private respondent the a)ount of P1. and &idin. :s earlier stated. co)pan( or corporation residing or located within the Philippines. The onl( re)ed( is one on behalf of the State to prosecute the parties for violatin% the la&. The other causes of action of private respondent are ordered dis)issed. the docu)ent and the subseJuent acts of the parties sho& that the( intended the ban" to safe"eep the forei%n e9chan%e. :ll receipts of forei%n e9chan%e b( an( resident person. and return it later to !shornac".22 a&arded b( the courts a )#o as da)a%es in the concept of liti%ation e9penses and attorne(Fs fees to be reasonable. &e find the P1. co)pan( or corporation shall be sold to authori'ed a%ents of the $entral *an" b( the recipients &ithin one business da( follo&in% the receipt of such forei%n e9chan%e. &ho alle%ed in his co)plaint that he is a Philippine resident. dispose of such forei%n e9chan%e in &hole or in part. Hastl(. JJ.222. &ho acJuires forei%n e9chan%e shall not. /05? to earn interest at the rate fi9ed b( the ban" for dollar savin%s deposits. SO ORD R D. =H R 7OR . +:rt. unless authori'ed b( the $entral *an". pursuant to :rticle ? of the $ivil $ode. it affords neither of the parties a cause of action a%ainst the other. &ithout sellin% the) to the $entral *an" &ithin one business da( fro) receipt. 42. . &ithin one business da( upon ta"in% o&nership or receivin% pa()ent of forei%n e9chan%e the afore)entioned persons and entities shall sell such forei%n e9chan%e to the authori'ed a%ents of the $entral *an".222.22 as of October 45. . More i)portantl(. both parties bein% in pari delicto. fir). . nor dela( ta"in% o&nership thereof e9cept as such dela( is custo)ar(E Provided. Since the )ere safe"eepin% of the %reenbac"s. nor receive less than its full value. the decision appealed fro) is hereb( MODI7I D. Section 6 provides< S $. the( shall have no cause of action a%ainst each other. it is void.22 as da)a%es.=hen the nullit( proceeds fro) the ille%alit( of the cause or ob.covera%e to Philippine residents onl(. is a transaction &hich is not authori'ed b( $* $ircular No.. 6. Ne& $ivil $ode. Other&ise. havin% been e9ecuted a%ainst the provisions of a )andator(Nprohibitor( la&.ect of the contract. it )ust be considered as one &hich falls under the %eneral class of prohibited transactions.. Hence. :n( resident person. *#tierre+. D. conc#r. fir). The parties did not intended to sell the -S dollars to the $entral *an" &ithin one business da( fro) receipt.222. /A//. and the act constitutes a cri)inal offense. That. .

9&&2' M"()* +. #. Danilo *. vs. :)on% the ter)s and conditions of the a%ree)ent e)bodied in a Me)orandu) of True and :ctual :%ree)ent of Sale of Hand &ere that the titles to the lots shall be transferred to the petitioner upon full pa()ent of the purchase price and that the o&nerFs copies of the certificates of titles thereto.R. THE HONORABLE COURT OF APPEALS "#$ SECUR T. The sa)e could be &ithdra&n onl( upon the . !E. No.64?.J. !A.oint si%natures of a representative of the petitioner and the Pu%aos upon full pa()ent of the purchase price.ernan. .54?. 199+ CA AGRO. -olorfino & -o!ing#e+ Law Offices for petitioner. 41A6?? and 404ADA.. J. shall be deposited in a safet( deposit bo9 of an( ban".: Is the contractual relation bet&een a co))ercial ban" and another part( in a contract of rent of a safet( deposit bo9 &ith respect to its contents placed b( the latter one of bailor and bailee or one of lessor and lesseeK This is the cru9 of the present controvers(.22 &as paid as do&npa()ent &hile the balance &as covered b( three 3DB postdated chec"s. Of this a)ount.ELOPMENT CORP. concur in the result.... On D #ul( /050. P5?. Transfer $ertificates of Title 3T$TB Nos. Petitioner. and . %. Ser%io :%uirreB and the spouses Ra)on and Paula Pu%ao entered into an a%ree)ent &hereb( the for)er purchased fro) the latter t&o 34B parcels of land for a consideration of PD?2.BANK AN! TRUST COMPAN-.N!USTR AL !E. petitioner 3throu%h its President. respondents. *anares for private respondent. took no part 7eliciano.R. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.. petitioner. throu%h Ser%io :%uirre.22.

both si%ned a contract of lease 3 9hibit . the latter filed on / Septe)ber /012 a co)plaint 2 for da)a%es a%ainst the respondent *an" &ith the $ourt of 7irst Instance 3no& Re%ional Trial $ourtB of Pasi%. *ecause of the dela( in the reconstitution of the title. rendered a decision 0 adverse to the petitioner on 1 . Hence. Metro Manila &hich doc"eted the sa)e as $ivil $ase No. Mrs.4. then proceeded to the respondent *an" on A October /050 to open the safet( deposit bo9 and %et the certificates of title.22 for the entire propert(.22. the bo9 (ielded no such certificates. the follo&in% conditions< /D. It then interposed a counterclai) for e9e)plar( da)a%es as &ell as attorne(Fs fees in the a)ount of P42. 7or this purpose. : %uard "e( re)ained in the possession of the respondent *an". t&o 34B renterFs "e(s &ere %iven to the renters 8 one to :%uirre 3for the petitionerB and the other to the Pu%aos. The safet( deposit bo9 has t&o 34B "e(holes.B &hich contains. a do)estic ban"in% corporation hereinafter referred to as the respondent *an". and it assu)es absolutel( no liabilit( in connection there&ith. acco)panied b( the Pu%aos. &hen opened in the presence of the *an"Fs representative. Thereafter. translates to a profit of P/22.4.22 per sJuare )eter or a total of P412. loss of an( of the ite)s or articles contained in the bo9 could not %ive rise to an action a%ainst it. The ban" has no interest &hatsoever in said contents. / In due course. In its :ns&er &ith $ounterclai).22 per sJuare )eter &hich. /A.22. The ban" is not a depositar( of the contents of the safe and it has neither the possession nor control of the sa)e. inter alia. Mrs.222. Mar%arita Ra)os offered to bu( fro) the petitioner the t&o 34B lots at a price of P44?. the trial court.?22.?22. Metro Manila. Petitioner subseJuentl( filed an ans&er to the counterclai). Ra)os de)anded the e9ecution of a deed of sale &hich necessaril( entailed the production of the certificates of title. a certain Mrs. and can be opened onl( &ith the use of both "e(s. :%uirre. Ho&ever. /AA1 of private respondent Securit( *an" and Trust $o)pan(. as petitioner alle%ed in its co)plaint. + respondent *an" alle%ed that the petitioner has no cause of action because of para%raphs /D and /A of the contract of lease 3 9hibit . Ra)os &ithdre& her earlier offer to purchase the lotsE as a conseJuence thereof. no& desi%nated as *ranch /6/ of the Re%ional Trial $ourt 3RT$B of Pasi%. 1 :fter the e9ecution of the contract. the petitioner alle%edl( failed to reali'e the e9pected profit of P412.BE corollaril(. D1D14. one for the %uard "e( and the other for the renterFs "e(. Petitioner clai)s that the certificates of title &ere placed inside the said bo9. e9cept herein e9pressl( provided. In vie& thereof.the Pu%aos then rented Safet( Deposit *o9 No.

22B P SOS as attorne(Fs fees.Dece)ber /016. /?/?2. 8 In its Decision pro)ul%ated on A #ul( /010. 9 respondent $ourt affir)ed the appealed decision principall( on the theor( that the contract 3 9hibit . the contract is %overned b( :rticle /6AD of the $ivil $ode 1& &hich provides< :rt.ud%)ent is hereb( rendered dis)issin% plaintiffFs co)plaint. $V No. the *an" has no liabilit( for the loss of the certificates of title.B e9ecuted b( the petitioner and respondent *an" is in the nature of a contract of lease b( virtue of &hich the petitioner and its co@renter &ere %iven control over the safet( deposit bo9 and its contents &hile the *an" retained no ri%ht to open the said bo9 because it had neither the possession nor control over it and its contents. pre)ises considered.222.o()ent or use of a thin% for a price certain. :s such. In the lease of thin%s.urisdiction. no lease for )ore than ninet(@nine (ears shall be valid. the provisions in the contract for lease of the safet( deposit bo9 absolvin% the *an" fro) an( liabilit( for loss. 3cB not concludin% that in this . petitioner appealed fro) the adverse decision to the respondent $ourt of :ppeals &hich doc"eted the appeal as $:@>. &hich held that the o&ner of the propert( . as &ell as under :)erican . The court declared that the said provisions are bindin% on the parties. Ho&ever. .R. /6AD.4.ud%)ent is hereb( rendered orderin% plaintiff to pa( defendant the a)ount of 7IV THO-S:ND 3P?. 3bB not declarin% as null and void. for bein% contrar( to la&. the liabilit( of the *an" is settled and 3dB a&ardin% attorne(Fs fees to the *an" and den(in% the petitionerFs pra(er for no)inal and e9e)plar( da)a%es and attorne(Fs fees. 6 The unfavorable verdict is based on the trial courtFs conclusion that under para%raphs /D and /A of the contract of lease. and for a period &hich )a( be definite or indefinite. =ith costs a%ainst plaintiff. It invo"ed Tolentino (s. . the dispositive portion of &hich reads< =H R 7OR . public order and public polic(. *on+ales 11 . Petitioner ur%ed the respondent $ourt to reverse the challen%ed decision because the trial court erred in 3aB absolvin% the respondent *an" fro) liabilit( fro) the loss. On defendantFs counterclai). Its )otion for reconsideration ' havin% been denied.urisprudence. one of the parties binds hi)self to %ive to another the en.

12 The appellate court &as Juic" to add. . the brief sub)itted to the respondent $ourt and the )otion to reconsider the latterFs decision. In a nutshell. petitioner )aintains that re%ardless of no)enclature. /05?. securities or instru)ents &hich earn interest shall be bound to collect the latter &hen it beco)es due. It reiterates the ar%u)ents it had raised in its )otion to reconsider the trial courtFs decision. /054.urisdiction a)ountin% to lac" thereof and 3cB set a precedent that is contrar( to. public order and public polic(.urisprudence adopted in the Philippines. *oo" IV of the $ivil $ode of the Philippines. the defendant@appellee is not under an( dut( to )aintain the contents of the bo9. The above provision shall not appl( to contracts for the rent of safet( deposit bo9es.learl(. and then concluded that . The *an" shall use due dili%ence that no unauthori'ed person shall be ad)itted to an( rented safe and be(ond this.+c.loses his control over the propert( leased durin% the period of the contract 8 and :rticle /05? of the $ivil $ode &hich provides< :rt. or is a departure fro) precedents adhered to and affir)ed b( decisions of this $ourt and precepts in :)erican . it is clai)ed that the respondent *an" is liable for the loss of the certificates of title pursuant to :rticle /054 of the said $ode &hich provides< :rt..4. 16 :ccordin%l(. respondent *an" is not co)pletel( free fro) liabilit( as it )a( still be )ade ans&erable in case unauthori'ed persons enter into the vault area or &hen the rented bo9 is forced open. The stipulation absolvin% the defendant@appellee fro) liabilit( is in accordance &ith the nature of the contract of lease and cannot be re%arded as contrar( to la&.B is actuall( a contract of deposit %overned b( Title OII. bonds. 3bB acted &ith %rave abuse of discretion or in e9cess of . the contract for the rent of the safet( deposit bo9 3 9hibit . The depositar( is obli%ed to "eep the thin% safel( and to return it. the *an" &ill not be responsible for the contents of an( safe rented fro) it. 1+ Its )otion for reconsideration 1/ havin% been denied in the respondent $ourtFs Resolution of 41 :u%ust /010. ho&ever. that under the contract of lease of the safet( deposit bo9. and to ta"e such steps as )a( be necessar( in order that the securities )a( preserve their value and the ri%hts correspondin% to the) accordin% to la&. The depositar( holdin% certificates. Petitioner avers that both the respondent $ourt and the trial court 3aB did not properl( and le%all( appl( the correct la& in this case. as e9pressl( provided for in stipulation nu)ber 1 of the contract in Juestion< 1. Thus. 10 petitioner too" this recourse under Rule A? of the Rules of $ourt and ur%es -s to revie& and set aside the respondent $ourtFs rulin%.

&hen reJuired. That access to the contents of the safe@deposit bo9 can be had onl( b( the use of a "e( retained b( the lessee 3 &hether it is the sole "e( or one to be used in connection &ith one retained b( the lessorB does not operate to alter the fore%oin% rule. . or to the person &ho )a( have been desi%nated in the contract. to the depositor. in such a case. or to his heirs and successors. provided the( are not contrar( to la&. ter)s and conditions as the( )a( dee) convenient. . and a se%)ent fro) =ords and Phrases 18 &hich states that a contract for the rental of a ban" safet( deposit bo9 in consideration of a fi9ed a)ount at stated periods is a bail)ent for hire. The ar%u)ent that there is not. %ood custo)s. %iven absolute control of access to the propert(. it cites :rticle /D26 of the $ivil $ode &hich provides that parties to a contract )a( establish such stipulations. :fter the respondent *an" filed its co))ent. and the depositor cannot %ain access thereto &ithout the consent and active participation of the co)pan(. . has been %enerall( re. a deliver( of e9clusive possession and control to the deposit co)pan(. this fact shall be ta"en into account in deter)inin% the de%ree of care that the depositar( )ust observe. and that therefore the situation is entirel( different fro) that of ordinar( bail)ent. b( the nature of the contract. usuall( on the %round that as possession )ust be either in the depositor or in the co)pan(. Petitioner then Juotes a passa%e fro) :)erican #urisprudence to e9pound on the prevailin% rule in the -nited States.ected b( the courts. If the deposit is %ratuitous. shall be %overned b( the provisions of Title I of this *oo". Petitioner further ar%ues that conditions /D and /A of the Juestioned contract are contrar( to la& and public polic( and should be declared null and void. to &it< 1' &hich is supposed The prevailin% rule appears to be that &here a safe@deposit co)pan( leases a safe@deposit bo9 or safe and the lessee ta"es possession of the bo9 or safe and places therein his securities or other valuables. the relation of bailee and bail or is created bet&een the parties to the transaction as to such securities or other valuablesE the fact that the safe@deposit co)pan( does not "no&. The petition is partl( )eritorious. In support thereof. )orals. since the co)pan( is. the character or description of the propert( &hich is deposited in such safe@deposit bo9 or safe does not chan%e that relation. it should reasonabl( be considered as in the latter rather than in the for)er. public order or public polic(. . &ith re%ard to the safe"eepin% and the loss of the thin%. 3citations o)ittedB. clauses. His responsibilit(. and that it is not e9pected that it shall "no&. this $ourt %ave due course to the petition and reJuired the parties to si)ultaneousl( sub)it their respective Me)oranda.

or lessor and lessee. the prevailin% rule is that the relation bet&een a ban" rentin% out safe@deposit bo9es and its custo)er &ith respect to the contents of the bo9 is that of a bail or and bailee. In addition to the operations specificall( authori'ed else&here in this :ct. It is clear that the depositar( cannot open the bo9 &ithout the renter bein% present.oint renters 8 the petitioner and the Pu%aos. Section 54 of the >eneral *an"in% :ct2+ pertinentl( provides< Sec. The %uard "e( of the bo9 re)ained &ith the respondent *an"E &ithout this "e(. *ut there is apparentl( no .=e a%ree &ith the petitionerFs contention that the contract for the rent of the safet( deposit bo9 is not an ordinar( contract of lease as defined in :rticle /6AD of the $ivil $ode. the prevailin% rule in the -nited States has been adopted. In this case. neither of the renters could open the bo9. 223citations o)ittedB In the conte9t of our la&s &hich authori'e ban"in% institutions to rent out safet( deposit bo9es. 21 This is . or stora%e co)pan(. also relied upon b( the respondent $ourt. 54. the first para%raph of such provision cannot appl( to a depositar( of certificates.ust the prevailin% vie& because< There is. in &hole or in part. the said "e( had a duplicate &hich &as )ade so that both renters could have access to the bo9. be invo"ed as an ar%u)ent a%ainst the deposit theor(. Obviousl(. e9press or i)plied. On the other hand. oral or &ritten. it is clear that in this . Ho&ever. so)e support for the vie& that the relationship in Juestion )i%ht be )ore properl( characteri'ed as that of landlord and tenant.urisdiction.urisdiction in &hich an( rule other than that applicable to bail)ents %overns Juestions of the liabilit( and ri%hts of the parties in respect of loss of the contents of safe@deposit bo9es. that the deposit theor( itself does not alto%ether find unani)ous support even in :)erican . It cannot be characteri'ed as an ordinar( contract of lease under :rticle /6AD because the full and absolute possession and control of the safet( deposit bo9 &as not %iven to the . is often described as contractual. the respondent *an" could not li"e&ise open the bo9 &ithout the renterFs "e(. =e do not full( subscribe to its vie& that the sa)e is a contract of deposit that is to be strictl( %overned b( the provisions in the $ivil $ode on depositE 19the contract in the case at bar is a special "ind of deposit. ho&ever. It has also been su%%ested that it should be characteri'ed as that of licensor and licensee. and the renter of a safe@deposit bo9 therein. ban"in% institutions other than buildin% and loan associations )a( perfor) the follo&in% services< . =e observe. the bail)ent bein% for hire and )utual benefit. ho&ever. the authorities cited b( the respondent $ourt 2& on this point do not appl(.urisprudence. =e a%ree &ith the petitioner that under the latter. Hence. safe@deposit co)pan(. securities or instru)ents &hich earn interest if such docu)ents are "ept in a rented safet( deposit bo9. Neither could :rticle /05?. bonds. The relation bet&een a ban".

)orals. docu)ents and other valuable ob.ects. petitioner )aintains that conditions /D and /A of the Juestioned contract of lease of the safet( deposit bo9. The ban" has no interest &hatsoever in said contents. 26 In the absence of an( stipulation prescribin% the de%ree of dili%ence reJuired. it is found %uilt( of fraud. provided the( are not contrar( to la&.ects deposited in the case at bar is %overned b( Title I. In the instant case. The rentin% out of the safet( deposit bo9es is not independent fro). the parties thereto )a( establish such stipulations. and valuable ob. :ccordin%l(. in perfor)in% its obli%ation. *oth e9e)pt the latter fro) an( liabilit( e9cept as conte)plated in condition 1 thereof &hich li)its its dut( to e9ercise reasonable dili%ence onl( &ith respect to &ho shall be ad)itted to an( rented safe. *oo" IV of the $ivil $ode. the receivin% in custod( of funds. 999 999 999 The ban"s shall perfor) the services per)itted under subsections 3aB. to &it< 1.3aB Receive in custod( funds. but related to or in con. The *an" shall use due dili%ence that no unauthori'ed person shall be ad)itted to an( rented safe and be(ond this. the depositar( &ould be liable if. this principal function. dela( or contravention of the tenor of the a%ree)ent.. an( stipulation e9e)ptin% the depositar( fro) an( liabilit( arisin% fro) the loss of the thin% deposited on account of fraud.unction &ith. docu)ents. and it assu)es absolutel( no liabilit( in connection there&ith. The depositar(Fs responsibilit( for the safe"eepin% of the ob. the *an" &ill not be responsible for the contents of an( safe rented fro) it. 2' Hence. and rent safet( deposit bo9es for the safe%uardin% of such effects. . &hich read< /D. e9cept herein e9pressl( provided. /A. 28 are void as the( are contrar( to la& and public polic(. that of a %ood father of a fa)il( is to be observed. ne%li%ence or dela( &ould be void for bein% contrar( to la& and public polic(. %ood custo)s. =e find Ourselves in a%ree)ent &ith this proposition for indeed.e. . 2/ 3e)phasis suppliedB Note that the pri)ar( function is still found &ithin the para)eters of a contract of deposit. clauses. said provisions are inconsistent &ith the respondent *an"Fs responsibilit( as a depositar( under Section 543aB of the >eneral *an"in% :ct. public order or public polic(.ects for safe"eepin%. 29 . pursuant to :rticle /D26 of the $ivil $ode. . The ban" is not a depositar( of the contents of the safe and it has neither the possession nor control of the sa)e. ter)s and conditions as the( )a( dee) convenient. : contract of deposit )a( be entered into orall( or in &ritin% 20 and. 3bB and 3cB of this section asdepositories or as a%ents. ne%li%ence. i.

