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G.R. No.

162336 February 1, 2010

Soriano was charged for estafa through falsification of commercial documents for
allegedly securing a loan of 48 million in the name of two (2) persons when in fact these
individuals did not make any loan in the bank, nor did the bank's officers approved or
had any information about the said loan. The state prosecutor conducted a Preliminary
Investigation on the basis of letters sent by the officers of Special Investigation of BSP
together with 5 affidavits and filed two (2) separate information against Soriano for
estafa through falsification of commercial documents and violation of DORSI law.

Soriano moved for the quashal of the two (2) informations based on the ground:
1. that the court has no jurisdiction over the offense charged, for the letter transmitted
by the BSP to the DOJ constituted the complaint and was defective for failure to comply
with the mandatory requirements of Sec. 3(a), Rule 112 of the Rules of Court, such as
statment of address of the petitioner and oath of subscription and the signatories were
not authorized persons to file the complaint; and
2. that the facts charged do not constitute an offense, for the commission of estafa uner
par. 1(b) of Art. 315 of the RPC is inherently incompatible with the violation of DORSI
law (Sec. 83 or RA 337 as amended by PD 1795), and therefore a person cannot be
charged of both offenses.
Whether or not the complaint filed complied with the mandatory requirements of law.
Whether or not the petition for certiorari under Rule 65 is the proper remedy in an
order denying a Motion to Quash.

Yes, the letters transmitted were not intended to be the complaint but merely
transmitted for preliminary investigation. The affidavits and not the letter transmitting
them initiated the preliminary investigation and therefore is the complaint which
substantially complied with the manadory requirements of law.

No. The proper procedure in such a case is for the accused to enter a plea, go to trial
without prejudice on his part to present special defenses he had invoked in his motion
to quash and if after trial on the merits, an adverse decision is rendered, to appeal
therefrom in the manner authorized by law.
AGAN VS PIATCO EN BANC agreements, filed a petition for prohibition. Several employees of MIAA likewise filed a
Posted by kaye lee on 3:33 PM petition assailing the legality of the various agreements.

G.R. No. 155001. May 5, 2003 En Banc [Non-legislative power of Congress; Police During the pendency of the cases, PGMA, on her speech, stated that she will not honor
Power; Delegation of emergency powers] (PIATCO) contracts which the Executive Branchs legal offices have concluded (as) null
and void.

On October 5, 1994, AEDC submitted an unsolicited proposal to the Government Whether or not the State can temporarily take over a business affected with public
through the DOTC/MIAA for the development of NAIA International Passenger interest.
Terminal III (NAIA IPT III).

