G.R. No. L-20119, June 30, 1967
CENTRAL BANK OF THE PHILIPPINES, petitioner, vs. THE HONORABLE JUDGE JESUS P. MORFE and FIRST MUTUAL SAVING AND LOAN ORGANIZATION, INC., respondents.

FACTS

The First Mutual Savings and Loan Organization, Inc. (Organization) is a registered non-stock corporation with the purpose of encouraging savings and extending loans to its members. The Central Bank of the Philippines (Bank) issued an opinion that the Organization and similar entities were unauthorized banking institutions under the Central Bank Act and the General Banking Act ( Republic Act No. 337 ). The Bank published an announcement stating that such organizations were not authorized to accept public deposits or engage in banking. Subsequently, a member of the Bank’s intelligence division applied for a search warrant with the Municipal Court of Manila, alleging the Organization was illegally engaged in banking activities at its premises on Rizal Avenue, Manila, in violation of Sections 2 and 6 of R.A. No. 337 . The application listed specific books, records, and documents (e.g., journals, ledgers, deposit slips, loan applications, mortgage contracts) to be seized. Judge Roman Cancino issued the search warrant. The Organization then filed a petition for certiorari and prohibition with the Court of First Instance of Manila (Civil Case No. 50409) to annul the warrant, arguing it was a general warrant, allowed seizure of unrelated documents, and that no court had jurisdiction to try a corporation for a criminal case. Respondent Judge Jesus P. Morfe issued an order granting a preliminary injunction, restraining the Bank from further search and seizure and ordering the return of all seized documents. The Bank’s motion for reconsideration was denied, prompting it to file the present original action for certiorari, prohibition, and injunction with the Supreme Court, alleging grave abuse of discretion by Judge Morfe.

ISSUE

Whether respondent Judge Jesus P. Morfe acted with grave abuse of discretion or in excess of jurisdiction in issuing the order that granted a preliminary injunction against the enforcement of the search warrant and ordered the return of seized documents to the Organization.

RULING

The Supreme Court granted the petition. The Court found that respondent Judge Morfe acted with grave abuse of discretion. The search warrant was issued based on a verified application alleging specific violations of banking laws (Sections 2 and 6 of R.A. No. 337 ) and described with particularity the books, records, and documents to be seized, which were the very instruments used in the alleged illegal banking activities. The warrant was not a general or roving warrant. The judge’s reasoning—that the applicant should have sought a warrant only for records of specific transactions with specific individuals—was erroneous. The nature of the offense (unauthorized banking) involves a continuous course of business, making all related books and records subject to seizure as evidence of the ongoing illegal activity. The Court emphasized the state’s interest in regulating banking and protecting the public from unauthorized entities, which outweighs the claim of unreasonable search in this context. The order of respondent Judge was set aside, and the writ of preliminary injunction issued by the Supreme Court was made permanent.