Teofisto Guingona, Jr., Antonio Martin, and Teresita Santos vs. The City Fiscal of Manila, Hon. Jose Flaminiano, Asst. City Fiscal Felizardo Lota and

Facts:

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

Issue:

(1) Whether the contract between NSLA and David is a contract of depositor a contract of loan, which answer determines whether the City Fiscal has the jurisdiction to file a case for estafa

(2) Whether there was a violation of Central Bank Circular No. 364

Held:

(1) When private respondent David invested his money on nine. and savings deposits with the aforesaid bank, the contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit. Hence, the relationship between the private respondent and the Nation Savings and Loan Association is that of creditor and debtor; consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals. While the Bank has the obligation to return the amount deposited, it has, however, no obligation to return or deliver the same money that was deposited. And, the failure of the Bank to return the amount deposited will not constitute estafa through misappropriation punishable under Article 315, par. l(b) of the Revised Penal Code, but it will only give rise to civil liability over which the public respondents have no jurisdiction.

But even granting that the failure of the bank to pay the time and savings deposits of private respondent David would constitute a violation of paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any incipient criminal liability was deemed avoided, because when the aforesaid bank was placed under receivership by the Central Bank, petitioners Guingona and Martin assumed the obligation of the bank to private respondent David, thereby resulting in the novation of the original contractual obligation arising from deposit into a contract of loan and converting the original trust relation between the bank and private respondent David into an ordinary debtor-creditor relation between the petitioners and private respondent. Consequently, the failure of the bank or petitioners Guingona and Martin to pay the deposits of private respondent would not constitute a breach of trust but would merely be a failure to pay the obligation as a debtor. Moreover, while it is true that novation does not extinguish criminal liability, it may however, prevent the rise of criminal liability as long as it occurs prior to the filing of the criminal information in court. In the case at bar, there is no dispute that petitioners Guingona and Martin executed a promissory note on June 17, 1981 assuming the obligation of the bank to private respondent David; while the criminal complaint for estafa was filed on December 23, 1981 with the Office of the City Fiscal. Hence, it is clear that novation occurred long before the filing of the criminal complaint with the Office of the City Fiscal. Consequently, as aforestated, any incipient criminal liability would be avoided but there will still be a civil liability on the part of petitioners Guingona and Martin to pay the assumed obligation.

(2) Petitioner Guingona merely accommodated the request of the Nation Savings and loan Association in order to clear the bank draft through his dollar account because the bank did not have a dollar account. Immediately after the bank draft was cleared, petitioner Guingona authorized Nation Savings and Loan Association to withdraw the same in order to be utilized by the bank for its operations. It is safe to assume that the U.S. dollars were converted first into Philippine pesos before they were accepted and deposited in Nation Savings and Loan Association, because the bank is presumed to have followed the ordinary course of the business which is to accept deposits in Philippine currency only, and that the transaction was regular and fair, in the absence of a clear and convincing evidence to the contrary.

In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no clear showing that they engaged in foreign exchange transactions, We hold that the public respondents acted without jurisdiction when they investigated the charges against the petitioners. Consequently, public respondents should be restrained from further proceeding with the criminal case for to allow the case to continue, even if the petitioners could have appealed to the Ministry of Justice, would work great injustice to petitioners and would render meaningless the proper administration of justice.

Overseas Bank of Manila vs. Cordero

Facts:

Private respondent opened a 1-year time deposit with petitioner bank amounting to P80,000, with interest of 6% p.a. Due to its distressed financial condition, the bank was unable to pay. Cordero instituted an action before the CFI Manila. Petitioner raised the defenses of insolvency and prejudice to other depositors. The lower court, and the Court of Appeals, ruled in favor of Cordero. Hence, the instant petition for review on certiorari.

Certain supervening events rendered the issue moot and academic. Respondent’s brother and attorney-in-fact sent a letter to the Commercial Bank of Manila (petitioner’s successor-in-interest), acknowledging receipt of P10,000, and another manifestation for P73,840, with waiver of damages. Upon further examination, it was found that the respondent’s brother has no SPA. Respondent’s brother submitted the SPA, with explanatory comment that the waiver applies only to third party claims, suits and damages, not to interest and attorney’s fees.

Issue:

Whether respondent is entitled to interest and attorney’s fees

Held:

The obligation to pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the Central Bank. Neither can respondent Cordero recover attorney’s fees. Petitioner’s refusal to pay was not due to a willful and dishonest refusal to comply with its obligation but to restrictions imposed by Central Bank.

Republic of the Philippines vs. Jose Bagtas, Felicidad Bagtas, administratrix of the intestate estate left by Jose Bagtas

Facts:

On May 8, 1948, Jose Bagtas borrowed from the Bureau of Animal Industry 3 bulls for 1 year for breeding purposes, subject to breeding fee for 10% of the book value of the bulls. Upon the expiration of the contract, Bagtas asked for a renewal for another year. The renewal granted was only for 1 bull. Bagtas offered to buy the bulls at book value less depreciation, but the Bureau told him that he should either return the bulls or pay for their book value. Bagtas failed to pay the book value, and so the Republic commenced an action with the CFI Manila to order the return of the bulls of the payment of book value. Felicidad Bagtas, the surviving spouse and administratrix of the decedent’s estate, stated that the 2 bulls have already been returned in 1952, and that the remaining one died of gunshot during a Huk raid. As regards the two bulls, is was proven that they were returned and thus, there is no more obligation on the part of the appellant. As to the bull not returned, Felicidad contends that the obligation is extinguished since the contract is that of a commodatum and that the loss through fortuitous event should be borne by the owner.