DOTC constituted the Prequalification Bids and Awards Committee (PBAC) for the RULING:
implementation of the project and submitted with its endorsement proposal to the Yes. PIATCO cannot, by mere contractual stipulation, contravene the
NEDA, which approved the project. Constitutional provision on temporary government takeover and obligate
the government to pay reasonable cost for the use of the Terminal and/or
On June 7, 14, and 21, 1996, DOTC/MIAA caused the publication in two daily Terminal Complex.
newspapers of an invitation for competitive or comparative proposals on AEDCs
unsolicited proposal, in accordance with Sec. 4-A of RA 6957, as amended.
Article XII, Section 17 of the 1987 Constitution provides:
On September 20, 1996, the consortium composed of Peoples Air Cargo and Section 17. In times of national emergency, when the public interest so requires, the
Warehousing Co., Inc. (Paircargo), Phil. Air and Grounds Services, Inc. (PAGS) and State may, during the emergency and under reasonable terms prescribed by it,
Security Bank Corp. (Security Bank) (collectively, Paircargo Consortium) submitted temporarily take over or direct the operation of any privately owned public utility or
their competitive proposal to the PBAC. PBAC awarded the project to Paircargo business affected with public interest.
Consortium. Because of that, it was incorporated into Philippine International Airport
Terminals Co., Inc.
The above provision pertains to the right of the State in times of national emergency,
AEDC subsequently protested the alleged undue preference given to PIATCO and and in the exercise of its police power, to temporarily take over the operation of any
reiterated its objections as regards the prequalification of PIATCO. business affected with public interest. The duration of the emergency itself is the
determining factor as to how long the temporary takeover by the government would last.
On July 12, 1997, the Government and PIATCO signed the Concession Agreement for The temporary takeover by the government extends only to the operation of the business
the Build-Operate-and-Transfer Arrangement of the NAIA Passenger Terminal III and not to the ownership thereof. As such the government is not required to
(1997 Concession Agreement). The Government granted PIATCO the franchise to compensate the private entity-owner of the said business as there is no
operate and maintain the said terminal during the concession period and to collect the transfer of ownership, whether permanent or temporary. The private entity-owner
fees, rentals and other charges in accordance with the rates or schedules stipulated in affected by the temporary takeover cannot, likewise, claim just compensation for the use
the 1997 Concession Agreement. The Agreement provided that the concession period of the said business and its properties as the temporary takeover by the government is
shall be for twenty-five (25) years commencing from the in-service date, and may be in exercise of its police power and not of its power of eminent domain.
renewed at the option of the Government for a period not exceeding twenty-five (25)
years. At the end of the concession period, PIATCO shall transfer the development
facility to MIAA. Article XII, section 17 of the 1987 Constitution envisions a situation wherein the
exigencies of the times necessitate the government to temporarily take over or direct
Meanwhile, the MIAA which is charged with the maintenance and operation of the NAIA the operation of any privately owned public utility or business affected with public
Terminals I and II, had existing concession contracts with various service providers to interest. It is the welfare and interest of the public which is the paramount
offer international airline airport services, such as in-flight catering, passenger consideration in determining whether or not to temporarily take over a particular
handling, ramp and ground support, aircraft maintenance and provisions, cargo business. Clearly, the State in effecting the temporary takeover is exercising its police
handling and warehousing, and other services, to several international airlines at the power. Police power is the most essential, insistent, and illimitable of powers. Its
NAIA. exercise therefore must not be unreasonably hampered nor its exercise be a source of
obligation by the government in the absence of damage due to arbitrariness of its
On September 17, 2002, the workers of the international airline service providers, exercise. Thus, requiring the government to pay reasonable compensation for the
claiming that they would lose their job upon the implementation of the questioned
reasonable use of the property pursuant to the operation of the business contravenes
the Constitution.
RCBC vs. Hi-Tri Development authority of the party making, drawing, accepting, or indorsing, as the case
G.R. No. 192413 may be; and, in such case, the delivery may be shown to have been
June 13, 2012 conditional, or for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where the instrument is in
FACTS: the hands of a holder in due course, a valid delivery thereof by all parties prior
Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal to him so as to make them liable to him is conclusively presumed. And where
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development the instrument is no longer in the possession of a party whose signature
Corporation (Hi-Tri) and Luz R. Bakunawa (Bakunawa). Petitioner seeks to appeal from appears thereon, a valid and intentional delivery by him is presumed until the
the 26 November 2009 Decision and 27 May 2010 Resolution of the Court of Appeals contrary is proved.
(CA),1 which reversed and set aside the 19 May 2008 Decision and 3 November 2008
Order of the Makati City Regional Trial Court (RTC) in Civil Case No. 06-244. The case Petitioner acknowledges that the Managers Check was procured by respondents, and
before the RTC involved the Complaint for Escheat filed by the Republic of the that the amount to be paid for the check would be sourced from the deposit account of
Philippines (Republic) pursuant to Act No. 3936, as amended by Presidential Decree Hi-Tri. When Rosmil did not accept the Managers Check offered by respondents, the
No. 679 (P.D. 679), against certain deposits, credits, and unclaimed balances held by latter retained custody of the instrument instead of cancelling it. As the Managers Check
the branches of various banks in the Philippines. The trial court declared the amounts, neither went to the hands of Rosmil nor was it further negotiated to other persons, the
subject of the special proceedings, escheated to the Republic and ordered them instrument remained undelivered. Petitioner does not dispute the fact that respondents
deposited with the Treasurer of the Philippines (Treasurer) and credited in favor of the retained custody of the instrument.
Republic. The assailed RTC judgments included an unclaimed balance in the amount
of P 1,019,514.29, maintained by RCBC in its Ermita Business Center branch. Since there was no delivery, presentment of the check to the bank for payment did not
occur. An order to debit the account of respondents was never made. In fact, petitioner
ISSUE: confirms that the Managers Check was never negotiated or presented for payment to
Whether or not the allocated funds may be escheated in favor of the Republic? its Ermita Branch, and that the allocated fund is still held by the bank. As a result, the
assigned fund is deemed to remain part of the account of Hi-Tri, which procured the
HELD: Managers Check. The doctrine that the deposit represented by a managers check
The Court held in the negative. An ordinary check refers to a bill of exchange drawn by automatically passes to the payee is inapplicable, because the instrument although
a depositor (drawer) on a bank (drawee), requesting the latter to pay a person named accepted in advance remains undelivered. Hence, respondents should have been
therein (payee) or to the order of the payee or to the bearer, a named sum of informed that the deposit had been left inactive for more than 10 years, and that it may
money.25 The issuance of the check does not of itself operate as an assignment of any be subjected to escheat proceedings if left unclaimed.
part of the funds in the bank to the credit of the drawer.26 Here, the bank becomes liable
only after it accepts or certifies the check. After the check is accepted for payment, the After a careful review of the RTC records, we find that it is no longer necessary to remand
bank would then debit the amount to be paid to the holder of the check from the account the case for hearing to determine whether the claim of respondents was valid. There was
of the depositor-drawer. no contention that they were the procurers of the Managers Check. It is undisputed that
There are checks of a special type called managers or cashiers checks. These are bills of there was no effective delivery of the check, rendering the instrument incomplete. In
exchange drawn by the banks manager or cashier, in the name of the bank, against the addition, we have already settled that respondents retained ownership of the funds. As
bank itself. Typically, a managers or a cashiers check is procured from the bank by it is obvious from their foregoing actions that they have not abandoned their claim over
allocating a particular amount of funds to be debited from the depositors account or by the fund, we rule that the allocated deposit, subject of the Managers Check, should be
directly paying or depositing to the bank the value of the check to be drawn. Since the excluded from the escheat proceedings. We reiterate our pronouncement that the
bank issues the check in its name, with itself as the drawee, the check is deemed accepted objective of escheat proceedings is state forfeiture of unclaimed balances. We further
in advance. Ordinarily, the check becomes the primary obligation of the issuing bank note that there is nothing in the records that would show that the OSG appealed the
and constitutes its written promise to pay upon demand. assailed CA judgments. We take this failure to appeal as an indication of disinterest in
pursuing the escheat proceedings in favor of the Republic.
Nevertheless, the mere issuance of a managers check does not ipso facto work as an
automatic transfer of funds to the account of the payee. In case the procurer of the
managers or cashiers check retains custody of the instrument, does not tender it to the
intended payee, or fails to make an effective delivery, we find the following provision on
undelivered instruments under the Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. Every contract on a
negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As between immediate
parties and as regards a remote party other than a holder in due course, the
delivery, in order to be effectual, must be made either by or under the
Development Bank of the Philippines v. Arcilla DBP gave Arcilla the option of converting his loan into a regular loan if he
retired early. By 1985, the amortization amount increased to P1,691.51. Arcilla opted
for early retirement in 1986, and so the loan was converted into a regular loan. In
1987, Arcilla signed three promissory notes amounting to P186,364.15, and was
Petition for certiorari obliged to pay service charges and interest. DBP reserved the right to increase or
decrease the interest rate of the loan as well as other charges and fees, with prior
June 30, 2005 notice to Arcilla. DBP later granted Arcilla a cash advance of P32,000.00, at 9% per
annum, which was consolidated to the oustanding balance of Arcillas original balance.
Ponente: Callejo, Sr., J.

