LAW ON SECRECY OF BANK DEPOSITS (R.A. NO.
1988 and 1989, respondent, while engaged as cashier
1405)
A. Purpose
BSB GROUP, INC. represented by its President
Mr. RICARDO BANGAYAN v. SALLY GO a.k.a.
SALLY GO-BANGAYAN G.R. No. 168644, 16
February 2010, Peralta, J.
R.A. No. 1405 has two allied purposes: it hopes to
discourage private hoarding and at the same time
encourage the people to deposit their money in
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic
development. Owing to this piece of legislation, the
confidentiality of bank deposits remains to be a basic
state policy in the Philippines.
FACTS.
BSB Group is duly organized domestic
corporation presided by Ricardo Bangayan. Sally Go is
Ricardos wife, who was employed in the company as a
cashier, and was engaged, among others, to receive
and account for the payments made by the various
customers of the company. Ricardo filed a complaint
for estafa and/or qualified theft against Sally Go,
alleging that several checks with an aggregate amount
of P1, 534, 135.50 issued by the companys customers
were, instead of being turned over to the companys
coffers, indorsed by Sally Go to her personal banking
account maintained at Security Bank Divisoria.
Trial ensued and the prosecution moved for
the issuance of subpoena duces tecum/ad
testificandum against the managers or records
custodian of Security Bank as well as of the Asian
Savings Bank (now Metrobank). The trial court
granted the same and issued the corresponding
subpoena. Sally Go filed a motion to quash the
subpoena addressed to Metrobank, noting that the
complaint filed with the prosecutor made no mention
of the said bank account to which she had allegedly
deposited the proceeds of the supposed checks. x x x
Petitioner argued for the relevancy of the Metrobank
account on the ground that two checks were deposited
therein. Sally Go filed a supplemental motion to quash,
invoking the absolutely confidential nature of the
Metrobank account under the provisions of R.A. No.
1405. The trial court denied the motion to quash.
Meanwhile, the prosecution was able to
present in court the testimony of Elenita Marasigan,
the representative of Security Bank. In a nutshell,
Marasigans testimony sought to prove that between
at the BSB Group, Inc., was able to run away with the
checks issued to the company by its customers,
endorse the same, and credit the corresponding
amounts to her personal deposit account with Security
Bank. In the course of the testimony, the subject
checks were presented to Marasigan for identification
and marking as the same checks received by
respondent, endorsed, and then deposited in her
personal account with Security Bank. But before the
testimony could be completed, respondent filed a
Motion to Suppress, seeking the exclusion of
Marasigans testimony and accompanying documents
thus far received, bearing on the subject Security
Bank account. This time respondent invokes, in
addition to irrelevancy, the privilege of confidentiality
under R.A. No. 1405.
The trial court, nevertheless, denied the motion as
well as the subsequent MR filed. On appeal, the
petition was granted and the testimony of the bank
representative was ordered stricken out.
ISSUE.
Does Marasigans testimony, as well as of the
corresponding checks allegedly deposited in said
account, have a direct relation to the subject matter of
the case for qualified theft, hence, exempted under the
coverage of confidentiality under R.A. No. 1405?
HELD.
YES. R.A. No. 1405 has two allied purposes. It
hopes to discourage private hoarding and at the same
time encourage the people to deposit their money in
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic
development. Owing to this piece of legislation, the
confidentiality of bank deposits remains to be a basic
state policy in the Philippines. Section 2 of the law
institutionalized this policy by characterizing as
absolutely confidential in general all deposits of
whatever nature with banks and other financial
institutions in the country.
Subsequent statutory enactments have
expanded the list of exceptions to this policy yet the
secrecy of bank deposits still lies as the general rule,
falling as it does within the legally recognized zones of
privacy. There is, in fact, much disfavor to construing
these primary and supplemental exceptions in a
manner that would authorize unbridled discretion,
whether governmental or otherwise, in utilizing these
exceptions as authority for unwarranted inquiry into
1
bank accounts. It is then perceivable that the present
legal order is obliged to conserve the absolutely
confidential nature of bank deposits.
In taking exclusion from the coverage of the
confidentiality rule, petitioner posits that the account
maintained by respondent with Security Bank contains
the proceeds of the checks that she has fraudulently
appropriated to herself and, thus, falls under one of
the exceptions in Section 2 of R.A. No. 1405 that the
money kept in said account is the subject matter in
litigation. x x x In Union Bank of the Philippines v.
Court of Appeals, the Court noted that the inquiry into
bank deposits allowable under R.A. No. 1405 must be
premised on the fact that the money deposited in the
account is itself the subject of the action. Given this
perspective, we deduce that the subject matter of the
action in the case at bar is to be determined from the
indictment that charges respondent with the offense,
and not from the evidence sought by the prosecution
to be admitted into the records.
It comes clear that the admission of testimonial and
documentary evidence relative to respondents
Security Bank account serves no other purpose than to
establish the existence of such account, its nature and
the amount kept in it. It constitutes an attempt by the
prosecution at an impermissible inquiry into a bank
deposit account the privacy and confidentiality of
which is protected by law. On this score alone, the
objection posed by respondent in her motion to
suppress should have indeed put an end to the
controversy at the very first instance it was raised
before the trial court.
B. Prohibited Acts
EMMANUEL C. OATE and ECON HOLDINGS
CORPORATION, petitioners, vs. HON. ZEUS C.
ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN
LIFE ASSURANCE COMPANY OF CANADA,
respondents. BRUNNER DEVELOPMENT
CORPORATION, petitioner, vs. HON. ZEUS C.
ABROGAR, as Presiding Judge of Branch 150 of
the Regional Trial Court of Makati, and SUN
LIFE ASSURANCE COMPANY OF CANADA,
respondents. G.R. No. 107303, 23 February 1995,
MENDOZA, EN BANC
Key Doctrine: Whether the transaction is
considered a sale or money placement does not
make the money the "subject matter of
litigation within the meaning of Sec. 2 of
Republic Act No. 1405 which prohibits the
disclosure or inquiry into bank deposits except
in cases where the money deposited or invested
is the subject matter of litigation.
Facts1
Sun Life filed a complaint for sum of money
against Onate, Econ Holdings and Brunner
Development. Sun Life alleges that Onate, as
president of Econ, offered to sell 46 million peso worth
of treasury bills at a discounted price. Sun Life paid
the price by means of a check payable to Brunner.
Brunner, through its President Dio, issued to it a
receipt with undertaking to deliver the treasury bills
to Sun Life. Brunner and Dio delivered instead a
promissory note, in which it was made to appear that
the transaction was a money placement instead of sale
of treasury bills.
Sun Life moved to examine the accounts and ledgers
of Brunner Development at Urban Bank and BPI. Also
properties of the petitioners were already garnished
notwithstanding the fact that they were served
summons only after the garnishment.
Issue
Was the attachment of the properties proper?
Was the examination proper?
Ruling
1. No, while the petition for a writ of
preliminary attachment may be granted and the writ
itself issued before the defendant is summoned, the
writ of attachment cannot be implemented until
jurisdiction over the person of the defendant is
obtained. It is required at the very least that when
proper officer commences implementation of the writ
of attachment service of summons should be
simultaneously made if the court only acquired
jurisdiction of the person of the defendant after the
attachment, such attachment is invalid.
2. No, the issue is whether the money paid to
Brunner was the consideration for the sale of treasury
bills, as Sun Life claims, or whether it was money
intended for placement, as petitioners allege.
Petitioners do not deny receipt of P39,526,500.82 from
Sun Life. Hence, whether the transaction is
considered a sale or money placement does not make
the money the "subject matter of litigation" within the
meaning of Sec. 2 of Republic Act No. 1405 which
prohibits the disclosure or inquiry into bank deposits
except "in cases where the money deposited or
invested is the subject matter of litigation." Nor will it
2
 matter whether the money was "swindled" as Sun Life
contends.
Further, The examination of bank books and records
cannot be justified under Rule 57, Sec. 10 2. Since, as
already stated, the attachment of petitioners'
properties was invalid, the examination ordered in
connection with such attachment must likewise be
considered invalid. Under the rule, examination is only
proper where the property of the person examined has
been validly attached.
1
This is a resolution resolving the MR filed by Onate
2
Sec. 10. Examination of party whose property is
attached and persons indebted to him or controlling
his property; delivery of property to officer. Any
person owing debts to the party whose property is
attached or having in his possession or under his
control any credit or other personal property
belonging to such party, may be required to attend
before the court in which the action is pending, or
before a commissioner appointed by the court, and
be examined on oath respecting the same. The party
whose property is attached may also be required to
attend for the purpose of giving information
respecting his property, and may be examined on
oath. The court may, after such examination, order
personal property capable of manual delivery
belonging to him, in the possession of the person so
required to attend before the court, to be delivered to
the clerk of the court, sheriff, or other proper officer
on such terms as may be just, having reference to
any lien thereon or claims against the same, to await
the judgment in the action.
PHILIPPINE COMMERCIAL INTERNATIONAL
BANK, PETITIONER, VS. COURT OF APPEALS
AND RORY W. LIM, RESPONDENTS. G.R. No.
97785, March 29, 1996, FRANCISCO, J .
Key Doctrine: The services being offered by a banking
institution like petitioner are imbued with public
interest; any attempt to completely exempt one of the
contracting parties from any liability in case of loss
notwithstanding its bad faith, fault or negligence,
cannot be sanctioned for being inimical to public
interest and therefore contrary to public policy
On March 13, 1986, private respondent Rory
Lim delivered the amount of P200,000.00 for the
purpose of obtaining a telegraphic transfer from
petitioner PCIB in the same amount. The money was
to be transferred to Equitable Banking Corporation,
Cagayan de Oro Branch, and credited to private
respondents account at the said bank. Upon purchase
of the telegraphic transfer, petitioner issued the
corresponding receipt which contained the assailed
provision, to wit: In case of fund transfer, the
undersigned hereby agrees that such transfer will be
made without any responsibility on the part of the
BANK, or its correspondents, for any loss occasioned
by errors, or delays in the transmission of message by
telegraph or cable companies or by the
correspondents or agencies, necessarily employed by
this BANK in the transfer of this money, all risks for
which are assumed by the undersigned."
Subsequent to the purchase of the telegraphic
transfer, petitioner in turn issued and delivered eight
Equitable Bank checks to his suppliers in different
amounts as payment for the merchandise that he
obtained from them. When the checks were presented
for payment, five of them bounced for insufficiency of
funds, while the remaining three were held overnight
for lack of funds upon presentment.
Upon verification by private respondent with
the Gingoog Branch Office of PCIB, it was confirmed
that his telegraphic transfer had not yet been remitted
to Equitable Bank, Cagayan de Oro branch. In fact,
petitioner PCIB made the corresponding transfer of
funds only on April 3, 1986, twenty one (21) days after
the purchase of the telegraphic transfer on March
13,1986.
Aggrieved, private respondent demanded from
petitioner PCIB that he be compensated for the
resulting damage that he suffered due to petitioners
failure to make the timely transfer of funds which led
to the dishonor of his checks. In a letter, PCIBs
Branch Manager Rodolfo Villarmia acknowledged
their failure to transmit the telegraphic transfer on
time as a result of their mistake in using the control
number twice and the petitioner banks failure to
request confirmation and act positively on the
disposition of the said telegraphic transfer.
Nevertheless, petitioner refused to heed
private respondents demand prompting the latter to
file a complaint for damages with the RTC of Gingoog
City. In his complaint, private respondent alleged that
as a result of petitioners total disregard and gross
violation of its contractual obligation to remit and
deliver the sum P200,000.00, private respondents
checks were dishonored for insufficient funds thereby
causing his business and credit standing to suffer
considerably for which petitioner should be ordered to
pay damages.
In its decision dated July 27, 1988 the RTC of
Gingoog City held petitioner liable for breach of
contract and struck down the aforecited provision
found in petitioners telegraphic transfer application
form/receipt exempting it from any liability and
declared the same to be invalid and unenforceable.
3
Upon appeal by petitioner to the Court of Appeals,
respondent court affirmed with modifications the
judgment of the trial court.
ISSUE
Is the assailed provision found in the
application form/receipt exempting petitioner from
any liability in case of loss resulting from errors or
delays in the transfer of funds valid?
RULING
NO.
The prohibition against this type of contractual
stipulation is treated by law as void which may not be
ratified or waived by a contracting party. Article 1409
of the Civil Code states:
"ART. 1409. The following contracts are inexistent and
void from the beginning: (1) Those whose cause,
object or purpose is contrary to law, morals, good
customs, public order or public policy;
xxx xxx xxx
These contracts cannot be ratified. Neither can the
right to set up the defense of illegality be
waived." Undoubtedly, the services being
offered by a banking institution like petitioner
are imbued with public
interest. The use of telegraphic transfers have now
become commonplace among businessmen because it
facilitates commercial transactions. Any attempt to
completely exempt one of the contracting parties from
any liability in case of loss notwithstanding its bad
faith, fault or negligence, as in the instant case,
cannot be sanctioned for being inimical to public
interest and therefore contrary to public policy.
Resultingly, there being no dispute that petitioner
acted fraudulently and in bad faith, the award of
moral[26] and exemplary damages were proper.
