JAIME HERNANDEZ, PETITIONER-APPELLANT, VS. DELFIN ALBANO, HERMOGENES CONCEPCION, JR., CITY FISCAL OF MANILA AND CARLOS C. GONZALES, SECOND ASSISTANT CITY FISCAL OF MANILA, RESPO…

Hernandez versus Albano

The Case

This is the case of Hernandez versus Albano, decided by the Supreme Court in January 1967. Jaime Hernandez, then Secretary of Finance and Presiding Officer of the Monetary Board of the Central Bank, sought to stop the City Fiscal of Manila and his assistant from investigating charges filed against him by Delfin Albano, a former Congressman of Isabela. The complaint alleged that Hernandez held prohibited shareholdings in several corporations that had obtained dollar allocations from the Central Bank through the Monetary Board while he presided over it. The case matters because it fixes two enduring rules: criminal prosecution is ordinarily not blocked by injunction, and the place of trial is the place where the crime or any essential ingredient of it was committed. It also teaches how a statute is read as a whole, so that a civil liability clause does not erase a penal one.

Procedural History

Albano lodged his complaint with the Office of the City Fiscal of Manila, and the charges were docketed as several investigations covering Hernandez's holdings in the Rural Bank of Nueva Caceres, the University of Nueva Caceres, the Bicol Electric Company, the University of the East, and DMG, Incorporated. At the joint investigation before the investigating fiscal, the complainant moved to exclude the charge of violating Article 216 of the Revised Penal Code, because that question had been pending in another case before the Supreme Court, which had since been resolved against Hernandez. The fiscal granted the motion. Hernandez then moved to dismiss the remaining charges, arguing that the constitutional violation should be prosecuted at the domicile of the private enterprises affected, and that a violation of Section 13 of Republic Act 265 is not criminal in nature. The motion was denied, and so was the motion for reconsideration.

Hernandez then went to the Court of First Instance of Manila on certiorari and prohibition with a prayer for preliminary injunction. Upon a stipulation of facts, the trial court dismissed the petition, with costs. Hernandez appealed, and the case reached the Supreme Court on that appeal.

Facts

Hernandez was the Secretary of Finance and, at the same time, the Presiding Officer of the Monetary Board of the Central Bank. Albano charged that during Hernandez's incumbency, Hernandez held shareholdings in the University of the East, the Bicol Electric Company, the Rural Bank of Nueva Caceres, DMG, Incorporated, and the University of Nueva Caceres, and that these corporations obtained dollar allocations from the Central Bank through the Monetary Board.

Hernandez did not deny the charges at this stage. He conceded that he stood charged with having those shareholdings and that the corporations purportedly obtained dollar allocations from the Central Bank through the Monetary Board while he was its presiding officer. What he contested was where the case could be investigated and whether the charges were criminal at all.

His position was that, except for his holdings in the University of the East in Manila, the Manila fiscals were powerless to investigate him, because the corporations were domiciled in Naga City and in Mandaluyong, Rizal, and the crime should be prosecuted at the situs of the shares. He also argued that Section 13 of Republic Act 265 carried only a civil sanction under Section 15, and not a criminal one.

Issues

• Whether or not the prosecuting arm of the City of Manila should be restrained from proceeding with the investigation of the charges against Hernandez.
• Whether or not a violation of Article Seven, Section Eleven, subsection two of the Constitution, punishable under Commonwealth Act 626, should be prosecuted at the domicile of the private enterprise affected by the violation.
• Whether or not a violation of Section 13 of Republic Act 265 is criminal in nature.

Applicable Provisions

Article Seven, Section Eleven, subsection two of the Constitution provides:

The heads of departments and chiefs of bureaus or offices and their assistants shall not, during their continuance in office, engage in the practice of any profession, or intervene, directly or indirectly, in the management or control of any private enterprise which in any way may be affected by the functions of their office; nor shall they, directly or indirectly, be financially interested in any contract with the Government, or any subdivision or instrumentality thereof.

This is the constitutional prohibition that Commonwealth Act 626 penalizes, and it defines the offense Hernandez is said to have committed.

Section 14 of Rule 110 of the Rules of Court provides:

In all criminal prosecutions the action shall be instituted and tried in the court of the municipality or province wherein the offense was committed or any one of the essential ingredients thereof took place.