Arcilla later defaulted on payments. As of October 31, 1990, the outstanding

balance was P241,940.93, including interest, fees, and penalties. DBP rescinded the
FACTS: Conditional Sale Agreement in 1990, but in January 1992 DBP offered Arcilla the
opportunity to repurchase the lot upon full payment of the current appraisal or the
updated total, whichever was higher. This offer was reiterated in October 7, 1992.
Arcilla did not respond. DBP placed the property up for sale at public bidding on
Atty. Felipe P. Arcilla, Jr. was employed by the Development Bank of the February 14, 1994.
Philippines (DBP) in October 1981. He availed of an Individual Housing Project loan
sometime in 1982. In 1983, DBP and Arcilla executed a Deed of Conditional Sale over a
parcel of land, including the house to be constructed on the property, for P160,000.00.
Arcilla borrowed the amount from DBP for the purchase of the lot and the Arcilla filed a case against DBP, alleging that DBP failed to furnish him with the
construction of the house. The loan was payable in 25 years, with a P1,417.91 disclosure statement required by Republic Act (R.A.) No. 37651 and Central Bank (CB)
amortization per month, at 9% interest per annum. Circular No. 1582 prior to the execution of the deed of conditional sale and the
conversion of his loan account with the bank into a regular housing loan account. DBP
countered that it substantially complied with R.A. No. 3765 and CB Circular No. 158
because the details required were disclosed in the promissory notes, deed of
conditional sale and the required notices sent to Arcilla. DBP further argued that its

1 (6) the finance charges expressed in terms of pesos and

From the case: Section 1 of R.A. No. 3765 provides that prior to the
consummation of a loan transaction, the bank, as creditor, is obliged to centavos; and
furnish a client with a clear statement, in writing, setting forth, to the extent (7) the percentage that the finance charge bears to the
applicable and in accordance with the rules and regulations prescribed by the total amount to be financed expressed as a simple annual rate
Monetary Board of the Central Bank of the Philippines, the following on the outstanding unpaid balance of the obligation.
information: 2 Also from the case: Under Circular No. 158 of the Central Bank, the information
required by R.A. No. 3765 shall be included in the contract covering the credit
(1) the cash price or delivered price of the property or
transaction or any other document to be acknowledged and signed by the debtor,
service to be acquired; thus:
(2) the amounts, if any, to be credited as down payment
and/or trade-in; The contract covering the credit transaction, or any other document to be
(3) the difference between the amounts set forth under acknowledged and signed by the debtor, shall indicate the above seven items of
clauses (1) and (2) information. In addition, the contract or document shall specify additional charges,
(4) the charges, individually itemized, which are paid or if any, which will be collected in case certain stipulations in the contract are not met
to be paid by such person in connection with the transaction by the debtor.
but which are not incident to the extension of credit;
Furthermore, the contract or document shall specify additional charges, if any, which
(5) the total amount to be financed;
will be collected in case certain stipulations in the contract are not met by the debtor.
failure to comply strictly with R.A. No. 3765 did not affect the validity and Additionally, as an employee of DBP, Arcilla ought to have known the terms of the
enforceability of the loan agreement. DBP interposed a counterclaim for the loan he was applying for.
possession of the property.