Moreover, that petitioner failed to discharge
its obligation to transmit private respondents
telegraphic transfer on time in accordance with their
agreement is already a settled matter as the same is
no longer disputed in this petition. Neither is the
finding of respondent Court of Appeals that petitioner
acted fraudulently and in bad faith in the performance
of its obligation, being contested by petitioner.
Perforce, we are bound by these factual
considerations.
Having established that petitioner acted
fraudulently and in bad faith, we find it implausible to
absolve petitioner from its wrongful acts on account of
the assailed provision exempting it from any liability.
In Geraldez vs. Court of Appeals, it was unequivocally
declared that notwithstanding the enforceability of a
contractual limitation, responsibility arising from a
fraudulent act cannot be exculpated because the same
is contrary to public policy. Indeed, Article 21 of the
Civil Code is quite explicit in providing that "[a]ny
person who willfully causes loss or injury to another in
a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the
damage." Freedom of contract is subject to the
limitation that the agreement must not be against
public policy and any agreement or contract made in
violation of this rule is not binding and will not be
enforced.
UNION BANK OF THE PHILIPPINES, vs. COURT
OF APPEALS and ALLIED BANK CORPORATION,
G.R. No. 134699, December 23, 1999,
KAPUNAN, J.
KEY DOCTRINE.
By the terms of R.A. No. 1405, the money
deposited itself should be the subject matter of the
litigation.
FACTS.
A check in the amount of 1 million pesos was
drawn against Account No. 0111-01854-8 with Allied
Bank payable to the order of Alvarez. The payee
deposited the check with Union Bank who credited the
P1,000,000.00 to the account of Mr. Alvarez. Union
Bank sent the check for clearing through the
Philippine Clearing House Corporation. When the
check was presented for payment, a clearing
discrepancy was committed by Union Banks clearing
staff when the 1 Million Pesos was erroneously under-
encoded to 1 Thousand Pesos.
Union Bank filed a petition for the
examination of Account No. 111-01854-8. The RTC
held that the case was not one where the money
deposited is the subject matter of the litigation.
Union Bank in its complaint filed before the
PCHC, Arbicom Case, clearly stated that its cause of
action against defendant arose from Allied Banks
deliberate violation of the provisions of the PCHC Rule
Book, Sec. 25.3, specifically on Under-Encoding of
check. A reading of petitioner collecting banks
complaint in the Arbicom case shows that its thrust is
directed against respondent drawee banks alleged
failure to inform the former of the under-encoding. On
the other hand, the petition before the Supreme Court
reveals that the true purpose for the examination is to
aid petitioner in proving the extent of Allied Banks
liability.
4
ISSUE.
Is the money deposited is covered by the term
subject matter of litigation?
RULING.
The petitioner is fishing for information so it
can determine the culpability of private respondent
and the amount of damages it can recover from the
latter. It does not seek recovery of the very money
contained in the deposit. The subject matter of the
dispute may be the amount of P999,000.00 that
petitioner seeks from private respondent as a result of
the latters alleged failure to inform the former of the
discrepancy; but it is not the P999,000.00 deposited in
the drawers account. By the terms of R.A. No. 1405,
the money deposited itself should be the subject
matter of the litigation.
That petitioner feels a need for such
information in order to establish its case against
private respondent does not, by itself, warrant the
examination of the bank deposits. The necessity of
the inquiry, or the lack thereof, is immaterial since
the case does not come under any of the exceptions
allowed by the Bank Deposits Secrecy Act. *From
DC
C. Deposits Covered
CARMEN LL. INTENGAN, et al. v. COURT OF
APPEALS, et al. G.R. No. 128996, 15 February
2002, SECOND DIVISION (De Leon, Jr., J.)
DOCTRINE OF THE CASE
When the accounts in question are U.S. dollar
deposits, the applicable law is not Republic Act No.
1405 (Bank Secracy Law) but R.A. 6426 (Foreign
Currency Deposit Act of the Philippines). Thus, under
R.A. No. 6426 there is only a single exception to the
secrecy of foreign currency deposits, that is,
disclosure is allowed only upon the written permission
of the depositor.
FACTS
Citibank filed a complaint, for violation of
section 31 vis--vis section 144 of the Corporation
Code, against its officers, Dante L. Santos (Treasurer
of the Global Consumer Group of the bank) and
Marilou Genuino (Asst. Vice President in the Santos
office).
In the investigation, Santos and Genuino,
contrary to their disclosures and the aforementioned
bank policy, appeared to have been actively engaged
in business endeavors that were in conflict with the
business of the bank. It was found that with the use of
2 companies in which they have personal financial
interest, namely Torrance Development Corporation
and Global Pacific Corporation, they managed or
caused existing bank clients/depositors to divert their
money from Citibank, N.A., such as those placed in
peso and dollar deposits and money placements, to
products offered by other companies that were
commanding higher rate of yields. This was done by
first transferring bank clients monies to Torrance and
Global which in turn placed the monies of the bank
clients in securities, shares of stock and other
certificates of third parties. It also appeared that out
of these transactions, they derived substantial
financial gains.
Intengan, Rosario Neri and Rita Brawner were
identified as the bank clients whose accounts have
been diverted to Torrance/Global. Their bank records
were disclosed and annexed in the complaint against
Santos and Genuino. The complaints were
subsequently amended to include a charge of estafa.
Intengan, et al. sought for their exclusion and the
physical withdrawal of their bank records attached.
The assistant provincial prosecutor recommended the
dismissal of Intengan, et al.s complaints. It was
overruled by the provincial prosecutor but directed
the filing of Informations against Citibanks officers for
alleged violation of R.A. 1405 (Bank Secrecy Law). The
DOJ Secretary ordered the withdrawal of the
Informations against Citibanks officers.
Before the CA, Intengan, et al.s petition to
reverse the DOJ resolution was denied, explaining that
the disclosure of their bank records were essential in
the complete prosecution of the case against Santos
and Genuino.
ISSUE:
1. Did Citibanks officers violate the Bank Secrecy
Law when they disclosed Intengan, et al.s bank
records in the complaint where the latter are not
involved?
2. Can Citibanks officers still be prosecuted for
violating R.A. 6426?
RULING:
1. NO. Actually, this case should have been studied
more carefully by all concerned. The finest legal minds
in the country - from the parties respective counsel,
the Provincial Prosecutor, the DOJ, the OSG, and the
CA - all appear to have overlooked a single fact which
dictates the outcome of the entire controversy. A
circumspect review of the record shows us the reason.
The accounts in question are U.S. dollar deposits;
consequently, the applicable law is not Republic Act
No. 1405 but R.A. 6426 (Foreign Currency Deposit
Act of the Philippines).
Thus, under R.A. No. 6426 there is only a
single exception to the secrecy of foreign currency
5
deposits, that is, disclosure is allowed only upon the
written permission of the depositor. Incidentally, the
acts of Citibanks officers complained of happened
before the enactment on September 29, 2001 of R.A.
No. 9160 (Anti-Money Laundering Act of 2001).
A case for violation of Republic Act No. 6426
should have been the proper case brought against
private respondents. Citibanks officers Lim and Reyes
admitted that they had disclosed details of Intengan,
et al.s dollar deposits without the latters written
permission. It does not matter if that such disclosure
was necessary to establish Citibanks case against
Dante L. Santos and Marilou Genuino. Lims act of
disclosing details of petitioners bank records
regarding their foreign currency deposits, with the
authority of Reyes, would appear to belong to that
species of criminal acts punishable by special laws,
called malum prohibitum.
2. NO. Per available records, Citibanks officers may
no longer be haled before the courts for violation of
Republic Act No. 6426. Vic Lim made the disclosure in
September of 1993 in his affidavit submitted before
the Provincial Fiscal. In her complaint-affidavit,
Intengan stated that she learned of the revelation of
the details of her foreign currency bank account on
October 14, 1993; Neri on October 24, 1993; and
Brawner on January 5, 1994. Prescription has set in.
The filing of the complaint or information in
the case at bar for alleged violation of Republic Act
No. 1405 did not have the effect of tolling the
prescriptive period. For it is the filing of the
complaint or information corresponding to the
correct offense which produces that effect.
It may well be argued that the foregoing
disquisition would leave petitioners with no remedy in
law. We point out, however, that the confidentiality of
foreign currency deposits mandated by Republic Act
No. 6426, as amended by Presidential Decree No.
1246, came into effect as far back as 1977. Hence,
ignorance thereof cannot be pretended. Even during
the pendency of this appeal, nothing prevented
Intengan, et al. from filing a complaint charging the
correct offense against Citibanks officers. This was
not done, as everyone involved was content to submit
the case on the basis of an alleged violation of
Republic Act No. 1405 (Bank Secrecy Law), however,
incorrectly invoked.
JOSEPH VICTOR EJERCITO v. SANDIGANBAYAN
AND PEOPLE OF THE PHILIPPINES G.R. No.
157294-95, November 30, 2006, EN BANC
(Ynares-Santiago, J.)
Key Doctrine: All deposits of whatever nature with
banks or banking institutions in the Philippines
including investments in bonds issued by the
Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and
may not be examined, inquired or looked into by any
person, government official, bureau or office, except
upon written permission of the depositor, or in cases
of impeachment, or upon order of a competent court
in cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or
invested is the subject matter of the litigation.
In the criminal case for plunder of People v.
Estrada, et al., the Special Prosecution Panel filed a
Request for Issuance of Subpoena Duces Tecum for
the issuance of a subpoena directing the President of
Export and Industry Bank (EIB, formerly Urban Bank)
or his/her authorized representative to certain
documents during the hearings in relation to Ejercitos
trust and savings account as well as Urban Bank
Managers Check and its corresponding application
forms. The Prosecution also filed the same request but
directed to the authorized representative of Equitable-
PCI Bank to produce statements of account pertaining
to certain accounts in the name of "Jose Velarde" and
to testify thereon. Sandiganbayan granted both
requests and subpoenas were issued. The Prosecution
filed another Request for Issuance of Subpoena for the
President of EIB or his/her authorized representative
to produce the same documents subject of the
Subpoena Duces Tecum and to testify thereon on the
hearings scheduled and subsequent dates until
completion of the testimony which was also granted.
Ejercito filed a letter in the Sandiganbayan
expressing his concern regarding the subpoena of his
bank account that the prosecution may have breached
bank secrecy laws and asking to hold in abeyance the
subpoena for at least 10 days to enable him to take
appropriate legal steps since he needs to consult a
lawyer regarding his right as a depositor. Associate
Justice Edilberto Sandoval, advised that his remedy
was to file a motion to quash, and he was given up to
12:00 noon the following day. Ejercito, unassisted by
counsel, filed a Motion to Quash Subpoena Duces
Tecum/Ad Testificandum praying that the subpoenas
issued be quashed, claiming that his bank accounts
are covered by The Secrecy of Bank Deposits Law and
do not fall under any of the exceptions. He further
claimed that the specific identification of documents in
the questioned subpoenas, including details on dates
and amounts, could only have been made possible by
an earlier illegal disclosure by the EIB and PDIC in its
capacity as receiver of the then Urban Bank.
Before the Motion to Quash was resolved by
the Sandiganbayan, the prosecution filed another
6
Request for the Issuance of Subpoena Duces
Tecum/Ad Testificandum again to direct the President
of the EIB to produce the same documents subject of
previous subpoenas except the Bank of Commerce MC
#0256254 in the amount of P2M as Bank of
Commerce MC #0256256 in the amount of P200M
was instead requested. The request covered additional
documents regarding another savings account. The
prosecution also filed the same directed to Aurora C.
Baldoz, Vice President-CR-II of the PDIC for her to
produce several documents on the scheduled
hearings. The subpoenas prayed for in both requests
were issued by the Sandiganbayan. Ejercito, assisted
by counsel, filed an Urgent Motion to Quash
Subpoenae Duces Tecum/Ad Testificandum praying
that the subpoena directed to Aurora Baldoz be
quashed for the same reasons which he cited in the
Motion to Quash he had earlier filed. Sandiganbayan
denied both his motions as well as his MR.
ISSUE:
Is Ejercitos trust account covered by the term
deposit as used in RA 1405?
HELD:
Yes. The contention that trust accounts are not
covered by the term "deposits," as used in R.A. 1405,
by the mere fact that they do not entail a creditor-
debtor relationship between the trustor and the bank,
does not lie. An examination of the law shows that the
term "deposits" used therein is to be understood
broadly and not limited only to accounts which give
rise to a creditor-debtor relationship between the
depositor and the bank. The policy behind the law is
laid down in Section 1: It is hereby declared to be the
policy of the Government to give encouragement to
the people to deposit their money in banking
institutions and to discourage private hoarding so that
the same may be properly utilized by banks in
authorized loans to assis t in the economic
development of the country.
If the money deposited under an account may
be used by banks for authorized loans to third
persons, then such account, regardless of whether it
creates a creditor-debtor relationship between the
depositor and the bank, falls under the category of
accounts which the law precisely seeks to protect for
the purpose of boosting the economic development of
the country.
Trust Account No. 858 is, without doubt, one
such account. The Trust Agreement between
petitioner and Urban Bank provides that the trust
account covers "deposit, placement or investment of
funds" by Urban Bank for and in behalf of petitioner.