. in order to var( the ordinar( obli%ations i)plied b( la& fro) the relationship of the partiesE liabilit( of the deposit co)pan( &ill not be enlar%ed or restricted b( &ords of doubtful )eanin%. the vie& has been ta"en that such a lessor )a( li)its its liabilit( to so)e e9tent b( a%ree)ent or stipulation. +& 3citations o)ittedB Thus. since the relation is a contractual one. Since both the petitioner and the Pu%aos a%reed that each should have one 3/B renterFs "e(. :s stated earlier. &ith the use of such "e( and the *an"Fs o&n %uard "e(. the respondent *an" "eeps the %uard "e( to the said bo9. to the e9tent above stated. &e reach the sa)e conclusion &hich the $ourt of :ppeals arrived at. It )ust clearl( appear that there actuall( &as such a special contract. the fore%oin% conditions in the contract in Juestion are void and ineffective. cannot e9e)pt itself fro) liabilit( for loss of the contents b( its o&n fraud or ne%li%ence or that of its a%ents or servants. and if a provision of the contract )a( be construed as an atte)pt to do so. condition /D stands on a &ron% pre)ise and is contrar( to the actual practice of the *an". contrar( to the holdin% of the $ourt of :ppeals. $learl( then. ho&ever. &ithout the other renter bein% present. renters cannot open their respective bo9es unless the *an" cooperates b( presentin% and usin% this %uard "e(. but rather on the fact that no co)petent proof &as presented to sho& that respondent *an" &as a&are of the a%ree)ent bet&een the petitioner and the Pu%aos to the effect that the certificates of title &ere &ithdra&able fro) the safet( deposit bo9 onl( upon both partiesF .oint si%natures. in rentin% safe@deposit bo9es. that is. it &ill be held ineffective for the purpose. It is not correct to assert that the *an" has neither the possession nor control of the contents of the bo9 since in fact. provided such contract is not in violation of la& or public polic(. :lthou%h it has been held that the lessor of a safe@deposit bo9 cannot li)it its liabilit( for loss of the contents thereof throu%h its o&n ne%li%ence. the parties. the respondent *an"Fs e9oneration cannot. be based on or proceed fro) a characteri'ation of the i)pu%ned contract as a contract of lease. The co)pan(. This in turn flo&s fro) this $ourtFs deter)ination that the contract involved &as one of deposit. it &as obvious that either of the) could as" the *an" for access to the safet( deposit bo9 and. but on %rounds Juite different fro) those relied upon b( the $ourt of :ppeals. the safet( deposit bo9 itself is located in its pre)ises and is under its absolute controlE )oreover.7urther)ore. and that no evidence &as sub)itted to reveal that the loss of the certificates of title &as due to the fraud or ne%li%ence of the respondent *an". In the instant case. )a( b( special contract define their respective duties or provide for increasin% or li)itin% the liabilit( of the deposit co)pan(. that the petition should be dis)issed. It has been said< =ith respect to propert( deposited in a safe@deposit bo9 b( a custo)er of a safe@ deposit co)pan(. could open the said bo9.

ET AL. the petitioner cannot be bla)ed for the filin% of the co)plaint and no bad faith on its part had been established. deductin% fro) the a)ount of interest due the su) of P/. file a co)plaint on the D2th of October. $V No. No.. No pronounce)ent as to costs. *#tierre+. To this e9tent.< The attorne( for the plaintiff. he sentenced to .. Jr. and sub. and to pa( the costs of the proceedin%s. the trial court erred in conde)nin% the petitioner to pa( the respondent *an" attorne(Fs fees. ho&ever.?1. /026. is on lea(e. /&10 August 2/. &idin.R. &ith interest thereon at the rate of /? per cent per annu) fro) the 42th of #anuar(. Republic of the Philippines SUPREME COURT Manila N *:N$ G.ointl( and severall( pa( the su) of P4. /ontinola for appellee. . the Decision 3dispositive portionB of public respondent $ourt of :ppeals )ust be )odified. TORRES. .Since./24. :n%el #avellana. 19&8 ANGEL . pra(in% that the defendants. J./6. J. . vs.A. Ro!ero and /elo. 0aldarriaga for appellants. =H R 7OR . &ith the $ourt of 7irst Instance of Iloilo. /?/?2. plaintiff@appellee..eliciano.R. SO ORD R D. R.616. /101. the Petition for Revie& is partiall( >R:NT D b( deletin% the a&ard for attorne(Fs fees fro) the A #ul( /010 Decision of the respondent $ourt of :ppeals in $:@ >.OSE L M. the dispositive portion of the said Decision is hereb( :77IRM D and the instant Petition for Revie& is other&ise D NI D for lac" of )erit. JJ. until full pa()ent should be )ade.. conc#r. :s )odified. #ose Hi) and $eferino Do)in%o Hi).ect to the pronounce)ent =e )ade above on the nature of the relationship bet&een the parties in a contract of lease of safet( deposit bo9es. defendants@appellants.ELLANA. &.

That. The docu)ent of indebtedness inserted in the co)plaint states that the plaintiff left on deposit &ith the defendants a %iven su) of )one( &hich the( &ere . 8 #aro. This )otion &as overruled and &as also e9cepted to b( the)E the bill of e9ceptions presented b( the appellants havin% been approved. &ritten in the Visa(an dialect and follo&ed b( a translation into Spanish &as e9ecuted. 46th of Ma(. /024.ud%)ent on the /?th of #anuar(. the /?th . /105. /025. the defendants be%%ed the plaintiff for an e9tension of ti)e for the pa()ent thereof.ected to loss and da)a%es. / and 4 of the co)plaintE that the( ad)itted the state)ents of the plaintiff relative to the pa()ent of /. /101. as a deposit &ithout interest. a%%re%ated the total su) of P?.ud%)ent be entered absolvin% the). and also denied all the other state)ents contained therein.ointl( and severall( obli%ed to return on a certain date fi9ed in the docu)entE but that. on the 46th of Ma(. vidence &as adduced b( both parties and. and on the Ath of #anuar(.616. :s a counterclai). The defendants e9cepted to the above decision and )oved for a ne& trial.0/?. it &as ac"no&led%ed. the sa)e &as in due course sub)itted to this court.624. as pa()ent of interest on the a)ount stated in the fore%oin% docu)ent./6 pesos )ade on the /?th of Nove)ber. &hich &e &ill return to the said %entle)an./24. on the 42th of #anuar(.5/A. not./6 ac"no&led%ed in the co)plaint. /024. the( as"ed that . the co)plaint &as a)ended on the /2th of #anuar(.?1 &ith the costs. the defendants ans&ered the ori%inal co)plaint before its a)end)ent. /105. the defendants e9ecuted and subscribed a docu)ent in favor of the plaintiff readin% as follo&s< =e have received fro) :n%el #avellana. to &hich the plaintiff accededE that on the /?th of Ma(.:uthorit( fro) the court havin% been previousl( obtained. and denied that there had been an( a%ree)ent as to an e9tension of the ti)e for pa()ent and the pa()ent of interest at the rate of /? per cent per annu) as alle%ed in para%raph D of the co)plaint. the defendants alle%ed that the( had paid to the plaintiff su)s &hich. : de)urrer to the ori%inal co)plaint &as overruled. at the date thereof. to%ether &ith an account boo" havin% been )ade of record. deductin% therefro) the total su) of P4. upon their e9hibits. &hen the docu)ent appearin% as 9hibits 4.ointl( and severall(. buildin% the)selves to pa( interest at the rate of /? per cent on the a)ount of their indebtedness. /025E it &as then alle%ed. 8 Si%ned #ose Hi)./6.?1E therefore. . and that. 8 Si%ned< $eferino Do)in%o Hi). and sentencin% the plaintiff to pa( the) the su) of P4. the plaintiff still o&ed the defendants P4.0/?. the debtors paid on account of interest due the su) of P/. nevertheless.222 pesos. ho&ever. but on account of the principal. the su) of t&o thousand si9 hundred and ei%ht(@si9 cents of pesos f#ertes. /025.AA and costs./24.?1 stated in the docu)ent transcribed in the co)plaint. settin% forth that the( ac"no&led%ed the facts stated in Nos. the court belo& rendered . in favor of the plaintiff for the recover( of the su) of P?. &hen the obli%ation beca)e due. to%ether &ith the P/. &ith the e9ception of either capital or interest. had thereb( been sub.

and bein% conscious that the( had used. inas)uch as. /101. he did not have in his possession the a)ount deposited. it is called a deposit consisted. to all intents and purposes %ratuitousl(. /101. for &hich reason he a%reed to pa( interest at the rate of /? per cent per annu). /105. &hen the return &as a%ain stipulated &ith the further a%ree)ent that the a)ount deposited should bear interest at the rate of /? per cent per annu). and the( could have acco)plished the return a%reed upon b( the deliver( of a su) eJual to the one received b( the). in accordance &ith the provisions of article //5D of the $ivil $ode. but a real contract of loan. as a )atter of fact. fro) the aforesaid date of #anuar( 42. their creditor. the contract loses the character of a deposit and beco)es a loan or bail)ent. the( en%a%ed to pa( interest to the creditor fro) the date na)ed until the ti)e &hen the refund should be )ade. :rticle /561 also provides that 8 =hen the depositor( has per)ission to )a"e use of the thin% deposited. deductin% fro) the total a)ount of interest the su) of /. until the 42th of #anuar(. in vie& of the fact the )one( &as scare. to losses and da)a%es for not co)pl(in% &ith &hat had been stipulated. &hich the( have done. and because neither hi)self nor the other defendant &ere able to return the a)ount deposited. The per)ission shall not be presu)ed. and fro) that dated &ith interest at /? per cent per annu) until its full pa()ent. evidentl( confir)ed the e9press per)ission previousl( %iven to use and dispose of the a)ount stated as havin% bee deposited. b( %rantin% the) the e9tension. =hen on one of the latter da(s of #anuar(. accordin% to the receipt issued b( hi) to the debtors. &hereb( he &as sub. ac"no&led%in% that the( have sub. #ose Hi) &ent to the office of the creditor as"in% for an e9tension of one (ear. &ould be included. /022. Such conduct on the part of the debtors is unJuestionable evidence that the transaction entered into bet&een the interested parties &as not a deposit. /101.of Nove)ber. Other&ise he shall be liable for losses and da)a%es. in accordance &ith the loan.222 pesos paid to the depositor on the /?th of Ma(. :rticle /565 of the $ivil $ode provides that 8 The depositor( can not )a"e use of the thin% deposited &ithout the e9press per)ission of the depositor. it &as because. for their o&n profit and %ain. and that the said rate of interest &ould obtain until the debtors on the 42th of Ma(. &hich. /024. 7or this reason it )ust be understood that the debtors &ere la&full( authori'ed to )a"e use of the a)ount deposited. he havin% )ade use of the sa)e in his business and for his o&n profitE and the creditor.ected to losses and da)a%es a)ountin% to 1D2 pesos since the 42th of #anuar(. as subseJuent sho&n &hen as"in% for an e9tension of the ti)e for the return thereof.222 pesos. and that the /. . and its e9istence )ust be proven. the )one( that the( received apparentl( as a deposit. that the a)ount deposited had not (et been returned to the creditor.ected the letter.

offered in evidence b( the defendants. nor has an( doubt been cast upon the authenticit( of the si%natures of the &itnesses &ho attested the e9ecution of the sa)eE and fro) the evidence in the case one is sufficientl( convinced that the said #ose Hi) &as perfectl( a&are of and authori'ed his . and the fact that in the ori%inal co)plaint the su) of /. This the( have done. and consented to pa( interest in return for the concession reJuested fro) the creditor. such is not the case &ith the defendantFs counterclai) for P?.$. bein% full( a&are that his debt had not (et been settled. the onl( pa()ent )ade on account of interest on the a)ount deposited accordin% to docu)ents No. the said docu)ent has not been contested as false. In vie& of the fore%oin%. the defendants received said a)ount b( virtue of real loan contract under the na)e of a deposit. and the defendants. and it further appears that docu)ent No.624. and ./24. for hi)self and on behalf of #ose Hi)E and it has also been proven that #ose Hi). /024. above referred to. b( $eferino Do)in%o Hi) on behalf of hi)self and the for)er. since the so@called bailees &ere forth&ith authori'ed to dispose of the a)ount deposited. less /.oint obli%ation contracted b( the defendant debtor still e9ists. too" steps to secure an e9tension of the ti)e for pa()ent.222 pesos appears as full( established.422 pesos. and to e9ecute the aforesaid docu)ent No. and adoptin% the findin%s in the . 4. for the reason above set forth it )a(./6 pesos.222 pesos. on account thereof. as has been clearl( sho&n. as has alread( been stated. 4 &as e9ecuted b( the other debtor. The plaintiffs alle%ation that the t&o a)ounts of A22 and /. and it has not been sho&n or proven in the proceedin%s that the creditor had released #oe Hi) fro) co)pl(in% &ith his obli%ation in order that he should not be sued for or sentenced to pa( the a)ount of capital and interest to%ether &ith his codebtor.ud%)ent appealed fro). because the e9istence and certaint( of said indebtedness i)puted to the plaintiff has not been proven.oint codebtor to liJuidate the interest. and not the least proof is sho&n in the record that #ose Hi) had ever paid the &hole or an( part of the capital stated in the ori%inal docu)ent. Moreover. referred to in docu)ents )ar"ed . either b( a cri)inal or b( a civil proceedin%.222 pesos. &as due to a )ista"e. 9hibit /.Not&ithstandin% that it does not appear that #ose Hi) si%ned the docu)ent 3 9hibit 4B e9ecuted in the presence of three &itnesses on the /?th of Nove)ber. because. be inferred that there &as no rene&al of the contract deposited converted into a loan. $eferino Do)in%o Hi). to pa( the su) of /. The ori%inal . nevertheless. has not been contradicted. to%ether &ith interest clai)ed in the co)plaint. 4 and letter . and &hich he did issue &henever the( paid hi) an( )one( on account. If the a)ount. it is our opinion that the sa)e should be and is hereb( affir)ed &ith the costs of this instance . as a )atter of course. : true ratification of the ori%inal docu)ent of deposit &as thus )ade.D. &ho call the)selves creditors for the said a)ount have not proven in a satisfactor( )anner that the plaintiff had received partial pa()ents on account of the sa)eE the latter alle%es &ith %ood reason.*. &as e9pressed in lieu of /. that the( should produce the receipts &hich he )a( have issued. because the record offers satisfactor( evidence a%ainst the pretension of #ose Hi). $eferino Do)in%o Hi)./6. had been received fro) $eferino Do)in%o Hi) on account of other debts of his.

as follo&s<t23. So ordered.J.unction filed b( petitioners on March 46.B. :s can be %leaned fro) the above. 7or purposes of brevit(. in &hich petitioners &ere char%ed b( private respondent $le)ent David. On March D/. 1/D/0D1 of the Office of the $it( 7iscal of Manila 3pp. C. A5@A1. $rellano. 198/ TEOF STO GU NGONA. b( virtue of a court resolution issued b( this $ourt on the sa)e date. representatives andNor person or persons actin% upon their 3respondentsFB orders or in their place or stead to refrain fro) proceedin% &ith the preli)inar( investi%ation in $ase No.. C TF SCAL FEL %AR!O N. concur. /01D.OSE B. %arson. vs. sho&ed that petitionersF obli%ation is civil in nature. On #anuar( 4A. LOTA "#$ CLEMENT !A. as &ell as the testi)on( of private respondentFs principal &itness and the evidence throu%h said &itness. 1illard and Tracey. No. ANTON O .R.urisdiction in that the alle%ations of the char%ed. 1/@D/0D1. MART N./014.R.:ñé+. "#$ TERES TA SANTOS. the instant petition see"s to prohibit public respondents fro) proceedin% &ith the preli)inar( investi%ation of I. Actg. /01D. Republic of the Philippines SUPREME COURT Manila S $OND DIVISION G.unction &ith a pra(er for the i))ediate issuance of restrainin% order andNor &rit of preli)inar( in. petitioners.J. provided that the interest a%reed upon shall be paid until the co)plete liJuidation of the debt. ASST.S.£ªwph!1 This is a petition for prohibition and in. on the %round of lac" of . No. a te)porar( restrainin% order &as dul( issued orderin% the respondents. D6A and related re%ulations re%ardin% forei%n e9chan%e transactions principall(.F SCAL OF MAN LA. HON. their officers. %.. &ith estafa and violation of $entral *an" $ircular No. rec. private respondent $le)ent David filed a )otion to lift restrainin% order &hich &as denied in the resolution of this $ourt dated Ma( /1. /014. !. =e hereb( adopt the antecedent facts narrated b( the Solicitor >eneral in its $o))ent dated #une 41.. a%ents. THE C T. JJ. L-6&&++ A1(23 /.a%ainst the appellant. respondents. . MAKAS AR.45h)w64 . /014. . FLAM N ANO.

/01/. -SC/?.On Dece)ber 4D.14/.t23.22 under a receipt dated #une 1.222.42 on nine deposits. his invest)ents &ere treated as special@ accounts &ith interest above the le%al rate. /01/ David received a report fro) the $entral *an" that onl( PD2?. Pa'. that David &as induced into )a"in% the aforestated invest)ents b( Robert Marshall an :ustralian national &ho &as alle%edl( a close associate of petitioner >uin%ona #r. #r.S.B<t23.45h)w64 . No.222. paid onl( P422. p. /01/. No. Paulino *. &hich case &as assi%ned to respondent Hota for preli)inar( investi%ation 3Petition. Martin and Santos.0A on savin%s account deposits 3. 3hereinafter called NSH:B the su) of P/.222. an recorded in separate confidential docu)ents onl( a portion of &hich &ere to be reported because he did not &ant the :ustralian %overn)ent to ta9 his total earnin%s 3norB to "no& his total invest)entsE that all transactions &ith David &ere recorded e9cept the su) of . thereb( reducin% the a)ounts )isappropriated to P0?0. the respondents in I. 1B. :nne9 . David char%ed petitioners 3to%ether &ith one Robert Marshall and the follo&in% directors of the Nation Savin%s and Hoan :ssociation. /050 to March.That Martin beca)e President of NSH: in March /051 3after the resi%nation of >uin%ona. then NSH: President. &hile Santos &as >eneral Mana%er up to Nove)ber /012E that because NSH: &as ur%entl( in need of funds and at DavidFs insistence. 7lavio Macasaet. filed a . D6A and related $entral *an" re%ulations on forei%n e9chan%e transactions.?D/.22 under a receipt and %uarantee of pa()ent and -SC?2. petitioner Martin.B and served as such until October D2. #ai)e V. P/D. na)el( Ho)ero >on'ales.?A6. Victor >o)e'..oint counter@affidavit 3Petition. Inc. /01/ N H: &as placed under receivership b( the $entral *an". D6A and related $entral *an" re%ulations on forei%n e9chan%e transactionsE that after de)ands. Perfecto Manalac. therefore. 1/@D/0D1. #r.7ro) March 42. David invested &ith the Nation Savin%s and Hoan :ssociation. at the sa)e ti)e violatin% $entral *an" $ircular No. 1/@D/0D1 in the Office of the $it( 7iscal of Manila.22. 1/@ D/0D1 )isappropriated the balance of the invest)ents.ointl( &ith his sister. and one #ohn DoeB &ith estafa and violation of $entral *an" $ircular No. :nne9F *FB in &hich the( stated the follo&in%.:.22 on ti)e deposit. then NSH: >eneral Mana%erE that on March 4/. /012 3au .04 of those invest)ents &ere entered in the records of NSH:E that. Dionisio.22. Petitioners.251... -SC/2. In I.S.222.S. Denise LuhneB. #uan Merino. private respondent David filed I.222. then NSH: 9ecutive Vice@President of NSH: and petitioner Santos./A?. so that David filed clai)s there&ith for his invest)ents and those of his sisterE that on #ul( 44./A and -SC5?.ointl( &ith Denise LuhneB.45h)w64 . /012.. No. petitioner >uin%ona #r. alle%edl( co))itted as follo&s 3Petition.

?22. 14@/60? in the $ourt of 7irst Instance to contest its 3NSH:FsB closureE that after NSH: &as placed under receivership. to effect the release of the )ort%a%e over one 3/B of the t&o parcels of land conve(ed to David under second )ort%a%es.22 &as placed in the na)e of one Pa' Roces because of a pendin% transaction &ith herE that the Philippine Deposit Insurance $orporation had alread( rei)bursed David &ithin the le%al li)itsE that )a. #r.E that in a Pro)issor( Note dated #une /5. . petitioners )oved to dis)iss the char%es a%ainst the) for lac" of . he 3>uin%ona.45h)w64 . #r.222..orit( of the stoc"holders of NSH: had filed Special Proceedin%s No. *an"erFs :cceptance.B he 3>uin%ona. and Martin assu)ed the)E and 3bB DavidFs principal &itness alle%edl( testified that the duplicate ori%inals of the aforesaid instru)ents of indebtedness &ere all .B had resi%ned as NSH: president in March /051.222. 1B. civil obli%ations on the part of NSH: &hich &ere novated &hen >uin%ona. :t the inception of the preli)inar( investi%ation before respondent Hota. or prior to those transactionsE that he assu)ed a portion oE the liabilities of NSH: to David because of the latterFs insistence that he placed his invest)ents &ith NSH: because of his faith in >uin%ona. #r.B filed $ivil $ase No.Fs dollar account because NSH: did not have one.22 &hich &as a personal loan of SantosE that DavidFs chec" for -SC?2.2/ and -SCD5.22 in stated install)entsE that he 3>uin%ona.22 &as cleared throu%h >uin%ona. after the presentation of DavidFs principal &itness.B bound hi)self to pa( David the su)s of P661.B paid P422. #r. :nne9 . #r. in his counter@affidavit 3Petition. 7iscal Hota denied the )otion to dis)iss 3Petition. petitioners filed the instant petition because< 3aB the production of the Pro)isor( Notes.e. that a draft of -SCD2.B secured pa()ent of those a)ounts &ith second )ort%a%es over t&o 34B parcels of land under a deed of Second Real state Mort%a%e 3Petition.22 &hich David refused to accept.22E and.-SC/?. #r.222. i. Petitioner. :nne9 .B in &hich it &as provided that the )ort%a%e over one 3/B parcel shall be cancelled upon pa()ent of one@half of the obli%ation to DavidE that he 3>uin%ona. >uin%ona.22 and tendered another PD22.That he had no hand &hatsoever in the transactions bet&een David and NSH: since he 3>uin%ona #r.D. G@DD16? in the $ourt of 7irst Instance of Ri'al at Gue'on $it(..222. hence.urisdiction because DavidFs clai)s alle%edl( co)prised a purel( civil obli%ation &hich &as itself novated. Martin e9ecuted a pro)issor( note in DavidFs favor and caused the transfer to hi) of a nine and on behalf 30 /N4B carat dia)ond rin% &ith a net value of P?/2.D25. *ut. p. :nne9F $FB stated the follo&in%<t23.. $ertificates of Ti)e Deposits and Savin%s :ccount alle%edl( sho&ed that the transactions bet&een David and NSH: &ere si)ple loans. #r. #r..222. that the liabilities of NSH: to David &ere civil in nature.222. /01/ 3Petition.