The Court remanded the matter of the determination of rental payments to the
RTC, as no evidence was adduced by DBP with respect to such rentals.
The RTC ruled in Arcillas favor, ordering DBP to furnish Arcilla with the
required disclosures, and rendered DBPs rescission null and void. On appeal,
however, the Court of Appeals reversed the RTC, ruling that DBP substantially
complied with R.A. No. 3765 and CB Circular No. 158. Both parties appealed to the Disposition: Arcillas appeal is DENIED, CA ruling is UPHELD; case remanded to RTC
Supreme Court: Arcilla, for a reversal of the CA ruling and reversion to the RTC ruling, for determination of reasonable rental payments.
and DBP for partial reconsideration in asking the CA to order Arcilla to vacate the


1. Was DBP compliant with R.A. No. 3765 and CB Circular No. 158?
2. Was Arcilla liable to vacate the property and pay rentals for his occupation of
the property from the time of the notarial rescission?

Ratio: If the borrower is not duly informed of the data required by the law prior to
the consummation of the availment or drawdown, the lender will have no right to
collect such charge or increases thereof, even if stipulated in the promissory note.
However, such failure shall not affect the validity or enforceability of any contract or


1. Yes, DBP substantially complied with R.A. No. 3765 and CB Circular No. 158.
The Court found that DBP failed to disclose the requisite information in the disclosure
statement form. Ordinarily, the lender has no right to collect any interest, charges, or
fees without due notice to the borrower. However, DBP , did include such information
on interests, charges, fees, and penalties in the loan transaction documents between it
and Arcilla. The Court considered this as subtantial compliance. Additionally, there
was no evidence that DBP sought to collect interest, charges, or fees beyond what was
contained in the documents provided to Arcilla.