The money deposited under Trust Account No. 858,
was, therefore, intended not merely to remain with the
bank but to be invested by it elsewhere. To hold that
this type of account is not protected by R.A. 1405
would encourage private hoarding of funds that could
otherwise be invested by banks in other ventures,
contrary to the policy behind the law.
Section 2 of the same law in fact even more
clearly shows that the term "deposits" was intended to
be understood broadly: All deposits of whatever
nature with banks or banking institutions in the
Philippines including investments in bonds issued by
the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and
may not be examined, inquired or looked into by any
person, government official, bureau or office, except
upon written permission of the depositor, or in cases
of impeachment, or upon order of a competent court
in cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or
invested is the subject matter of the litigation.
The phrase "of whatever nature" proscribes
any restrictive interpretation of "deposits." Moreover,
it is clear from the immediately quoted provision that,
generally, the law applies not only to money which is
deposited but also to those which are invested. This
further shows that the law was not intended to apply
only to "deposits" in the strict sense of the word.
Otherwise, there would have been no need to add the
phrase "or invested." Clearly, therefore, R.A. 1405 is
broad enough to cover Trust Account No. 858.
The protection afforded by the law is, however,
not absolute, there being recognized exceptions
thereto, as above-quoted Section 2 provides. In the
present case, two exceptions apply, to wit: (1) the
examination of bank accounts is upon order of a
competent court in cases of bribery or dereliction of
duty of public officials, and (2) the money deposited or
invested is the subject matter of the litigation.
D. Exceptions
PHILIPPINE NATIONAL BANK and EDUARDO Z.
ROMUALDEZ, in his capacity as President of the
PNB, plaintiffs-appellants, vs. EMILIO A.
GANCAYCO and FLORENTINO FLOR, Special
Prosecutors of the DOJ, defendants-appellees.
[G.R. No. L-18343, September 30, 1965,
REGALA, J . ]
Section 8 of the Anti-Graft Law is intended to amend
section 2 of Republic Act No. 1405 by providing
additional exception to the rule against the
disclosure of bank deposits. Cases of unexplained
7
wealth are similar to cases of bribery or dereliction
of duty and no reason is seen why these two classes
of cases cannot be excepted from the rule making
bank deposits confidential.
Defendants Emilio A. Gancayco and Florentino
Flor, as special prosecutors of the DOJ, required the
plaintiff PNB to produce at a hearing the records of
the bank deposits of Ernesto T. Jimenez, former
administrator of the Agricultural Credit and
Cooperative Administration, who was then under
investigation for unexplained wealth.
PNB declined to reveal its records, invoking
the Sec. 21 of the Law on Secrecy of Bank Deposits.
On the other hand, the defendants cited Sec. 82 of the
Anti-Graft and Corrupt Practices Act (RA 3019) in
support of their claim of authority.
PNB filed an action for declaratory judgment
before the CFI-Manila. The court rendered judgement,
sustaining the power of the defendants to compel the
disclosure of bank accounts of ACCFA Administrator
Jimenez. The court said that, by enacting section 8 of,
the Anti-Graft and Corrupt Practices Act, Congress
clearly intended to provide an additional ground for
the examination of bank deposits. Without such
provision, the court added prosecutors would be
hampered if not altogether frustrated in the
prosecution of those charged with having acquired
unexplained wealth while in public office. Hence, this
petition.
ISSUE: Can a bank be compelled to disclose the
records of accounts of a depositor who is under
investigation for unexplained wealth?
RULING: YES.
Section 8 of the Anti-Graft Law is intended to
amend section 2 of Republic Act No. 1405 by
providing additional exception to the rule against the
disclosure of bank deposits.
With regard to the claim that disclosure would
be contrary to the policy making bank deposits
confidential, it is enough to point out that while
section 2 of Republic Act 1405 declares bank deposits
to be "absolutely confidential," it nevertheless allows
such disclosure in the following instances: (1) Upon
written permission of the depositor; (2) In cases of
impeachment; (3) Upon order of a competent court in
cases of bribery or dereliction of duty of public
officials; (4) In cases where the money deposited is the
subject matter of the litigation. Cases of unexplained
wealth are similar to cases of bribery or dereliction of
duty and no reason is seen why these two classes of
cases cannot be excepted from the rule making bank
deposits confidential. The policy as to one cannot be
different from the policy as to the other. This policy
express the motion that a public office is a public trust
and any person who enters upon its discharge does so
with the full knowledge that his life, so far as relevant
to his duty, is open to public scrutiny.
1
SEC. 2. All deposits of whatever nature with banks or
banking institutions in the Philippines including
investments in bonds issued by the Government of the
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an
absolutely confidential nature and may not be
examined, inquired or looked into by any person,
government official, bureau or office, except upon
written permission of the depositor, or in cases of
impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or
invested is the subject matter of the litigation.
2
SEC. 8. Dismissal due to unexplained wealth. If in
accordance with the provisions of Republic Act
Numbered One thousand three hundred seventy-nine,
a public official has been found to have acquired
during his incumbency, whether in his name or in the
name of other persons, an amount of property and/or
money manifestly out of proportion to his salary and to
his other lawful income, that fact shall be a ground for
dismissal or removal. Properties in the name of the
spouse and unmarried children of such public official
may be taken into consideration, when their
acquisition through legitimate means cannot be
satisfactorily shown. Bank deposits shall be taken
into consideration in the enforcement of this
section, notwithstanding any provision of law to
the contrary.
BANCO FILIPINO SAVINGS AND MORTGAGE
BANK vs. HON. FIDEL PURISIMA, and HON.
VICENTE ERICTA and JOSE DEL FIERO, G.R. No.
L-56429 May 28, 1988, J. Narvasa
Manuel Caturla, a special agent of the Bureau of
Customs was accused by the BIR of having acquired
property manifestly out of proportion to his salary and
other lawful income. In the course of the investigation
thereof, the Tanodbayan issued a subpoena duces
tecum to Banco Fiipino, commanding its
representative to appear at the Office of the
Tanodbayan and furnish the latter with duly certified
copies of the records in all its branches, of the loans,
savings and time deposits and other banking
transactions, dating back to 1969, appearing in the
names of Caturla, his wife, Purita, their children
and/or Pedro Escuyos.
Caturla moved to quash the subpoena duces tecum
arguing that compliance therewith would result in a
violation of Sections 2 and 3 of the Law on Secrecy of
Bank Deposits. Then Tanodbayan Ericta not only
denied the motion for lack of merit, and directed
compliance with the subpoena, but also expanded its
8
scope through a second subpoena duces tecum, this
time requiring production by BF of the bank records of
Siargao Agro-Industrial Corporation, Pedro Escuyos or
his wife, Emeterio Escuyos, Purita Caturla, Lucia
Escuyos, etc. Two other subpoena of substantially the
same tenor as the second were released by the
Tanodbayan's Office.
BF took over from Caturla in the effort to nullify the
subpoenae. It filed a complaint for declaratory relief
with the CFI of Manila. BF Bank prayed for a judicial
declaration as to whether its compliance with the
subpoenae duces tecum would constitute an
infringement of the provisions of Sections 2 and 3 of
R.A. No. 1405 in relation to Section 8 of R.A. No.
3019. Respondent Judge Purisima issued an Order
denying for lack of merit the application by BF Bank
for a preliminary injunction and/or restraining order.
Issue: Does the Law on Secrecy of Bank Deposits
preclude production by subpoena duces tecum of bank
records of transactions by or in the names of the wife,
children and friends of a special agent of the Bureau
of Customs, accused before the Tanodbayan of having
allegedly acquired property manifestly out of
proportion to his salary and other lawful income, in
violation of the "Anti-Graft and Corrupt Practices Act?"
NO
Held:
BF argues that subpoenae in question are in the
nature of "fishing expeditions" or "general warrants"
since they authorize indiscriminate inquiry into bank
records; that, assuming that such an inquiry is
allowed, it is constitutionally impermissible with
respect to private individuals or public officials not
under investigation on a charge of violating said Act.
The provisions of R.A. No. 1405 subject of BF's
declaratory action, read as follows:
Sec. 2. All deposits of whatever nature with banks or
banking institutions in the Philippines including
investments in bonds issued by the Government of the
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an
absolutely confidential nature and may not be
examined, inquired or looked into by any person,
government official, bureau or office, except upon
written permission of the depositor, or in cases of
impeachment, or upon order of a competent court in
cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or
invested is the subject matter of litigation.
Sec. 3. It shall be unlawful for any official or employee
of a banking institution to disclose to any person other
than those mentioned in Section two hereof any
information concerning said deposits.
The other provision involved in the declaratory action
is Section 8 of R.A. No. 3019. It reads:
Sec. 8. Dismissal due to unexplained wealth. If a
public official has been found to have acquired during
his incumbency, whether in his name or in the name of
other persons, an amount of property and/or money
manifestly out of proportion to this salary and to his
other lawful income, that fact shall be a ground for
dismissal or removal. Properties in the name of the
spouse and unmarried children of such public official
may be taken into consideration, when their
acquisition through legitimate means cannot be
satisfactorily shown.
Bank deposits shall be taken into consideration
in the enforcement of this section,
notwithstanding any prohibition of law to the
contrary.
The inquiry into illegally acquired property extends to
cases where such property is concealed by being held
by or recorded in the name of other persons. This
proposition is made clear by R.A. No. 3019 which
quite categorically states that the term, "legitimately
acquired property of a public officer or employee shall
not include .. property unlawfully acquired by the
respondent, but its ownership is concealed by its
being recorded in the name of, or held by,
respondent's spouse, ascendants, descendants,
relatives or any other persons."
To sustain the petitioner's theory, and restrict the
inquiry only to property held by or in the name of the
government official or employee, or his spouse and
unmarried children is unwarranted in the light of the
provisions of the statutes in question, and would make
available to persons in government who illegally
acquire property an easy and fool-proof means of
evading investigation and prosecution; all they would
have to do would be to simply place the property in
the possession or name of persons other than their
spouse and unmarried children. This is an absurdity
that we will not ascribe to the lawmakers.
RIZAL COMMERCIAL BANKING CORPORATION,
petitioner, vs. THE HONORABLE PACIFICO P. DE
CASTRO and PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION, respondents G.R. No. L-34548
November 29, 1988, CORTES, J.
Key Doctrine: by virtue of the order of garnishment,
the same was placed in custodia legis and therefore,
from that time on, RCBC was holding the funds
subject to the orders of the court a quo. That the
sheriff, upon delivery of the check to him by RCBC
encashed it and turned over the proceeds thereof to
the plaintiff was no longer the concern of RCBC as the
responsibility over the garnished funds passed to the
court. Thus, no breach of trust or dereliction of duty
9
can be attributed to RCBC in delivering its depositor's
funds pursuant to a court order which was merely in
the exercise of its power of control over such funds.
In a civil case entitled "Badoc Planters, Inc. versus
Philippine Virginia Tobacco Administration (PVTA), et
al.," which was an action for recovery of unpaid
tobacco deliveries, an Order (Partial Judgment) was
issued by the Hon. San Diego, then Presiding Judge,
ordering the defendants therein to pay jointly and
severally, the plaintiff Badoc Planters, Inc. (hereinafter
referred to as "BADOC") within 48 hours the
aggregate amount of P206,916.76, with legal interests
thereon.
BADOC filed an Urgent Ex-Parte Motion for a Writ of
Execution of the said Partial Judgment which was
granted on the same day by the herein respondent
judge who acted in place of the Hon. Judge San Diego
who had just been elevated as a Justice of the Court of
Appeals. Accordingly, the Branch Clerk of Court on the
very same day, issued a Writ of Execution addressed to
Special Sheriff Faustino Rigor, who then issued a
Notice of Garnishment addressed to RCBC, requesting
a reply to said garnishment as to any property which
PVTA might have in the possession or control of RCBC.
Upon an Urgent Ex-Parte Motion filed by BADOC, the
respondent Judge issued an Order granting the Ex-
Parte Motion and directing the herein petitioner "to
deliver in check the amount garnished to Sheriff
Faustino Rigor and Sheriff Rigor in turn is ordered to
cash the check and deliver the amount to the
plaintiff's representative and/or counsel on record." In
compliance with said Order, petitioner delivered to
Sheriff Rigor a certified check in the sum of P
206,916.76.
Respondent PVTA filed a Motion for Reconsideration
which was granted for failure of plaintiff BADOC to
appear on the hearing dates, setting aside the Orders
of Execution and of Payment and the Writ of Execution
and ordering petitioner and BADOC "to restore, jointly
and severally, the account of PVTA with the said bank
by reimbursing the PVTA of the amount of P 206,
916.76 with interests at the legal rate.
Issue: If in compliance with the court order, the bank
(RCBC) delivered the garnished amount to the sheriff,
who in turn delivered it to the judgment creditor, but
subsequently, the order of the court directing payment
was set aside by the same judge, should the bank be
held solidarily liable with the judgment creditor to its
depositor for reimbursement of the garnished funds?
Ruling: No. RCBC is absolved from reimbursing the
funds garnished!
In the first place, it should be pointed out that RCBC
did not deliver the amount on the strength solely of a
Notice of Garnishment; rather, the release of the
funds was made pursuant to the aforesaid Order.
In the second place, the bank had already filed a reply
to the Notice of Garnishment stating that it had in its
custody funds belonging to the PVTA, which, in fact
was the basis of the plaintiff in filing a motion to
secure delivery of the garnished amount to the sheriff.
