PAULINO GULLAS V. PNB (G.R. NO.

L-43191)
Facts:
Petitioner Gullas maintains a current account with herein respondent PNB. He together with one Pedro Lopez signed as
endorsers of a Warrant issued by the US Veterans Bureau payable to the order of one Francisco Bacos. PNB cashed the check
but was subsequently dishonored by the Insular Treasurer. PNB then sent notices to petitioner which could not be delivered to
him at the time because he was in Manila. PNB in the letter informed the petitioner the outstanding balance on his account was
applied to the part payment of the dishonored check. Upon petitioners return, he received the notice of dishonor and
immediately paid the unpaid balance of the warrant. As a consequence of these, petitioner was inconvenienced when his
insurance was not paid due to lack of funds and was publicized widely at his area to his mortification.
Issue:
Whether or not PNB has the right to apply petitioners deposit to his debt to the bank.
Ruling: NO.
As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part
of a depositor. The Civil Code contains provisions regarding compensation (set off) and deposit. The portions of Philippine law
provide that compensation shall take place when two persons are reciprocally creditor and debtor of each other. In this
connection, it has been held that the relation existing between a depositor and a bank is that of creditor and debtor. [General
Rule]
Starting, therefore, from the premise that the Philippine National Bank had with respect to the deposit of Gullas a right of set
off, we next consider if that remedy was enforced properly. The fact we believe is undeniable that prior to the mailing of notice
of dishonor, and without waiting for any action by Gullas, the bank made use of the money standing in his account to make
good for the treasury warrant.
Gullas was merely an indorser and had issued in good faith. As to an indorser, the situation is different and notice should
actually have been given him in order that he might protect his interests. We accordingly are of the opinion that the action of
the bank was prejudicial to Gullas.

Guingona v. City Fiscal Flaminiano

TEOFISTO GUINGONA, JR., ANTONIO MARTIN, and TERESITA SANTOS v.

CITY FISCAL FLAMINIANO, ASST. CITY FISCAL LOTA and CLEMENT DAVID
1984 / Makasiar

David invested several deposits with the Nation Savings and Loan Association [NSLA]. He said that he was induced into making
said investments by an Australian national who was a close associate of the petitioners [NSLA officials]. On March 1981, NSLA
was placed under receivershipby the Central Bank, so David filed claims for his and his sisters investments.
On June 1981, Guingona and Martin, upon Davids request, assumed the banks obligation to David by executing a
joint promissory note. On July 1981, David received a report that only a portion of his investments was entered in the NSLA
records.
On December 1981, David filed I.S. No. 81-31938 in the Office of the City Fiscal, which case was assigned to Asst. City
Fiscal Lota for preliminary investigation. David charged petitioners with estafa and violation of Central Bank Circular No. 364
and related regulations on foreign exchange transactions.
Petitioners moved to dismiss the charges against them for lack of jurisdiction because David's claims allegedly
comprised a purely civil obligation, but the motion was denied. After the presentation of David's principal witness, petitioners
filed this petition for prohibition and injunction because:
a. The production of various documents showed that the transactions between David and NSLA were simple loans (civil
obligations which were novated when Guingona and Martin assumed them)
b. David's principal witness testified that the duplicate originals of the instruments of indebtedness were all on file with NSLA.
A TRO was issued ordering the respondents to refrain from proceeding with the preliminary investigation in I.S. No.
81-31938.

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

GENERAL RULE: Criminal prosecution may not be blocked by court prohibition or injunction.
EXCEPTIONS
1. For the orderly administration of justice
2. To prevent the use of the strong arm of the law in an oppressive and vindictive manner
3. To avoid multiplicity of actions
4. To afford adequate protection to constitutional rights
5. In proper cases, because the statute relied upon is unconstitutional or was held invalid
When David invested his money on time and savings deposits with NSLA, the contract that was perfected was a contract of
simple loan or mutuum and not a contract of deposit. The relationship between David and NSLA is that of creditor and debtor.
While the Bank has the obligation to return the amount deposited, it has no obligation to return or deliver the same
money that was deposited. NSLAs failure to return the amount deposited will not constitute estafa through
misappropriation, but it will only give rise to civil liability over which the public respondents have no jurisdiction.
Considering that petitioners liability is purely civil in nature and that there is no clear showing that they engaged in
foreign exchange transactions, public respondents acted without jurisdiction when they investigated the charges against the
petitioners. Public respondents should be restrained from further proceeding with the criminal case for to allow the case to
continue would work great injustice to petitioners and would render meaningless the proper administration of justice.
Even granting that NSLAs 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 relationbetween 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.
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 Davids 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 theamount 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.