2. Yes, Arcilla is liable to vacate the property, but the Court made no ruling on
the issue of rentals. The Court adopted the findings of the CA, stating that had Arcilla
been an ordinary borrower, it would have been inclined to be stricter in the application
of the Truth in Lending Act, insisting that the borrower be fully informed of what he is
entering into. However, the Court noted that Arcilla was a lawyer, and so presumed
that Arcilla would not be so negligent as to sign papers he had not carefully studied.
SAMPAGUITA BUILDERS v PNB the right to assent to an important modification in their agreement and would also
negate the element of mutuality in their contracts. The clause cited earlier made the
Mini digest: Sampaguita loaned money from PNB. PNB unilaterally increased rates of fulfillment of the contracts dependent exclusively upon the uncontrolled will of
interest in the loan w/o informing Sampaguita. PNB claimed they were authorized to do respondent and was therefore void. Besides, the pro forma promissory notes have the
it as there was a clause in the agreement that they may do so. Besides, Usury law was no character of a contract dadhsion, where the parties do not bargain on equal footing,
longer in force = SC said NO! PNB cannot do so; it will violate mutuality of contracts the weaker partys [the debtors] participation being reduced to the alternative to take
under 1308. Besides, SC may intervene when amount of interest is unconscionable. it or leave it.
Sampaguita secured a loan from PNB in an aggregate amount of 8M pesos, mortgaging Circular that lifted the ceiling of interest rates of usury law did not authorize either party
the properties of Sampaguitas president and chairman of the board. Sampaguita also to unilaterally raise the interest rate without the others consent.
executed several promissory notes due on different dates (payment dates). The first
promissory note had 19.5% interest rate. The 2nd and 3rd had 21.5%. a uniform clause the interest ranging from 26 percent to 35 percent in the statements of account -- must
therein permitted PNB to increase the rate within the limits allowed by law at any time be equitably reduced for being iniquitous, unconscionable and exorbitant. Rates found
depending on whatever policy it may adopt in the future x x x, without even giving prior to be iniquitous or unconscionable are void, as if it there were no express contract
notice to petitioners. There was also a clause in the promissory note that stated that if thereon. Above all, it is undoubtedly against public policy to charge excessively for the
the same is not paid 2 years after release then it shall be converted to a medium term use of money.
loan and the interest rate for such loan would apply.
It cannot be argued that assent to the increases can be implied either from the June 18,
Later on, Sampaguita defaulted on its payments and failed to comply with obligations 1991 request of petitioners for loan restructuring or from their lack of response to the
on promissory notes. Sampaguita thus requested for a 90 day extension to pay the loan. statements of account sent by respondent. Such request does not indicate any
Again they defaulted, so they asked for loan restructuring. It partly paid the loan and agreement to an interest increase; there can be no implied waiver of a right when there
promised to pay the balance later on. AGAIN they failed to pay so PNB extrajudicially is no clear, unequivocal and decisive act showing such purpose. Besides, the statements
foreclosed the mortgaged properties. It was sold for 10M. PNB claimed that Sampaguita were not letters of information sent to secure their conformity; and even if we were to
owed it 12M so they filed a case in court asking sampaguita to pay for deficiency. presume these as an offer, there was no acceptance. No one receiving a proposal to
modify a loan contract, especially interest -- a vital component -- is obliged to answer
RTC found that Sampaguita was automatically entitled to the debt relief package of PNB the proposal.
and ruled that the latter had no cause of action against the former. CA reversed, saying
Sampaguita was not entitled, thus ordered them to pay the deficiency Appeal = Went Besides, PNB did not comply with its own stipulation that should the loan not be paid 2
to SC. Sampaguita claims the loan was bloated so they dont really owe PNB anymore, years after release of money then it shall be converted to a medium term loan.
but it just overcharged them!
*Court applied 12% interest rate instead for being a forbearance of money
W/N the loan accounts are bloated: YES. There is no deficiency; there is actually an (there were some pieces of evidence presented by PNB in court that sampaguita objected
overpayment of more than 3M based on the computation of the SC. to. Lower courts overruled the objections but SC said the objections were correct and
Whether PNB could unilaterally increase interest rates: NO the evidence should not have been admitted. i.e. contract wasnt signed by the parties, a
part of the contract wasnt properly annexed/no reference was made in the main
Ratio: contract.)
Sampaguitas accessory duty to pay interest did not give PNB unrestrained freedom to
charge any rate other than that which was agreed upon. No interest shall be due, unless In addition to the preceding discussion, it is then useless to labor the point that the
expressly stipulated in writing. It would be the zenith of farcicality to specify and agree increase in rates violates the impairment clause of the Constitution, because the sole
upon rates that could be subsequently upgraded at whim by only one party to the purpose of this provision is to safeguard the integrity of valid contractual agreements
agreement. against unwarranted interference by the State in the form of laws. Private individuals
intrusions on interest rates is governed by statutory enactments like the Civil Code
The unilateral determination and imposition of increased rates is violative of the
principle of mutuality of contracts ordained in Article 1308 of the Civil Code. One-sided
impositions do not have the force of law between the parties, because such impositions
are not based on the parties essential equality.

Although escalation clauses are valid in maintaining fiscal stability and retaining the
value of money on long-term contracts, giving respondent an unbridled right to adjust
the interest independently and upwardly would completely take away from petitioners

JOSE C. GO, G.R. No. 178429


Present: On August 20, 1999, an Information[6] for violation of Section 83 of Republic Act No. 337
(RA 337) or the General Banking Act, as amended by Presidential Decree No. 1795, was
filed against Go before the RTC. The charge reads:

QUISUMBING, J., Chairperson,

- versus - *CARPIO, That on or about and during the period comprised

between June 27, 1996 and September 15, 1997, inclusive, in the
CARPIO MORALES, City of Manila, Philippines, the said accused, being then the
Director and the President and Chief Executive Officer of
BRION, and the Orient Commercial Banking Corporation (Orient
Bank), a commercial banking institution created, organized and
ABAD, JJ. existing under Philippines laws, with its main branch located at
C.M. Recto Avenue, this City, and taking advantage of his position
as such officer/director of the said bank, did then and
there wilfully, unlawfully and knowingly borrow, either
BANGKO SENTRAL NG PILIPINAS, directly or indirectly, for himself or as the representative
Promulgated: of his other related companies, the deposits or funds of
the said banking institution and/or become a guarantor,
indorser or obligor for loans from the said bank to others,
October 23, 2009 by then and there using said borrowed deposits/funds of
the said bank in facilitating and granting and/or caused
x ------------------------------------------------------------------------------------------x the facilitating and granting of credit lines/loans and,
among others, to the New Zealand Accounts loans in the
DECISION Currency, said accused knowing fully well that the same
has been done by him without the written approval of the
majority of the Board of Directors of said Orient Bank and
which approval the said accused deliberately failed to obtain and
BRION, J.: enter the same upon the records of said banking institution and to
transmit a copy of which to the supervising department of the said
bank, as required by the General Banking Act.