Lastly, the bank, upon the receipt of the Notice of
Garnishment, duly informed PVTA thereof to enable
the latter to take the necessary steps for the
protection of its own interest.
Moreover, by virtue of the order of garnishment, the
same was placed in custodia legis and therefore, from
that time on, RCBC was holding the funds subject to
the orders of the court a quo. That the sheriff, upon
delivery of the check to him by RCBC encashed it and
turned over the proceeds thereof to the plaintiff was
no longer the concern of RCBC as the responsibility
over the garnished funds passed to the court. Thus, no
breach of trust or dereliction of duty can be attributed
to RCBC in delivering its depositor's funds pursuant to
a court order which was merely in the exercise of its
power of control over such funds.
Another issue: Are the PVTA funds public funds
exempt from garnishment?
Ruling: The Court holds that they are not.
Republic Act No. 2265 created the PVTA as an
ordinary corporation with all the attributes of a
corporate entity subject to the provisions of the
Corporation Law. Hence, it possesses the power "to
sue and be sued" and "to acquire and hold such assets
and incur such liabilities resulting directly from
operations authorized by the provisions of this Act or
as essential to the proper conduct of such operations."
Among the specific powers vested in the PVTA are: 1)
to buy Virginia tobacco grown in the Philippines for
resale to local bona fide tobacco manufacturers and
leaf tobacco dealers; 2) to contracts of any kind as
may be necessary or incidental to the attainment of its
purpose. It is clear that PVTA has been endowed with
a personality distinct and separate from the
government which owns and controls it. Accordingly,
this Court has heretofore declared that the funds of
the PVTA can be garnished since "funds of public
corporation which can sue and be sued were not
exempt from garnishment" [Philippine National Bank
v. Pabalan, G.R. No. L-33112, June 15, 1978, 83 SCRA
595, 598.]
Also, "garnishment was the appropriate remedy for
the prevailing party which could proceed against the
funds of a corporate entity even if owned or controlled
by the government" inasmuch as "by engaging in a
particular business thru the instrumentality of a
corporation, the government divests itself pro hac vice
10
of its sovereign character, so as to render the
corporation subject to the rules of law governing
private corporations" [Philippine National Bank v. CIR,
G.R No. L-32667, January 31, 1978, 81 SCRA 314,
319.]
MELLON BANK, N.A. vs. HON. CELSO L.
MAGSINO, G.R. No. 71479, October 18, 1990,
FERNAN, C.J., THIRD DIVISION
Doctrine
Section 2 of Republic Act No. 1405 on the secrecy of
bank deposits allows the disclosure of bank deposits
in cases where the money deposited is the subject
matter of the litigation. Inasmuch as Civil Case is
aimed at recovering the amount converted by the
Javiers for their own benefit, necessarily, an inquiry
into the whereabouts of the illegally acquired amount
extends to whatever is concealed by being held or
recorded in the name of persons other than the one
responsible for the illegal acquisition
Facts
Dolores Ventosa requested the transfer of $1,000 from
the First National Bank of Moundsville, West Virginia,
U.S.A. to Victoria Javier in Manila through the
Prudential Bank. To effect the transfer, the First
National Bank requested the petitioner, Mellon Bank,
which mistakenly indicated in its wire sent to
Manufacturers Hanover Bank (correspondent of
Prudential Bank) the amount transferred as
"US$1,000,000.00" instead of US$1,000.00.
Manufacturers Hanover Bank transferred one million
dollars less bank charges of $6.30 to the Prudential
Bank for the account of Victoria Javier.
Javier opened a new dollar account in the Prudential
Bank and deposited $999,943.70. Immediately,
Victoria Javier and her husband, Melchor Javier, Jr.,
made withdrawals from the account, deposited them
in several banks only to withdraw them later in an
apparent plan to conceal, "launder" and dissipate the
erroneously sent amount.
Melchor Javier, requested Jose Marquez, a realtor, to
look for properties for sale in the United States.
Marquez offered a 160-acre lot in the Mojave Desert in
California City which was owned by Honorio Poblador.
Without having seen the property, Javier agreed to buy
said property. The payment of the purchased property
was made through six cashier's checks withdrawn
from dollar account while the balance of P236,000 was
paid in cash by Javier who did not even ask for a
receipt. Inasmuch as Poblador had requested that the
purchase price should not be paid directly to him, the
payment was coursed through six companies in which
he is financially related with.
Mellon Bank filed a complaint in the Superior Court of
California, County of Kern, against Javier spouses to
impose constructive trust of the property theyve
purchased from the money mistakenly and
erroneously transferred to their account. Mellon Bank
also filed in the Court of First Instance of Rizal,
Branch X, a complaint against the Javier spouses,
Honorio Poblador, etc to recover the amount they
received for the sale of the California City property.
In due course, it was found out that the checks
originally issued by Javier spouses were already
negotiated and now were deposited to an account in
the Philippine Veterans Bank in the name of Cipriano
Azada, Poblador's law partner and counsel to the
Javiers. Mellon Bank then subpoenaed Erlinda
Baylosis of Veterans Bank to show that Azada
deposited HSBC checks amounting to P874,490.75 in
his personal current account with said bank and
Pilologo Red, Jr. of HSBC to prove that said amount
was returned by Azada to Hagedorn one of the
companies connected with Poblador. The testimonies
of these witnesses were objected to by the defense on
the grounds of res inter alios acta, immateriality,
irrelevancy and confidentiality and then moved to
strike off the testimonies from the record of the case
in violation of Republic Act No. 1405 the Secrecy of
Bank Deposits. The CFI ordered that the testimonies
be stricken from the records. Mellon Bank moved for
reconsideration but denied. Hence, this petition.
Issue
Whether or not disclosure of bank deposits in cases
where the money is the subject matter of litigation
violates RA 1405.
Ruling
Private respondents' protestations that to allow the
questioned testimonies to remain on record would be
in violation of the provisions of Republic Act No. 1405
on the secrecy of bank deposits, is unfounded. Section
2 of said law allows the disclosure of bank deposits in
cases where the money deposited is the subject matter
of the litigation.
Inasmuch as Civil Case No. 26899 is aimed at
recovering the amount converted by the Javiers for
their own benefit, necessarily, an inquiry into the
whereabouts of the illegally acquired amount extends
to whatever is concealed by being held or recorded in
the name of persons other than the one responsible
for the illegal acquisition.
PHILIPPINE COMMERCIAL & INDUSTRIAL
BANK and JOSE HENARES, petitioners, vs. THE
HON. COURT OF APPEALS and MARINDUQUE
MINING AND INDUSTRIAL CORPORATION,
11
respondents. G.R. No. 84526, January 28, 1991,
SARMIENTO, J.:
Key Doctrine: The prohibition against examination of
or inquiry into a bank deposit under Republic Act
1405 does not preclude its being garnished to insure
satisfaction of a judgment. Indeed there is no real
inquiry in such a case, and if existence of the deposit
is disclosed the disclosure is purely incidental to the
execution process.
Facts:
An action was filed with the National Labor
Relations Commission (NLRC) by a group of laborers
who obtained a favorable judgment for payment of
backwages amounting to P205,853.00 against the
private respondent (Marinduque Mining and Industrial
Corporation). The said Commission issued a writ of
execution directing the Deputy Sheriff of Negros
Occidental, one Damian Rojas, to enforce the
aforementioned judgment. The deputy sheriff went to
the mining site of the private respondent and served
the writ of execution on the persons concerned, but
nothing seemed to have happened thereat. Then, the
Sheriff prepared on his own a Notice of Garnishment
dated addressed to six (6) banks, all located in
Bacolod City, one of which being the Petitioner PCIB
herein, directing the bank concerned to immediately
issue a check in the name of the Deputy Provincial
Sheriff of Negros Occidental in an amount equivalent
to the amount of the garnishment and that proper
receipt would be issued therefor.
Incidentally, the house lawyer of Marinduque
Mining, Atty. Alejano, acting on a tip regarding the
existence of the said notice of garnishment,
communicated with the bank manager, the petitioner
Jose Henares, verbally at first at around 2:00 o'clock
in the afternoon of that day, April 29, 1976, and later
confirmed in a formal letter received by the petitioner
Henares at about 5:00 o'clock of that same day,
requesting the withholding of any release of the
deposit of the private respondent Marinduque Mining
Co. with the petitioner bank (PCIB).
Meanwhile, at about 9:30 in the morning of
April 29, 1976, the deputy sheriff presented the Notice
of Garnishment and the Writ of Execution attached
therewith to the petitioner Henares and later in the
afternoon, demanded from the latter, under pain of
contempt, the release of the deposit of the private
respondent. Henares, upon knowing from the Acting
Provincial Sheriff that there was no restraining order
from the NLRC and on the favorable advice of the
bank's legal counsel, issued a debit memo for the full
balance of the Marinduque Mining Co. account with
the petitioner bank (PCIB). Thereafter, he issued a
manager's check in the name of the Deputy Provincial
Sheriff of Negros Occidental for the amount of
P37,466.18, which was the exact balance of the
Marinduque Mining Co.s account as of that day.
On the following day, April 30, 1976, at about
1:00 o'clock in the afternoon, the deputy sheriff
returned to the bank in order to encash the check but
before the actual encashment, Henares once again
inquired about any existing restraining order from the
NLRC and upon being told that there was none, the
latter allowed the said encashment.
On July 6, 1976, Marinduque Mining Co.filed a
complaint before the RTC Manila, Branch II, against
the petitioners and Damian Rojas, the Deputy
Provincial Sheriff of Negros Occidental, then
defendants, alleging that the former's current deposit
with the PCIB was levied upon, garnished, and with
undue haste unlawfully allowed to be withdrawn, and
notwithstanding the alleged unauthorized disclosure
of the said current deposit and unlawful release
thereof, the latter have failed and refused to restore
the amount of P37,466.18 to the former's account
despite repeated demands.
The trial court rendered its judgment in favor
of the private respondent Marinduque Mining Co. On
appeal, respondent court (CA), first reversed the said
judgment of the lower court, but however, on the
motion for reconsideration filed by the private
respondent, subsequently annulled and set aside its
said decision in the resolution. It held that petitioners
were liable. Then, it denied the petitioner's (PCIB)
own motion for reconsideration. Hence, this petition.
Issues:
1. Whether or not petitioners had legal basis in
releasing the garnished deposit of private
respondent to the sheriff. (YES)
2. Whether or not petitioners violated Republic Act
No. 1405, otherwise known as the Secrecy of Bank
Deposits Act, when they allowed the sheriff to
garnish the deposit of private respondent. (NO)
Ruling:
The petition is impressed with merit.
1. The crux of the instant controversy boils down to
the question of whether or not a bank is liable for
releasing its depositor's funds on the strength of
the notice of garnishment made by the deputy
sheriff pursuant to a writ of execution issued by
the NLRC.
The respondent court (CA) in its decision, cited the
case of De la Rama vs. Villarosa, wherein the amount
garnished was not actually taken possession of by the
12
sheriff, even from the time of garnishment, because
the judgment debtor was able to appeal to the Court of
Appeals and obtain from the Court an injunction
prohibiting execution of the judgment. De la Rama is
not exactly on all fours with the facts of the case at
bar.
On the contrary, the uncontroverted statements in
the deposition of the petitioner Henares that he had
previously sought the advice of the bank's counsel and
that he had checked twice with the Acting Provincial
Sheriff who had informed him of the absence of any
restraining order, belie any allegation of undue and
indecent haste in the release of the said deposit in
question.
Section 8, Rule 57 of the Rules of Court
provides:
Effect of attachment of debts and credits.
All persons having in their possession or under
their control any credits or other similar
personal property belonging to the party
against whom attachment is issued, or owing
any debts to the same, at the time of service
upon them of a copy of the order of
attachment and notice as provided in the last
preceding section, shall be liable to the
applicant of the amount of such credits, debts
or other property, until the attachment be
discharged, or any judgment recovered by him
be satisfied, unless such property be delivered
or transferred, or such debts be paid, to the
clerk, sheriff or other proper officer of the
court issuing the attachment.
Garnishment is considered as a specie of
attachment for reaching credits belonging to
the judgment debtor and owing to him from a
stranger to the litigation. Under the above-
cited rule, the garnishee [the third person] is
obliged to deliver the credits, etc. to the
proper officer issuing the writ and "the law
exempts from liability the person having in his
possession or under his control any credits or
other personal property belonging to the
defendant, . . . if such property be delivered or
transferred, .
. . to the clerk, sheriff, or other officer of the
court in which the action is pending."
Moreover, there is no issue concerning the
indebtedness of the petitioner bank to the private
respondent since the latter has never denied the
existence of its deposit with the former, the said
deposit being considered a credit in favor of the
depositor against the bank. The Court therefore sees
no application for Sec. 39, Rule 39 of the Rules of
Court invoked by the private respondent as to
necessitate the "examination of the debtor of the
judgment debtor."