S.6/D. 1/@D/0D1. rec.222. or on #ul( /5.222. /01/ affidavit. contrar( to DavidFs clai) that so)e of his invest)ents &ere not record 3Petition. petitioners >uin%ona and Martin.222.DD6.42.on file &ith NSH:. to%ether &ith one Robert Marshall and the other directors of the Nation Savin%s and Hoan :ssociation.. /5./A?. assu)ed the obli%ation of the ban" to private respondent David b( e9ecutin% on #une /5. 1@0B.6/A. #r.251.. 12. : casual perusal of the Dece)ber 4D. 0B +pp. rec. The a)ount of indebtedness assu)ed appears to be bi%%er than the ori%inal clai) because of the added interest and the inclusion of other deposits of private respondentFs sister in the a)ount of P//6. There is )erit in the contention of the petitioners that their liabilit( is civil in nature and therefore. rec.?22.?A6. upon the reJuest of private respondent David. pp. and petitioner >uin%ona e9ecuted another pro)issor( note antedated to #une /5. petitioners >uin%ona and Martin a%reed to divide the said indebtedness. p.22 3p.B. private respondent David.24 and -SC5?. &ill sho& that fro) March 42. Santos. /?D@/?5.B./?0. The aforesaid pro)issor( notes &ere e9ecuted as a result of deposits )ade b( $le)ent David and Denise Luhne &ith the Nation Savin%s and Hoan :ssociation./A 3pp. /01/ a . /01/. 1/.22 3p. :s correctl( pointed out b( the Solicitor >eneral.B. roc. the records reveal that &hen the aforesaid ban" &as placed under receivership on March 4/. It appears further that private respondent David.ect )atter of I. invested &ith the Nation Savin%s and Hoan :ssociation the su) of P/. the sole issue for resolution is &hether public respondents acted &ithout . Moreover.. :ntonio I. 7urther)ore. Martin and Teresita >.oint pro)issor( note in favor of private respondent ac"no&led%in% an indebtedness of Pl.6/A. 4?. public respondents have no . 6@6D4 and 40@5A4.DD6.22 3/N4 of -SC5?. Thereafter. /01/. )ade invest)ents in the aforesaid ban" in the a)ount of -SC5?.urisdiction &hen the( investi%ated the char%es 3estafa and violation of $* $ircular No.D25. co)plaint filed in the Office of the $it( 7iscal of Manila b( private respondent David a%ainst petitioners Teopisto >uin%ona.?D/. to%ether &ith his sister.urisdiction over the char%e of estafa.B. No. This pro)issor( note &as based on the state)ent of account as of #une D2.24B and -SCD5.2/ 3/N4 of P/. rec. Denise Luhne.B. D6A and related re%ulations re%ardin% forei%n e9chan%e transactionsB sub. /050 to March. /?@/6.22B in favor of private respondent 3p. before this $ourt indisputabl( sho& that he has indeed invested his )one( on ti)e and . to%ether &ith his sister. rec. Petitioners alle%ed that the( did not e9haust available ad)inistrative re)edies because to do so &ould be futile 3Petition. /01/ prepared b( the private respondent 3p. or a total of P/.0A on savin%s account deposits covered b( passboo" nos. /01/. /01/ &hereb( he personall( ac"no&led%ed an indebtedness of P661. the various pleadin%s and docu)ents filed b( private respondent David.42 on ti)e deposits covered b( *an"ers :cceptances and $ertificates of Ti)e Deposits and the su) of P/D.

Phil. /012 $ivil $odeE In re HiJuidation of Mercantile *ati" of $hina Tan Tion% Tic" vs.45h)w64 It should be noted that fi9ed.6? Phil. ho&ever. The( are reall( Floans because the( earn interest. the failure of the *an" to return the a)ount deposited &ill not constitute estafa throu%h )isappropriation punishable under :rticle D/?. =hile the *an" has the obli%ation to return the a!o#nt deposited. $hinese >rocers :ssociation 6? Phil. Hence. :rticle /012 of the Ne& $ivil $ode provides that<t23. /012 $ivil $ode >ullas vs. In the case of %entral &ank of the Philippines (s. It )ust be pointed out that &hen private respondent David invested his )one( on nine. it has.B that<t23. are not preferred credits 3:rt.. and savin%s deposits &ith the aforesaid ban".ail#re of the respondent &ank to honor the ti!e deposit is fail#re to pay its obligation as a debtor and not a breach of tr#st arising fro! a depositary8s fail#re to ret#rn the s#b'ect !atter of the deposit 3 )phasis suppliedB. the contract that &as perfected &as a contract of si)ple loan or !#t##! and not a contract of deposit. no obli%ation to return or deliver the sa!e !oney that &as deposited. the relationship bet&een the private respondent and the Nation Savin%s and Hoan :ssociation is that of creditor and debtorE conseJuentl(. par. and current deposits of@)one( in ban"s and si)ilar institutions shall be %overned b( the provisions concernin% si)ple loan. vs. are loans to a bank beca#se it can #se the sa)e.. or current are to be treated as loans and are to be covered b( the la& on loans 3:rt. :)erican :pothecaries $o. :nd. savin%s. ?/0B. the o&nership of the a)ount deposited &as trans)itted to the *an" upon the perfection of the contract and it can )a"e use of the a)ount deposited for its ban"in% operations. %#rrent and sa(ing deposits. 7i9ed. :ll "inds of ban" deposits.. Thus. 66 Phil A/AE Pacific $oast *iscuit $o.. This $ourt also declared in the recent case of 7errano (s. %entral &ank of the Philippines 306 S$R: /24 +/012. D5?E 7letcher :)erican National *an" vs. such as to pa( interests on deposits and to pa( &ithdra&als. 64 Phil. . National *an". and current deposits of )one( in ban"s and si)ilar institutions are hat true deposits. =e said<t23. but it &ill onl( %ive rise to civil liabilit( over &hich the public respondents . as such. savin%s.45h)w64 :rticle /012. vs. 6? PhiH A40E >opoco >rocer( vs.savin%s deposits &ith the Nation Savin%s and Hoan :ssociation. &hether fi9ed. The petitioner here in )a"in% ti)e deposits that earn interests &ill respondent Overseas *an" of Manila &as in realit( a creditor of the respondent *an" and not a depositor. AADB. Pacific $oast *iscuit $O. l3bB of the Revised Penal $ode. /orfe 36D S$R: //A. :)erican :pothecaries $o.45h)w64 *an" deposits are in the nature of irre%ular deposits. :n% $hon% -M 66 P=H D1?E Pacific $o))ercial $o. are considered si)ple loans and. savin%s.//0 +/05?.. The respondent *an" &as in turn a debtor of petitioner.

:rt. the bills or coins. as contrasted to co!!odat#! the borrower ac)#ires ownership of the !oney. &hich the( received fro) private respondents. because &hen the aforesaid ban" &as placed under receivership b( the $entral *an". 8 : person &ho receives a loan of )one( or an( other fun%ible thin% acJuires the o&nership thereof. /0DD. petitioners >uin%ona and Martin assu)ed the obli%ation of the ban" to private respondent David. %i(il %ode. thereb( resultin% in the novation of the ori%inal contractual obli%ation .:rt. DA +/050. goods or personal property borrowed &eing the owner.. it )ust be pro(en that he has the obligation to deli(er or return the so!e !oney. the su)s of )one( that petitioners received &ere loans. It can be readily noted fro! the abo(e9)#oted pro(isions that in si!ple loan :!#t##!. ownership passes to the borrower. The nature of si)ple loan is defined in :rticles /0DD and /0?D of the $ivil $ode. nevertheless an( incipient cri)inal liabilit( &as dee)ed avoided.t23.In co))odatu) the bailor retains the o&nership of the thing loaned while in si!ple loan.e. #pon the condition that the sa!e a!o#nt of the sa!e kind and )#ality shall he paid in which case the contract is si!ply called a loan or !#t##!. one of the parties delivers to another. 8 *( the contract of loan. either so)ethin% not consu)able so that the latter )a( use the sa)e for a certain ti)e@ and return it. Mali". /0?D..have no@ . This is so because as clearl( as stated in cri)inal co)plaints. . the borrower can dispose of the thing borrowed :$rticle <=>..urisdiction. = have alread( laid do&n the rule that<t23. . 0A S$R: D2.45h)w64 . goods or personal property that he recei(ed Petitioners had no such obli%ation to return the sa)e )one(. .45h)w64 In order that a person can be convicted under the above@Juoted provision. and is bound to pa( to the creditor an eJual a)ount of the sa)e "ind and Jualit(.$o))odatu) is essentiall( %ratuitous. . the related civil co)plaints and the supportin% s&orn state)ents.E )phasis suppliedB. and his act will not be considered !isappropriation thereof8 3Ia) vs. i.Si)ple loan )a( be %ratuitous or &ith a stipulation to pa( interest. *ut even %rantin% that the failure of the ban" to pa( the ti)e and savin%s deposits of private respondent David &ould constitute a violation of para%raph /3bB of :rticle D/? of the Revised Penal $ode. in &hich case the contract is called a co))odatu)E or )one( or other cons#!able thing.

/4A S$R: ?51. thereof. it is clear that novation occurred lon% before the filin% of the cri)inal co)plaint &ith the Office of the $it( 7iscal. this $ourt reiterated the rulin% in People (s. :beto vs. >a'. ?A Off.45h)w64 :s pointed out in People (s.cast doubt on the true nature. The cri)e bein% an offense a%ainst the state. Moreover. the offended part( )a( no lon%er divest the prosecution of its po&er to e9act the cri)inal liabilit(. Villareal. >ervacio. and place the co)plainant in estoppel to insist on the ori%inal transaction or . It )a( be observed in this re%ard that novation is not one of the )eans reco%ni'ed b( the Penal $ode &hereb( cri)inal liabilit( can be e9tin%uishedE hence. or other si)ilar dis%uise is resorted to 3cf. *ut after the . ery 3 /2 S$R: 4AA +/06A. the failure of the ban" or petitioners >uin%ona and Martin to pa( the deposits of private respondent &ould not constitute a breach of trust but &ould )erel( be a failure to pa( the obli%ation as a debtor. ?12@?1/ +/01D. ?1/E -. &hile it is true that novation does not e9tin%uish cri)inal liabilit(. in the latest case of Ong (s.ustice authorities have ta"en co%ni'ance of the cri)e and instituted action in court. in *on+ales (s. novation prior to the filin% of the cri)inal infor)ation 8 as in the case at bar 8 )a( convert the relation bet&een the parties into an ordinar( creditor@debtor relation. as &hen )one( loaned is )ade to appear as a deposit. onl( the latter can renounce it 3People vs. . /01/ &ith the Office of the $it( 7iscal. thereb( placin% the co)plainant in estoppel to insist on the ori%inal trust. 02 Phil. 56E -. as distin%uished fro) the civil. &hether or not it &as such that its breach &ould not %ive rise to penal responsibilit(. Hence. 45 Phil. In the case at bar. 7errano 3 4? S$R: 6A. B. Montanes. 642B. $onseJuentl(. declarin% that<t23. the role of novation )a( onl( be to either prevent the rise of cri)inal habiht( or to cast doubt on the true nature of the ori%inal basic transaction. Velasco. B. it )a( ho&ever. A4 Phil. ery. vs.arisin% fro) deposit into a contract of loan and convertin% the ori%inal trust relation bet&een the ban" and private respondent David into an ordinar( debtor@creditor relation bet&een the petitioners and private respondent. Thus. :%ain. 1 Phil.S. there is no dispute that petitioners >uin%ona and Martin e9ecuted a pro)issor( note on #une /5. /01/ assu)in% the obli%ation of the ban" to private respondent DavidE &hile the cri)inal co)plaint for estafa &as filed on Dece)ber 4D. 60 +/061. vs. prevent the rise of cri)inal liabilit( as lon% as it occurs prior to the filin% of the cri)inal infor)ation in court.S. People. %o#rt of $ppeals 3H@?1A56. A1/B.B =e held that<t23. 4101E People vs.45h)w64 The novation theor( )a( perhaps appl( prior to the fillin% of the cri)inal infor)ation in court b( the state prosecutors because up to that ti)e the ori%inal trust relation )a( be converted b( the parties into an ordinar( creditor@debtor situation.

even if the petitioners could have appealed to the Ministr( of #ustice. PetitionersF contention is &orth( of behelf for the follo&in% reasons< /. in petitionersF repl( filed on Ma( 5. thereb( addin% )ore support to the conclusion that the -SC5?.22 &ith the Nation Savin%s and Hoan :ssociation. Petitioner >uin%ona )erel( acco))odated the reJuest of the Nation Savin%s and loan :ssociation in order to clear the ban" draft throu%h his dollar account because the ban" did not have a dollar account. :ccordin%l(. Respondent David has not denied the aforesaid contention of herein petitioners despite the fact that it &as raised. Rules of $ourtB. /014 repl( to public respondentsF co))ent and reiterated in petitionersF )e)orandu) filed on October D2.urisdiction &hen the( investi%ated the char%es a%ainst the petitioners. the sa)e had to be cleared first and converted into Philippine currenc(. ?.S. $onsiderin% that this )i%ht adversel( affect his case.222.222.222. In conclusion. because the ban" is presu)ed to have follo&ed the ordinar( course of the business &hich is to accept deposits in Philippine currenc( onl(.22 &ithout authorit( fro) the $entral *an". =e hold that the public respondents acted &ithout . and that the transaction &as re%ular and fair. It appears fro) the records that &hen respondent David &as about to )a"e a deposit of ban" draft issued in his na)e in the a)ount of -SC?2. &ould &or" %reat in. Petitioners herein &ere li"e&ise char%ed &ith violation of Section D of $entral *an" $ircular No. It is safe to assu)e that the -. dollars &ere converted first into Philippine pesos before the( &ere accepted and deposited in Nation Savin%s and Hoan :ssociation. 4. &ho in turn deposited it to his dollar account &ith the Securit( *an" and Trust $o)pan(.$onseJuentl(. Rule /D/. in the absence of a clear and convincin% evidence to the contrar( 3see para%raphs p and ).Sec. as aforestated. public respondents should be restrained fro) further proceedin% &ith the cri)inal case for to allo& the case to continue. an( incipient cri)inal liabilit( &ould be avoided but there &ill still be a civil liabilit( on the part of petitioners >uin%ona and Martin to pa( the assu)ed obli%ation.ustice . /014. I))ediatel( after the ban" draft &as cleared. considerin% that the liabilit( of the petitioners is purel( civil in nature and that there is no clear sho&in% that the( en%a%ed in forei%n e9chan%e transactions. petitioner >uin%ona authori'ed Nation Savin%s and Hoan :ssociation to &ithdra& the sa)e in order to be utili'ed b( the ban" for its operations. respondent David should have pro)ptl( denied petitionersF alle%ation. D6A and other related re%ulations re%ardin% forei%n e9chan%e transactions b( acceptin% forei%n currenc( deposit in the a)ount of -SC5?. that the -S dollars intended b( respondent David for deposit &ere all converted into Philippine currenc( before acceptance and deposit into Nation Savin%s and Hoan :ssociation. the ban" draft &as endorsed b( respondent David to petitioner >uin%ona. /014 to private respondentFs co))ent and in the #ul( 45.22 &ere reall( converted into Philippine currenc( before the( &ere accepted and deposited into Nation Savin%s and Hoan :ssociation. D. $onseJuentl(. The( contend ho&ever.

if convicted. 06 +/065. =e held that<t23. thus<t23.?. epo!#ceno.ect of prohibition and in. the %eneral rule is that . =e also ad)itted a petition to restrain the prosecution of certain chiropractors althou%h. 6D Phil. as e9traordinar( le%al re)edies. Pan%asinan.A.unction can restrain the proceedin%s in $ri)inal $ase No.45h)w64 . this court has reco%ni'ed the resort to the e9traordinar( &rits of prohibition and in. =e too" co%ni'ance of a petition for certiorari and prohibition althou%h the accused in the case could have appealed in due ti)e fro) the order co)plained of. the( could have appealed.45h)w64 The &rits of certiorari and prohibition. :lbano.ustice. to prevent the use of the stron% ar) of the la& in an oppressive and vindictive )annerE . the petition for certiorari challen%in% the trial courtFs action ad)ittin% an a)ended infor)ation &as sustained despite the availabilit( of appeal at the proper ti)e. D2A. et al. in proper cases. Thus.a'ardo. ho&ever..unction. /0 S$R: 0?.45h)w64 On the issue of &hether a &rit of in. $OSTS :>:INST TH PRIV:T R SPOND NT./. AD Phil. Trinidad. The %ity J#dge. are allo&ed in the follo&in% instances<t23.ustice and to avoid possible oppression b( the stron% ar) of the la&. In -i!ay#ga (s.D.ordinaril(.usticeE . . D1?. A5 Phil. :nd in$re(alo (s. =hile as a rule. the prosecution in a cri)inal offense cannot be the sub. 64/@644 +/066.B.D IS M:D P RM:N NT. our action in the pre)ises bein% based on the public &elfare polic( the advance)ent of public polic(. TH P TITION IS H R *I >R:NT DE TH T MPOR:RI R STR:ININ> ORD R PR VIO-SHI ISS. 4? S$R: ??5 +/061. 645. to avoid )ultiplicit( of actionsE . because the statute relied upon is unconstitutional or &as held invalid. Hi"e&ise. .E citin% Ra)os vs. to afford adeJuate protection to constitutional ri%htsE . 0D S$R: A64.B.to petitioners and &ould render )eanin%less the proper ad)inistration of . in Lope+ (s.4.unction in e9tre)e cases. A60@A52 +/050.ustice. intended to annul void proceedin%sE to prevent the unla&ful and oppressive e9ercise of le%al authorit( and to provide for a fair and orderl( ad)inistration of . =H R 7OR . are in the ulti)ate anal(sis. 3 Pri)icias vs. 9ceptions. =e %ave due course to their petition for the orderl( ad)inistration of . cri)inal prosecution )a( not be bloc"ed b( court prohibition or in.E and Hernande' vs. for the orderl( ad)inistration of . D/A2. Torres. 3 /1 S$R: 6/6. Municipalit( of -rdaneta.unction. in ?# @ong Ang (s.

J.R. Jr. . .222 and that the( ad)itted that the( did not deliver the difference &hen the( assu)ed in their personal capacities the obli%ation to pa( hi).6 TEOF STO GU NGONA.42.14/. Asu#)2o# . Tu<"38. 7. He ar%ues that the petitioners co))itted estafa throu%h )isappropriation.BCwphDB. J. LOTA "#$ CLEMENT !A.?A6. T8o.?D/. !EC S ON A=U NO. FLAM N ANO..04 out of his deposits in the a)ounts of P/.F SCAL FEL %AR!O N. and that prohibition is proper to stop a void proceedin%. P/?. He contends that this $ourt failed to consider that the petitioners entered in the records and boo"s of the Nation Savin%s and Hoan :ssociation onl( PD2?. ANTON O . *#errero.chanrobles la& librar( On the other hand. MART N../A?. HON.u35 18. too" no part. L-6&&++. -e %astro and Ascolin. .2sto Gu2#go#" "#$ F832)2"#o C. not cri)inalE that his clai) has been novated.. . JJ. THE C T.2)8#t8 .o( Petitioners. to prevent the unla&ful and oppressive e9ercise of la&ful . the petitioners contend that the decision had alread( beco)e final because the Solicitor >eneral did not file an( )otion for reconsiderationE that David cannot adopt a theor( &hich is inconsistent &ith his ori%inal theor(E that his clai) is clearl( civil. EN BANC 4G. /01A. .(. No.. "#$ TERES TA SANTOS.0A and C5?.o( Private Respondent.SO ORD R D. C T.> Respondent $le)ent David filed a )otion for the reconsideration of this $ourtPs decision dated :pril A. conc#r. conc#r in the res#lt.. :Juino.R. Petitioners. /41 S$R: ?55.F SCAL OF MAN LA.3Et %oncepcion. Respondents. !. . Lo(8#9o T":"$". #.OSE B. ASST. $bad 7antos. 1980..

e&el appraiser at P412.6/A. antedated #une /5.authorit( and to provide a .222 a (ear 3p.222 &as deposited in the account of Teofisto >uin%ona. /01/.222.0A as sho&n in Passboo"s Nos.42 as evidenced b( seven ban"ers acceptances and five certificates of ti)e deposits. The( also invested in Nation Savin%s -SC5?. :ntonio I. /01/ )ade place)ents &ith the Nation Savin%s and Hoan :ssociation. The pro)issor( note &as novated b( another note. /01/ until full( paid.222 but appraised b( a . RolloB. Santos &as its %eneral )ana%er.251. &hereb( >uin%ona ac"no&led%ed one@half of the obli%ation as his debt or the su)s of P661.D25. On #ul( 44. He secured it &ith the pled%e of a rin% valued accordin% to hi) at P?62.S. He and his sister Denise also had savin%s deposits in the Nation Savin%s in the su) of P/D.?A6. The petitioners filed this prohibition action because their obli%ation is alle%edl( civil in character and because of the adverse publicit( supposedl( insti%ated b( David. Martin assu)ed the other half of the total debt. Inc. 6. 6@6D4 and 40@5A2. Nation Savin%s &as placed under receivership b( the $entral *an" because of serious fraud and irre%ularities co))itted b( its "e( officers 3:nne9 /4B. in the total su) of P/. Nation Savin%s alle%edl( paid David fro) /050 to the earl( part of /01/ interests of P4A2. Martin &as the president of Nation Savin%s. Martin is also indebted to David in the su) of P62.2/ and CD5. #r. /0D. dollars. /050 to March.ustice.?D/. of &hich C?2. :%%re%ate invest)ents of David and Luhne in Nation Savin%s< P/.?22 and secured the sa)e b( second )ort%a%es on his Gue'on $it( properties 3:nne9 DB.222 to be paid in install)ents &ithin /12 da(s fro) said date &ith interest at /6Q per annu) fro) #ul( /.chanrobles la&librar( < rednad :t the ti)e the deposits &ere )ade. ?. /01/. /01/. The factual bac"%round )a( be restated as follo&s<chanrob/es virtual /a& librar( /. 4. David received a report fro) the $entral *an" that onl( ./A in local currenc( and 5?. and >uin%ona &as a director./A?.222 in /012 as evidenced b( receipts. /01/.222 in -. &ith the Securit( *an" and Trust $o)pan(.24 and C5?. Teresita >. >uin%ona paid P422. On March 4/. >uin%ona and Martin e9ecuted a pro)issor( note ac"no&led%in% a debt of P/. $le)ent David and his sister Denise Luhne durin% the period fro) March 42./?0.222 on that note.ust and orderl( ad)inistration of . A. D.DD6. On #une /5.222 &hich David paid to Monte de Piedad to redee) the rin%.