Through the present petition for review on certiorari,[1] petitioner Jose C. Go

(Go) assails the October 26, 2006 decision[2] of the Court of Appeals (CA) in CA-G.R. SP
No. 79149, as well as its June 4, 2007 resolution.[3] The CA decision and resolution CONTRARY TO LAW. [Emphasis supplied.]
annulled and set aside the May 20, 2003[4] and June 30, 2003[5] orders of the Regional
Trial Court (RTC), Branch 26, Manila which granted Gos motion to quash the
Information filed against him. On May 28, 2001, Go pleaded not guilty to the offense charged.
After the arraignment, both the prosecution and accused Go took part in the except upon the pledge of shares of the association having a total
pre-trial conference where the marking of the voluminous evidence for the parties was withdrawal value greater than the amount borrowed. (As amended
accomplished. After the completion of the marking, the trial court ordered the parties by PD 1795)
to proceed to trial on the merits.

In support of his motion to quash, Go averred that based on the facts alleged
Before the trial could commence, however, Go filed on February 26, 2003[7] a motion to in the Information, he was being prosecuted for borrowing the deposits or funds of the
quash the Information, which motion Go amended on March 1, 2003.[8] Go claimed Orient Bank and/or acting as a guarantor, indorser or obligor for the banks loans to
that the Information was defective, as the facts charged therein do not other persons. The use of the word and/or meant that he was charged for being either a
constitute an offense under Section 83 of RA 337 which states: borrower or a guarantor, or for being both a borrower and guarantor. Go claimed that
the charge was not only vague, but also did not constitute an offense. He posited that
Section 83 of RA 337 penalized only directors and officers of banking institutions who
acted either as borrower or as guarantor, but not as both.
No director or officer of any banking institution shall either directly
or indirectly, for himself or as the representative or agent of
another, borrow any of the deposits of funds of such banks, nor
shall he become a guarantor, indorser, or surety for loans from such Go further pointed out that the Information failed to state that his alleged act
bank, to others, or in any manner be an obligor for money of borrowing and/or guarantying was not among the exceptions provided for in the
borrowed from the bank or loaned by it, except with the written law.According to Go, the second paragraph of Section 83 allowed banks to extend credit
approval of the majority of the directors of the bank, excluding the accommodations to their directors, officers, and stockholders, provided it is limited to
director concerned. Any such approval shall be entered upon the an amount equivalent to the respective outstanding deposits and book value of the paid-
records of the corporation and a copy of such entry shall be in capital contribution in the bank. Extending credit accommodations to bank directors,
transmitted forthwith to the appropriate supervising officers, and stockholders is not per se prohibited, unless the amount exceeds the legal
department. The office of any director or officer of a bank who limit. Since the Information failed to state that the amount he purportedly borrowed
violates the provisions of this section shall immediately become and/or guarantied was beyond the limit set by law, Go insisted that the acts so charged
vacant and the director or officer shall be punished by did not constitute an offense.
imprisonment of not less than one year nor more than ten years
and by a fine of not less than one thousand nor more than ten
thousand pesos.
Finding Gos contentions persuasive, the RTC granted Gos motion to quash
the Information on May 20, 2003. It denied on June 30, 2003 the motion for
reconsideration filed by the prosecution.
The Monetary Board may regulate the amount of credit
accommodations that may be extended, directly or indirectly, by
banking institutions to their directors, officers, or
stockholders.However, the outstanding credit accommodations The prosecution did not accept the RTC ruling and filed a petition
which a bank may extend to each of its stockholders owning two for certiorari to question it before the CA. The Information, the prosecution claimed,
percent (2%) or more of the subscribed capital stock, its directors, was sufficient. The word and/or did not materially affect the validity of the Information,
or its officers, shall be limited to an amount equivalent to the as it merely stated a mode of committing the crime penalized under Section 83 of RA
respective outstanding deposits and book value of the paid-in 337. Moreover, the prosecution asserted that the second paragraph of Section 83
capital contribution in the bank. Provided, however, that loans and (referring to the credit accommodation limit) cannot be interpreted as an exception to
advances to officers in the form of fringe benefits granted in what the first paragraph provided. The second paragraph only sets borrowing limits
accordance with rules and regulations as may be prescribed by that, if violated, render the bank, not the director-borrower, liable. A violation of the
Monetary Board shall not be subject to the preceding limitation. second paragraph of Section 83 under which Go is being prosecuted is therefore
(As amended by PD 1795) separate and distinct from a violation of the first paragraph. Thus, the prosecution
prayed that the orders of the RTC quashing the Information be set aside and the criminal
case against Go be reinstated.