Rather, SC finds the immediate release of
the funds by the petitioners on the strength of
the notice of garnishment and writ of execution,
whose issuance, absent any patent defect, enjoys
the presumption of regularity, sufficiently
supported by Sec. 41, Rule 39 of the Rules of
Court which reads:
xxx xxx xxx
After an execution against property has
issued, a person indebted to the judgment
debtor, may pay to the officer holding the
execution the amount of his debt or so much
thereof as may be necessary to satisfy the
execution, and the officer's receipt shall be a
sufficient discharge for the amount so paid or
directed to be credited by the judgment
creditor on the execution.
Finally, SC likewise takes cognizance of the
subject of the judgment sought to be enforced in the
writ of execution in question, namely, laborers'
backwages. It believes that the petitioners should
rather be commended for having acted with urgent
dispatch despite attempts by the private respondent,
as with so many scheming employers, to frustrate or
unjustifiably delay the prompt satisfaction of final
judgments which often result in undue prejudice to
the legitimate claims of labor.
2. NO. SC finds no violation whatsoever by the
petitioners of Republic Act No. 1405, otherwise
known as the Secrecy of Bank Deposits Act.
The Court in China Banking Corporation vs. Ortega
had the occasion to dispose of this issue when
it stated, thus: It is clear from the discussion
of the conference committee report on Senate
Bill No. 351 and House Bill No. 3977, which
later became Republic Act 1405, that the
prohibition against examination of or inquiry
into a bank deposit under Republic Act 1405
does not preclude its being garnished to
insure satisfaction of a judgment. Indeed there
is no real inquiry in such a case, and if
existence of the deposit is disclosed the
disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever
within the intention of Congress to enable
debtors to evade payment of their just debts,
13
 even if ordered by the Court, through the
expedient of converting their assets into cash
and depositing the same in a bank.
Since there is no evidence that the petitioners
themselves divulged the information that the private
respondent had an account with the petitioner bank
and it is undisputed that the said account was
properly the object of the notice of garnishment and
writ of execution carried out by the deputy sheriff, a
duly authorized officer of the court, we cannot
therefore hold the petitioners liable under R.A. 1405.
The petitioners are therefore absolved from any
liability for the disclosure and release of the private
respondent's deposit to the custody of the deputy
sheriff in satisfaction of the final judgment for the
laborers' backwages.
ALEXANDER VAN TWEST and THE HON.
SALVADOR P. DE GUZMAN, in his capacity as
Presiding Judge of the Regional Trial Court of
Makati, Branch 142, petitioners, vs. THE HON.
COURT OF APPEALS and GLORIA ANACLETO,
respondents. G.R. No. 106253 February 10, 1994
FELICIANO, J.
Key Doctrine: Where the foreign currency deposits
belonged to one of the depositors and were held in
trust for him by the other depositor who unilaterally
closed the joint account and transferred the funds to
her personal account, the latter cannot invoke the
exemption from court process under RA 6426 because
she is not the owner of the deposit in the account.
Consequently, the depositor who owned the funds can
have her enjoined from making withdrawals from her
personal account.
On March 1990, petitioner Alexander Van Twest filed a
complaint against private respondent Gloria Anacleto
and International Corporate Bank ("Interbank") for
recovery of a sum of money with prayer for a writ of
preliminary injunction, before Branch 142 of the
Regional Trial Court of Makati, Van Twest alleged that
he and private respondent opened a joint foreign
currency savings account with Interbank to hold funds
which "belonged entirely and exclusively" to
petitioner, to "facilitate the funding of certain business
undertakings" of both of them and which funds were
to be "temporarily (held) in trust" by private
respondent, who "shall turnover the same to plaintiff
upon demand."
Petitioner further alleged that withdrawals from the
account were always made through their joint
signatures; that when his business relationship with
private respondent turned sour, the latter unilaterally
closed their joint account, withdrew the remaining
balance of Deutschmark (DM) 269,777.37 and placed
the money in her own personal account with the same
bank. Thus, Alexander sought an injunctive writ to
prevent private respondent from withdrawing the
money.
The RTC granted the writ of preliminary injunction.
However, the CA reversed the order holding that
Gloria is a co-owner of the funds who could
unilaterally control its application.
Gloria contends that the personal currency deposit she
is maintaining is exempt from process issued by the
courts pursuant to RA 6426 (Foreign Currency Deposit
Act).
ISSUE: WON Anacleto may invoke RA 6426.
RULING: NO.
Private respondent's contentions do not persuade. Her
belated invocation of the provisions of R.A. No. 6426
as amended violates basic procedural due process by
interposing a new matter before this Court the
consideration of which would further delay a final
disposition on the propriety of petitioner of
petitioner's application for an injunctive writ.
On a substantive, the Court holds that the privileges
extended by the statute cited by private respondent
are actually enjoyed, and are invocable only, by the
petitioner, both because private respondent's
transactions fall outside the ambit of the statute, and
because petitioner is the owner of the foreign
exchange fund subject of this case. This conclusion is
anchored on the consistent and contemporaneous
administrative construction by the Central Bank of the
basic statute, as manifested in the relevant circulars
issued by it in implementation of that law, which are
entitled to great respect by the courts.
Section 8 of R.A. No. 6426 (the Foreign Currency
Deposit Act), as amended by P.D. No. 1246, are hereby
declared as and considered of an absolutely
confidential nature and, except upon the written
permission of the depositor, in no instance shall such
foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau
or office, whether judicial or administrative or
legislative or any other entity whether public or
private: Provided, however, that said foreign currency
shall be exempt from attachment, garnishment, or any
other order or process of any court, legislative body,
government agency or any administrative body
whatsoever.
Section one hundred-two of Circular No. 960, Series of
1983, provides in relevant part:
a. Foreign exchange purchased from authorized
agent banks in accordance with existing
14
 regulations such as excess travel funds; unspent
financial assistance of dependents abroad of
Philippine residents; foreign exchange acquired
from any resident persons, firm, association and
corporation; and transfers to foreign currency
deposit account or receipt from another foreign
currency deposit account, whether for payment of
legitimate obligation or otherwise, are not eligible
for deposit under the System.
xxx xxx xxx
This Circular was in force at the time private
respondent undertook her questioned transactions;
thus, such local transfer from the original joint foreign
currency account to another (personal) foreign
currency account, was not an eligible foreign currency
deposit within the coverage of R.A. No. 6426 and not
entitled to the benefit of the confidentiality provisions
of R.A. No. 6426. Circular No. 960 was superseded by
Circular No. 1318, Series of 1992, which did not
reenact and continue the administrative provision
above-mentioned (Section 102).
Section forty-nine, Chapter five of the same Circular,
dealing with the Offshore Banking System, stated in
part:
d. "Deposit" shall refer to funds in foreign
currencies which are accepted and held by an
OBU business, with the obligation to return an
equivalent amount to the owner thereof, with or
without interest;
In other words, although transfers from one foreign
currency deposit account to another foreign currency
deposit account in the Philippines are now eligible
deposits under the Central Bank's Foreign Currency
Deposit System, private respondent is still not entitled
to the confidentiality provisions of the relevant
circulars. For, as noted earlier, private respondent is
not the owner of such foreign currency funds and her
personal deposit account is not, under Section 49 of
Circular No. 1318, protected by this Circular.
Circular No. 1318 was superseded for a brief period
by Circular No. 1353, Series of 1992, which in turn
was superseded by Circular No. 1389, Series of 1993.
Circular No. 1389 is the current implementing
issuance for R.A. No. 6426; the relevant provisions
(Sections 74 and 49) of Circular No. 1318 have been
incorporated en toto in the current Circular.
LOURDES T. MARQUEZ, in her capacity as
Branch Manager, Union Bank of the
Philippines, petitioners, vs. HON. ANIANO A.
DESIERTO G.R. No. 135882. June 27, 2001,
PARDO, J.
Key Doctrine: Before an in camera inspection may be
allowed, there must be a pending case before a court
of competent jurisdiction. Further, the account must
be clearly identified, the inspection limited to the
subject matter of the pending case before the court of
competent jurisdiction. The bank personnel and the
account holder must be notified to be present during
the inspection, and such inspection may cover only the
account identified in the pending case.
Facts
Sometime in May 1998, petitioner Marquez received
an Order from the Ombudsman Aniano A. Desierto to
produce several bank documents for purposes of
inspection in camera relative to various accounts
maintained at Union Bank of the Philippines, Julia
Vargas Branch, where petitioner Marquez is the
branch manager. The accounts to be inspected are
involved in a case pending with the Ombudsman
entitled, Fact-Finding and Intelligence Bureau (FFIB)
v. Amado
Lagdameo, et al. The basis of the Ombudsman in
ordering an in camera inspection of the accounts is a
trail managers checks purchased by one George
Trivinio, a respondent in OMB-097-0411, pending with
the office of the Ombudsman. Trivinio, purchased 51
Managers Checks (MCs) for P272.1 Million at Traders
Royal Bank. Out of the 51 MCs, eleven (11) MCs in the
amount of P70.6 million, were deposited and credited
to an account maintained at the Union Bank, Julia
Vargas Branch.
Marquez wrote the Ombudsman explaining to
him that the accounts in question cannot readily be
identified and asked for time to respond to the order.
But the Ombudsman issued an order directing
Marquez to produce the bank documents relative to
accounts in issue. Thereafter, Marquez together with
Union Bank of the Philippines, filed a petition for
declaratory relief with the RTC Makati City, against
the Ombudsman to clear the rights and duties of
Marquez due to the clear conflict between RA
No.6770, Section 15 and R.A. No. 1405, Sections 2
and 3.
Marquez received a copy of the motion to cite
her for contempt, filed with the Office of the
Ombudsman by Agapito B. Rosales, Director, Fact
Finding and Intelligence Bureau (FFIB). However,
Marquez filed with the Ombudsman an opposition to
the motion to cite her in contempt and wanted to be
clarified as to how she would comply with the orders
without her breaking any law, particularly RA. No.
1405.
15
Issue:
Whether the order of the Ombudsman to have an in
camera inspection of the questioned account is
allowed as an exception to the law on secrecy of bank
deposits (R.A. No.1405)
Ruling:
The order of the Ombudsman to produce for in
camera inspection the subject accounts with the Union
Bank of the Philippines, Julia Vargas Branch, is based
on a pending investigation at the Office of the
Ombudsman against Amado Lagdameo, et. al. for
violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to
the Joint Venture Agreement between the Public
Estates Authority and AMARI. We rule that before an
in camera inspection may be allowed, there must be a
pending case before a court of competent jurisdiction.
Further, the account must be clearly identified, the
inspection limited to the subject matter of the pending
case before the court of competent jurisdiction. The
bank personnel and the account holder must be
notified to be present during the inspection, and such
inspection may cover only the account identified in the
pending case.
In Union Bank of the Philippines v. Court of
Appeals, we held that "Section 2 of the Law on
Secrecy of Bank Deposits, as amended, declares bank
deposits to be "absolutely confidential" except: (1) In
an examination made in the course of a special or
general examination of a bank that is specifically
authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe
that a bank fraud or serious irregularity has been or is
being committed and that it is necessary to look into
the deposit to establish such fraud or irregularity, (2)
In an examination made by an independent auditor
hired by the bank to conduct its regular audit
provided that the examination is for audit purposes
only and the results thereof shall be for the exclusive
use of the bank, (3) Upon written permission of the
depositor, (4) In cases of impeachment, (5) Upon order
of a competent court in cases of bribery or dereliction
of duty of public officials, or (6) In cases where the
money deposited or invested is the subject matter of
the litigation".
In the case at bar, there is yet no pending
litigation before any court of competent authority.
What is existing is an investigation by the Office of the
Ombudsman. In short, what the office of the
ombudsman would wish to do is to fish for additional
evidence to formally charge Amado Lagdameo, et. al.,
with the Sandiganbayan. Clearly, there was no
pending case in court which would warrant the
opening of the bank account for inspection. Zone of
privacy are recognized and protected in our laws.
Invasion of privacy is an offense in special laws like
the Anti-Wiretapping Law, the Secrecy of Bank
Deposits Act, and the Intellectual Property Code.
OFFICE OF THE OMBUDSMAN v. HON.
FRANCISCO B. IBAY, in his capacity as Presiding
Judge of the RTC Makati, UNION BANK OF THE
PHILIPPINES, and LOURDES T. MARQUEZ, in
her capacity as Branch Manager of UBP Julia
Vargas Branch G. R. No. 137538, September 3,
2001, QUISUMBING J.
KEY DOCTRINE: Before an in camera inspection of
bank accounts may be allowed, there must be a
pending case before a court of competent jurisdiction.
Further, the account must be clearly identified, and
the inspection limited to the subject matter of the
pending case before the court of competent
jurisdiction. The bank personnel and the account
holder must be notified to be present during the
inspection, and such inspection may cover only the
account identified in the pending case. In the present
case, since there is no pending litigation yet before a
court of competent authority, but only an investigation
by the Ombudsman on the so-called scam, any order
for the opening of the bank account for inspection is
clearly premature and legally unjustified.
Petitioner OMBUDSMAN conducted an
investigation on the alleged scam on the Public
Estates Authority-Amari Coastal Bay Development
Corporation. Initial result of the investigation revealed
that the alleged anomaly was committed through the
issuance of checks which were subsequently deposited
in several financial institutions.
The OMBUDSMAN issued an order directing
private respondent Lourdes Marquez, (MARQUEZ)
branch manager of Union Bank of the Philippines
branch at Julia Vargas Avenue, Pasig City, to produce
several bank documents for in camera inspection
relative to three Account Numbers, reportedly
maintained in the said branch.