This is the rule on venue that decides whether the Manila fiscals may investigate.

Section 13 of Republic Act 265 provides:

Withdrawal of persons having a personal interest. Whenever any person attending a meeting of the Monetary Board has a personal interest of any sort in the discussion or resolution of any given matter, or any of his business associates or any of his relatives within the fourth degree of consanguinity or second degree of affinity has such an interest, said person may not participate in the discussion or resolution of the matter and must retire from the meeting during the deliberations thereon. The minutes of the meeting shall note the withdrawal of the member concerned.

This is the provision Hernandez is charged with violating.

Section 15 of Republic Act 265 provides:

Responsibility. Any member of the Monetary Board or officer or employee of the Central Bank who wilfully violates this Act or who is guilty of gross negligence in the performance of his duties shall be held liable for any loss or injury suffered by the Bank as a result of such violation or negligence.

Hernandez relies on this as the only sanction, which he says is civil.

Section 34 of Republic Act 265 provides:

Proceedings upon violation of laws and regulations. Whenever any person or entity wilfully violates this Act or any order, instruction, rule or regulation legally issued by the Monetary Board, the person or persons responsible for such violation shall be punished by a fine of not more than twenty thousand pesos and by imprisonment of not more than five years.

This is the penal clause the Court holds applies to a wilful violation of Section 13.

Ruling

On the first issue, the Court held that the investigation should not be restrained. By statute, the prosecuting officers of Manila are empowered to investigate crimes committed within the city's territorial jurisdiction, and it is their sworn duty to investigate a criminal charge filed with their office. The Court laid down the general rule that ordinarily criminal prosecution may not be blocked by court prohibition or injunction. It acknowledged exceptions, where relief in equity is needed for the orderly administration of justice, to prevent the use of the strong arm of the law in an oppressive and vindictive manner, to avoid multiplicity of actions, to afford adequate protection to constitutional rights, and where the statute relied upon is unconstitutional or has been held invalid. None of these was present.

On the second issue, the Court held that the Manila fiscals have jurisdiction. Venue lies where the offense or any essential ingredient of it took place. The Court rejected Hernandez's reliance on the rule that the property right in shares of stock can be enforced only at the corporation's domicile, because the charges are not directed against the corporations and not mere ownership of shares is involved. Possession of prohibited interests is only one essential component of the offense. Equally essential is that Hernandez was a head of department, and that while holding that office and chairing the Monetary Board he was financially interested in corporations that secured dollar allocations, and that he had to act officially in his dual capacity in Manila, where he held his office.

On the third issue, the Court held that a violation of Section 13 is criminal. Section 15 provides civil liability for loss or injury suffered by the Bank, while Section 34 prescribes the penalty for a wilful violation of the Act, whether or not the Bank suffered loss. The statute must be construed as a whole, so that every part is effective, harmonious, and sensible. The penal sanction in Section 34 is an additional incentive toward obedience to the law, and one does not preclude the other. The Court also noted that the penal provisions were grouped in Sections 32, 33, and 34 to present a clearer picture of the liabilities under the Central Bank Act. On the congressional record, the Court held that nothing in the debates forecloses criminal action, and that the announced amendment to Section 13 was unnecessary because Section 34 is broad enough to cover any person, including the Chairman of the Monetary Board, who wilfully violates the Act.

Doctrine

First, criminal prosecution may not ordinarily be blocked by court prohibition or injunction, because the fiscal's power to investigate is a sworn duty demanded by public interest. Relief in equity is available only in extreme cases, such as those the Court listed.

Second, under Section 14 of Rule 110, criminal actions are instituted and tried where the offense or any essential ingredient of it was committed. Where the accused is a head of department who acted officially in Manila, Manila is the proper venue even if the corporations involved are domiciled elsewhere.

Third, a statute must be construed as a whole, so that every part is effective, harmonious, and sensible. A provision imposing civil liability does not erase a separate provision imposing a criminal penalty for a wilful violation of the same Act.

Disposition

The Supreme Court affirmed the judgment of the trial court dismissing the petition, with costs against Hernandez.

Remember This

Memorize the line that criminal prosecution may not ordinarily be blocked by injunction, and that venue lies where the crime or any essential ingredient of it was committed. Examiners use this case on the fiscal's duty to investigate, on venue in criminal cases, and on statutory construction where civil and penal sanctions coexist in one statute.