In addition to the conditions established in the preceding

paragraph, no director or a building and loan association shall
engage in any of the operations mentioned in said paragraphs,
On October 26, 2006, the CA rendered the assailed decision granting the
prosecutions petition for certiorari.[9] The CA declared that the RTC misread the law
when it decided to quash the Information against Go. It explained that the allegation THE COURTS RULING
that Go acted either as a borrower or a guarantor or as both borrower and guarantor
merely set forth the different modes by which the offense was committed. It did not
necessarily mean that Go acted both as borrower and guarantor for the same loan at the
same time. It agreed with the prosecutions stand that the second paragraph of Section
83 of RA 337 is not an exception to the first paragraph. Thus, the failure of the
The Court does not find the petition meritorious and accordingly denies it.
Information to state that the amount of the loan Go borrowed or guaranteed exceeded
the legal limits was, to the CA, an irrelevant issue. For these reasons, the CA annulled
and set aside the RTCs orders and ordered the reinstatement of the criminal charge
against Go. After the CAs denial of his motion for reconsideration,[10] Go filed the The Accuseds Right to
present appeal by certiorari. be Informed

THE PETITION Under the Constitution, a person who stands charged of a criminal offense
has the right to be informed of the nature and cause of the accusation against
him.[12] The Rules of Court, in implementing the right, specifically require that the acts
or omissions complained of as constituting the offense, including the qualifying and
In his petition, Go alleges that the appellate court legally erred in overturning
aggravating circumstances, must be stated in ordinary and concise language, not
the trial courts orders. He insists that the Information failed to allege the acts or
necessarily in the language used in the statute, but in terms sufficient to enable a person
omissions complained of with sufficient particularity to enable him to know the offense
of common understanding to know what offense is being charged and the attendant
being charged; to allow him to properly prepare his defense; and likewise to allow the
qualifying and aggravating circumstances present, so that the accused can properly
court to render proper judgment.
defend himself and the court can pronounce judgment.[13] To broaden the scope of the
right, the Rules authorize the quashal, upon motion of the accused, of an Information
that fails to allege the acts constituting the offense.[14] Jurisprudence has laid down the
Repeating his arguments in his motion to quash, Go reads Section 83 of RA fundamental test in appreciating a motion to quash an Information grounded on the
337 as penalizing a director or officer of a banking institution for either borrowing the insufficiency of the facts alleged therein. We stated in People v. Romualdez[15] that:
deposits or funds of the bank, or guaranteeing or indorsing loans to others, but not for
assuming both capacities. He claimed that the prosecutions shotgun approach in
alleging that he acted as borrower and/or guarantor rendered the Information highly The determinative test in appreciating a motion to quash xxx is the
defective for failure to specify with certainty the specific act or omission complained sufficiency of the averments in the information, that is, whether the
of. To petitioner Go, the prosecutions approach was a clear violation of his facts alleged, if hypothetically admitted, would establish the
constitutional right to be informed of the nature and cause of the accusation against essential elements of the offense as defined by law without
him. considering matters aliunde. As Section 6, Rule 110 of the Rules of
Criminal Procedure requires, the information only needs to
state the ultimate facts; the evidentiary and other details
can be provided during the trial.
Additionally, Go reiterates his claim that credit accommodations by banks to
their directors and officers are legal and valid, provided that these are limited to their To restate the rule, an Information only needs to state the
outstanding deposits and book value of the paid-in capital contribution in the bank. The ultimate facts constituting the offense, not the finer
failure to state that he borrowed deposits and/or guaranteed loans beyond this limit details of why and how the illegal acts alleged amounted
rendered the Information defective. He thus asks the Court to reverse the CA decision to undue injury or damage matters that are appropriate for the
to reinstate the criminal charge. trial. [Emphasis supplied]

The facts and circumstances necessary to be included in the Information are determined
by reference to the definition and elements of the specific crimes. The Information
In its Comment,[11] the prosecution raises the same defenses against Gos must allege clearly and accurately the elements of the crime charged.[16]
contentions. It insists on the sufficiency of the allegations in the Information and prays
for the denial of Gos petition.
Elements of Violation prohibition shall be the standards to be applied to directors transactions such as those
of involved in the present case.
Section 83 of RA 337
Under Section 83, RA 337, the following elements must be present to constitute a accommodation
violation of its first paragraph: limit is not an
1. the offender is a director or officer of any banking institution; exception nor is it an
2. the offender, either directly or indirectly, for himself or as representative or element of the
agent of another, performs any of the following acts: offense
a. he borrows any of the deposits or funds of such bank; or
b. he becomes a guarantor, indorser, or surety for loans from such
bank to others, or Contrary to Gos claims, the second paragraph of Section 83, RA 337 does not
c. he becomes in any manner an obligor for money provide for an exception to a violation of the first paragraph thereof, nor does it
borrowed from bank or loaned by it; constitute as an element of the offense charged. Section 83 of RA 337 actually imposes
3. the offender has performed any of such acts without the written approval of three restrictions: approval, reportorial, and ceiling requirements.
the majority of the directors of the bank, excluding the offender, as the
director concerned. The approval requirement (found in the first sentence of the first
paragraph of the law) refers to the written approval of the majority of the banks board
A simple reading of the above elements easily rejects Gos contention that the of directors required before bank directors and officers can in any manner be an obligor
law penalizes a bank director or officer only either for borrowing the banks deposits or for money borrowed from or loaned by the bank. Failure to secure the approval renders
funds or for guarantying loans by the bank, but not for acting in both capacities. The the bank director or officer concerned liable for prosecution and, upon conviction,
essence of the crime is becoming an obligor of the bank without securing subjects him to the penalty provided in the third sentence of first paragraph of Section
the necessary written approval of the majority of the banks directors. 83.

