G.R. No. L-60033. April 4, 1984.
TEOFISTO GUINGONA, JR., ANTONIO I. MARTIN, and TERESITA SANTOS, petitioners, vs. THE CITY FISCAL OF MANILA, HON. JOSE B. FLAMINIANO, ASST. CITY FISCAL FELIZARDO N. LOTA and CLEMENT DAVID, respondents.

FACTS

Private respondent Clement David filed a criminal complaint for estafa and violation of Central Bank Circular No. 364 against petitioners, officers of Nation Savings and Loan Association (NSLA). David alleged that from 1979 to 1981, he invested substantial sums in NSLA, but upon the bank’s receivership, Central Bank records showed only a fraction was entered, implying misappropriation. Petitioners moved to dismiss the complaint for lack of jurisdiction at the preliminary investigation stage, contending the allegations and evidence revealed a purely civil obligation arising from deposit transactions. They argued that the claims were essentially for the recovery of investments, with petitioners having executed promissory notes and mortgages to secure the debts, and partial payments and settlements already made.

ISSUE

Whether public respondents, the City Fiscal and Assistant City Fiscal of Manila, acted without jurisdiction in conducting a preliminary investigation for estafa and foreign exchange violations when the facts alleged and evidence presented establish that the obligation is civil in nature.

RULING

Yes. The Supreme Court granted the petition for prohibition, making the temporary restraining order permanent. The legal logic is anchored on the principle that a preliminary investigation is an inquiry to determine whether a crime has been committed and if the accused is probably guilty. If the facts alleged in the complaint and the evidence presented during the investigation indisputably show that the obligation is civil—arising from contract, such as a loan or deposit—then no criminal liability for estafa exists. The essence of estafa under Article 315(1)(b) of the Revised Penal Code is the fraudulent misappropriation or conversion of money received in trust or on commission. Here, the transactions were investments or deposits with the bank, creating a debtor-creditor relationship. The subsequent execution of promissory notes and real estate mortgages by petitioners to secure the debt, and the partial payments made, confirmed the civil character of the obligation. The claim of violation of foreign exchange regulations was also deemed without basis, as the transactions were internal deposits, not involving the foreign exchange market. Since the facts clearly negated criminal intent and established a civil debt, the public respondents acted without jurisdiction in proceeding with the criminal investigation. While prohibition generally does not lie to restrain criminal prosecution, exceptions exist to prevent oppression, multiplicity of suits, and to afford orderly administration of justice. This case fell within those exceptions, as allowing the investigation to continue would work great injustice when the absence of a criminal offense was apparent from the pleadings and evidence.