CA AGRO-INDUSTRIAL DEVELOPMENT CORP.

v.
THE HONORABLE COURT OFAPPEALS and SECURITY BANK AND TRUST COMPANY G.R. No. 90027, March 3, 1993, THIRD
DIVISION (DAVIDE, JR.,
J.
)FACTS:
CA Agro-Industrial Development Corp. (CA Agro) purchased two (2) parcels
of l a n d f r o m t h e s p o u s e s R a m o n a n d P a u l a P u g a o ( P u g a o s ) . C A A g r o p a i d
a downpayment and issued three (3) post-dated checks covering the balance of theprice. It was contracted that the
titles to the lots shall be transferred to CA
Agrou p o n f u l l p a y m e n t o f t h e p u r c h a s e p r i c e a n d t h a t t h e o w n e r ' s c o p i e s o f t h e c
ertificates of titles thereto shall be deposited in a safety deposit box of any bank. The same could be withdrawn only upon the
joint signatures of a representative of CA Agro and the Pugaos upon full payment of the purchase price.Forthwith, CA Agro
and the Pugaos rented Safety Deposit Box of SecurityBank and Trust Company (Bank). For this purpose,
they both signed a contract of lease containing the following conditions:
13. The bank is not a depositary of the contents of the safe and it has neitherthe possession nor control of
the same.1 4 . T h e b a n k h a s n o i n t e r e s t w h a t s o e v e r i n s a i d c o n t e n t s , e x c e p t h e r e i n e x p r e s s l y p r
o v i d e d , a n d i t a s s u m e s a b s o l u t e l y n o l i a b i l i t y i n c o n n e c t i o n therewith.

After the execution of the contract, two (2) renter's keys were given to the renters one to CA Agro and the
other to the Pugaos. A guard key remained in thepossession of the Bank. The safety deposit box has two (2)
keyholes, one for theguard key and the other for the renter's key, and can be opened only with the useof both
keys. Thereafter, a certain Mrs. Margarita Ramos (Ramos) offered to buy from CAAgro the two (2) lots at a price that
will yield a profit for the latter. Accordingly,Ramos demanded the execution of a deed of sale which
necessarily entailed theproduction of the certificates of title. In view thereof, CA Agro, accompanied by thePugaos, then
proceeded to the bank to open the safety deposit box and get
thec e r t i f i c a t e s o f t i t l e . H o w e v e r , w h e n o p e n e d i n t h e p r e s e n c e o f t h e B
a n k ' s representative, the box yielded no such certificates. As a result, Ramos withdrew her offer to buy the
lots.As a consequence, CA Agro failed to realize the expected profit, thus, it
fileda c o m p l a i n t f o r d a m a g e s a g a i n s t t h e B a n k . T h e B a n k i n i t s a n s w e r w i
t h a counterclaim invoked paragraphs 13 and 14 of the contract of lease for its defense.In due course, the trial court
rendered a decision against CA Agro on the ground that the provisions of the contract of lease are binding on the
parties, andthat under said paragraphs, the Bank has no liability for the loss of the certificatesof title.

Facts:
On July 3, 1979, petitioner (through its President- Sergio Aguirre) and the Spouses Ramon and Paula Pugao entered into an
agreement whereby the former purchase two parcel of lands from the latter. It was paid of downpayment while the balance
was covered by there postdated checks. Among the terms and conditions embodied in the agreement were the titles shall be
transferred to the petitioner upon full payment of the price and the owner's copies of the certificate of titles shall be deposited
in a safety deposit box of any bank. Petitioner and the Pugaos then rented Safety Deposit box of private respondent Security
Bank and Trust Company.

Thereafter, a certain Margarita Ramos offered to buy from the petitioner. Mrs Ramos demand the execution of a deed of sale
which necessarily entailed the production of the certificate of titles. In view thereof, Aguirre, accompanied by the Pugaos, then
proceed to the respondent Bank to open the safety deposit box and get the certificate of titles. However, when opened in the
presence of the Bank's representative, the box yielded no such certificate. Because of the delay in the reconstitution of the title,
Mrs Ramos withdrew her earlier offer to purchase.

Hence this petition.

Issue:
Whether or not the contract of rent between a commercial bank and another party for the use of safety deposit box can be
considered alike to a lessor-lessee relationship.

Ruling:
The petitioner is correct in making the contention that the contract for the rent of the deposit box is not a ordinary contract of
lease as defined in Article 1643 of the Civil Code. However, the Court do not really subscribe to its view that the same is a
contract of deposit that is to be strictly governed by the provisions in Civil Code on Deposit; the contract in the case at bar is a
special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and
absolute possession and control of the safety deposit box was not given to the joint renters- the petitioner and the Pugaos. The
guard key of the box remained with the respondent bank; without this key, neither of the renters could open the box. On the
other hand, the respondent bank could not likewise open the box without the renter's key. The Court further assailed that the
petitioner is correct in applying American Jurisprudence. Herein, the prevailing view is that the relation between the a bank
renting out safe deposits boxes and its customer with respect to the contents of the box is that of a bail or/ and bailee, the
bailment being for hire and mutual benefits. That prevailing rule has been adopted in Section 72 of the General Banking Act.

