GUINGONA VS CITY FISCAL

GUINGONA VS CITY FISCAL

G.R. No. L-60033 April 4, 1984

TEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, and TERESITA SANTOS, petitioners, 
THE CITY FISCAL OF MANILA, HON. JOSE B. FLAMINIANO, ASST. CITY FISCAL FELIZARDO N. LOTA and CLEMENT DAVID, respondents.

Nature: 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

Keywords: Bank deposits are loans, mutuum, estafa, criminal charge, civil case, thrift bank, NSLA

Summary: From March 1979 to March 1981, Clement David made several investments with the National Savings and Loan Association (NSLA). On March 21, 1981, the Bangko Sentral placed the bank under receivership. 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.

MAKASIAR, Actg. C.J.

Facts: David invested several deposits with the Nation Savings and Loan Association [NSLA]. He said that he was induced into making said investments by an Australian national who was a close associate of the petitioners [NSLA officials]. On March 1981, NSLA was placed under receivership by the Central Bank, so David filed claims for his and his sister’s investments.

On June 1981, Guingona and Martin, upon David’s request, assumed the bank’s obligation to David by executing a joint promissory note. On July 1981, David received a report that only a portion of his investments was entered in the NSLA records.

On December 1981, David filed I.S. No. 81-31938 in the Office of the City Fiscal, which case was assigned to Asst. City Fiscal Lota for preliminary investigation. David charged petitioners with estafa and violation of Central Bank Circular No. 364 and related regulations on foreign exchange transactions.

Petitioners moved to dismiss the charges against them for lack of jurisdiction because David's claims allegedly comprised a purely civil obligation, but the motion was denied. After the presentation of David's principal witness, petitioners filed this petition for prohibition and injunction because:

a. The production of various documents showed that the transactions between David and NSLA were simple loans (civil obligations which were novated when Guingona and Martin assumed them)

b. David's principal witness testified that the duplicate originals of the instruments of indebtedness were all on file with NSLA.

A TRO was issued ordering the respondents to refrain from proceeding with the preliminary investigation in I.S. No. 81-31938.

Petitioners’ liability is civil in nature, so respondents have no jurisdiction over the estafa charge. TRO CORRECTLY ISSUED.

Issue:

1. Whether the contract between NSLA and David is a contract of depositor or 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 David invested his money on time and savings deposits with NSLA, the contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit. Hence, the relationship between David and NSLA is that of creditor and debtor, consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the contract and it can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to pay withdrawals..

While the Bank has the obligation to return the amount deposited, it has no obligation to return or deliver the same money that was deposited. NSLA’s failure to return the amount deposited will not constitute estafa through misappropriation 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.

Considering that petitioners’ liability is purely civil in nature and that there is no clear showing that they engaged in foreign exchange transactions, public respondents acted without jurisdiction when they investigated the charges against the petitioners. Public respondents should be restrained from further proceeding with the criminal case for to allow the case to continue would work great injustice to petitioners and would render meaningless the proper administration of justice.

Even granting that NSLA’s failure to pay the time and savings deposits would constitute a violation of RPC 315, paragraph 1(b), any incipient criminal liability was deemed avoided. When NSLA was placed under receivership, Guingona and Martin assumed the obligation to David, thereby resulting in the novation of the original contractual obligation. The original trust relation between NSLA and David was converted into an ordinary debtor-creditor relation between the petitioners and David. While it is true that novation does not extinguish criminal liability, it may prevent the rise of criminal liability as long as it occurs prior to the filing of the criminal information in court.

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

Ruling: WHEREFORE, THE PETITION IS HEREBY GRANTED; THE TEMPORARY RESTRAINING ORDER PREVIOUSLY ISSUED IS MADE PERMANENT.

Note:

GENERAL RULE: Criminal prosecution may not be blocked by court prohibition or injunction.

EXCEPTIONS

1. For the orderly administration of justice

2. To prevent the use of the strong arm of the law in an oppressive and vindictive manner

3. To avoid multiplicity of actions

4. To afford adequate protection to constitutional rights

5. In proper cases, because the statute relied upon is unconstitutional or was held invalid

Sison, Jr. vs. Ancheta, 130 SCRA 654; G.R. No. L-59431; July 25, 1984

Sison, Jr. vs. Ancheta, 130 SCRA 654; G.R. No. L-59431; July 25, 1984

Nature: Suit for declaratory relief or prohibition proceeding

Keywords: Right to Tax, Equal Protection, Due Process, Rule of Requiring uniformity in taxation

FERNANDO, C.J.