The documents referred to include bank
account application forms, signature cards,
transactions history, bank statements, bank ledgers,
debit and credit memos, deposit and withdrawal slips,
application for purchase of managers checks, used
managers checks and check microfilms. The
inspection would be done in camera wherein the bank
16
records would be examined without bringing the
documents outside the bank premises.
In the event of her failure to comply as
directed, MARQUEZ was ordered to show cause why
she should not be cited for contempt by the
OMBUDSMAN and why she should not be charged for
obstruction. Instead of complying with the order of
OMBUDSMAN, private respondent MARQUEZ filed a
petition for declaratory relief with an application for
temporary restraining order and/or preliminary
injunction before the RTC Makati City, presided by
respondent Judge Francisco Ibay.
In her petition, private respondent averred
that under Sections 2 and 3 of R.A. 1405 (Law on
Secrecy of Bank Deposits), she had the legal
obligation not to divulge any information relative to all
deposits of whatever nature with banks in the
Philippines. But the Ombudsmans Order cited Section
15 (8) of R.A. 6770 stating that the Ombudsman had
the power to examine and have access to bank
accounts and records. MARQUEZ, therefore, sought a
definite ruling and/or guidelines as regards her rights
as well as Ombudsmans power to inspect bank
deposits under the cited provisions of law.
ISSUE: Whether or not an order for the opening of the
bank account for inspection is legally justified
RULING: NO
In this case, the controversy concerns the
extent of the power of petitioner to examine bank
accounts under Section 15 (8) of R.A. 6770 vis--vis the
duty of banks under Republic Act 1405 not to divulge
any information relative to deposits of whatever
nature.
Circumstances considered, we hold that public
respondent (Judge Ibay) has jurisdiction to take
cognizance of the petition for declaratory relief.
In any event, the relief being sought by private
respondent MARQUEZ in her action for declaratory
relief before the RTC of Makati City has been squarely
addressed by our decision in Marquez vs. Desierto.
In that case, we ruled that before an in camera
inspection of bank accounts may be allowed, there
must be a pending case before a court of competent
jurisdiction. Further, the account must be clearly
identified, and the inspection limited to the subject
matter of the pending case before the court of
competent jurisdiction.
The bank personnel and the account holder must be
notified to be present during the inspection, and such
inspection may cover only the account identified in the
pending case. In the present case, since there is no
pending litigation yet before a court of competent
authority, but only an investigation by the
Ombudsman on the so-called scam, any order for the
opening of the bank account for inspection is clearly
premature and legally unjustified.
CHINA BANKING CORPORATION vs THE
HONORABLE COURT OF APPEALS and JOSE
JOSEPH GOTIANUY as substituted by
ELIZABETH GOTIANUY LO G.R. No. 140687 |
December 18, 2006 | CHICO-NAZARIO, J.
In the case of Intengan v. Court of Appeals, it was
held that the only exception to the secrecy of foreign
currency deposits is in the case of a written
permission of the depositor.
Facts: A Complaint for recovery of sums of money
and annulment of sales of real properties and shares
of stock was filed by Jose Joseph Gotianuy against his
son-in-law, George Dee, and his daughter, Mary
Margaret Dee, before the RTC of Cebu City.
Jose Gotianuy accused his daughter Mary Margaret
Dee of stealing, among his other properties, US dollar
deposits with Citibank N.A. amounting to not less than
P35,000,000.00 and US$864,000.00. Mary Margaret
Dee received these amounts from Citibank N.A.
through checks which she allegedly deposited at
China Bank. He likewise accused his son-in-law,
George Dee, husband of his daughter, Mary Margaret,
of transferring his real properties and shares of stock
in George Dees name without any consideration. Jose
Gotianuy, died during the pendency of the case before
the trial court. He was substituted by his daughter,
Elizabeth Gotianuy Lo. The latter presented the US
Dollar checks withdrawn by Mary Margaret Dee from
his US dollar placement with Citibank wherein it could
be gleaned that both Margaret Dee and Jose Gotianuy
are named as co-payees.
Upon motion of Elizabeth Gotianuy Lo, the trial court
issued a subpoena to Cristota Labios and Isabel Yap,
employees of China Bank, to testify on the case.
China Bank moved for a reconsideration. Resolving
the motion, the trial court issued an ordre allowing the
said witnesses to testify but only in so far as to
disclose the name the said foreign currency fund is
deposited which is not violative of the law.
China Bank appealed before the CA, but CA affirmed
RTC.
ISSUE: Whether or not petitioner China Bank is
correct in its submission that the Citibank dollar
checks with both Jose Gotianuy and/or Mary Margaret
Dee as payees, deposited with China Bank, may not be
looked into under the law on secrecy of foreign
17
currency deposits. As a corollary issue, sought to be
resolved is whether Jose Gotianuy may be considered
a depositor who is entitled to seek an inquiry over the
said deposits.
RULING: NO, China Bank is not correct. The law
provides that all foreign currency deposits authorized
under RA No. 6426, as amended by Sec. 8, PD No.
1246, PD No. 1035, as well as foreign currency
deposits authorized under PD No. 1034 are considered
absolutely confidential in nature and may not be
inquired into. There is only one exception to the
secrecy of foreign currency deposits, that is,
disclosure is allowed upon the written permission
of the depositor.
It must be remembered that the Citibank checks that
were deposited to China Bank named Jose Gotianuy
and Margaret Dee as co- payees, therefore as held by
CA and affirmed by the Supreme Court, Jose Gotianuy
is considered as a co-depositor. On that basis, no
written consent from Mary Margaret Dee is
necessitated.
A depositor, in cases of bank deposits, is one who pays
money into the bank in the usual course of business,
to be placed to his credit and subject to his check or
the beneficiary of the funds held by the bank as
trustee.
Since the late Jose Gotianuy is a co-depositor of the
CBC account, then his request for the assailed
subpoena is tantamount to an express permission of a
depositor for the disclosure of the name of the account
holder.
Also, it is worth to note that in this case, there is no
issue as to the source of the funds. Mary Margaret
Dee declared the source to be Jose Gotianuy. There is
likewise no dispute that these funds in the form of
Citibank US dollar Checks are now deposited with
China Bank.
As the owner of the funds unlawfully taken and which
are undisputably now deposited with China Bank, Jose
Gotianuy has the right to inquire into the said
deposits.
BSB GROUP, INC., represented by its President,
Mr. RICARDO BANGAYAN vs SALLY GO a.k.a.
SALLY GO-BANGAYAN G.R. No. 168644 | February
16, 2010 | PERALTA, J.
R.A. No. 1405 has two allied purposes. It hopes to
discourage private hoarding and at the same time
encourage the people to deposit their money in
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic
development.
What indeed constitutes the subject matter in
litigation in relation to Sec. 2 of R.A. No. 1405 has
been pointedly and amply addressed in Union Bank of
the Philippines v. Court of Appeals, in which the Court
noted that the inquiry into bank deposits allowable
under R.A. No. 1405 must be premised on the fact
that the money deposited in the account is itself the
subject of the action.
Facts: An Information for qualified theft was filed
against respondent Sally Go (wife of Ricardo
Bangayan), the companys cashier on the strength of
the complaint filed by BSB Group as represented by
Ricardo Bangayan alleging that several checks
representing the total amount of P1,534,135.50 issued
by the companys customers in payment of their
obligation were, instead of being turned over to the
companys coffers, indorsed by respondent who
deposited the same to her personal banking account
maintained at Security Bank in Divisoria, Manila
Branch.
During the course of the trial, on the premise that
respondent had allegedly encashed the subject checks
and deposited the corresponding amounts thereof to
her personal banking account, the prosecution moved
for the issuance of subpoena duces tecum /ad
testificandum against the respective managers or
records custodians of Security Banks Divisoria
Branch, as well as of the Asian Savings Bank (now
Metrobank), in Jose Abad Santos, Tondo, Manila
Branch. The trial court granted the motion and issued
the corresponding subpoena.
Respondent filed a motion to quash the subpoena
addressed to Metrobank averring that there was no
mention of the said bank in the complaint-affidavit
filed and is therefore irrelevant. There was however
no mention made as to the irrelevancy of the Security
Bank account.
Petitioner opposed the motion to quash arguing that
Metrobank is relevant because there were two checks
which was deposited in an account with the said bank.
To this, respondent filed a supplemental motion to
quash, invoking the absolutely confidential nature of
the Metrobank account under the provisions of R.A.
No. 1405. The trial court did not sustain respondent;
hence, it denied the motion to quash for lack of merit.
Meanwhile, the prosecution was able to present in
court the testimony of Elenita Marasigan, the
representative of Security Bank. She mainly testified
on how Sally Go was able to run away with the checks,
endorse the same and credit the corresponding
amounts to her personal deposit account with Security
Bank.
Before Marasigans testimony could be completed,
respondent filed a Motion to Suppress, seeking the
exclusion of Marasigans testimony and accompanying
documents thus far received,bearing on the subject
Security Bank account. This time respondent invokes,
in addition to irrelevancy, the privilege of
confidentiality under R.A. No. 1405.
18
The trial court denied the motion. On appeal, CA
reversed RTCs decision.
On appeal to Supreme Court, petitioner argues that
the said evidence had a direct relation to the subject
matter of the case for qualified theft and, hence,
brings the case under one of the exceptions to the
coverage of confidentiality under R.A. 1405.
Respondent on the other hand, maintains that the
money represented by the Security Bank account was
neither relevant nor material to the case, because
nothing in the criminal information suggested that the
money therein deposited was the subject matter of the
case. More in point, respondent opined that admitting
the testimony of Marasigan, as well as the evidence
pertaining to the Security Bank account, would violate
the secrecy rule under R.A. No. 1405.
ISSUE: Whether or not the testimony of Marasigan
and the accompanying documents are violative of the
absolutely confidential nature of bank deposits and,
hence, excluded by operation of R.A. No. 1405.
RULING: YES, the subject pieces of evidence are
inadmissible.
R.A. No. 1405 has two allied purposes. It hopes to
discourage private hoarding and at the same time
encourage the people to deposit their money in
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic
development. Owing to this piece of legislation, the
confidentiality of bank deposits remains to be a basic
state policy in the Philippines. Section 2 of the law
institutionalized this policy by characterizing as
absolutely confidential in general all deposits of
whatever nature with banks and other financial
institutions in the country. The absolute confidentiality
rule in R.A. No. 1405 actually aims at protection from
unwarranted inquiry or investigation if the purpose of
such inquiry or investigation is merely to determine
the existence and nature, as well as the amount of the
deposit in any given bank account. The absolute
confidentiality is, however, subject to certain
exceptions provided by law.
In taking exclusion from the coverage of the
confidentiality rule, petitioner in the instant case
posits that the account maintained by respondent with
Security Bank contains the proceeds of the checks
that she has fraudulently appropriated to herself and,
thus, falls under one of the exceptions in Section
2 of R.A. No. 1405 that the money kept in said
account is the subject matter in litigation.
What indeed constitutes the subject matter in
litigation in relation to Section 2 of R.A. No. 1405 as
pointed out in Union Bank of the Philippines v. Court
of Appeals, in which the Court noted that the inquiry
into bank deposits allowable under R.A. No. 1405 must
be premised on the fact that the money deposited in
the account is itself the subject of the action.
In this case, it can hardly be inferred from the
indictment itself that the Security Bank account is the
ostensible subject of the prosecutions inquiry. Without
needlessly expanding the scope of what is plainly
alleged in the Information, the subject matter of the
action in this case is the money amounting to
P1,534,135.50 alleged to have been stolen by
respondent, and not the money equivalent of the
checks which are sought to be admitted in
evidence. Thus, it is that, which the prosecution is
bound to prove with its evidence, and no other.
Rizal Commercial Banking Corporation, petitioner,
vs. Hi-Tri Development Corporation and Luz R.
Bakunawa, respondents. G.R. No. 192413||June 13,
2012||SERENO, J.
In case the bank complies with the provisions of the
law and the unclaimed balances are eventually
escheated to the Republic, the bank shall not
thereafter be liable to any person for the same.
However, when the managers check was never
negotiated or presented for payment to the bank, the
procurer of the check retained ownership of the funds;
hence, proper notice should have been given to the
latter for compliance with the law.
FACTS:
Spouses Bakunawa are owners of 6 parcels of
land which Teresita Millan offered to buy for P 6.7M
with the promise that she will clear whatever
obstacles there may be to effect the sale. The spouses
gave to Millan their TCTs and in turn, Millan made a
down payment (DP) of P1,019,514.29 . Millan however
was not able to clear said obstacles and as a result,
the Spouses rescinded the sale and offered to return
to Millan her DP. Since Millan refused to accept back
the DP, the spouses in 1991, through their company
Hi-Tri took a Managers Check from RCBC in the
amount of P1,019,514.29 made payable to Millans
company Rosmil Realty and used this as one of their
basis for a case against Millan which they filed to
recover their TCTs.
In 2003, during the pendency of the
abovementioned case and without the knowledge of
the spouses, RCBC reported the P1,019,514.29-credit
existing in favor of Rosmil to the Bureau of Treasury
as among its "unclaimed balances". Subsequently in
2006, the Republic filed for Escheat.