4/1. on one hand. The receivership &as challen%ed b( Nation Savin%s stoc"holders in Special Proceedin%s No. and Santos.chanrobles virtual la&librar( /2. The foreclosure &as restrained b( the Gue'on $it( $ourt of 7irst Instance. RolloB. and the su) of PD2?. the prohibition petition should be dis)issed. p. p. the a)ount entered in Nation Savin%sP boo"s.04 of the place)ents )ade b( hi) and his sister &ere entered in the NSH: records 3:nne9 A. G@DD16? in the Gue'on $it( $ourt of 7irst Instance. as %eneral )ana%er. He pra(ed for da)a%es of P51?. =ith the fore%oin% bac"%round. On Nove)ber /0. p. RolloB.222./A and C5?. David filed &ith the $it( 7iscalPs Office. On March /?. RolloB. In vie& of the pro)issor( note and the )ort%a%es. 1. as board chair)an. RolloB. ?1. The filin% of this petition is pre)ature. David dealt directl( &ith >uin%ona.251. :lbano. D5. 14@/6?? 3p. It has not been finished. David. on #ul( 44. RolloB. 4A2. ///. /4? Phil. On #anuar( 42. 1/@ D/0D1. /01/. /01/. p. //. director and principal stoc"holder of Nation Savin%sE Martin. On Dece)ber 44. director and shareholder. RolloB. ?0. RolloB. /4. a co)plaint for estafa and violation of $* $ircular No.udiciall( the t&o )ort%a%es 3p. the Solicitor >eneral. 14@5??4. as vice@president. in behalf of the $entral *an". The Solicitor >eneral ans&ered that petition b( alle%in% that Nation Savin%s &as pla%ued &ith irre%ularities 3p. The petitioners have no cause of action for prohibition because the $it( 7iscal has . . No.222 a%ainst David for his failure to accept pa()ent of a cashierPs chec" for PD22. on the other hand. 5.14/.222B and to release one of the )ort%a%ed properties 3:nne9 L. The case does not fall &ithin an( of the e9ceptions &hen prohibition lies to stop the preli)inar( investi%ation 3Hernande' v.222 3in addition to the P422. The three filed a counter@char%e of per. /014. 44?. RolloB. He filed the co)plaint a%ainst >uin%ona. filed a petition in the $ourt of 7irst Instance of Manila for assistance in the liJuidation of Nation Savin%s as an insolvent fir) 3Spec. constitutes the defraudation a%ainst hi). RolloB.S. /01/. /4?.04. >uin%ona filed a%ainst David $ivil $ase No.14/. Proc. He clai)ed that the difference bet&een his place)ents of P/. Martin and Santos in his transactions &ith Nation Savin%s.ur( a%ainst David and his la&(ers 3p. David sou%ht to foreclose e9tra. 0. e9ecuted an affidavit &herein he bound hi)self to desist fro) an( prosecution of >uin%ona &ithout pre. Manila I. A6. D6A and related re%ulations. The director of the $* Depart)ent of Rural *an"s and Savin%s and Hoan :ssociations in a report dated #une 4D./?0.PD2?.urisdiction to conduct the preli)inar( investi%ation. /01/ reco))ended that the irre%ularities be brou%ht to the attention of the $* consultant on cri)inal cases for appropriate investi%ation of Nation Savin%sP officials 3p. No.udice to the balance of his clai) a%ainst Nation Savin%s 3:nne9 M. ?/DB. /014.

J.. an in.. No.unction not lie &hen the case is still at the preli)inar( investi%ation sta%e. /4A Phil. and -. not that of partialit(. #r. In vie& of the fore%oin% considerations.. an :ustralian citi'en. The fact that the Solicitor >eneral. De la 7uente and $uevas. concur.S. I vote to den( the )otion for reconsideration. as counsel of the public respondents.?A6. RolloB.chanrobles la& librar( SO ORD R D. JJ. &hich &as consolidated &ith the estafa char%e 3p. Mencias. J. Of these a)ounts onl( PD2?. #R. %. David alle%es that he delivered to petitioners P/. C5?. Separate Vote and State)ent<chanrob/es virtual /a& librar( On Dece)ber 4D... This $ourt should not conduct the preli)inar( investi%ation. No costs. The $it( 7iscalPs office should be allo&ed to finish its investi%ation and )a"e its factual findin%s. 7ernando. S81"("t8 O12#2o#s $ON$ P$ION.0A. /AD6..42. This $ourt should not usurp the pri)ar( function of the $it( 7iscal to conduct the preli)inar( investi%ation of the estafa char%e and of the petitionersP counterchar%e for per.14/. 3People v. &ith estafa and violation of $entral *an" $ircular No.222 to be deposited as ti)e deposits or savin%s account &ith Nation Savin%s and Hoan :ssociation. /AA/B.:s a %eneral rule.ur(. :bad Santos. too" no part. did not file a )otion for reconsideration does not estop David fro) continuin% &ith the prosecution of the petitioners.ud%e.unction &ill not be %ranted to restrain a cri)inal prosecution. He has to )aintain an attitude of neutralit(.J. In the present posture of the case.. *riefl(. Robert Marshall. 1/@D/0D1 in the Office of the $it( 7iscal of Manila char%in% petitioners and one. D6A and related $entral *an" circulars and re%ulations on forei%n e9chan%e transactions. Plana. =ith )ore reason &ill in. R The instant case is pri)aril( a liti%ation bet&een David and the petitioners.?D/. scolin. >utierre'. /01/. the $it( 7iscal occupies the analo%ous position of . filed I. It is not a trier of facts. the decision is reconsidered. to%ether &ith ei%ht others &ho &ere directors of the Nation Savin%s and Hoan :ssociation. P/?. too" no part.. the petition is dis)issed and the $it( 7iscal of Manila is directed to finish the preli)inar( investi%ation. ?0.04 &ere entered in the records and ./A?.S. private respondent $le)ent David. J.

ect to revie& b( the Ministr( of #ustice. prohibition does not lie to stop the preli)inar( investi%ation bein% conducted b( the $it( 7iscal. to &it< 3/B it )ust be directed a%ainst the tribunal. corporation. it cannot be said that respondent $it( 7iscal did act &ithout or in e9cess of his . In the case before -s.. The first &itness of private respondent David &as the Deput( Receiver of the $entral *an". 3DB there is no appeal or an( other plain. &hich )otion &as pro)ptl( denied. :fter her testi)on(.for lac" of . R HOV:. This &as also denied. board. On the contrar(. Mrs. In addition to estafa.ustif( the issuance of the &rit the follo&in% reJuisites are necessar(. speed( and adeJuate re)ed( in the ordinar( course of the la&. petitioners a%ain )oved to dis)iss the case on the sa)e %round. J. corporation. The People of the Philippines is not a part( to the entire proceedin%s. In the co)plaint before the $it( 7iscalPs Office. or &ith %rave abuse of discretion. &ould be to usurp the duties and functions of the $it( 7iscal and the po&er to revie& the resolution of the $it( 7iscal b( the Ministr( of #ustice. =hatever be the resolution is sub.udicial or )inisterialE 34B the tribunal. and for &hat char%es reJuires that the presentation of evidence be co)pleted. he has .boo"s of the said :ssociation. To hold other&ise. if an(. To deter)ine &ho are liable.urisdiction over the case and should have been allo&ed to ter)inate the preli)inar( investi%ation . board or person has acted &ithout or in e9cess of its or his .urisdiction because the clai)s alle%ed in the char%e co)pro)ise a purel( civil obli%ation &hich has been novated. The Solicitor >eneral is onl( a no)inal part( at )ost. there are char%es of violation of $entral *an" circulars.urisdiction. To . Iu Donato.chanroblesvirtuala&librar( The procedure laid do&n b( la& is for the $it( 7iscal to co)plete his investi%ation and thereafter to )a"e a resolution.urisdiction. or &ith %rave abuse of discretionE and. In the case at bar. The issue before -s is< $an =e or should =e stop the $it( 7iscal fro) co)pletin% his preli)inar( investi%ation on the %round that the char%es are civil in natureK I hold =e cannot and =e should not. petitioners )oved to dis)iss the case . Hence this petition. there are so)e other respondents aside fro) petitioners. concurrin%<chanrob/es virtual /a& librar( I vote to %rant the )otion for reconsideration and to dis)iss the petition for prohibition. and as provided for b( la& the actuations of the $it( 7iscal have been defended b( respondent David. or person e9ercisin% functions . :t the start of the investi%ation..

the a%%rieved part( )a( appeal to the Minister of #ustice. #ustice 7eli9 V. 4 &ith Mr. #ustices $oncepcion....to finish the preli)inar( investi%ation. concurrin%<chanrob/es virtual /a& librar( I concur &ith this Resolution and &ith the $oncurrin% Opinion of #ustice Relova. #ustice :Juino ta"in% no partB &ould no& be overturned b( the Resolution at bar. Said investi%ation &as bein% conducted as a result of char%es for alle%ed estafa and violation of $entral *an" $ircular No. D6A and related re%ulations re%ardin% forei%n e9chan%e transactions filed b( private respondent $le)ent David. /01A / 3&ith the concurrence of Messrs. an :ustralian national. the petitioner shall .oin as parties defendant the person or persons interested in sustainin% the proceedin%s in the courtE and it should be the dut( of such person or persons to appear and defend. The Resolution at bar &ould set aside the decision on the %round of pre)aturit( of the filin% of the petition and directs the respondent cit( fiscal . >uerrero.. representin% the $it( 7iscal.. did not file a )otion for reconsideration. de $astro and scolin. The rule is clear that &hen a petition for prohibition is filed.unction and )ade per)anent the te)porar( restrainin% order issued on March D/. It )ust be for this reason that the Solicitor >eneral did not file a )otion for reconsideration on the resolution of this $ourt %rantin% the petition because it &as incu)bent upon the private respondent to appear and defend the act of the respondent $it( 7iscal. and entr( . /01A %ranted the petition for prohibition and in.and to render his resolution thereon. I share the sa)e vie& e9pressed b( #ustice Relova in this case.crala& virtua/a& librar( Stripped do&n to essentials. a%ents. #r. :bad Santos. /01A of the /?@da( re%le)entar( period fro) receipt thereof b( the Solicitor >eneral on :pril 6. Ma"asiar. is &ithout )erit. /01A &ithout his havin% filed a )otion for reconsideration. I vote to den( the )otion for reconsideration for the follo&in% reasons<chanrob/es virtual /a& librar( /. Thereafter. their officers. /014 orderin% the respondents.ud%e affected b( the proceedin%s in the court. The ori%inal decision of :pril A. 1/@D/0D1 of the Office of the $it( 7iscal of Manila. dissentin%<chanrob/es virtual /a& librar( I concur &ith the e9tended dissentin% opinion of Mr. J. J. J. both in his or their o&n behalf and in behalf of the court or . The ori%inal decision of :pril A. :la)pa(. T H:NL . Melencio@Herrera. /01A beca)e final and e9ecutor( upon the e9piration on :pril 4/. representatives andNor person or persons actin% upon their 3respondentsPB orders or in their place or stead to refrain fro) proceedin% &ith the preli)inar( investi%ation in $ase No. &hose ori%inal ponencia in the $ourtPs 3Second DivisionPsB ori%inal decision of :pril A. The contention of petitioner that the resolution of the $ourt %rantin% the petition for prohibition has beco)e final because the Solicitor >eneral.

/01A as e9pressl( ad)itted b( the Solicitor >eneral in his )anifestation dated :u%ust 4D.B 4. It cannot be overe)phasi'ed that the issues in this case &ere .the instant case is pri)aril( a liti%ation bet&een David and the petitioners. /01A 3:pril 44nd bein% a Sunda(B. Para%raphs D to ? of the Resolution sho& the respective civil obli%ations of the petitioners as per their pro)issor( notes as subseJuentl( novated. /01A. and such finalit( &hich is no& res . such liti%ation is purel( civil in nature and has to be pursued and settled in the various pendin% civil cases of the parties as a private )atter bet&een the). #ustice Ma"asiar and his present dissentin% opinion sho& be(ond peradventure that an( obli%ation or liabilit( incurred b( petitioners as to DavidPs and his sisterPs funds is purel( civil in character.ud%)ent should therefore have been )ade on :pril 4D. and therefore the( have no standin% or personalit( &hatever to file the cri)inal char%e in the fiscalPs office.unction proceedin%s here &hich have brou%ht out the pertinent facts. /01A of the $ourtPs ne%ative verdict of :pril A. DavidPs filin% of a separate )otion for reconsideration did not toll the period for finalit( of the ori%inal .unction )a( be resorted to and issued .oinin% or abortin% cri)inal prosecution. /01A and filed on :u%ust 41. The ori%inal decision correctl( applied here the savin% clause to the %eneral rule a%ainst en. A.for the orderl( ad)inistration of .udicata cannot be set aside under the %uise of actin% on DavidPs )otion for reconsideration &hich should be re%arded as a )ere scrap of paper because of his lac" of le%al personalit( and standin%. /01A of Mr. to avoid )ultiplicit( of actions and to afford adeJuate protection to constitutional ri%hts@. have .ud%)ent. If . /01A.oined bet&een petitioners and public and private respondents. as stated in the Resolution 3at pa%e 6B. /01A on the Juestion of &hether there e9isted an( cri)inal liabilit( on the part of petitioners that &ould &arrant the continuation of the fiscalPs preli)inar( investi%ation.of . Puno. have no le%al personalit( nor standin% in a cri)inal case and cannot adopt a stand inconsistent &ith or contrar( to that of the Solicitor >eneral &ho has supervision and control over all cri)inal cases. PetitionersP %ood faith and lac" of cri)inal intent are self@evident in the aforecited pronounce)ents and acts. and &ere resolved in the ori%inal decision of :pril A. Private respondent $le)ent David and his sister Denise Luhne &ho is supposed to be co@o&ner of the )one( place)ents but has not even co)e to the Philippines nor filed an( co)plaint. :n( continuation of the fiscalPs preli)inar( investi%ation has been rendered )oot and acade)ic b( this $ourtPs .ud%)ent of lac" of an( cri)inal liabilit( &hich beca)e final and e9ecutor( on :pril 4D. The Solicitor >eneral accepted the finalit( on :pril 4D. vi'. to prevent the use of the stron% ar) of the la& in an oppressive and vindictive )anner. that the e9traordinar( and eJuitable &rit of in. 52 S$R: 626. &ith )ort%a%es and collaterals placed b( the). D 3$abral v. /01A &ith the acceptance thereof b( public respondents headed b( the Solicitor >eneral. The cit( fiscalPs office re)ains per)anentl( en. This issue of lac" of cri)inal liabilit( &as full( discussed b( all parties at the hearin% and in their e9tensive )e)oranda. The in..oined b( this $ourtPs final .ustice.ud%)ent nor prevent its havin% beco)e final and e9ecutor( on :pril 4D. The record and the Resolution at bar itself as &ell as the ori%inal decision of :pril A. D. David had been e9ecuted an affidavit of desistance on his o&n behalf and that of his sister.

invest)ents. filed a )otion dated :pril 41.. private respondent $le)ent David. /01A 8 but &as onl( directin% the fiscal to continue &ith and ter)inate the investi%ation on the pre)ise that . /01A. dissentin%<chanrob/es virtual /a& librar( On :pril D2. )alicious and oppressive prosecution. and also to protect the state fro) useless and e9pensive trials..ud%)ent has lon% beco)e final and e9ecutor( on :pril 4D. and to protect hi) fro) an open and public accusation of cri)e.orit( in adoptin% the Resolution )ade it clear in the deliberations that it &as in no &a( passin% .. /01A. 3at pa%e ?B The onl( point is that the said . I The Solicitor >eneral. A =ith all due deference.urisdiction of the cit( fiscal to conduct the preli)inar( investi%ation dero%ated or i)paired. *oncan.the filin% of this petition is pre)ature. ? =hen thin%s &ent a&r(. since the )a.. //1 S$R: 4A/E citin% Hashi) v.to finish the preli)inar( investi%ation. In no &a( is the Juestion of . 3Trocio v. 4/6B. Hence. he )ade sure that he &as full( covered &ith collaterals b( petitioners.ud%)ent of :pril A. /01A. Manta. #ustice RelovaPs separate opinion 8 particularl(. &ho ca)e here for special treat)ent for his . as special accounts . nothin% &ould be %ained nor achieved b( still directin% the fiscal . . thru counsel :tt(. /01A &ith respect to public respondents.ud%)ent upon the e9istence or non@e9istence of cri)inal liabilit( 8 as resolved and deter)ined ne%ativel( in the ori%inal .to secure the innocent a%ainst hast(. &hen the issue of cri)inal liabilit( or not has been sub)itted to and resolved b( this $ourt. Norberto Guisu)bin%. the aforesaid decision. M:L:SI:R. J. nor to "no& his total invest)ents. ?. &hich the Solicitor >eneral received on :pril 6. He cannot and should not be allo&ed to )isuse our prosecutorial a%encies for collection or enforce)ent of a purel( civil liabilit(.chanrobles virtual la&librar( . &ho e9ecuted the) in all %ood faith and he in turn e9ecuted an affidavit of desistance. as is the thrust of the Resolution and Mr. respondent $le)ent David. =e have here the case of a non@resident alien.unction issued therein a%ainst further continuation of the investi%ation can no lon%er be set aside.. as counsel for public respondent.and onl( a portion of &hich &as to be reported because he did not &ant the :ustralian %overn)ent to ta9 his total earnin%s. /01A and the per)anent in. did not file &ithin the re%le)entar( period an( )otion for reconsideration of the aforesaid decision of :pril A. fro) the trouble. beca)e final and e9ecutor( on :pril 44. This is in accord &ith the %eneral polic( that the fiscalPs office should not be used or abused as a collection a%enc(. /01A for the reconsideration of the decision pro)ul%ated on :pril A. 5/ Phil.served the purpose of a continuation of the preli)inar( investi%ation. as e9pressl( ad)itted b( the Solicitor >eneral. /01A %rantin% the petition of herein petitioners and )a"in% per)anent the te)porar( restrainin% order previousl( issued &ith costs a%ainst private Respondent. e9pense and an9iet( of a public trial.

