TEOFISTO GUINGONA vs CITY FISCAL OF MANILA

A certain Clemente David made several investments with NSLA (National  Savings and Loan Association). But after almost 3 years of investing the bank was placed under receivership by the Central Bank.

So.. here we find out that NSLA is suppose to be a bank ok?  Don’t laugh. This is not a mainstream bank were talking about here such as BDO, BPI, MetroBank, RCBC and all those commercial banks we all see around.  These types are what you call S&L banks or Thrift Banks ok? The difference between the two is that thrift banks are governed by R.A. 7906 which is the Thrift Bank Act, whereas commercial banks are governed by R.A. 8791 the General Banking Law, though the latter law has suppletory application to thrift banks. Gets? So if the name doesn’t ring any bell, it’s suppose to be highly understandable.  

S&L,  meaning savings and loan association. These are financial institutions that specializes in accepting savings deposits and making mortgage and other loans.  They are often mutually held by a certain collective class , like teachers, soldiers, etc. often called mutual savings banks meaning that the depositors and borrowers are members with voting rights, and have the ability to direct the financial and managerial goals of the organization. I should know, I've worked in one type of bank my self during my Letran days.

To site some examples I think we have the Manila Teachers Savings and Loan Association, which has its office in UN Ave.  JUSLAI is another, the Judiciary Savings and Loan Association Inc., I think the Armed Forces have one of their own.  So generally these institutions are not stand alones, they are mostly subsidiaries of their mother institution to where their collective clients belong. 

So here we see in this case NSLA was placed under receivership by Central Bank, and whenever you hear that a certain bank (thrift banks included) is being placed under receivership by Banko Sentral,  take note that's a red flag, that only means one thing, that the bank is in a brink of insolvency.. in other words its getting bankrupt.  So better take your money immediately out of it. You see by law, thrift banks can have no more than 20 percent of their lending in commercial loans so their focus on mortgage and consumer loans makes them particularly vulnerable to housing downturns.

So here’s the scenario,  starting early of 1979 David and her sister were making several investments with said thrift bank NSLA right?  Three years later (1981) the bank gets bankrupt.  So by operation of law Central Bank has to come in right? in order to save bank assets  and see what can be done for its recovery. And of course to protect investors. Which they actually did. But sadly due to technical reasons, not in this case. But can you blame the petitioners here? I dont think so.

With regard to the owners of the bank I dunno correct me if I’m wrong but I’m just inferring from the digested case. I think the said bank was partly owned by the then Senator Teofisto Guingona Jr. , I’m talking about the old Guingona. No not the Sr. but the  Jr. because the current senate speaker, which is the good Senator Teofisto Guingona III is ofcourse the third.

This case was decided 1984. The senator assumed senate office in 1987. And that was mostly the start of his long political career. So.. this tells you aside from heading the Philippine Chamber of Commerce and being the top honcho of DBP before assuming his seats of power, the fellow was a simple businessman.

But as an investor of course suddenly knowing that the funds in the bank where you placed your money is at stake, you ofcourse kinda worry for your financial security you know?  So what David did was he requested  from Guingona and Martin a joint promissory note stating that they are absorbing the obligations of the bank in case of insolvency, and since the former senator as we all know is a man of his word, in good faith, he and his co-owner divided the indebtedness and issued the requested joint promissory note.   

Let’s take a look at what David is arguing for and how much he is trying to secure.  It says in the actual case Clement David, together with his sister, Denise Kuhne, invested with NSLA the sum of:

P1,145,546.20 on time deposits

P13,531.94 on savings account deposits  

 US$ 75,000.00 on foreign deposits

(plus interests)

Ladies and gentlemen were talking about year 1979-1981. So.. you could just figure out how much this amounts are valued during the time prevailing.  