Issue:

Whether, depending on the nature of the contract, the respondent is liable for the death of the bull

Held:

A contract of commodatum is essentially gratuitous. If the breeding fee be considered a compensation, then the contract would be a lease of the bull. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had continued possession of the bull after the expiry of the contract. And even if the contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a bailee in a contract of commodatum

. . . is liable for loss of the things, even if it should be through a fortuitous event:

(2) If he keeps it longer than the period stipulated . . .

(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous event;

The loan of one bull was renewed for another period of one year to end on 8 May 1950. But the appellant kept and used the bull until November 1953 when during a Huk raid it was killed by stray bullets. Furthermore, when lent and delivered to the deceased husband of the appellant the bulls had each an appraised book value. It was not stipulated that in case of loss of the bull due to fortuitous event the late husband of the appellant would be exempt from liability.

Special proceedings for the administration and settlement of the estate of the deceased Jose V. Bagtas having been instituted in the Court of First Instance of Rizal (Q-200), the money judgment rendered in favor of the appellee cannot be enforced by means of a writ of execution but must be presented to the probate court for payment by the appellant, the administratrix appointed by the court.

Philippine Rabbit vs. Cruz

Facts:

In a civil case, private respondent Pedro Manabat obtained judgment against Philippine Rabbit, amounting to P72,500 with legal interest. The judgment having become final and executory at the Court of Appeals, the deputy sheriff garnished funds amounting to P155,150, which is the amount of damages plus 12% interest. Philippine Rabbit moved to dissolve the garnishment, asserting that it was willing to pay, but only at 6% interest.

Issue:

Whether the 12% interest is the correct rate to be applied

Held:

Central Bank Circular No. 416, which amended Act No. 2655 (Usury Law), increased the rate of legal interest from 6% to 12%. Act No. 2655 deals with interest on: (1) loans; (2) forbearance of any money, goods, or credits; and (3) rate allowed in judgments. The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment is not within the ambit of the authority granted to the Central Bank. Action for damages for injury to persons and loss of property does not involve any loan, much less forbearance of any money, goods or credits. The applicable law is Art. 2209 of the New Civil Code, which prescribes legal interest at 6%.

Catholic Vicar Apostolic of the Mountain Province vs. Court of Appeals, Heirs of Egmidio Octaviano and Juan Valdez

Facts:

The whole controversy started when the herein petitioner filed an application for registration of lands 1, 2, 3 and 4 in La Trinidad, Benguet on September 5, 1962. The heirs of Juan Valdez and the heirs of Egmidio Octaviano filed an opposition on lots 2 and 3, respectively. On November 17, 1965, the land registration court confirmed the registrable title of the petitioner. On May 9, 1977, the Court of Appeals reversed the decision and dismissed the Vicar’s application. The heirs filed a motion for reconsideration, praying that the lots be ordered registered under their names. The Court of Appeals denied the motion for lack of sufficient merit. Both parties then came before the Supreme Court. The Supreme Court, in a minute resolution, denied both petitions. The heirs filed the instant cases for the recovery and possession of the lots.

Respondents argue that the petitioner is barred from setting up the defense of ownership or long and continuous possession by the prior judgment of the Court of Appeals under the principle of res judicata. Petitioner contends that the principle is not applicable because the dispositive portion of the judgment merely dismissed the application for registration.

Issues:

(1) Whether the decision of the Court of Appeals constitute res judicata and therefore bars the petitioner from alleging ownership over the lots

(2) Whether the petitioner has acquired the lots through acquisitive prescription

Held:

(1) The Court of Appeals did not positively declare private respondents as owners of the land, neither was it declared that they were not owners of the land, but it held that the predecessors of private respondents were possessors of Lots 2 and 3, with claim of ownership in good faith from 1906 to 1951. Petitioner was in possession as borrower in commodatum up to 1951, when it repudiated the trust by declaring the properties in its name for taxation purposes. When petitioner applied for registration of Lots 2 and 3 in 1962, it had been in possession in concept of owner only for eleven years. Ordinary acquisitive prescription requires possession for ten years, but always with just title. Extraordinary acquisitive prescription requires 30 years. On the above findings of facts supported by evidence and evaluated by the Court of Appeals, affirmed by this Court, We see no error in respondent appellate court's ruling that said findings are res judicata between the parties. They can no longer be altered by presentation of evidence because those issues were resolved with finality a long time ago. To ignore the principle of res judicata would be to open the door to endless litigations by continuous determination of issues without end.

(2) Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar after the church and the convent were destroyed. They never asked for the return of the house, but when they allowed its free use, they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The action of petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title.

Motion for Reconsideration

Issue:

Who is entitled to the possession and ownership of the land?

Held:

Pursuant to the said decision in CA-G.R. No. 38830-R, the two lots in question remained part of the public lands. This is the only logical conclusion when the appellate court found that neither the petitioner nor private respondents are entitled to confirmation of imperfect title over said lots. Hence, the Court finds the contention of petitioner to be well taken in that the trial court and the appellate court have no lawful basis in ordering petitioner to return and surrender possession of said lots to private respondents. Said property being a public land its disposition is subject to the provision of the Public Land Act, as amended.

Article 555 of the Civil Code provides as follows:

Art. 555. A possessor may lose his possession:

(4) By the possession of another, subject to the provisions of Article 537, if the new possession has lasted longer than one year. But the real right of possession is not lost till after the lapse of ten years.

It is clear that the real right of possession of private respondents over the property was lost or no longer exists after the lapse of 10 years that petitioner had been in adverse possession thereof. Thus, the action for recover of possession of said property filed by private respondents against petitioner must fail. The Court, therefore, finds that the trial court and the Court of Appeals erred in declaring the private respondents to be entitled to the possession thereof. Much less can they pretend to be owners thereof. Said lots are part of the public domain.