DAD and 16? on forei%n e9chan%eE par.ured part( is that of intervenin% in the prosecution for the sole purpose of enforcin% the civil liabilit( for the cri)inal action and not of de)andin% punish)ent of the accused.as a%ainst other parties adversel( affected b( the decision &ho did not appeal the decision )ust be dee)ed to have beco)e final and e9ecutor(. Rule //2.ect to the provisions of section A of the sa)e Rule that all cri)inal actions either co))enced b( co)plaint or b( infor)ation shall be prosecuted under the direction and control of the 7iscal. and did not file a )otion for reconsideration.B.B that< . and said court %rants the petition the intervention of the . D6A and Nos. the Sintervention of the offended part( or his attorne( is authori'ed b( section /? of Rule /26 of the Rules of $ourt 3no& section /?. = held in Tan #r. = ruled in Sin%h v. D//@D/A +/056.B<.crala& virtua/a& librar( Since the Solicitor >eneral has supervision and control over a cri)inal action 3in this case.. the( are not in control of the case. Revised Rules of $ourt of /06AB.Therefore.%c<chanrobles. Hibert( Insurance $orp.. or the People of the Philippine Islands.ph .:nd in an( event. 4.:s e9pressl( stated b( the Solicitor >eneral in his )anifestation dated :u%ust 4D. sub.ect to the direction and control of the prosecutin% official. the office of the Solicitor >eneral received the cop( of the aforesaid decision on :pril 6. /01A and filed on :u%ust 41. the aforesaid decision of :pril A. Dia'. .SThe position occupied b( the offended part( is subordinate to that of the pro)oter fiscal because as the pro)oter fiscal alone is authori'ed to represent the public prosecution. the Decision beca)e e9ecutor( as to the public respondent on :pril 44. dependin% upon &hether or not there is. /01A.co). 3p. rec. /01A. bein% at libert( to co))ence it or not to refrain fro) prosecutin% it or not. and as it is discretionar( &ith hi) to institute and prosecute a cri)inal proceedin%. The ri%ht &hich the procedural la& reserves to the in. hence. $onseJuentl(. and to control the proceedin%. 31 S$R: ?/5. Orais<. althou%h the private prosecutors )a( be per)itted to intervene. A/1. . supra.%c<chanrobles. sufficient evidence to establish the %uilt of the accused be(ond a reasonable doubt. Rule //2B. v. >allardo 35D S$R: D26. : contrar( vie& &ould lead to indefeasible results. /01A shall li"e&ise be considered as final and e9ecutor( &ith respect to herein private respondent $le)ent David &ho cannot adopt a stand inconsistent &ith that of the 7iscal. /01A. :s e9plained in Herrero v.ph . his intervention )ust al&a(s be sub.. and their interests are subordinate to those of the People of the Philippines represented b( the fiscal. in the prosecution of offenders. &hether an offended part( intervenes in the prosecution of a cri)inal action. if the pro)oter fiscal desists fro) pressin% the char%e or as"s the co)petent $ourt of 7irst Instance in &hich the case is pendin% for the dis)issal thereof. ?42 +/06D.co). herein petitioners &ere char%ed &ith estafa and violation of Section D of $entral *an" $ircular No. the continuation of the offended part(Ps intervention depends upon the continuation of the proceedin%. :s e9plained in People v. / of Section A.P . e9cept &hen the case is pendin% in the $ourt of 7irst Instance. in his opinion.

ured b( the co))ission of the offense ceases b( virtue of the principle that the accessor( follo&s the principal. or to control the proceedin% once it is co))enced. =e ruled that< . ?1.P " " " . throu%h the private prosecutor. citin% several cases.ect to the pro)oter fiscalPs ri%ht of control. it cannot 3sicB be stated that an order of dis)issal decreed upon petition of the pro)oter fiscal hi)self deprives the offended part( of his ri%ht to appeal fro) an order overrulin% a co)plaint or infor)ation. D//@D/AE Italics s#ppliedB.ph This fact alone b( itself suffices to &arrant the denial of the )otion for reconsideration filed b( private respondent $le)ent David as co)plainant. &ould be tanta)ount to %ivin% said offended part( of the direction and control of a cri)inal proceedin% in violation of the provisions of the above@ cited section /25 of >eneral Order No. $onseJuentl(.chanrobles virtuala&librar( chanrobles. Puno 352 S$R: 626@6/2 +/056. The prosecution in a cri)inal case throu%h the private prosecutor is under the direction and control of the 7iscal. and as his ri%ht to intervene therein is sub. t :l. II :nd because of the co)pro)ise a%ree)ent entered into prior to the filin% of the cri)inal infor)ation in court. such )ove did not stop the runnin% of the period for appeal.=hile it is true that the offended part(. $:. the interest of the private prosecutors is subordinate to that of the State and the( cannot be allo&ed to ta"e a stand inconsistent &ith that of the Solicitor >eneral. Such novation or co)pro)ise prevents the institution of a cri)inal prosecution 3On% v.ured b( the co))ission of an offense to appeal fro) an order dis)issin% a cri)inal case issued b( a $ourt of 7irst Instance upon petition of the pro)oter fiscal. the said co)pro)ise a%ree)ent or novation converted the ori%inal relationship bet&een the parties into ordinar( creditor@debtor situation. for that &ould be tanta)ount to %ivin% the latter the direction and control of the cri)inal proceedin%s.B.It is evident. 3Italics s#ppliedB. therefore. in the case of $abral v. ?1. and onl( the )otion for reconsideration or appeal filed b( the 7iscal could have interrupted a period for appeal. 3pp. /4A . To per)it a person in.co)<chanrobles. contrar( to the provisions of la& and the settled rules on the )atter. :%ain..co). He did not have the le%al personalit( to appeal or to file a )otion for reconsideration on his behalf. that since the Solicitor >eneral alone is authori'ed to represent the State or the People of the Philippines. as the offended part( is not entitled to represent the People of the Philippine Islands in the prosecution of a public offense. filed a )otion for reconsideration &ithin the re%le)entar( fifteen@da( period.person in. &hich ri%ht belon%s e9clusivel( to the pro)oter fiscal b( virtue of the provisions of section AA of >eneral Order No. Silvino San Die%o.

ustice authorities have ta"en co%ni'ance of the cri)e and instituted action in court. and Teresita Santos &ere respectivel( Director.H. Ner(.co). an :ustralian citi'en.S. :lso. Plana. MontaTes. The cri)e bein% an offense a%ainst the state. /051 until October or Nove)ber. /050 to March. 56E -. and place the co)plainant in estoppel to insist on the ori%inal transaction or Ucast doubt on the true natureP thereof. v. Martin. novation prior to the filin% of the cri)inal infor)ation 8as in the case at bar 8 )a( convert the relation bet&een the parties into an ordinar( creditor@debtor relation. Re(es. Re(es in People v. P/D.ph . Sept. 3/4A S$R: ?51.222. 1 Phil. !aldivar. In the oft@cited case of People v.co). /012.42 on ti)e deposits. #ustice #.ph .?D/. :n%eles and 7ernando.ointl( &ith his sister Denise LuhneBE -SC/2.22 under receipts and %uarantee of pa()ent . concurred in b( #ustices Melencio@ Herrera. Mr. President and >eneral Mana%er of the Nation Savin%s and Hoan :ssociation 3NSH:B fro) March. #ustices Padilla. the offended part( )a( no lon%er divest the prosecution of its po&er to e9act the cri)inal liabilit(.22 on ti)e deposits. Mr. Ner( 3/2 S$R: 4AAB. ?A Off. ruled that<. $oncepcion.%c<chanrobles. Ner( 3/2 S$R: 4AA./A?.*. #r. /06AB. Ma"alintal. Di'on. 7ro) March 42. >ervacio. *ut after the . It should be recalled that petitioners Teofisto >uin%ona. 7eb. 642B. thus<. Velasco. ?12@1/ +/01D. Re%ala and Ma"alintal.H. thereb( placin% the co)plainant in estoppel to insist on the ori%inal trust. VasJue' and >utierre'B. A4 Phil. spo"e for the $ourt. #ustice #.0A on savin%s account deposits 3. ?. *arrera.%c<chanrobles. Paredes. Manila $it( 7iscal ulo%io Serrano 34? S$R: 6A. &ith the full concurrence of $hief #ustice $esar *en%'on. in the case of >on'ales v.S$R: ?51. Re(es.chanrobles la& librar( < red III Moreover. /01/. 4101E People v. *autista :n%elo. 34? S$R: 60B. /061B. :ntonio I. onl( the latter can renounce it 3People v.*.. invested &ith the NSH: 8 dealin% directl( &ith petitioners Martin and Santos as NSH: President and >eneral Mana%er 8 the su) of P/.H. In said On% case. $hief #ustice Roberto $oncepcion. as distin%uished fro) the civil. ?12@?1/B. private respondent cannot no& intervene in the prosecution of the cri)inal offense because he has &aived his ri%ht to the civil action &hen he filed his ans&er &ith counterclai) in $ivil $ase No.The novation theor( )a( perhaps appl( to the filin% of the cri)inal infor)ation in court b( the state prosecutors because up to that ti)e the ori%inal trust relation )a( be converted b( the parties into an ordinar( creditor@debtor situation. penned b( #ustice Relova. -SC/?. Sanche'. Habrador. Di'on. G@DD16? in then $ourt of 7irst Instance.*. Mr. #ustice Relova Juoted Mr. $astro.?A6.:s pointed out in People v. private respondent David. >a'. no& Re%ional Trial $ourt in Gue'on $it(. &ith the concurrence of :ssociate #ustices #.222. 4D.

co)pellin% petitioner >uin%ona to file $ivil $ase No.B. /01/.and -SC?2. as he hi)self ad)itted.A? plus interests. /2A@/2?..60/.222. /01/ and on October 4/.B &ith stipulation that the )ort%a%e of one parcel should be cancelled upon pa()ent of /N4 of his one@half share in their obli%ation to David.B. pp. p. received periodic interests on his deposits avera%in% P?. In said $ivil $ase No. Thereafter.2/ and -SCD5.B. /01/.D. 46@40.ointl( &ith Denise LuhneBE that upon private respondent DavidPs insistence. upon reJuest of private respondent David..222. /01/ prepared b( private respondent David hi)self.222. for the release of the )ort%a%e over one of the t&o parcels of land conve(ed to private respondent David as stipulated in the deed of second )ort%a%e.222. >uin%ona #r. G@DD16? in the $7I of Gue'on $it( on Nove)ber /0.22 to David &ho received the sa)e. and attorne(Ps feesB pp.6/A. =hen he tendered on October /?. 4?. the aforesaid invest)ents &ere treated as special accounts &ith interest above the le%al rate. 12.22 &hich &as a personal loan to Santos. respondent David.22 &as cleared thru >uin%onaPs dollar account &ith the Securit( *an" because NSH: did not have an( dollar account.222. respondent David refused to accept.222. v. rec. /01/ 3T. >uin%ona paid P422. The chec" of -SC?2. and recorded in separate confidential docu)entsE that onl( a portion of said deposits or invest)ents &ere to be reported because respondent David did not &ant the :ustralian %overn)ent to ta9 his total earnin%s nor to "no& his total invest)ents. /01/ a pro)issor( note in favor of David ac"no&led%in% indebtedness of P/. >uin%ona e9ecuted a ne& pro)issor( note for his one@half share of the assu)ed indebtedness &hich &as secured b( second )ort%a%es of t&o parcels of land 3:nne9 . pra(in% a)on% others.?22. /01/ an ans&er to the co)plaint for da)a%es &ith counter@clai) for the re)ainin% balance of petitioner >uin%onaPs indebtedness in the a)ount of P6D1.chanrobles la& librar( < red On Septe)ber /?. rec.22.?25.22. $le)ent DavidB for specific perfor)ance &ith da)a%es. G@DD16? before the Gue'on $it( RT$. =hen the NSH: &as placed under receivership on March 4/. rec.222. da)a%es.22 a &ee" 3pp. Petition. rec. on #ul( /5.D42.DD6. /012 3all . rec. private respondent David filed on Dece)ber /0.222. each one assu)in% an indebtedness of P661.D6 and -SCA0.24 and -SC5?. D05@D01. .22 in favor of private respondent David 3:nne9 . /01/. :ll transactions &ith private respondent David &ere recorded e9cept the su) of -SC/?. petitioners >uin%ona and Martin a%reed to divide said indebtedness eJuall(. The other half of the indebtedness assu)ed b( petitioner Martin &as secured b( a 0 /N4 "arat dia)ond rin% &ith a net value of P?/2.B. assu)ed the obli%ation of the *an" to respondent David and e9ecuted on #une /5. /01/ another PD22. &hich a)ounts &ere based on the state)ent of account as of #une D2. .22 under a receipt dated #une 1. petitioners >uin%ona and Martin.22 3p. Thereafter.

His affidavit of desistance states<. 3>orospe and >orospe v. G@DD16?. 62D +/0?6.22 on October 4/. /01/. Thus. D6A 3Sec.222. /D50A2 and /D50A/ of the Re%istr( of Deeds of Gue'on $it(E . That on or about #ul( /5.22 has been paid.co). =hen petitioner >uin%ona co)plied &ith the reJuest b( deliverin% the cashierPs chec" coverin% the a)ount of PD22. G@DD16? filed in the Gue'on $it( RT$ b( petitioner >uin%ona &hich is a"in to an e9press reservation of his ri%ht to file a separate civil action.%c<chanrobles. in )( favor.B. 622. rec.222. /01/ in the Office of the $it( 7iscal of Manila a%ainst herein petitioners for estafa and violation of $entral *an" $ircular No. of &hich P?2.B.222.22 fro) petitioner >uin%ona. 01 Phil. /01/ for the a)ount of P661. for hi)self and in behalf of his sister Denise Luhne.D. a Pro)issor( Note dated #une /5. /01/ an affidavit of desistance &herein he. rec. and t&o Second Real state Mort%a%es coverin% t&o parcels of land. the latter offered hi) four personal chec"s coverin% the a)ount of PD22. private respondent David filed his affidavit@co)plaint dated Dece)ber 4D. ?5.2/ and -SCD5. but also &hen he has actuall( instituted the civil action even if he has not )ade the &aiver or reservation adverted to. The counterclai) of private respondent David for the re)ainin% balance of the share in the obli%ation of petitioner >uin%ona included in his ans&er in the aforesaid civil case before the Gue'on $it( RT$ is in effect a civil action for the enforce)ent of the civil liabilit( of herein petitioner >uin%ona. respondent David alread( filed an ans&er &ith counterclai) in $ivil $ase No. Mr.*ecause of the filin% b( petitioner >uin%ona of $ivil $ase No. It &ould appear therefore that private respondent David i)pliedl( &aived his ri%ht to intervene in this cri)inal case because four da(s before the cri)inal co)plaint &as filed &ith the $it( 7iscal of Manila. &ith buildin%s and i)prove)ents.. /01/ as stipulatedE but private respondent David reJuested that the four personal chec"s be chan%ed to )ana%erPs chec" and e9tended the period of pa()ent to October 42. It should be stressed that after receivin% the first pa()ent to hi) of P422.an offended part( loses his ri%ht to intervene in the prosecution of a cri)inal case not onl( &hen he has &aived the civil action or e9pressl( reserved his ri%ht to institute it. it should be e)phasi'ed that private respondent David e9ecuted on #ul( /5. a%reed to desist fro) an( prosecution of petitioner >uin%ona 3p.ph . DB and related re%ulations on forei%n transaction. e9ecuted. /01/. &ith Transfer $ertificate of Title Nos.22 &hich a)ount &as due on October /?. /01/.B. Teofisto >uin%ona #r.222. A6.?22 &ith interest at /6Q per annu) fro) #ul( /. >at)aitan.D25. it has been ruled that .chanrobles virtual la&librar( Hi"e&ise. private respondent David refused to accept the sa)e clai)in% that petitioner >uin%ona &as alread( in default and that the entire re)ainin% balance had alread( beco)e due and pa(able 3p. t :l. /01/. situated at Gue'on $it(.

as such. Thus.co).. :)erican :pothecaries $o. .?. That I. Teofisto >uin%ona #r. :n% $hen% Hian.ect )atter of the deposit. &hether fi9ed.A. v. /24@/2DB.co).. /012. This is &ithout pre. therefore. Morfe 36D S$R: //AB +March /4. v.It should be noted that fi9ed. enunciated that<.ph .%c<chanrobles. $hinese >rocers :ssociation.*an" deposits are in the nature of irre%ular deposits. National *an". 6? Phil. /0?D and /012 of the Ne& $ivil $ode and decisions on the )atter. and 7ernande'. and its other officers and e)plo(eesE . Denise Luhne. 3pp. 6? Phil. Mr. D5?E 7letcher :)erican National *an" v. /012. spea"in% for the Second Division. and concurred in b( #ustices *arredo. 6? Phil. in the case of $* v. &ithdra& )( clai) &ith the $entral *an" onl( insofar as Mr. and current deposits of )one( in ban"s and si)ilar institutions are not true deposits. :Juino and :bad Santos. :ll "inds of ban" deposits. is concerned to the e9tent of the Pro)issor( Note and the Mort%a%es in the a)ounts indicated in the Pro)issor( Note. 6? Phil. Phil. /0DD. the invest)ents or private respondent David in the NSH: b( &a( of ti)e deposits and savin%s deposits are loans under the e9press provisions of :rticles 4A1. :Juino. The respondent *an" &as in turn a debtor of petitioner. D1?E Pacific $o))ercial $o. Pacific $oast *iscuit $o.. The( are reall( loans because the( earn interest. #ustice Ra)on $. $* 306 S$R: 06. Inc.. *arredo. $ivil $odeE >ullas v.udice to the balance of )( clai) a%ainst Nation Savin%s and Hoan :ssociation. The petitioner here in )a"in% ti)e deposits that earn interests &ith respondent Overseas *an" of Manila &as in realit( a creditor of the respondent *an" and not a depositor. :)erican :pothecaries $o. spea"in% for the Second Division. are not preferred credits 3:rt. //0. 7ailure of the respondent *an" to honor the ti)e deposit is failure to pa( its obli%ation as a debtor and not a breach of trust arisin% fro) a depositar(Ps failure to return the sub. :ntonio. A40E >opoco >rocer( v. &ith the concurrence of $hief #ustice Ma"alintal and #ustices 7ernando. /24 +7eb. The( are considered si)ple loans and. $urrent and savin%s deposits are loans to a ban" because it can use the sa)e.ph . That I e9ecute this affidavit not onl( for )(self but also in behalf of )( sister. and underta"e to desist fro) an( prosecution a%ainst hi). +p. 6? Phil. $ivil $odeE In re HiJuidation of Mercantile *an" of $hinaE Tan Tion% Tic" v. stated<.crala& virtua/a& librar( IV :s =e stated in the decision sou%ht to be reconsidered. /05?. #ustice Her)o%enes $oncepcion #r..B. AADB.B.%c<chanrobles. ?/0B. savin%s. in the case of Serrano v. savin%s. /012.chanrobles la&librar( < rednad :%ain. A/AE Pacific $oast *iscuit $o. or current are to be treated as loans and are to be covered b( the la& on loans 3:rt. 64 Phil... /A.

Mrs. /5./A?.V In his )otion for reconsideration. he. rec. /01/. /050 to March.0D and -SC5?./A?.?D/. he filed a co)plaint for estafa and violation of Section D of $entral *an" $ircular No.?D/. He li"e&ise )ade invest)ents in the aforesaid ban" in the a)ount of -SC5?. and that petitionersP assu)ption of the obli%ation of the ban" to private respondent &as an ad)ission that the( did not deliver the )one( to the ban". &hile the duplicate ori%inal of said instru)ents &ere on file in the Nation Savin%s and Hoan :ssociation. The follo&in% facts and circu)stances on record indisputabl( sho& that private respondent $le)ent David invested his )one( on ti)e and savin%s deposits &ith the Nation Savin%s and Hoan :ssociation directl( and not &ith herein petitioners as private individuals<chanrob/es virtual /a& librar( /.42 on ti)e deposits and the su) of P/D./A?. to%ether &ith his sister.42E P/D. /46.222. Denise Luhne.B. rec./A 3pp. rec.22 3p. a)ountin% to P/. testified under oath before the :ssistant $it( 7iscal that one of the reco%ni'ed &a(s of recordin% transactions is to "eep on file the duplicate ori%inal of the accountin% for)s used in the transactions 3pp.co)<crala&<red Private respondentPs ne& theor( in his )otion for reconsideration has no factual basis.222. A26.42 on ti)e deposits and the su) of P/D. *ut as pointed out b( petitioners herein. He further stated that &hen the ban" &as placed under receivership b( the $entral *an". as &ell as the a)ount of -SC5?.?D/.251.chanrobles. /01/.0A on savin%s account deposits or a total of P/.14/. .?A6. &ho in turn had the obli%ation to deliver the sa)e to the ban". the Deput( Receiver of the $entral *an".251./?0. D6A and related $entral *an" re%ulations re%ardin% forei%n e9chan%e transactions a%ainst the Nation Savin%s and Hoan :ssociation and the entire board of directors includin% the petitioners herein. this constitutes a co)plete chan%e of private respondentPs ori%inal theor( in the $it( 7iscalPs Office as sho&n b( his affidavit@ co)plaint on Dece)ber 4D. Private respondent hi)self cate%oricall( stated in his affidavit@co)plaint that he invested &ith the Nation Savin%s and Hoan :ssociation the su) of P/. he filed his clai) for all of his invest)ents and later received a report fro) the $entral *an" that onl( PD2?.?A6.04 &ere entered in the records of the ban". /?@/6. rec.22. to be deposited as ti)e and savin%s deposit &ith the Nation Savin%s and Hoan :ssociation.14/.B. It appears that the ori%inal instru)ents of indebtedness &ere %iven to private respondent.0A on savin%s account deposits or a total of P/./A./?0. invested &ith the Nation Savin%s and Hoan :ssociation the su) of P/.04 of his invest)ents &ith the ban" &ere entered in its records.B. private respondent contends that the )one(.?A6.222. Since the( did not deliver or deposit the )one( &ith the Nation Savin%s and Hoan :ssociation. &as delivered to petitioners herein in their personal capacit(. /5. So. the( beca)e liable for estafa b( )isappropriation as the $entral *an" discovered that onl( PD2?. Iu Donato.22 3p. &herein he stated that fro) March 42.B.