Facts: Petitioners challenged the constitutionality of Section 1 of Batas Pambansa Blg. 135. It amended

Section 21 of the National Internal Revenue Code of 1977, which provides for rates of tax on citizens or residents on (a) taxable compensation income, (b) taxable net income, (c) royalties, prizes, and other winnings, (d) interest from bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements, (e) dividends and share of individual partner in the net profits of taxable partnership, (f) adjusted gross income.

Petitioner as taxpayer alleged that "he would be unduly discriminated against by the imposition of higher rates of tax upon his income arising from the exercise of his profession vis-a-vis those which are imposed upon fixed income or salaried individual taxpayers." He characterizes the above section as arbitrary amounting to class legislation, oppressive and capricious in character.

For petitioner, therefore, there is a transgression of both the equal protection and due process clauses of the Constitution as well as of the rule requiring uniformity in taxation.

The OSG prayed for dismissal of the petition due to lack of merit.

Issue:

Whether or not the assailed provision violates the equal protection and due process clauses of the Constitution while also violating the rule that taxes must be uniform and equitable.

Held: The petition is without merit.

Ratio:

It is undoubted that the due process clause may be invoked where a taxing statute is so arbitrary that it finds no support in the Constitution. An obvious example is where it can be shown to amount to the confiscation of property. That would be a clear abuse of power.

It has also been held that where the assailed tax measure is beyond the jurisdiction of the state, or is not for a public purpose, or, in case of a retroactive statute is so harsh and unreasonable, it is subject to attack on due process grounds.

For equal protection, the applicable standard to determine whether this was denied in the exercise of police power or eminent domain was the presence of the purpose of hostility or unreasonable discrimination.

It suffices then that the laws operate equally and uniformly on all persons under similar circumstances or that all persons must be treated in the same manner, the conditions not being different, both in the privileges conferred and the liabilities imposed. Favoritism and undue preference cannot be allowed. For the principle is that equal protection and security shall be given to every person under circumstances, which if not identical are analogous. If law be looks upon in terms of burden or charges, those that fall within a class should be treated in the same fashion, whatever restrictions cast on some in the group equally binding on the rest.

The equal protection clause is, of course, inspired by the noble concept of approximating the ideal of the laws's benefits being available to all and the affairs of men being governed by that serene and impartial uniformity, which is of the very essence of the idea of law.

The equality at which the 'equal protection' clause aims is not a disembodied equality. The Fourteenth Amendment enjoins 'the equal protection of the laws,' and laws are not abstract propositions. They do not relate to abstract units A, B and C, but are expressions of policy arising out of specific difficulties, addressed to the attainment of specific ends by the use of specific remedies. The Constitution does not require things which are different in fact or opinion to be treated in law as though they were the same.

Lutz v Araneta- it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation.

Petitioner- kindred concept of uniformity- Court- Philippine Trust Company- The rule of uniformity does not call for perfect uniformity or perfect equality, because this is hardly attainable

Equality and uniformity in taxation means that all taxable articles or kinds of property of the same class shall be taxed at the same rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation

There is quite a similarity then to the standard of equal protection for all that is required is that the tax "applies equally to all persons, firms and corporations placed in similar situation"

There was a difference between a tax rate and a tax base. There is no legal objection to a broader tax base or taxable income by eliminating all deductible items and at the same time reducing the applicable tax rate.

The discernible basis of classification is the susceptibility of the income to the application of generalized rules removing all deductible items for all taxpayers within the class and fixing a set of reduced tax rates to be applied to all of them. As there is practically no overhead expense, these taxpayers are not entitled to make deductions for income tax purposes because they are in the same situation more or less.

Taxpayers who are recipients of compensation income are set apart as a class.

On the other hand, in the case of professionals in the practice of their calling and businessmen, there is no uniformity in the costs or expenses necessary to produce their income. It would not be just then to disregard the disparities by giving all of them zero deduction and indiscriminately impose on all alike the same tax rates on the basis of gross income.

There was a lack of a factual foundation, the forcer of doctrines on due process and equal protection, and he reasonableness of the distinction between compensation and taxable net income of professionals and businessmen not being a dubious classification.

Ruling: WHEREFORE, the petition is dismissed. Costs against petitioner.