In April 2008, the spouses were able to settle
amicably their dispute with Rosmil. They intended
RCBC Managers Check to cover part of the
settlement, only to find out that the said amount was
already subject of the escheat proceedings. A month
thereafter, RTC declared such amount escheated to
the Republic. The CA upon appeal reversed the RTCs
decision and ruled that the banks failure to notify
respondents to intervene in the escheat proceedings
19
and to present evidence to substantiate their claim is
violation of right to due process.
ISSUE:
WON the allocated funds represented by the
Managers Check may be escheated in favor of the
Republic
RULING:
NO. The funds allocated for the payment of
the Managers Check must be excluded from the
escheat proceedings.
Act No. 3936, as amended, outlines the proper
procedure to be followed by in filing a sworn
statement with the Treasurer concerning dormant
accounts and their escheat. Accordingly, banks and
other similar institutions are under obligation to
communicate with owners of dormant accounts before
filing a sworn statement. The purpose of this initial
notice is for a bank to determine whether an inactive
account has indeed been unclaimed, abandoned,
forgotten, or left without an owner. Should it fail to
comply with the legally outlined procedure to the
prejudice of the depositor, the bank shall be liable to
any person for the same.
RCBC contends that there is no need to send
prior notice to the spouses since they are no longer
owners of the unclaimed balance because the funds
represented by the Managers Check were deemed
transferred to the credit of the payee upon issuance of
the check. The proper party then entitled to the
notices was the payee Rosmil and not the spouses.
This contention is erroneous. 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, there exist an undelivered
instrument.
In the present case, it is undisputed that there
was no effective delivery of the check, rendering the
instrument incomplete. Presentment of the check to
the bank for payment did not occur. An order to debit
the account of Hi-Tri was never made. In fact, RCBC
confirms that the Managers Check was never
negotiated or presented for payment to 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 Managers Check. In addition thereto, RCBC does
not dispute the fact that the spouses retained custody
of the instrument.
As it is obvious from the foregoing acts that
the spouses have not abandoned their claim over the
fund, the allocated deposit subject of the Managers
Check should then be excluded from the escheat
proceedings. It should be emphasized that escheat is
not a proceeding to penalize depositors for failing to
deposit to or withdraw from their accounts but rather
a proceeding whereby the State compels the
surrender to it of unclaimed deposit balances. It is not
the intent of the law to force depositors into
unnecessary litigation and defense of their rights, as
the State is only interested in escheating balances that
have been abandoned and left without an owner.
DOA ADELA EXPORT INTERNATIONAL, INC.,
Petitioner, vs. TRADE AND INVESTMENT
DEVELOPMENT CORPORATION (TIDCORP), AND
THE BANK OF THE PHILIPPINE ISLANDS (BPI),
Respondents. G.R. No. 201931||February 11, 2015||
VILLARAMA, JR., J.:
A stipulation in the Joint Motion to Approve
Compromise Agreement that petitioner waives its
right to confidentiality of its bank deposits requires
the both the written consent of the depositor and
conformity of its receiver.
FACTS:
Petitioner Doa Adela Export International,
Inc. filed a Petition for Voluntary Insolvency.
Thereafter, RTC issued an order declaring petitioner
as insolvent and staying all civil proceedings against it
and appointing Atty. Arlene Gonzales as receiver who
later on filed a motion for parties to enter into Dacion
En Pago by Compromise Agreement. Several creditors
of Doa Adela including TIDCORP and BPI
subsequently filed a Joint Motion to Approve
Agreement which contained the following provision
among others:
5. WAIVER OF CONFIDENTIALITY. The
petitioner and the members of its Board of
Directors shall waive all rights to
confidentiality provided under the
provisions of Republic Act No. 1405, as
amended, otherwise known as the Law on
Secrecy of Bank Deposits, and Republic
Act No. 8791, otherwise known as The
General Banking Law of 2000.
In 2011, RTC approved the Agreement. Doa
Adela sought partial reconsideration assailing the
waiver of confidentiality provision in the BPI-TIDCORP
Joint Motion to Approve Agreement. According to it,
R.A. No. 1405 requires the express and written
consent of the depositor to make the waiver effective.
This was denied by RTC on the ground of estoppel
holding that Doa Adela s silence or acquiescence is
tantamount to an admission that binds it to the
compromise agreement especially the waiver of
confidentiality of bank deposits. Hence, the petition to
the Supreme Court.
ISSUE:
20
WON the Doa Adela is bound by the waiver of
confidentiality provision in the BPI-TIDCORP
Joint Motion to Approve Agreement.
RULING:
NO. The waiver of confidentiality in the Joint
Motion to Approve Agreement lacks the required
written consent of petitioner and conformity of the
receiver, thus petitioner is not bound by the said
provision.
R.A. No. 1405 or the Law on Secrecy of Bank
Deposits provides for exceptions when records of
deposits may be disclosed. One of which is where
there is a written permission of the depositor.
In this case, the Joint Motion to Approve
Agreement was executed by BPI and TIDCORP only.
There was no written consent given by petitioner or its
representative that it is waiving the confidentiality of
its bank deposits. The provision on the waiver of the
confidentiality of petitioners bank deposits was
merely inserted in the agreement. It is clear therefore
that petitioner is not bound by the said provision since
it was without the express consent of petitioner who
was not a party and signatory to the said agreement.
Neither can petitioner be deemed to have
given its permission by failure to interpose its
objection during the proceedings. It is an elementary
rule that a waiver must not only be voluntary, but must
have been made knowingly and intelligently. Mere
silence on the part of the holder of the right should
not be construed as a surrender thereof.
In addition, the provision on the waiver of the
confidentiality requires the approval and conformity of
Atty. Gonzales as receiver since all the properties of
the petitioner have been assigned and conveyed to
her. In this case there is no showing that Atty.
Gonzales signified her conformity to such waiver.
Consistent with the doctrine of relativity of
contracts, a judgment based entirely on a compromise
agreement is binding only on the parties to the
compromise the court approved, and not upon the
parties who did not take part in the compromise
agreement.
E. Garnishment of Deposits, including Foreign
Deposits
LOURDES DE LA RAMA, plaintiff-appellee, vs.
AUGUSTO R. VILLAROSA, ET AL., defendants,
LUZON SURETY COMPANY, INC., defendant-
appellant. G.R. No. L-17927||June 29, 1963||
LABRADOR, J.:
Where an amount of P71,533.99 of the bank deposits
of the defendant was garnished, but only the sum of
P31,535.57 was paid to the sheriff on execution of
judgment, the defendant cannot demand that the
plaintiff pay 6% interest on the difference between the
total sum actually garnished and the sum actually
obtained in the final judgment.
FACTS:
In 1959, the CFI Manila in a civil case decreed
a contract of lease between plaintiff Lourdes de la
Rama and Villarosa rescinded and ordered the latter
and his surety, Luzon Surety Co. to pay de la Rama a
total amount of P71,533.99. Pursuant to a writ of
execution, the sheriff garnished the deposit of Luzon
Surety with the Philippine Trust Co. for
abovementioned amount.
In the meantime and on July 1958, Luzon
Surety Co. perfected an appeal. Before the
garnishment could be complied with by the garnishee
(Philippine Trust), Luzon Surety filed a petition for
certiorari with preliminary injunction with the CA. The
injunction was then granted and by virtue of such, the
garnishee did not deliver to the sheriff any portion of
the amount garnished and de la Rama never received
any amount either in full or partial satisfaction of the
original judgment of the trial court then under
execution.
In 1960, the CA acting on the appeal issued
decision ordering Luzon Surety to pay De la Rama the
sum of P33,002.72 plus legal sheriffs fee (total of
P31,535.57)
Thereafter, Luzon Surety invoking section 5
Rule 39 of Rules of Court, filed with the lower court a
verified motion for the restitution of the difference
between the total sum actually garnished (P71,533.99)
and the sum actually obtain in the final judgment
(P31,535.57) and demand that de la Rama pay interest
thereon at the rate of 6% per annum.
De la Rama opposed the motion, alleging that
by virtue of preliminary injunction issued by the CA,
the sheriff was never able to collect from the
Philippine Trust Company any portion of the amount
garnished, and so section 5 of Rule 39, invoked has no
application, there being no property belonging to the
defendant company which has been delivered to the
sheriff on the plaintiff and which has to be restituted.
On August 6, 1960, the lower court denied the
motion of the Luzon Surety. It likewise issued a writ of
execution directing the sheriff to enforce the judgment
of the CA on the sum of P33,002.72 out of a total of
P71,533.99 then under garnishment and in the
possession of the Philippine Trust Co.
ISSUE: WON an interest on the difference between
the total sum garnished and the sum actually obtain in
the final judgment be awarded to Luzon Surety.
RULING:
NO. There are various reasons why the
petition for interest on the balance of the amount
21
garnished cannot be awarded to the defendant-
appellant.
In the first place, the total sum garnished was
not actually taken possession of by the sheriff because
the order for the execution of the judgment of the
lower court was suspended in time by the appeal and
the preliminary injunction issue on appeal. As a matter
of fact, it was only on August 6, 1960 that the plaintiff-
appellee was able to secure a full satisfaction of the
judgment.
In the second place, the mere garnishment of
funds belonging to the party upon order of the court
does not have the effect of delivering the money
garnished to the sheriff or to the party in whose favor
the attachment is issued. The fund is retained by the
garnishee or the person holding the money for the
defendant.
The garnishee, or one in whose hands
property is attached or garnished, is
universally regarded as charged with its
legal custody pending the outcome of the
attachment of garnishment, unless, by
local statute and practice, he is permitted
to surrender or pay the garnished property
or funds into court, to the attaching
officer, or to a receiver or trustee
appointed to receive them.
The effect of the garnishment, therefore, was
to require the Philippine Trust Company, holder of the
funds of the Luzon Surety Co., to set aside said
amount from the funds of the Luzon Surety Co. and
keep the same subject to the final orders of the Court.
In the case, there was never an order to deliver the
full amount garnished to the plaintiff-appellee; all that
was ordered to be delivered after the judgment had
become final was the amount found by the Court of
Appeals to be due. The balance of the amount
garnished, therefore, remained all the time in the
possession of the bank as part of the funds of the
Luzon Surety Co., although the same could not be
disposed of by the owner.
In the third place, the motion by the
defendant-appellant for the payment of damages or
interest was presented when the judgment had
already become final. Damages incident to the
issuance of an attachment may only be claimed before
final judgment
Lastly, there was an absence of any allegation
to the effect that the garnishment of appellant's funds
in the Philippine Trust Company caused actual
damages to defendant-appellant, (e.g. that the funds
could not be utilized to pay a pending obligation as a
result of which interest was paid on such obligation).
PHILIPPINE COMMERCIAL & INDUSTRIAL
BANK VS. COURT OF APPEALS
G.R. No. 84526. January 28, 1991, J. Sarmiento,
Jr., Second Division
The prohibition against examination of or inquiry into
a bank deposit under Republic Act 1405 does not
preclude its being garnished to insure satisfaction of a
judgment. Indeed there is no real inquiry in such a
case, and if existence of the deposit is disclosed the
disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever within
the intention of Congress to enable debtors to evade
payment of their just debts, even if ordered by the
Court, through the expedient of converting their
assets into cash and depositing the same in a bank.
FACTS: A group of laborers obtained a favorable
judgment with the NLRC for the payment of
backwages amounting to P205,853.00 against
Marinduque Mining and Industrial Corporation
(MMIC).
NLRC issued a writ of execution directing the Deputy
Sheriff of Negros Occidental, one Damian Rojas, to
enforce the aforementioned judgment. Deputy sheriff
went to the mining site of the MMIC and served the
writ of execution on the persons concerned, but
nothing seemed to have happened thereat.
Thereafter, the Sheriff prepared on his own a Notice of
Garnishment dated April 29, 1976 addressed to six (6)
banks, all located in Bacolod City, one of which being
PCIB, directing the bank concerned to immediately
issue a check in the name of the Deputy Provincial
Sheriff of Negros Occidental in an amount equivalent
to the amount of the garnishment and that proper
receipt would be issued therefor.
Incidentally, the house lawyer of the MMIC, Atty.
Rexes V. Alejano, acting on a tip regarding the
existence of the said notice of garnishment,
communicated with the bank manager, Jose Henares,
verbally at first at around 2:00 o'clock in the afternoon
of that day, April 29, 1976, and later confirmed in a
formal letter received by the Henares at about 5:00
o'clock of that same day, requesting the withholding of
any release of the deposit of MMIC with the PCIB.
Meanwhile, at about 9:30 in the morning of April 29,
1976, the deputy sheriff presented the Notice of
Garnishment and the Writ of Execution to the Henares
and later in the afternoon, demanded from the latter,
under pain of contempt, the release of the deposit of
MMIC.
Henares upon knowing from the Acting Provincial
Sheriff that there was no restraining order from the
NLRC and on the favorable advice of the bank's legal
counsel, issued a debit memo for the full balance of
MMICs account with PCIB. Thereafter, he issued a
manager's check in the name of the Deputy Provincial
Sheriff of Negros Occidental for the amount of
22
P37,466.18, which was the exact balance of MMICs
account as of that day.