especiall( after =e ruled in Our )ain decision sou%ht to be reconsidered that ban" deposits are in the nature of si)ple loans. to adopt a theor( &hich is different fro) that &hich he sustained in the $it( 7iscalP s Office. rec. or a total of PD2. /2/. rec. and properl( receipted for in ban" for)s 3pp.co)<chanrobles. stated that the sa)e &ere e9ecuted as a result of deposits )ade b( $le)ent David and Denise Luhne &ith the Nation Savin%s and Hoan :ssociation 3pp. rec.B. such as the state)ent of account 3re< ti)e and savin%s depositsB as of #une D2.22 fro) the PDI$. Private respondentPs invest)ents &ere treated as special accounts &ith special rates upon his insistence and because Nation Savin%s and Hoan :ssociation &as ur%entl( in need of funds.22 a &ee" 3pp.co). and the failure of the ban" to return the deposits &ill not constitute estafa throu%h )isappropriation. rec.B. -nder the la&. The ban" &ould not have paid hi) such substantial interest &ee"l( if he &ere not a depositor of said NSH:. stated that private respondent David and Denise Luhne could be allo&ed pa()ent of their recorded deposits up to P/?. D05@D01. The report dated #une 4D.ph ?. /01/ prepared b( private respondent and his affidavit of desistance. onl( deposits of distressed ban"s are entitled to such pa()ent fro) the PDI$.22 under the Philippine Deposit Insurance $orporation Ha& 3p.4. upon the latterPs reJuest. 6.222. The pro)issor( notes e9ecuted b( petitioners >uin%ona and Martin &herein the( assu)ed the obli%ation of the Nation Savin%s and Hoan :ssociation to private respondent.22 each. Private respondent testified under oath before the :ssistant $it( 7iscal of Manila that he )ade the deposits in the principal office of the Nation Savin%s and Hoan :ssociation durin% office hours.222. 5. The invest)ents &ere recorded in separate confidential docu)ents. D05@D01.chanrobles virtuala&librar( chanrobles. Private respondentPs pleadin%s.B.B. rec. /014 and )e)orandu) dated Dece)ber 4/. and docu)ents. at this sta%e of the proceedin%s. 4A2. It is undisputed that private respondent had alread( filed and received his clai) and that of his sister in the total a)ount of PD2. A. 4/. D. /01/ of Director $onsolacion Odra of the $entral *an" Depart)ent for Rural *an"s and Savin%s and Hoan :ssociations.B.222. private respondent ad)itted that he &as a depositor of the Nation Savin%s and Hoan :ssociation 3p. nor to "no& his total invest)ents 3p. but it &ill onl( %ive rise to .B. In his verified ans&er to the co)plaint of petitioner >uin%ona in $ivil $ase G@DD16? for specific perfor)ance &ith da)a%es. filed before this $ourt sho& that he deposited his )one( &ith the Nation Savin%s and Hoan :ssociation. and onl( a portion of &hich &as to be reported because he did not &ant the :ustralian %overn)ent to ta9 his total earnin%s. particularl( his co))ent dated :pril 4/. 4?. 12. 1. 7urther)ore. Private respondent further ad)itted under oath that he received periodic interests on his deposits at an avera%e of P?. before authori'ed officers of the ban". /014.222. rec. private respondent cannot be per)itted.

ust and oppressive for the appellate court to adopt a theor( at variance &ith that on &hich the case &as presented to and tried b( the lo&er court. Rep. It &ould be unfair and un. 4A Phil. ?? Phil. National Habor Relations $o))ission 3/4D S$R: 406. DA Phil.ph . adopt a theor( inconsistent &ith that &hich the( sustained in the lo&er court. that. 62?@620BP. It &ould be un.%c<chanrobles. ?05. &here a cause has been tried upon the theor( that the pleadin%s are at issue. A?B.%c<chanrobles. It is i)proper to chan%e theor( on appeal and )ore so in a )otion for reconsideration. A6/B.ustice and violative of petitionerPs constitutional ri%ht to due process of la&.co).. on a )otion for reconsideration of the decision on its )erits. or &here an issue is tacitl( accepted b( all parties as properl( presented for trial and as the onl( issue.ph . in the recent case of Dosch v.SIt is undoubtedl( the la&. =e held that. Manila lectric $o)pan( 3A4 S$R: ??6. this $ourt said<.eopard( upon the theor( that she could still be convicted under an infor)ation &hich she branded to be insufficient in the lo&er court. 3Italics s#ppliedB.*ut as pointed out. to ta"e the) una&are and off their %uard. Decasa. the appellate court &ill proceed upon the sa)e theor( 3Hi'arra%a Her)anos v.. It could also undul( prolon% liti%ations because a part( can al&a(s chan%e postures to suit his o&n advanta%e. deprive the) of their da( in court 3Hi)pan%co Sons v. on appeal. :nd. VI . Iap Tico. this issue &as not raised. :rchilla 3/ S$R: 601. in People v. Rule A6. $onseJuentl(. 52/ +/06/..B.B.chanrobles virtual la&librar( Thus. Revised Rules of $ourtB. So)es. Ian%co Stea)ship $o. D/2 +/01D. /1. This chan%e of theor( on appeal is i)properE it is offensive to the basic rules of fair pla( and . Rep. so that it &ould be i)proper to consider it on appeal. It &ould surprise the parties. . and &ould in effect. and &orse still.Reali'in% that its Uresi%nationP theor( &as &ea" and fli)s(. 4A Phil. or that a particular issue is )ade b( the pleadin%s.It is &ell@settled that parties to a . +Italics s#pplied. .ust to the other part( liti%ant as it violates petitionersP constitutional ri%ht to due process. :ppellate courts )a( not entertain Juestions of la& or fact not raised in the lo&er courts 3Sec.crala& virtua/a& librar( :%ain.co). nor &as the inverse conde)nation doctrine invo"ed in the trial court. ?62 +/05/. for that &ould constitute a chan%e of theor( not per)issible on appeal 3Toribio v. in the case of Velasco v. North&est abandoned it and contended for the first ti)e that petitioner &as %uilt( of insubordination &hen he refused to co)pl( &ith the transfer order. appellee is no& estopped fro) invo"in% the idea of double .udicial proceedin% )a( not.civil liabilit(. =e said<.. ?2AE Molina v. citin% several casesB.

=olfe 34 Phil. Hicera. under &hich the depositor is the creditor of the ban". &hich thereb( beco)es the debtor of the depositor. AD/B citin% the case of Me"in v. 3People v.deprives a person accused of a cri)e of so)e la&ful protection to &hich he has beco)e entitled. &hich includes interposin% a counterclai) in an ans&er. to prevent the use of the stron% ar) of the la& in an oppressive and vindictive )anner. /01/ b( respondent David of his affidavit@co)plaint before the $it( 7iscal &ould be a"in to a violation of petitionersP ri%ht a%ainst e9 post facto la&s. and %ives rise onl( to a civil obli%ationE and 3?B the e9traordinar( &rits of in. #udicial decisions of the Supre)e $ourt assu)e the sa)e authorit( as the statute itself . such as the protection of a for)er conviction or acJuittal.crala& virtua/a& librar( The aforecited defenses &ere alread( available to herein petitioners and afford the) le%al protection alread( secured to the) prior to the filin% of the co)plaint &ith the $it( 7iscal 8 even before an( cri)inal infor)ation has been filed in court. one of the si9 "inds of e9 post facto la& is that &hich . to avoid )ultiplicit( of actions and to afford adeJuate protection to constitutional ri%hts 8 &hich defenses &ere alread( e9istin% lon% before the filin% on Dece)ber 4D..B. or a procla)ation of a)nest(.unction are available for the orderl( ad)inistration of . before the institution in court of a cri)inal action estops or bars the co)plainant fro) intervenin% in the cri)inal actionE 3AB all ban" deposits 8 &hether savin%s. :rticle 1 of the Ne& $ivil $ode of /0?2 directs that . Decisions of the Supre)e $ourt are part of the la& of the land. current or ti)e deposits 8 are in the nature of loans. the co)pro)ise and affidavit of desistance have the effect of an a)nest( 8 co)plete absolution fro) an( cri)inal liabilit(.udicial decisions appl(in% or interpretin% the la&s or the $onstitution shall for) part of the le%al s(ste) of the Philippines. :dditionall(.ustice.. 6? S$R: 452 +/05?.To deprive petitioners herein of the fore%oin% defenses that 3/B failure to file a )otion for reconsideration of a decision inevitabl( renders such decision final and e9ecutor(Echanrobles la& librar( < red 34B a co)pro)ise e9ecuted before the institution of the cri)inal action in court precludes the filin% of such cri)inal actionE 3DB the filin% of a civil action. :s held in the /052 case of La( Ville%as La)i 3D? S$R: A40. 5AB.

. $onseJuentl(. Ma( 4?. March ?. H@/41D5. Ma( /5. Her)osisi)a. . Oct. /0?1B. H@602/. #ose v. ?/ Off. Provincial *oard.E see also Mercado v. Hacson. in spite of the fore%oin% le%al constitutional defenses. $loribel. /1 S$R: 4A5E /4A Phil. /0?AE Manuel v. D4 S$R: A66 +/052. /01A. etc.. /0?6E $ar)ona v. $hair)an. H@1D?1.B. &ho alread( acJuired vested ri%ht in the aforesaid defenses a%ainst such prosecution. $arbonell. 9haustion of ad)inistrative re)edies is not reJuired &here the action of the ad)inistrative officer is clearl( and obviousl( devoid of an( le%alit( or authorit( 3Man%ubat v. A140E 7. H@/2A55. //6 S$R: 0D +/014.E *e%osa v. H@5/12. !a%ado. To continue &ith the prosecution of herein petitioners. t :l.ustice. >a'.. PV:. A52B and because of the ur%enc( of the relief de)anded b( petitioners 3>uerrero v. etc. March D2. D/. 454@45DB. Mun. //1 S$R: 4A/ +/014. Os)eTa. t.. 4/6 +/0A/. >a'. Hechanova.E Tapales v. /2? Phil.E >on'ales v. v. /06D. &ould render the re)ed( inadeJuate and not speed( enou%h to save herein petitioners fro) so )uch harass)ent. e9pose the petitioners to undue and oppressive harass)ent and a%%ravate their an%uish and e9penses. Manta. Ma(or of Nabua. t :l. /0??. Ma( D/.. Me)bers. etc.. etc. *oncan. /A S$R: 460. H@A24AA. 5 S$R: ??DE Pascual v. Dece)ber /A. A66. 4A. A1 Off. :)ante. :ppealin% to the appropriate ad)inistrative authorities concerned fro) the action of the $it( 7iscal then to the Re%ional Trial $ourt and finall( bac" to this Supre)e Tribunal. an%uish and e9penses or irreparable da)a%e. #r. H@//0?0. President. /26 Phil. 5/ Phil. H@4/6?D. VII There is no need of prior e9haustion of ad)inistrative re)ediesE because the instant case is an e9ception to the principle of e9haustion as onl( constitutional and le%al Juestions are involved herein 3Hi)oico v. ?4 Off. :l. /0?6E and *riones v.chanrobles virtual la&librar( Insistence on the cri)inal prosecution of herein petitioners. den( the) their constitutional ri%hts. :)ante. $ourt. Palo)ar.E Hashi) v. /0?0. ?/ S$R: DA2 +/05D. etc. H@/2664. :pril D2. DD S$R: ?1? +/052. unpublishedB. ?/20E Senarillos v. per #ustice Melencio@HerreraE Del Mar v. H@ /4?D6. de la 7uente. &ould subvert the orderl( ad)inistration of . /0?0. /4/E $ovacha v. in )uch the sa)e &a( that such unnecessar( prosecution e9poses the State to useless and e9pensive trials 3Trocio v. Sept. March /?.. H@/5?4D..o v. &ould therefore be clearl( e9 post facto. an( )odification or revocation of the previous doctrines aforeJuoted cannot be %iven retroactive effect in the instant cri)inal prosecution. D/. Oct.3$alte9 v. /0?5E 7esti. 0 S$R: 4D2 +/06D. /D21@/D20E Pala)ine v. /06?. 56DB.E Teo9on v. Os)eTa. >a'. *oard.. etc. or &here the challen%ed action &ill create irreparable da)a%e 3De Hara..

of the :ns&er of respondent $entral *an" of the Philippines in >. .R. %entral &ank of the Philippines.OSEFA RAMOS !ELA RAMA. No.R. L-+&011 F8?(u"(5 1/. van%elista M >lecerio T. #R. on the alle%ed failure of the Overseas *an" of Manila to return the ti)e deposits )ade b( petitioner and assi%ned to hi). entitled FA!erita /. Rene -iokno for petitioner. 7eliciano $. Tu)ale.UATCO. . . Salon%a for all other respondents. petitioner. RAMOS.R. 198& MANUEL M. PeriJuet for respondent Overseas *an" of Manila. No. RO!OLFO LE!ESMA.UATCO. et al (s. RAMOS. HORAC O !ELA RAMA. RAMOS. the )otion for reconsideration of private respondent should be denied. ANTON O B. EMER TO B. SERRANO. Orsolino for respondent $entral *an" of the Philippines. "#$ TEOF LO TAN. $ON$ P$ION. J. 1 Petitioner also pra(s that both respondent ban"s be ordered to e9ecute the proper and necessar( docu)ents to constitute all properties fisted in :nne9 . a%ainst respondent $entral *an" of the Philippines and Overseas *an" of Manila and its stoc"holders. #osefina >.oint and solidar( liabilit( to the a)ount of Three Hundred 7ift( Thousand Pesos. CENTRAL BANK OF THE PH L PP NES@ O.. vs.F into a trust fund in favor of petitioner . Torres and :ntonio *.ERSEAS BANK OF MAN LA@ EMER TO M. on the %round that respondent $entral *an" failed in its dut( to e9ercise strict supervision over respondent Overseas *an" of Manila to protect depositors and the %eneral public.unction. &ith interest. SUSANA B. . &ith preli)inar( in.chanrobles virtual la&librar( Republic of the Philippines SUPREME COURT Manila S $OND DIVISION G. that see"s the establish)ent of . H@40D?4. RAMOS.5.. F LOMENA RAMOS LE!ESMA.: Petition for !anda!#s and prohibition. CTOR A RAMOS TAN. Pacifico T.Hence. Ra!os. respondents. 7.

Respondent $entral *an" clai)s that as of March /4.a also )ade a ti)e deposit. on March 6. assi%ned and conve(ed to petitioner Manuel M. / On :u%ust D/. i)ple)entin%. 6 Respondent $entral *an" ad)its that it is char%ed &ith the dut( of ad)inisterin% the ban"in% s(ste) of the Republic and it e9ercises supervision over all doin% business in the Philippines. the Overseas *an" of Manila. petitioner )ade a ti)e deposit.and all other depositors of respondent Overseas *an" of Manila. for one (ear &ith 6@VQ interest.a.22 &ith respondent Overseas *an" of Manila. -ndisputed pertinent facts are< On October /D. /061. or doin% an( act predicated upon the validit( or efficac( of the deeds of )ort%a%e. 0 Not&ithstandin% series of de)ands for encash)ent of the afore)entioned ti)e deposits fro) the respondent Overseas *an" of Manila. This li)ited operation of respondent Overseas *an" of Manila continued up to /061. not a sin%le one of the ti)e deposit certificates &as honored b( respondent Overseas *an" of Manila.22B &ith the sa)e respondent Overseas *an" of Manila. /065. )arried to 7eli9berto M. of T&o Hundred Thousand Pesos 3P422. of One Hundred 7ift( Thousand Pesos 3P/?2. $oncepcion Mane. + $oncepcion Mane. dated March /4. to prohibit the Overseas *an" of Manila fro) )a"in% ne& loans and invest)ents in vie& of its chronic reserve deficiencies a%ainst its deposit liabilities. /066 and Dece)ber /4.22B &ith the respondent Overseas *an" of Manila. for one (ear &ith 6Q interest. her ti)e deposit of P422.unction a%ainst both respondent ban"s &as not %iven b( this $ourt.5. /061. &hile operatin%. datin% fro) Dece)ber 6. /06?. Serrano. /066. No. ' Respondent $entral *an" also denied that it is %uarantor of the per)anent solvenc( of an( ban"in% institution as clai)ed b( petitioner. of the :ns&er of respondent $entral *an" in >. It clai)s that neither the la& nor sound . Serrano. assi%n)ent. i)pl(in% that respondent $entral *an" has to &atch ever( )ove or activit( of all ban"s. &as onl( on a li)ited de%ree of ban"in% operations since the Monetar( *oard decided in its Resolution No.222. 2 : sou%ht for e9@parte preli)inar( in. It is also pra(ed that the respondents be prohibited per)anentl( fro) honorin%. D44. includin% respondent Overseas *an" of Manila. andNor conve(ance or transfer of &hatever nature of the properties listed in :nne9 . /065 up to March A.R.222.222. 40D?4. but denies the petitionerFs alle%ation that the $entral *an" has the dut( to e9ercise a )ost ri%id and strin%ent supervision of ban"s. /06?.

H@40D?4. %entral &ank of the Philippines. and orderin% the liJuidation of said ban"B are hereb( annulled and set asideE and said respondent $entral *an" of the Philippines is directed to co)pl( &ith its obli%ations under the Votin% Trust :%ree)ent. H@40D?4. declarin% the for)er insolvent..R.ban"in% supervision reJuires respondent $entral *an" to advertise or represent to the public an( re)edial )easures it )a( i)pose upon chronic delinJuent ban"s as such action )a( inevitabl( result to panic or ban" .a. No. /061. No. 9 Respondent $entral *an" avers no "no&led%e of petitionerFs clai) that the properties %iven b( respondent Overseas *an" of Manila as additional collaterals to respondent $entral *an" of the Philippines for the for)erFs overdrafts and e)er%enc( loans &ere acJuired throu%h the use of depositorsF )one(. 1& In >. Ra!os.R. H@40D?4 on October A.runs. and if this $ourt &ere to allo& Serrano to intervene as depositor in >.R. In the (ears /066@/065. et al. on the %round that his clai) as depositor of the Overseas *an" of Manila should properl( be ventilated in the $ourt of 7irst Instance. H@40D?4 opposed petitioner Manuel SerranoFs )otion to intervene in that case. and liJuidatin% its assets. 8 Respondent $entral *an" li"e&ise denied that a constructive trust &as created in favor of petitioner and his predecessor in interest $oncepcion Mane. /05/. includin% that of the petitioner and $oncepcion Mane. direct the suspension of its operation. /46D. In the resolution dated October A.a &hen their ti)e deposits &ere )ade in /066 and /065 &ith the respondent Overseas *an" of Manila as durin% that ti)e the latter &as not an insolvent ban" and its operation as a ban"in% institution &as bein% salva%ed b( the respondent $entral *an". &herein respondent Overseas *an" of Manila sou%ht to prevent respondent $entral *an" fro) closin%. this $ourt denied SerranoFs. /054. &hich beca)e final and e9ecutor( on March D.R. No. the &rits pra(ed for in the petition are hereb( %ranted and respondent $entral *an"Fs resolution Nos.F a case &as filed b( the petitioner Ra)os. and to desist fro) . on the %round that Serrano had a real and le%al interest as depositor of the Overseas *an" of Manila in the )atter in liti%ation in that case. /061. )otion to intervene. (s. &ith the dispositive portion to &it< =H R 7OR . favorable to the respondent Overseas *an" of Manila.R. filed on Septe)ber 6. a )otion to intervene in >. 11 This $ourt rendered decision in >. The contents of said )otion to intervene are substantiall( the sa)e as those of the present petition. entitled FA!erita /. Petitioner Manuel Serrano in this case. H@40D64. thousands of other depositors &ould follo& and thus cause an avalanche of cases in this $ourt. Respondent $entral *an" in >. /402 and /DDD 3that prohibit the Overseas *an" of Manila to participate in clearin%. No. there &ere no findin%s to declare the respondent Overseas *an" of Manila as insolvent. No.

No. $osts a%ainst respondent $entral *an" of the Philippines. pra(in% for a decision on the )erits. and recover( of da)a%es a%ainst respondent $entral *an" for its alle%ed failure to strictl( supervise the acts of the other respondent *an" and protect the interests of its depositors b( virtue of the constructive trust created &hen respondent $entral *an" reJuired the other respondent to increase its collaterals for its overdrafts said e)er%enc( loans. 7ailure of he respondent *an" to honor the ti)e deposit is failure to . $lai)s of these nature are not proper in actions for )anda)us and prohibition as there is no sho&n clear abuse of discretion b( the $entral *an" in its e9ercise of supervision over the other respondent Overseas *an" of Manila. as it did in >.ointl( and severall( liable &ith respondent Overseas *an" of Manila to the petitioner for the PD?2.ud%in% respondent $entral *an" . The respondent *an" &as in turn a debtor of petitioner. 7urther)ore. 1+ *( the ver( nature of the clai)s and causes of action a%ainst respondents. savin%s. both parties overloo"ed one funda)ental principle in the nature of ban" deposits &hen the petitioner clai)ed that there should be created a constructive trust in his favor &hen the respondent Overseas *an" of Manila increased its collaterals in favor of respondent $entral *an" for the for)erFs overdrafts and e)er%enc( loans. ad. had been acco)plished a lon% ti)e a%o. or current are to be treated as loans and are to be covered b( the la& on loans. 12 *ecause of the above decision. said collaterals alle%edl( acJuired throu%h the use of depositors )one(.ud%)ent in this case. petitioner here is not the proper part( to raise that Juestion. &hich petitioner here intends to use as his basis for clai)s of da)a%es a%ainst respondent $entral *an". :ll "inds of ban" deposits. The( are reall( loans because the( earn interest. &hether fi9ed.urisdiction as =e alread( pointed out &hen this $ourt denied petitionerFs )otion to intervene in >. since the Juestioned acts of the respondent $entral *an" 3the acts of dissolvin% and liJuidatin% the Overseas *an" of ManilaB. No. petitioner in this case filed a )otion for . since these collaterals &ere acJuired b( the use of depositorsF )one(. 1/ $urrent and savin%s deposit are loans to a ban" because it can use the sa)e. H@40D?4. &ith all interests due thereinE and declarin% all assets assi%ned or )ort%a%ed b( the respondents Overseas *an" of Manila and the Ra)os %roups in favor of the $entral *an" as trust funds for the benefit of petitioner and other depositors. Neither is there an(thin% to prohibit in this case. but rather the Overseas *an" of Manila. H@40D?4. and if there &as. These clai)s shoud be ventilated in the $ourt of 7irst Instance of proper .ta"in% action in violation therefor. The petitioner here in )a"in% ti)e deposits that earn interests &ith respondent Overseas *an" of Manila &as in realit( a creditor of the respondent *an" and not a depositor.R.222 ti)e deposit )ade &ith the latter ban". *an" deposits are in the nature of irre%ular deposits. the( in realit( are recover( of ti)e deposits plus interest fro) respondent Overseas *an" of Manila.R.