The second element merely lists down the various modes of committing the The reportorial requirement, on the other hand, mandates that any such
offense. The third mode, by declaring that [no director or officer of any banking approval should be entered upon the records of the corporation, and a copy of the entry
institution shall xxx] in any manner be an obligor for money borrowed from be transmitted to the appropriate supervising department. The reportorial requirement
the bank or loaned by it, in fact serves a catch-all phrase that covers any situation is addressed to the bank itself, which, upon its failure to do so, subjects it to quo
when a director or officer of the bank becomes its obligor. The prohibition is warrantoproceedings under Section 87 of RA 337.[20]
directed against a bank director or officer who becomes in any manner an
obligor for money borrowed from or loaned by the bank without the written The ceiling requirement under the second paragraph of Section 83
approval of the majority of the banks board of directors. To make a distinction regulates the amount of credit accommodations that banks may extend to their directors
between the act of borrowing and guarantying is therefore unnecessary because in either or officers by limiting these to an amount equivalent to the respective outstanding
situation, the director or officer concerned becomes an obligor of the bank against whom deposits and book value of the paid-in capital contribution in the bank. Again, this is a
the obligation is juridically demandable. requirement directed at the bank. In this light, a prosecution for violation of the first
paragraph of Section 83, such as the one involved here, does not require an allegation
The language of the law is broad enough to encompass either act of borrowing that the loan exceeded the legal limit. Even if the loan involved is below the legal limit,
or guaranteeing, or both. While the first paragraph of Section 83 is penal in nature, and a written approval by the majority of the banks directors is still required; otherwise, the
by principle should be strictly construed in favor of the accused, the Court is unwilling bank director or officer who becomes an obligor of the bank is liable. Compliance with
to adopt a liberal construction that would defeat the legislatures intent in enacting the the ceiling requirement does not dispense with the approval requirement.
statute.The objective of the law should allow for a reasonable flexibility in its
construction. Section 83 of RA 337, as well as other banking laws adopting the same Evidently, the failure to observe the three requirements under Section 83
prohibition,[17] was enacted to ensure that loans by banks and similar financial paves the way for the prosecution of three different offenses, each with its own set of
institutions to their own directors, officers, and stockholders are above board.[18] Banks elements. A successful indictment for failing to comply with the approval requirement
were not created for the benefit of their directors and officers; they cannot use the assets will not necessitate proof that the other two were likewise not observed.
of the bank for their own benefit, except as may be permitted by law. Congress has thus
deemed it essential to impose restrictions on borrowings by bank directors and officers Rules of Court allow
in order to protect the public, especially the depositors.[19] Hence, when the law amendment of
prohibits directors and officers of banking institutions from becoming in any manner insufficient
an obligor of the bank (unless with the approval of the board), the terms of the Information
Assuming that the facts charged in the Information do not constitute an offense, we find
it erroneous for the RTC to immediately order the dismissal of the Information, without
giving the prosecution a chance to amend it. Section 4 of Rule 117 states:

SEC. 4. Amendment of complaint or information.If the motion

to quash is based on an alleged defect of the complaint or information
which can be cured by amendment, the court shall order that an
amendment be made.

If it is based on the ground that the facts charged do not

constitute an offense, the prosecution shall be given by the
court an opportunity to correct the defect by
amendment. The motion shall be granted if the prosecution
fails to make the amendment, or the complaint or
information still suffers from the same defect despite the
amendment. [Emphasis supplied]

Although an Information may be defective because the facts charged do not constitute
an offense, the dismissal of the case will not necessarily follow. The Rules specifically
require that the prosecution should be given a chance to correct the defect; the court can
order the dismissal only upon the prosecutions failure to do so. The RTCs failure to
provide the prosecution this opportunity twice[21] constitutes an arbitrary exercise of
power that was correctly addressed by the CA through the certiorari petition. This
defect in the RTCs action on the case, while not central to the issue before us,
strengthens our conclusion that this criminal case should be resolved through full-
blown trial on the merits.

WHEREFORE, we DENY the petitioners petition for review

on certiorari and AFFIRM the decision of the Court of Appeals in CA-G.R. SP No.
79149, promulgated on October 26, 2006, as well as its resolution of June 4, 2007. The
Regional Trial Court, Branch 26, Manila is directed to PROCEED with the hearing of
Criminal Case No. 99-178551. Costs against the petitioner.


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