But I’m not sure what triggered private respondent David to file a complaint with the Office of the City Fiscal of Manila charging Guingona and Martin with estafa and violation of Central Bank Circular No. 364 and related Central Bank regulations on foreign exchange transactions.  The actual case as I read it recounts that the promissory note was based on the statement of account as of June 30, 1981 prepared by the private respondent.  Thing was, the amount of indebtedness assumed appears to be bigger than the original claim because of the added interest and the inclusion of other deposits of private respondent's sister in the amount of P116,613.20 where Guingona by himself executed another promissory note antedated to June 17, 1981 whereby he personally acknowledged an indebtedness. So here it's clear, the former senator was aware of his obligation and had no plans to back down.

So, what do you think will happen next?  If I am the former senator and I am faced with a criminal law suit instead of a civil one, I would file a petition myself. Which they did. Hence this case.  

This is a petition for prohibition and injunction with a prayer for the immediate issuance of restraining order and/or writ of preliminary injunction seeking  to prohibit the public respondent which is the City Fiscal of Manila  from proceeding with the preliminary investigation, in which they were charged by private respondent Clement David.  

So as I said erlier, the charge was ESTAFA and a violation of Central Bank Circular No 364.  Now here lies the controversy .. Estafa is a criminal offense.   

So the ISSUE now is: Whether City Fiscal of Manila acted without jurisdiction when they investigated the charges of estafa and violation of CB Circular No. 364 and related regulations regarding foreign exchange transactions.

RULING:

Court HELD that the City Fiscal of Manila have NO JURISDICTION over the charge of ESTAFA.

When private respondent David invested his money  with the bank, the contract that was perfected was a CONTRACT OF SIMPLE LOAN or mutuum and not a Contract of Deposit.

So take note okay?  Time deposits are different from savings account deposits.  It’s an all too different bologna.  It’s more complicated than you’ll ever thought.  The rulebooks and the SC couldn’t have said it more clearly.  It’s an all too different contract meaning the repercussions and ramification are not the same.    

Check this out: Article 1980 of the New Civil Code provides that:  

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

Hence, the relationship between David and the NSLA is that of creditor and debtor.  David is the creditor the bank is the debtor.  So  if you do time deposits, consequently, the ownership of the amount deposited will be transmitted to the bank upon the perfection of the contract. That means the bank can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals.

Now, take note of this, 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.  Meaning the bank may return it in full or in half depending on its solvency.

And, take note further…  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, as in the case at bar public respondent City Fiscal of Manila therefore have no- jurisdiction.. since its suppose to be a civil case, tsk tsk tsk.

Coz you see… in order that a person can be convicted under the above-quoted provision, it must be proven that he has the obligation to deliver or return the sum of money, goods or  personal property that he received.   And as we have just pointed out, such in the prevailing contract, petitioners Guingona and Martin had no such obligation to return the same money they received from David. Okay?

This is because as clearly as stated earlier the sums of money that petitioners received were loans. The nature of simple loan is defined in Articles 1933 and 1953 of the Civil Code. So.. check it out for yourself.

If I were you, I’d hold on to that money and push aside that time deposit contract. Shake that manager’s hand and bid him farewell. Until you find a stronger, stable, and reliable bank for that matter.

 "Art. 1933. - By the contract of loan, one of the parties delivers to another, either something not consumable so that the latter may use the same for a certain time-and return it, in which case the contract is called a commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid in which case the contract is simply called a loan or mutuum.

"Commodatum is essentially gratuitous." Simple loan may be gratuitous or with a stipulation to pay interest."In commodatum the bailor retains the ownership of the thing loaned while in simple loan, ownership passes to the borrower.

"Art. 1953. - A person who receives a loan of money or any other fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal amount of the same kind and quality."

So in simple loan(mutuum), as contrasted to commodatum the borrower acquires ownership of the money, goods or personal property borrowed right? And of course being the owner, the borrower can dispose of the thing borrowed (Article 248, Civil Code) and his act will not be considered misappropriation thereof. right?'

Uuuuh!! Gooey.