/051. The petitioner has no causes of action a%ianst the $entral *an" to obtain those reliefs. It is not the $entral *an"Fs )inisterial dut( to pa( petitionerFs ti)e deposits or to hold the )ort%a%ed properties in trust for the depositors of the Overseas *an" of Manila. conc#r in the '#dg!ent on the of the conc#rring opinion of J#stice $)#ino. Rollo. petitionerFs re)ed( is to file his clai) in the liJuidatin% proceedin% 3$entral *an" vs. a re)ed( usuall( available a%ainst an( tribunal. $bad 7antos. The petitioner has no cause of action for prohibition.. Morfe. &arredo :%hair!an. March /4. concurrin%< The petitioner pra(ed that the $entral *an" be ordered to pa( his ti)e deposits of PD?2. #anuar( /2. H@ D1A45. 6D S$R: //AE Hernande' vs. Rural *an" of Hucena. Since the Overseas *an" of Manila &as found to be insolvent and the Superintendent of *an"s &as ordered to ta"e over its assets preparator( to its liJuidation under section 40 of Republic :ct No. /05?. &ith costs a%ainst petitioner. $ntonio. &hich he could not recover fro) the distressed Overseas *an" of Manila..pa( s obli%ation as a debtor and not a breach of trust arisin% fro) depositar(Fs failure to return the sub. 1/ S$R: 5?B. the petition is dis)issed for lac" of )erit.udicial or )inisterial functions. 46? 3p. board. plus interests. Inc.. and to declare all the assets assi%ned or )ort%a%ed b( that ban" and the Ra)os %roup to the $entral *an" as trust properties for the benefit of the petitioner and other depositors.222. The( cannot be %ranted in petitionerFs instant ori%inal actions in this $ourt for )anda)us and prohibition. SO ORD R D. /05DB.. J. . corporation or person e9ercisin% .ect )atter of the deposit =H R 7OR . J. JJ. H@ 4050/. S81"("t8 O12#2o#s A=U NO. Manifestation of Septe)ber /0. /05. conc#r.

Separate Opinions A=U NO, J., concurrin%< The petitioner pra(ed that the $entral *an" be ordered to pa( his ti)e deposits of PD?2,222, plus interests, &hich he could not recover fro) the distressed Overseas *an" of Manila, and to declare all the assets assi%ned or )ort%a%ed b( that ban" and the Ra)os %roup to the $entral *an" as trust properties for the benefit of the petitioner and other depositors. The petitioner has no causes of action a%ianst the $entral *an" to obtain those reliefs. The( cannot be %ranted in petitionerFs instant ori%inal actions in this $ourt for )anda)us and prohibition. It is not the $entral *an"Fs )inisterial dut( to pa( petitionerFs ti)e deposits or to hold the )ort%a%ed properties in trust for the depositors of the Overseas *an" of Manila. The petitioner has no cause of action for prohibition, a re)ed( usuall( available a%ainst an( tribunal, board, corporation or person e9ercisin% ;udicial or )inisterial functions. Since the Overseas *an" of Manila &as found to be insolvent and the Superintendent of *an"s &as ordered to ta"e over its assets preparator( to its liJuidation under section 40 of Republic :ct No. 46? 3p. /05, Rollo, Manifestation of Septe)ber /0, /05DB, petitionerFs re)ed( is to file his clai) in the liJuidatin% proceedin% 3$entral *an" vs. Morfe, H@ D1A45, March /4, /05?, 6D S$R: //AE Hernande' vs. Rural *an" of Hucena, Inc., H@ 4050/, #anuar( /2, /051, 1/ S$R: 5?B. Republic of the Philippines SUPREME COURT Manila 7IRST DIVISION

G.R. No. 1&/612 M"5 1&, 199/ BANK OF THE PH L PP NE SLAN!S Asu))8sso(-2#- 2#t8(8st o; COMMERC AL AN! TRUST CO.B,petitioner, vs. HON. COURT OF APPEALS, EASTERN PL-COO! CORP. "#$ BEN GNO !. L M, respondents. Leonen, Ra!ire+ & $ssociates for petitioner. $onstante :. :ncheta for private respondents.

!A, !E, .R., J.: The petitioner ur%es us to revie& and set aside the a)ended Decision 1 of 6 March /004 of respondent $ourt of :ppeals in $:@ >.R. $V No. 4?5D0 &hich )odified the Decision of /? Nove)ber /002 of *ranch /0 of the Re%ional Trial $ourt 3RT$B of Manila in $ivil $ase No. 15@A4065, entitled &ank of the Philippine Islands :s#ccessor9in9interest of %o!!ercial &ank and Tr#st %o!pany; (ers#s Aastern Plywood %orporation and &enigno -. Li!. The $ourt of :ppeals had affir)ed the dis)issal of the co)plaint but had %ranted the defendantsF counterclai) for PDD/,46/.AA &hich represents the outstandin% balance of their account &ith the plaintiff. :s culled fro) the records and the pleadin%s of the parties, the follo&in% facts &ere dul( established< Private respondents astern Pl(&ood $orporation 3 asternB and *eni%no D. Hi) 3Hi)B, an officer and stoc"holder of astern, held at least one ;oint ban" account 3,andNor, accountB &ith the $o))ercial *an" and Trust $o. 3$*T$B, the predecessor@in@interest of petitioner *an" of the Philippine Islands 3*PIB. So)eti)e in March /05?, a ;oint chec"in% account 3,and, accountB &ith Hi) in the a)ount of P/42,222.22 &as opened b( Mariano Velasco &ith funds &ithdra&n fro) the account of astern andNor Hi). Various a)ounts &ere later deposited or &ithdra&n fro) the ;oint account of Velasco and Hi). The )one( therein &as placed in the )one( )ar"et. Velasco died on 5 :pril /055. :t the ti)e of his death, the outstandin% balance of the account stood at P664,?44.15. On ? Ma( /055, b( virtue of an Inde)nit( -nderta"in% e9ecuted b( Hi) for hi)self and as President and >eneral Mana%er of astern, 2 one@half of this a)ount &as provisionall( released and transferred to one of the ban" accounts of astern &ith $*T$. +

Thereafter, on /1 :u%ust /051, astern obtained a loan of P5D,222.22 fro) $*T$ as ,:dditional =or"in% $apital,, evidenced b( the ,Disclosure State)ent on HoanN$redit Transaction, 3Disclosure State)entB si%ned b( $*T$ throu%h its branch )ana%er, $eferino #i)ene', and astern, throu%h Hi), as its President and >eneral Mana%er. / The loan &as pa(able on de)and &ith interest at /AQ per ann#!. 7or this loan, astern issued on the sa)e da( a ne%otiable pro)issor( note for P5D,222.22 pa(able on de)and to the order of $*T$ &ith interest at /AQ per ann#!. 0 The note &as si%ned b( Hi) both in his o&n capacit( and as President and >eneral Mana%er of astern. No reference to an( securit( for the loan appears on the note. In the Disclosure State)ent, the bo9 &ith the printed &ord ,-NS $-R D, &as )ar"ed &ith ,O, 8 )eanin% unsecured, &hile the line &ith the &ords ,this loan is &holl(Npartl( secured b(, is follo&ed b( the t(pe&ritten &ords ,Hold@Out on a /</ on $N: No. 4D/2@

22/@A4,, &hich refers to the ;oint account of Velasco and Hi) &ith a balance of PDD/,46/.AA. In addition, astern and Hi), and $*T$ si%ned another docu)ent entitled ,Holdout :%ree)ent,, also dated /1 :u%ust /051, 6 &herein it &as stated that ,as securit( for the Hoan +Hi) and astern. have offered +$*T$. and the latter accepts a holdout on said +$urrent :ccount No. 4D/2@2//@A4 in the ;oint na)es of Hi) and Velasco. to the full e9tent of their alle%ed interests therein as these )a( appear as a result of final and definitive ;udicial action or a settle)ent bet&een and a)on% the contestin% parties thereto., ' Para%raph 24 of the :%ree)ent provides as follo&s< astpl( + astern. and Mr. Hi) hereb( confer upon $o)trust +$*T$., &hen and if their alle%ed interests in the :ccount *alance shall have been established &ith finalit(, a)ple and sufficient po&er as shall be necessar( to retain said :ccount *alance and enable $o)trust to appl( the :ccount *alance for the purpose of liJuidatin% the Hoan in respect of principal andNor accrued interest. :nd para%raph 2? thereof reads< The acceptance of this holdout shall not i)pair the ri%ht of $o)trust to declare the loan pa(able on de)and at an( ti)e, nor shall the e9istence hereof and the non@resolution of the dispute bet&een the contendin% parties in respect of entitle)ent to the :ccount *alance, preclude $o)trust fro) institutin% an action for recover( a%ainst astpl( andNor Mr. Hi) in the event the Hoan is declared due and pa(able and astpl( andNor Mr. Hi) shall default in pa()ent of all obli%ations and liabilities thereunder. In the )eanti)e, a case for the settle)ent of VelascoFs estate &as filed &ith *ranch /?4 of the RT$ of Pasi%, entitled , In re Intestate Astate of /ariano Gelasco ,, and doc"eted as Sp. Proc. No. 10?0. In the said case, the &hole balance of PDD/,46/.AA in the aforesaid ;oint account of Velasco and Hi) &as bein% clai)ed as part of VelascoFs estate. On 0 Septe)ber /016, the intestate court %ranted the ur%ent )otion of the heirs of Velasco to &ithdra& the deposit under the ;oint account of Hi) and Velasco and authori'ed the heirs to divide a)on% the)selves the a)ount &ithdra&n. 8

So)eti)e in /012, $*T$ &as )er%ed &ith *PI. 9 On 4 Dece)ber /015, *PI filed &ith the RT$ of Manila a co)plaint a%ainst Hi) and astern de)andin% pa()ent of the pro)issor( note for P5D,222.22. The co)plaint &as doc"eted as $ivil $ase No. 15@ A4065 and &as raffled to *ranch /0 of the said court, then presided over b( #ud%e =enceslao M. Polo. Defendants Hi) and astern, in turn, filed a counterclai) a%ainst *PI for the return of the balance in the disputed account sub;ect of the Holdout :%ree)ent and the interests thereon after deductin% the a)ount due on the pro)issor( note.

. failed to rule on the defendantsF 3private respondentsFB partial appeal fro) the trial courtFs denial of their counterclai). and that the defendants. it ruled that . of the intestate court. 12 *oth parties appealed fro) the said decision to the $ourt of :ppeals. to astern Pl(&ood $orporation andNor *eni%no Hi).22 covered b( the pro)issor( note. denied it because the .AA shall beco)e a securit( for respondent Hi)Fs pro)issor( note onl( if respondentsF Hi) and astern Pl(&ood $orporationFs interests to that a)ount are established as a result of a final and definitive .222. No.oint account of Velasco and Hi) ca)e fro) astern and Hi)Fs o&n account as a findin% that the )one( deposited in the . 10?0 &hen the said account &as clai)ed b( VelascoFs estate.. . It then ordered *PI . the $ourt of :ppeals rendered a decision affir)in% the decision of the trial court. the $ourt of :ppeals pro)ul%ated on 6 March /004 an :)ended Decision 1+ &herein it ruled that the settle)ent of VelascoFs estate had nothin% to do &ith the clai) of the defendants for the return of the balance of their account &ith $*T$N*PI as the( &ere not priv( to that case. ar%u)ent of the petitioner.46/. *PI asserts. the suspensive . 1/ On 44 :pril /004.ect to the Fhold@outF a%ree)ent. the trial court. $*T$N*PI should have protected the defendantsF interest in Sp. The( interpret the findin%s of both the trial and appellate courts that the )one( deposited in the .46/.udicial action or a settle)ent bet&een and a)on% the contestin% parties thereto. as depositors of $*T$N*PI. to debit the account of the defendants under the pro)issor( note to set off the loan even thou%h the sa)e has no fi9ed )aturit(. On 4D #anuar( /00/.to pa( defendants the a)ount of PDD/. ho&ever.:fter due proceedin%s.said clai) cannot be a&arded &ithout disturbin% the resolution. 10?0. 7urther)ore..PDD/. reco%ni'in% the fact that the entire a)ount in Juestion had been &ithdra&n b( VelascoFs heirs pursuant to the order of the intestate court in Sp.suspensive condition. 4?5D0. 11 :s to the defendantsF counterclai). Proc. Private respondents astern and Hi) dispute the . (i+. the $ourt of :ppeals erred in affir)in% the trial courtFs decision dis)issin% the co)plaint on the %round that it &as the dut( of $*T$ to debit the account of the defendants to set off the a)ount of P5D.the pro)issor( note in Juestion is sub. that the .ri%htfull( belon%+ed. Their appeal &as doc"eted as $:@>. the trial court rendered its decision on /? Nove)ber /002 dis)issin% the co)plaint because *PI failed to )a"e out its case..oint account of Hi) and Velasco .R. :nd because the latter are the ri%htful o&ners of the )one( in Juestion. 1& and that based on this a%ree)ent. *PI filed the instant petition alle%in% therein that the Holdout :%ree)ent in Juestion &as sub. -pon their )otion for reconsideration.ect to a suspensive condition stated therein.. No.it &as the dut( of plaintiff *an" +*PI. $V No. Proc. It. are the latterFs creditorsE hence..AA representin% the outstandin% balance in the ban" account of defendants. 10 Hence.

oint account to the pa()ent of the note.222. =hen it de)anded pa()ent of the debt directl( fro) astern and Hi).222.222.udicial action reJuired b( the Holdout :%ree)entE hence. Onl( a ne%otiation b( indorse)ent could have operated as a valid transfer to )a"e *PI a holder in due course. therefore. =e disa%ree. >enerall(. or *PI as its successor@in@ interest. not a dut(. =hat the a%ree)ent conferred on $*T$ &as a power. .here is no Juestion that the pro)issor( note is a ne%otiable instru)ent. The "e( issues in this case are &hether *PI can de)and pa()ent of the loan of P5D.22 representin% the securit( reJuired for the note and )ust return the rest. On its face.222. a ban" is under no dut( or obli%ation to )a"e the application.condition does not find an( application in this case and the ban" had the dut( to set off this deposit &ith the loan.22 despite the e9istence of the Holdout :%ree)ent and &hether *PI is still liable to the private respondents on the account sub.. =e %ave due course to the petition and reJuired the parties to sub)it si)ultaneousl( their )e)oranda.oinder thereto. not an e9clusive. too" the note sub. $*T$.ect of the Holdout :%ree)ent after its &ithdra&al b( the heirs of Velasco. *PI. and as stated b( the respondent $ourt of :ppeals. It acJuired the note fro) $*T$ b( the contract of )er%er or sale bet&een the t&o ban"s. 1' It further correctl( ruled that *PI &as not a holder in due course because the note &as not indorsed to *PI b( the pa(ee. 18 To appl( the deposit to the pa()ent of a loan is a privile%e.ect to the Holdout :%ree)ent. had ever( ri%ht to de)and that astern and Hi) settle their liabilit( under the pro)issor( note. )ethod of enforcin% its clai) on the note. 19 :lso. Its suit for the enforce)ent of the note . It is clear fro) para%raph 24 thereof that $*T$. The collection suit of *PI is based on the pro)issor( note for P5D. =hat it provides is an alternative. para%raph 2? of the Holdout :%ree)ent itself states that not&ithstandin% the a%ree)ent. &ith the $ourt of :ppeals in its interpretation of the Holdout :%ree)ent. the petitioner can onl( hold the a)ount of P5D.+t. 16 The petitioner filed a Repl( to the aforesaid $o))ent. The( add that the rulin% of the lo&er court that the( o&n the disputed a)ount is the final and definitive .22.22. $*T$ &as not in an( &a( precluded fro) de)andin% pa()ent fro) astern and fro) institutin% an action to recover pa()ent of the loan. ho&ever.ect of the Holdout :%ree)ent to the pa()ent of the pro)issor( note for P5D. the note is an unconditional pro)ise to pa( the said a)ount. The private respondents filed a Re. a ri%ht of set@off &hich the ban" has the option to e9ercise. *PI had opted not to e9ercise its ri%ht to appl( part of the deposit sub. It cannot be co)pelled to retain and appl( the deposit in Hi) and VelascoFs .

The counterclai) of astern and Hi) for the return of the PDD/.AA 2& &as eJuivalent to a de)and that the( be allo&ed to &ithdra& their deposit &ith the ban". 22 The account &as proved and established to belon% to astern even if it &as deposited in the na)es of Hi) and Velasco. 2+ Moreover. %entral &ank of the Philippines. Proc. :rticle /012 of the $ivil $ode e9pressl( provides that . 2/ *ecause the o&nership of the deposit re)ained undeter)ined. the order of the court in Sp.suspensive condition. The $ourt of :ppeals also erred in affir)in% such dis)issal. The pa()ent of the )one( deposited &ith *PI that &ill e9tin%uish its obli%ation to the .+f.udicial co)pulsion to do so. 21 &e held that ban" deposits are in the nature of irre%ular depositsE the( are reall( loans because the( earn interest. it &as pa(able on de)and of the depositor. The $ourt of :ppeals correctl( decided on the counterclai). as the debtor &ith respect thereto. *PI &as not specificall( ordered to release the account to the said heirsE hence. The . *PI cannot be relieved of its dut( to pa( astern si)pl( because it alread( allo&ed the heirs of Velasco to &ithdra& the &hole balance of the account. savin%s. had no ri%ht to pa( to persons other than those in &hose favor the obli%ation &as constituted or &hose ri%ht or authorit( to receive pa()ent is indisputable.oint account of Velasco and Hi) &as bein% clai)ed b( the) and that one@half &as bein% clai)ed b( the heirs of Velasco.udication that the account belon%ed to Velasco. 4D/2@22/@A4 &hich *PI should have debited.i9ed. theor( of the petitioner is. The authori'ation %iven to the heirs of Velasco cannot be construed as a final deter)ination or ad. In 7errano (s.46/. =e have ruled that &hen the o&nership of a particular propert( is disputed. it &as under no . The petitioner should not have allo&ed such &ithdra&al because it had ad)itted in the Holdout :%ree)ent the Juestioned o&nership of the )one( deposited in the account. $*T$ &as notified b( the $orporate Secretar( of astern that the deposit in the . *PI. and current deposits of )one( in ban"s and si)ilar institutions shall be %overned b( the provisions concernin% si)ple loan. :s the real creditor of the ban". astern has the ri%ht to &ithdra& it or to de)and pa()ent thereof.ect of e9ecution. :s earl( as /4 Ma( /050. The deposit under the Juestioned account &as an ordinar( ban" depositE hence. untenable.. The relationship then bet&een a depositor and a ban" is one of creditor and debtor. No.&as then in order and it &as error for the trial court to dis)iss it on the theor( that it &as set off b( an eJuivalent portion in $N: No. 10?0 )erel( authori'ed the heirs of Velasco to &ithdra& the account. the deter)ination b( a probate court of &hether that propert( is included in the estate of a deceased is )erel( provisional in character and cannot be the sub. therefore.

co)puted fro) that date until pa()ent pursuant to :rticle 44/4 of the $ivil $ode. co)puted fro) /1 :u%ust /051 until pa()entE 3bB /4Q per ann#! on the interest &hich had accrued up to the date of the filin% of the co)plaint. 20 Pa()ent )ade b( the debtor to the &ron% part( does not e9tin%uish the obli%ation as to the creditor &ho is &ithout fault or ne%li%ence. even if the debtor acted in ut)ost %ood faith and b( )ista"e as to the person of the creditor. 196' LUA K AN. $V No."#u"(5 0. The challen%ed a)ended decision in $:@>. %r#+.. H#iason and @ap#nan.ect to a )odification of the interest.creditor@depositor is pa()ent to the person of the creditor or to one authori'ed b( hi) or b( the la& to receive it. &ellosillo. the instant petition is partl( >R:NT D. 4?5D? is hereb( MODI7I D. plaintiff and appellee. In the li%ht of the above findin%s. conc#r Republic of the Philippines SUPREME COURT Manila N *:N$ G.R. :s )odified< 3/B Private respondents are ordered to pa( the petitioner the pro)issor( note for P5D. 34B The a&ard of PDD/.46A. No pronounce)ent as to costs.22 &ith interest at< 3aB /AQ per ann#! on the principal. or throu%h error induced b( fraud of a third person.R. JJ. =H R 7OR . did not e9tin%uish its obli%ation to the true depositor. The a&ard on the counterclai) is sustained sub. SO ORD R D. L-2+&++ .222. 26 The pa()ent then b( *PI to the heirs of Velasco. the dis)issal of the petitionerFs co)plaint is reversed and set aside. .AA in favor of the private respondents shall bear interest at the rate of /4Q per ann#! co)puted fro) the filin% of the counterclai). astern. even if done in %ood faith. No.