Section 72. In addition to the operations specifically authorized elsewhere in this Act, banking institutions other that building
and loan associations may perform the following services:
(a) Receive in custody funds, document and valuable objects and rents safety deposits taxes for the safeguard of such effects.
xxx xxx xxx
The bank shall perform the services permitted under subsections (a) (b) and (c) of this section as depositories or as agents.

CORPORATION CODE:
Sec. 6. Classification of shares. - The shares of stock of stock corporations may be divided into classes or series of shares, or
both, any of which classes or series of shares may have such rights, privileges or restrictions as may be stated in the articles of
incorporation: Provided, That no share may be deprived of voting rights except those classified and issued as "preferred" or
"redeemable" shares, unless otherwise provided in this Code: Provided, further, That there shall always be a class or series of
shares which have complete voting rights. Any or all of the shares or series of shares may have a par value or have no par value
as may be provided for in the articles of incorporation: Provided, however, That banks, trust companies, insurance companies,
public utilities, and building and loan associations shall not be permitted to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given preference in the distribution of the assets of the corporation
in case of liquidation and in the distribution of dividends, or such other preferences as may be stated in the articles of
incorporation which are not violative of the provisions of this Code: Provided, That preferred shares of stock may be issued only
with a stated par value. The board of directors, where authorized in the articles of incorporation, may fix the terms and
conditions of preferred shares of stock or any series thereof: Provided, That such terms and conditions shall be effective upon
the filing of a certificate thereof with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed fully paid and non-assessable and the holder of such shares
shall not be liable to the corporation or to its creditors in respect thereto: Provided; That shares without par value may not be
issued for a consideration less than the value of five (P5.00) pesos per share: Provided, further, That the entire consideration
received by the corporation for its no-par value shares shall be treated as capital and shall not be available for distribution as
dividends.
A corporation may, furthermore, classify its shares for the purpose of insuring compliance with constitutional or legal
requirements.
Except as otherwise provided in the articles of incorporation and stated in the certificate of stock, each share shall be equal in
all respects to every other share.
Where the articles of incorporation provide for non-voting shares in the cases allowed by this Code, the holders of such shares
shall nevertheless be entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of the corporate property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with another corporation or other corporations;
7. Investment of corporate funds in another corporation or business in accordance with this Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the vote necessary to approve a particular corporate act as
provided in this Code shall be deemed to refer only to stocks with voting rights.
Sec. 28. Removal of directors or trustees. - Any director or trustee of a corporation may be removed from office by a vote of
the stockholders holding or representing at least two-thirds (2/3) of the outstanding capital stock, or if the corporation be a
non-stock corporation, by a vote of at least two-thirds (2/3) of the members entitled to vote: Provided, That such removal shall
take place either at a regular meeting of the corporation or at a special meeting called for the purpose, and in either case, after
previous notice to stockholders or members of the corporation of the intention to propose such removal at the meeting. A
special meeting of the stockholders or members of a corporation for the purpose of removal of directors or trustees, or any of
them, must be called by the secretary on order of the president or on the written demand of the stockholders representing or
holding at least a majority of the outstanding capital stock, or, if it be a non-stock corporation, on the written demand of a
majority of the members entitled to vote. Should the secretary fail or refuse to call the special meeting upon such demand or
fail or refuse to give the notice, or if there is no secretary, the call for the meeting may be addressed directly to the
stockholders or members by any stockholder or member of the corporation signing the demand. Notice of the time and place
of such meeting, as well as of the intention to propose such removal, must be given by publication or by written notice
prescribed in this Code. Removal may be with or without cause: Provided, That removal without cause may not be used to
deprive minority stockholders or members of the right of representation to which they may be entitled under Section 24 of this
Code.

CLOSE CORPORATIONS
Sec. 96. Definition and applicability of Title. - A close corporation, within the meaning of this Code, is one whose articles of
incorporation provide that: (1) All the corporation's issued stock of all classes, exclusive of treasury shares, shall be held of
record by not more than a specified number of persons, not exceeding twenty (20); (2) all the issued stock of all classes shall be
subject to one or more specified restrictions on transfer permitted by this Title; and (3) The corporation shall not list in any
stock exchange or make any public offering of any of its stock of any class. Notwithstanding the foregoing, a corporation shall
not be deemed a close corporation when at least two-thirds (2/3) of its voting stock or voting rights is owned or controlled by
another corporation which is not a close corporation within the meaning of this Code.
Any corporation may be incorporated as a close corporation, except mining or oil companies, stock exchanges, banks, insurance
companies, public utilities, educational institutions and corporations declared to be vested with public interest in accordance
with the provisions of this Code.
The provisions of this Title shall primarily govern close corporations: Provided, That the provisions of other Titles of this Code
shall apply suppletorily except insofar as this Title otherwise provides.

CIVIL CODE:
Article 1980. Fixed, savings, and current deposits of money in banks and similar institutions shall be governed by the provisions
concerning simple loan.
Article 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of
safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract,
there is no deposit but some other contract.
Article 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.

http://www.bsp.gov.ph/downloads/Regulations/gba.pdf