140 cases )ar"ed UH-: LI:N /A?1F &ere dischar%ed fro) the vessel SS U>OHD N * :RF and received b( defendant Manila Port Service per pertinent tall( sheets issued b( the said carr(in% vessel. /062E A./1D.$arnation. Inc. for defendants and appellants. and on this ship)ent.// &hile the invoice value of the 15 cases of $arnation Mil" clai)ed b( the defendant Manila Port Service to have been over@delivered b( it to plaintiff is P/. &ith defendant Manila Port ServiceE 5. /5E D. MAN LA RA LROA! COMPAN. CE.0/D cases of $arnation Mil" )ar"ed . . on #anuar( 4A..H-: LI:N /A?1. $ebu -nited nterprises has a pendin% clai) for short@ deliver( a%ainst defendant Manila Port ServiceE ?. Pa!polina Jr.222 cases of $arnation Mil" per *ill of Hadin% No. BENG%ON.$ *. per *ill of Hadin% No. and shipped on *oard SS . per *ill of Hadin% No. )il" alle%ed to have been undelivered. /0?0. -. $alifornia. J. The follo&in% stipulation of facts &as )ade< /. G. Out of the aforesaid ship)ent of 4.6?E . P.>OHD N * :R. defendant Manila Port Service as a subsidiar( of defendant Manila Railroad $o)pan( operated the arrastre service at the Port of Manila under and pursuant to the Mana%e)ent $ontract entered into b( and bet&een the *ureau of $usto)s and defendant Manila Port Service on 7ebruar( 40. onl( /. : provisional clai) &as filed b( the consi%neeFs bro"er for and in behalf of the plaintiff on #anuar( /0. 7an J#an. /1.. /5. defendants and appellants. per pertinent %ate passes and bro"erFs deliver( receiptsE 6. Ildefonso Tionloc."#$ MAN LA PORT SER. Defendant Manila Port Service delivered to the plaintiff thru its bro"er. . consi%ned to $ebu -nited nterprises. Laig and $ssociates for plaintiff and appellee./5/ cases of $arnation Mil" )ar"ed .222 cases of $arnation Mil" fro) the $arnation $o)pan( of San 7rancisco. Dischar%ed fro) the sa)e vessel on the sa)e date unto the custod( of defendant Manila Port Service &ere D. The invoice value of the 15 cases of $arnation Mil" clai)ed b( the plaintiff to have been short@delivered b( defendant Manila Port Service is P/.-NIT D A162@PH@M:NIH:. and that durin% the ti)e )aterial to this action.: The present suit &as filed b( Hua Lian a%ainst the Manila Railroad $o. and Manila Port Service for the recover( of the invoice value of i)ported evaporated .. On Dece)ber D/. /0?6E 4. The( ad)it each otherFs le%al personalit(. /acaranas and 7. /062. /. plaintiff Hua Lian i)ported 4./D2.vs.

4 :s custodian of the %oods dischar%ed fro) the vessel. the e9cess /5/ cases )ar"ed .0/D cases of $arnation )entioned in para%raph ? hereof &ere ta"en b( the bro"er at Pier /D.222 cases in the bill of ladin% &ere dischar%ed to the Manila Port Service. offered the solution. and covered b( *ill of Hadin% No. li"e that of an( ordinar( depositar(.S.$ebu -nited.140 cases to Hua Lian and that it had there before in fact over@delivered to the latter. $alifornia. Inas)uch as the defendant Manila Port Service actuall( delivered /. //E 0. San 7rancisco. it )i%ht be sued b( the consi%nee. :ccordin%l(. Shed D. 3/5/ cases o(er the D./1D. and bearin% the sa)e )ar"s as the ship)ent herein but had been dischar%ed fro) SNS . The bill of ladin% in favor of $ebu -nited nterprises indicated that onl( D. )il". ho&ever. -. The( sub)it the )atter of attorne(Fs fees and costs to the sound discretion of the $ourt. for should it deliver the) to Hua Lian the %oods could be clai)ed b( the consi%nee $ebu -nited nterprises &hose )ar"in%s the( bore. Hua Lian as consi%nee thereof filed a clai) for short@deliver( a%ainst defendant Manila Port Service. P5?2. insistin% that Manila Port Service &as bound to deliver onl( /..222 cases &ere due to said consi%nee.$arnation.140 cases )ar"ed Hua Lian 3/5/ cases less than the 4.1.// representin% such shorta%e of 15 cases. The /. &ith le%al interest fro) the date of the suit. /5/ should have been delivered to Hua Lian.$ebu -nited. so)eti)e in 7ebruar(. it &as defendant arrastre operatorFs dut(. /&hich is onl( 15 cases short of 4. Defendants appealed to -s and contend that the( should not be )ade to ans&er for the undelivered cases of )il".22 in settle)ent of its clai)E /2.222 cases as per bill of ladin% the for)er &as ordered to pa( Hua Lian the su) of P/. and said defendant Manila Port Service paid Hua Lian plaintiff herein. The dile))a itself. there &ere stored therein. $onsiderin% that Hua Lian and $ebu -nited nterprises &ere the onl( consi%nees of the ship)ent of ?. aside fro) the ship)ent involved herein./5/ cases &ere )ar"ed in its favor. /222 cases of $arnation Mil" bearin% the sa)e )ar"s and also consi%ned to plaintiff Hua Lian but had been dischar%ed fro) SS UST H :DVO$:T F and covered b( *ill of Hadin% No. to $ebu -nited nterprises./5/ cases )ar"ed . placed the defendant arrastre operator in a dile))a. althou%h D. &here at the ti)e.D -nder this particular set of circu)stances. The( reserve the ri%ht to sub)it docu)entar( evidenceE //.222 cases indicated in the bill of ladin% and D. //.ST H :DVO$:T . and should it deliver accordin% to )ar"in%s.$ebu -nited. plus P?22 as attorne(Fs fees.222 cases of . . it found that of the D. The le%al relationship bet&een an arrastre operator and the consi%nee is a"in to that of a depositor and &arehouse)an. the $ourt of 7irst Instance of Manila ruled that /. to ta"e %ood care of the %oods and to turn the) over to the part( entitled to their possession. /062./5/ cases )ar"ed .:. Hua Lian &hose bill of ladin% indicated that it should receive /5/ cases )ore. Of the ship)ent of /222 cases of $arnation Mil" &hich also ca)e fro) the $arnation $o)pan(.0/D cases to plaintiff. On these facts and docu)entar( evidence subseJuentl( presented.

&ith the aforesaid reservation. NTOLA "#$ LORETO !. &ithout pre. &ith costs a%ainst appellants. =e cannot ho&ever e9cuse the aforestated defendant fro) liabilit( in this case before -s no& because the bill of ladin% sho&ed that onl( D. %. conc#r. MELENC O-HERRERA. =ith respect to the attorne(Fs fees a&arded belo&. JJ. /akalintal. =e therefore dee) it reasonable to decrease the attorne(Fs fees to PD22. plaintiff@appellee. J. Reyes. =herefore./1D. J.22. not unli"e that under Section /1 of the =arehouse Receipts Ha&.222 cases &ere consi%ned to $ebu -nited nterprises. The fact that the e9cess of /5/ cases &ere )ar"ed for $ebu -nited nterprises and that the consi%n)ent to Hua Lian &as /5/ cases less than the 4. %oncepcion. to interplead.said defendant should have &ithheld deliver( because of the discrepanc( bet&een the bill of ladin% and the )ar"in%s and conducted its o&n investi%ation. -i+on. Republic of the Philippines SUPREME COURT Manila 7IRST DIVISION G. . should have been sufficient reason for the defendant Manila Port Service to &ithhold the %oods pendin% deter)ination of their ri%htful o&nership. Regala.22.ud%)ent appealed fro) is affir)ed.R.J.//. and &ith the )odification that the attorne(Fs fee is reduced to PD22. It is true that Section /4 of the Mana%e)ent $ontract e9e)pts the arrastre operator fro) responsibilit( for )isdeliver( or non@deliver( due to i)proper or insufficient )ar"in%.222 in the bill of ladin%.. the . So ordered.. 7anche+ and %astro..L. this $ourt notices that the sa)e is about ?2 per cent of the liti%ated a)ount of P/. defendants@appellants. No. '+2'1 M"5 29.. or called upon the parties. NTOLA.&. NSULAR BANK OF AS A AN! AMER CA. 0aldi(ar.: . vs. such as in a case under Section /5 of the sa)e la&.udice to their ta"in% &hatever proper le%al steps the( )a( consider &orth&hile to recover the e9cess delivered to $ebu -nited nterprises. 198' SPOUSES T RSO . in order to deter)ine the ri%htful o&ner of the %oods. =e therefore find the defendants liable.

22. of the afore)entioned a)ount or such portion thereof as )a( be dra&n or paid. a%reed to pa( the ban" . On the sa)e da(.222. certified the sa)e to this $ourt. on Da9 Lin International for the purchase of pu"a and olive seashells. /014. The Hetter of $redit authori'ed the ban" to ne%otiate for their account drafts dra&n b( their supplier. acJuitted the VINTOH:S of the cri)e char%ed. &ho &ere unable to dispose of the shells.. applied for and &ere %ranted a do)estic letter of credit b( the Insular *an" of :sia and :)erica 3I*::B. In consideration thereof. )isapplied and converted for their o&n personal use and benefit the aforesaid %oods. and due to the continued refusal of the VINTOH:S to )a"e %ood their underta"in%. Durin% the trial of the cri)inal case the VINTOH:S turned over the seashells to the custod( of the Trial $ourt.222. and . after findin% that the ele)ent of )isappropriation or conversion &as ine9istent. I*:: co))enced the present civil action to recover the value of the .. The facts are not disputed. to turn over the proceeds as soon as received to 3I*::B the due date indicated in the docu)ent &as October /0. $ebu $it(. /05?. ho&ever. 2 Shortl( thereafter. $oncluded the $ourt< 7inall(. The VINTOH:S. I*:: de)anded pa()ent fro) the VINTOH:S in a letter dated #anuar( /. I*:: refused to accept the )erchandise..at )aturit(. the ban" is entitled to ta"e possession of the %oods or to recover its eJuivalent value to%ether &ith the usual char%es. the VINTOH:S.. . it should be )entioned that under the trust receipt. the re)ed( of the *an" is civil and not cri)inal in nature. the VINTOH:S e9ecuted a Trust Receipt a%ree)ent &ith I*::. /05?.Da9 Lin International. en%a%ed in the )anufacture of ra& sea shells into finished products. in Philippine currenc(.22.This case &as appealed to the Inter)ediate :ppellate $ourt &hich. *ranch VII. 1 in the a)ount of PA2. :u%ust 42. the issue involved bein% purel( le%al. $ebu $it(. the then $ourt of 7irst Instance of $ebu.ointl( and severall(. On :pril /4. On :u%ust 42. one Stalin Tan. havin% received fro) Stalin Tan the pu"a and olive shells &orth PA2. -nder that :%ree)ent. doin% business under the na)e and st(le . in the event of default andNor non@fulfill)ent on the part of the accused of their underta"in%. upon the faith of the said credit to%ether &ith the usual char%es. Havin% defaulted on their obli%ation.latterFs propert( &ith libert( to sell the sa)e for its account. the VINTOH:S a%reed to hold the %oods in trust for I*:: as the . responded b( offerin% to return the %oods. /056. /05? the spouses Tirso and Horeta Vintola 3the VINTOH:S. . the eJuivalent. . In either case. for shortB.in case of sale. I*:: char%ed the) &ith stafa for havin% )isappropriated.

. Instit#tion of cri!inal and ci(il action. Rule /// of the /01? Rules on $ri)inal Procedure. . pursuant to Section /. readin%< Section /. the civil action for the recover( of civil liabilit( arisin% fro) the offense char%ed is i)pliedl( instituted &ith the cri)inal action. *ranch OVI. unless the e9tinction proceeds fro) a declaration in a final .014. plus costs of the suit. plus interest of /AQ per annu) and service char%e of one 3/QB per cent per annu) co)puted fro) ..ointl( and severall( to pa( the plaintiff the su) of Sevent( T&o Thousand Nine Hundred i%ht( T&o and 45N/22 3P54.ud%)ent of acJuittal in the cri)inal case. as provided b( Section D@b of Rule /// of the sa)e Rules providin%< 3bB 9tinction of the penal action does not carr( &ith it e9tinction of the civil. the person entitled to the civil action )a( institute it in the . =hen a cri)inal action is instituted. Order3edBdefendants .ud%)ent in the cri)inal case had )ade a declaration that the facts fro) &hich the civil action )i%ht arise did not e9ist. Holdin% that the co)plaint &as barred b( the .222. In other cases.ud%)ent that the fact fro) &hich the civil )i%ht arise did not e9ist. Ho&ever. + The VINTOH:S rest their present appeal on the principal alle%ation that their acJuittal in the stafa case bars I*::Fs filin% of the civil action because I*:: had not reserved in the cri)inal case its ri%ht to enforce separatel( their civil liabilit(.%oods before the Re%ional Trial $ourt of $ebu. The( )aintain that b( intervenin% activel( in the prosecution of the cri)inal case throu%h a private prosecutor. unless the offended part( e9pressl( &aives the civil action or reserves his ri%ht to institute it separatel(. I*:: had chosen to file the civil action i)pliedl( &ith the cri)inal action. said $ourt dis)issed the co)plaint. on I*::Fs )otion. and that since the . Philippine $urrenc(. 7urther. Ordered defendants . the VINTOH:S ta"e the position that their obli%ation to I*:: has been .45B. the filin% of the civil action arisin% fro) the offense is no& barred. .ointl( and severall( to pa( attorne(Fs fees to the plaintiff in the su) of 7our Thousand 3PA. the $ourt %ranted reconsideration and< /.22B pesos.urisdiction in the )anner provided b( la& a%ainst the person &ho )a( be liable for restitution of the thin% and reparation or inde)nit( for the da)a%e suffered. Philippine $urrenc(.udicial de)and and until the obli%ation is full( paidE 4.

docu)ents or instru)ents the)selves if the( are unsold or not other&ise disposed of. an( transaction b( and bet&een a person referred to in this Decree as the entruster..)eans a propert( interest in %oods. &ith the trust receipt as a securit( for the loan. //? defines a trust receipt transaction as< . docu)ents or instru)ents in trust for the entruster and to sell or other&ise dispose of the %oods. 0 :s elucidated in 7a!o (s.Securit( Interest.D. The fore%oin% sub)ission overloo"s the nature and )ercantile usa%e of the transaction involved. &hereb( the entruster. : trust receipt.e9tin%uished inas)uch as.. -nder that set@up. throu%h no fault of their o&n. 3aB to sell the %oods or procure their sale. docu)ents or instru)ents. releases the sa)e to the possession of the entrustee upon the latterFs e9ecution and deliver( to the entruster of a si%ned docu)ent called a . and a securit( feature &hich is in the coverin% trust receipt. in the %oods. as o&ner of the %oods.a trust receipt is considered as a securit( transaction intended to aid in financin% i)porters and retail dealers &ho do not have sufficient funds . People 6 . &herein the entrustee binds hi)self to hold the desi%nated %oods..It secures an indebtedness and there can be no such thin% as securit( interest that secures no obli%ation. b( depositin% the) &ith the $ourt. &henever such title is in substance ta"en or retained for securit( onl(. &hether or not e9pressed to be absolute. a ban" e9tends a loan covered b( the Hetter of $redit. : letter of credit@trust receipt arran%e)ent is endo&ed &ith its o&n distinctive features and characteristics. Section A of P. therefore.. in accordance &ith the ter)s and conditions specified in the trust receipt. or for other purposes substantiall( eJuivalent to an( one of the follo&in%< /. In the case of %oods or docu)ents. Thus. . In other &ords. the transaction involves a loan feature represented b( the letter of credit. is a securit( a%ree)ent. and that the( have relin%uished possession thereof to the I*::.. the( &ere unable to dispose of the seashells. &ho o&ns or holds absolute title or securit( interests over certain specified %oods. . No. / :s defined in our la&s< 3hB . docu)ents or instru)ent thereof to the e9tent of the a)ount o&in% to the entruster or as appears in the trust receipt or the %oods.securit( interest. docu)ents or instru)ents to secure perfor)ance of so)e obli%ations of the entrustee or of so)e third persons to the entruster and includes title. pursuant to &hich a ban" acJuires a .trust receipt. and another person referred to in this Decree as the entrustee.

:.. The trust receipt arran%e)ent did not convert the I*:: into an investorE the latter re)ained a lender and creditor. the ban" is )ade to appear as the o&ner.. I*:: did not beco)e the real o&ner of the %oods.B The( further a%reed that their )ar%inal deposit of P1. &ithout further proceedin%s or for)alities to pa( or reduce our obli%ation #nder this letter of credit or its corresponding Tr#st Receipt. and &ho )a( not be able to acJuire credit e9cept throu%h utili'ation. To consider the ban" as the true o&ner fro) the inception of the transaction &ould be to disre%ard the loan feature thereof. later increased to P//... 3 9hibit .22 be applied. ' Since the I*:: is not the factual o&ner of the %oods. and b( that loan. It &as )erel( the holder of a securit( title for the advances it had )ade to the VINTOH:S The %oods the VINTOH:S had purchased throu%h I*:: financin% re)ain their o&n propert( and the( hold it at their o&n ris".or resources to finance the i)portation or purchase of )erchandise.. it could dispose of the %oods in an( )anner it &ants. it &as but an artificial e9pedient. for the ban" has previousl( e9tended a loan &hich the HN$ represents to the i)porter. . the VINTOH:S cannot . as collateral of the )erchandise i)ported or purchased. If under the trust receipt. .22. the i)porter should be the real o&ner of the %oods. IN&e pro)ise and a%ree to pa( (ou at )aturit( in Philippine $urrenc( the eJuivalent of the above a)ount or such portion thereof as )a( be dra&n or paid upon the faith of said credit to%ether &ith the usual char%es.. &hich it cannot do. The fact that the( &ere unable to sell the seashells in Juestion does not affect I*::Fs ri%ht to recover the advances it had )ade under the Hetter of $redit.ust to %ive consistenc( &ith the purpose of the trust receipt of %ivin% a stron%er securit( for the loan obtained b( the i)porter. for if it &ere so. ..222.ustifiabl( clai) that because the( have surrendered the %oods to I*:: and subseJuentl( deposited the) in the custod( of the court. In so ar%uin%. the VINTOH:S convenientl( close their e(es to their application for a Hetter of $redit &herein the( e9pressl( obli%ated the)selves in these ter)s< IN $ONSID R:TION TH R O7. $ontrar( to the alle%ation of the VINTOH:S. the( are absolutel( relieved of their obli%ation to pa( their loan because of their inabilit( to dispose of the %oods. .222. 3 )phasis suppliedB 8 . )ore of a le%al fiction than fact.

e9plicitl( providin%< :rt. &hether the( did or the( did not . 11 Rather. the( are %overned b( :rticle D/ of the $ivil $ode. the action for the recover( of &hich &ould have been dee)ed instituted &ith the cri)inal@action 3unless &aived or reservedB and &here acJuittal based on a .eliciano. ar(asa.the re)ed( of the *an" is civil and not cri)inal in nature. No costs. SO ORD R D. for the $ourt &ould not have d&elt on a civil liabilit( that it had intended to e9tin%uish b( the sa)e decision. 9 The VINTOH:S are liable e" contract# for breach of the Hetter of $redit 8 Trust Receipt.udicial declaration that the cri)inal acts char%ed do not e9ist &ould have e9tin%uished the civil action. .ud%)ent in the estafa case had declared that the facts fro) &hich the civil action )i%ht arise. conc#r. for.. =hen the civil action is based on an obli%ation not arisin% fro) the act or o)ission co)plained of as a felon(. D/.The fore%oin% pre)ises considered. did not e9ist. ?ap :%hair!an. it follo&s that the acJuittal of the VINTOH:S in the stafa case is no bar to the institution of a civil action for collection. This a)ounts to a reservation of the civil action in I*::Fs favor.)isappropriate. is on lea(e.ud%)ent appealed fro). the )erchandise as char%ed in the cri)inal case. it &ill be recalled that the decision of acJuittal e9pressl( declared that . J. . It is inaccurate for the VINTOH:S to clai) that the . the civil suit instituted b( I*:: is based e" contract# and as such is distinct and independent fro) an( cri)inal proceedin%s and )a( proceed re%ardless of the result of the latter. findin% no reversible error in the . such civil action )a( proceed independentl( of the cri)inal proceedin%s and re%ardless of the result of the latter. *ancayco. JJ. 1& Their civil liabilit( does not arise e" delicto.... =H R 7OR . -nder the situational circu)stances of the parties. the sa)e is hereb( :77IRM D. )isappl( or convert. and 7ar!iento. %r#+.