On the following day, April 30, 1976, at about 1:00
o'clock in the afternoon, the deputy sheriff returned to
the bank in order to encash the check but before the
actual encashment, Henares once again inquired
about any existing restraining order from the NLRC
and upon being told that there was none, the latter
allowed the said encashment.
MMIC filed a complaint before the RTC against PCIB
and the Sheriff, alleging that the former's current
deposit with the PCIB was levied upon, garnished, and
with undue haste unlawfully allowed to be withdrawn,
and notwithstanding the alleged unauthorized
disclosure of the said current deposit and unlawful
release thereof, the latter have failed and refused to
restore the amount of P37,466.18 to the former's
account despite repeated demands.
ISSUE: Whether or not PCIB is liable for releasing
MMICs funds on the strength of the notice of
garnishment made by the deputy sheriff pursuant to a
writ of execution issued by the NLRC.
RULING: NO. PCIB is not liable for releasing MMICs
funds on the strength of the notice of garnishment
made by the deputy sheriff pursuant to a writ of
execution issued by the NLRC.
There is no evidence that PCIB themselves divulged
the information that MMIC had an account with the
PCIB and it is undisputed that the said account was
properly the object of the notice of garnishment and
writ of execution carried out by the deputy sheriff, a
duly authorized officer of the court.
Garnishment is considered as a specie of attachment
for reaching credits belonging to the judgment debtor
and owing to him from a stranger to the litigation. The
garnishee [the third person] is obliged to deliver the
credits, etc. to the proper officer issuing the writ and
"the law exempts from liability the person having in
his possession or under his control any credits or
other personal property belonging to the defendant, . .
. if such property be delivered or transferred, . . . to
the clerk, sheriff, or other officer of the court in
which the action is pending."
The cases more in point to the present controversy are
the recent decisions in Engineering Construction Inc.
v. National Power Corporation and Rizal Commercial
Banking Corporation (RCBC) vs. De Castro where the
Court absolved both garnishees, MERALCO and
RCBC, respectively, from any liability for their prompt
compliance in the release of garnished funds,
Applying the case of at bar, MERALCO, as garnishee,
after having been judicially compelled to pay the
amount of the judgment represented by funds in its
possession belonging to the judgment debtor or NPC,
should be released from all responsibilities over such
amount after delivery thereof to the sheriff. The
reason for the rule is self evident. To expose
garnishees to risks for obeying court orders and
processes would only undermine the
administration of justice.
The immediate release of the funds by the petitioners
on the strength of the notice of garnishment and writ
of execution, whose issuance, absent any patent
defect, enjoys the presumption of regularity.
The prohibition against examination of or inquiry into
a bank deposit under Republic Act 1405 does not
preclude its being garnished to insure satisfaction of a
judgment. PCIB are therefore absolved from any
liability for the disclosure and release of the MMICs
deposit to the custody of the deputy sheriff in
satisfaction of the final judgment for the laborers'
backwages.
SALVACION VS. CENTRAL BANK OF THE
PHILIPPINES G.R. No. 94723. August 21, 1997, J.
Torres, Jr., En Banc
If we rule that the questioned Section 113 of Central
Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or
process of any court, legislative body, government
agency or any administrative body whatsoever, is
applicable to a foreign transient, injustice would
result especially to a citizen aggrieved by a foreign
guest
FACTS: In February 4, 1989, Karen Salvacion, then 12
years old, was at the Plaza Fair Makati Cinema Square
with a friend when Greg Bartelli y Northcott, an
American tourist, approached her and introduced
himself as a Math teacher. He told her that he has a
sister who is a nurse in New York who has a daughter
who is about Karen's age staying with him in his house
along Kalayaan Avenue. The American asked Karen
what was her favorite subject and she told him it's
Pilipino. He then invited her to go with him to his
house where she could teach Pilipino to his niece. He
even gave her a stuffed toy to persuade her to teach
his niece.
Upon reaching his apartment, Greg Bartelli led Karen
upstairs. Upon entering the bedroom, Greg locked the
door and proceeded to tie up and undress Karen. Greg
committed several acts of rape on the child over the
period of four days. Greg raped Karen once on
February 4, and three times each day on February 5,
6, and 7. During this time, she was kept locked in the
bedroom and merely fed with biscuit and coke.
On the fourth day of her ordeal (Feb 7), Karen was
able to alert the attention of some neighbors by calling
for help through the bathroom window. Policemen
arrived and Karen was rescued.
Greg Bartelli was arrested and detained at the Makati
Municipal Jail. The policemen recovered from Bartelli
the following items: (a) Dollar Check for US 3,903.20
23
(b) COCOBANK Bank Book (Peso Acct.) (c) Dollar
Account with China Banking Corp (d) a Teddy Bear
used in seducing Karen, and some other personal
items.
Informations were filed against Greg Bartelli charging
him with Serious Illegal Detention and four (4) counts
of Rape. On February 24, 1989, the day there was a
scheduled hearing for Bartelli's petition for bail, the
latter escaped from jail.
Meanwhile, petitioners also filed with the RTC a civil
suit for damages with preliminary attachment against
Greg Bartelli. A Writ of Preliminary Attachment was
granted and issued by the trial court. The Deputy
Sheriff served a Notice of Garnishment on China
Banking Corporation.
China Banking Corp. invoked the secrecy of bank
deposits under Republic Act No. 1405. The bank also
invoked Section 113 of Central Bank Circular No. 960
to the effect that the dollar deposits (of Greg Bartelli)
are exempt from attachment, garnishment, or any
other order or process of any court, legislative body,
government agency or any administrative body,
whatsoever.
When petitioners made an inquiry with the Central
Bank regarding the application of Section 113 of CB
Circular No. 960, the Central Bank replied that the
provision is absolute in application and admits of no
exception.
Petitioners thereafter filed a petition for declaratory
relief directly with the Supreme Court.
ISSUE: Should Section 113 of CB Circular No. 960
and Section 8 of R.A. 6426, as amended by P.D. 1246,
otherwise known as the Foreign Currency Deposit Act,
be made applicable to a foreign transient?
RULING: No. The Offshore Banking System and the
Foreign Currency Deposit System were designed to
draw deposits from foreign lenders and investors and,
subsequently, to give the latter protection.
However, the foreign currency deposit made by a
transient or a tourist is not the kind of deposit
encouraged by PD Nos. 1034 and 1035 and given
incentives and protection by said laws because
such depositor stays only for a few days in the
country and, therefore, will maintain his deposit
in the bank only for a short time.
Considering that Bartelli is just a tourist or a
transient, he is not entitled to the protection of
Section 113 of Central Bank Circular No. 960 and PD
No. 1246 against attachment, garnishment or other
court processes.
The provisions of Section 113 of CB Circular No. 960
and PD No. 1246, insofar as it amends Section 8 of
R.A. No. 6426 are held to be inapplicable to the
present case because of its peculiar circumstances.
China Banking Corp. was ordered to comply with the
writ of execution and to release to petitioners the
dollar deposit of Greg Bartelli y Northcott in such
amount as would satisfy the judgment.
In fine, the application of the law depends on the
extent of its justice. Eventually, if we rule that the
questioned Section 113 of Central Bank Circular No.
960 which exempts from attachment, garnishment, or
any other order or process of any court. Legislative
body, government agency or any administrative body
whatsoever, is applicable to a foreign transient,
injustice would result especially to a citizen aggrieved
by a foreign guest like accused Greg Bartelli. This
would negate Article 10 of the New Civil Code which
provides that in case of doubt in the interpretation or
application of laws, it is presumed that the lawmaking
body intended right and justice to prevail. Simply
stated, when the statute is silent or ambiguous, this is
one of those fundamental solutions that would respond
to the vehement urge of conscience.
It would be unthinkable, that the questioned Section
113 of Central Bank No. 960 would be used as a
device by accused Greg Bartelli for wrongdoing, and
in so doing, acquitting the guilty at the expense of the
innocent.
NOTE: As to the issue of whether the Supreme Court
may entertain the petition for declaratory relief
despite the fact that original jurisdiction thereof rests
with the lower court, the Supreme Court held that it
has no original and exclusive jurisdiction over a
petition for declaratory relief. However, exceptions to
this rule have been recognized. Thus, where the
petition has far-reaching implications and raises
questions that should be resolved, it may be treated as
one for mandamus.
GOVERNMENT SERVICE INSURANCE SYSTEM v.
THE HONORABLE 15th DIVISION OF THE
COURT OF APPEALS and INDUSTRIAL BANK OF
KOREA, TONG YANG MERCHANT BANK,
HANAREUM BANKING CORP., LAND BANK OF
THE PHILIPPINES, WESTMONT BANK and
DOMSAT HOLDINGS, INC., G.R. No. 189206,
June 8, 2011, FIRST DIVISION, PEREZ, J.
Applying Section 8 of Republic Act No. 6426,
absent the written permission from Domsat, Westmont
Bank cannot be legally compelled to disclose the bank
deposits of Domsat, otherwise, it might expose itself
to criminal liability under the same act.
FACTS:
Banks agreed to lend United States (U.S.) $11
Million to Domsat for the purpose of financing the
lease and/or purchase of a Gorizon Satellite from the
24
International Organization of Space Communications
(Intersputnik). The controversy originated from a
surety agreement by which Domsat obtained a surety
bond from GSIS to secure the payment of the loan
from the Banks. We quote the terms of the Surety
Bond in its entirety. When Domsat failed to pay the
loan, GSIS refused to comply with its obligation
reasoning that Domsat did not use the loan proceeds
for the payment of rental for the satellite. GSIS
alleged that Domsat, with Westmont Bank as the
conduit, transferred the U.S. $11 Million loan
proceeds from the Industrial Bank of Korea to Citibank
New York account of Westmont Bank and from there
to the Binondo Branch of Westmont Bank. The Banks
filed a complaint before the RTC of Makati against
Domsat and GSIS. The RTC issued a subpoena decus
tecum. A motion to quash was filed by the banks on
three grounds: 1) the subpoena is unreasonable,
oppressive and does not establish the relevance of the
documents sought; 2) request for the documents will
violate the Law on Secrecy of Bank Deposits; and 3)
GSIS failed to advance the reasonable cost of
production of the documents. Domsat also joined the
banks' motion to quash through its
Manifestation/Comment. The RTC issued an Order
denying the motion to quash for lack of merit. RTC
denied MR. Second MR was granted.
Undaunted, petitioner now argues that
paragraph 2, Section 27 of CB Circular 1389 is
applicable because Domsat's $11,000,000.00 loan
from respondent banks was intended to be paid to a
foreign supplier Intersputnik and, therefore, should
have been paid directly to Intersputnik and not
deposited into Westmont Bank. The fact that it was
deposited to the local bank Westmont Bank, petitioner
claims violates the circular and makes the deposit lose
its confidentiality status under R.A. 6426. However, a
reading of the entire Section 27 of CB Circular 1389
reveals that the portion quoted by the petitioner refers
only to the procedure/conditions of drawdown for
service of debts using foreign exchange. The above-
said provision relied upon by the petitioner does not in
any manner prescribe the conditions before any
foreign currency deposit can be entitled to the
confidentiality provisions of R.A. 6426. Court of
Appeals held that Domsat's deposit with Westmont
Bank cannot be examined. GSIS invokes Republic Act
No. 1405 to justify the issuance of the subpoena while
the banks cite Republic Act No. 6426 to oppose it. The
core issue is which of the two laws should apply in the
instant case.
ISSUE:
Can Westmont bank be legally compelled to
disclose the account of Domsat in favor of
GSIS?
RULING: NO.
These two laws both support the confidentiality of
bank deposits. There is no conflict between them.
Republic Act No. 1405 was enacted for the purpose of
giving encouragement to the people to deposit their
money in banking institutions and to discourage
private hoarding so that the same may be properly
utilized by banks in authorized loans to assist in the
economic development of the country. It covers all
bank deposits in the Philippines and no distinction was
made between domestic and foreign deposits. Thus,
Republic Act No. 1405 is considered a law of general
application. On the other hand, Republic Act No. 6426
was intended to encourage deposits from foreign
lenders and investors. It is a special law designed
especially for foreign currency deposits in the
Philippines. A general law does not nullify a specific or
special law. Generalia specialibus non derogant.
Therefore, it is beyond cavil that Republic Act No.
6426 applies in this case. Intengan v. Court of Appeals
affirmed the above-cited principle and categorically
declared that for foreign currency deposits, such as
U.S. dollar deposits, the applicable law is Republic Act
No. 6426. In said case, Citibank filed an action against
its officers for persuading their clients to transfer
their dollar deposits to competitor banks. Bank
records, including dollar deposits of petitioners,
purporting to establish the deception practiced by the
officers, were annexed to the complaint. Petitioners
now complained that Citibank violated Republic Act
No. 1405. This Court ruled that since the accounts in
question are U.S. dollar deposits, the applicable law
therefore is not Republic Act No. 1405 but Republic
Act No. 6426.
The above pronouncement was reiterated in
China Banking Corporation v. Court of Appeals, where
respondent accused his daughter of stealing his dollar
deposits with Citibank. The latter allegedly received
the checks from Citibank and deposited them to her
account in China Bank. The subject checks were
presented in evidence. A subpoena was issued to
employees of China Bank to testify on these checks.
China Bank argued that the Citibank dollar checks
with both respondent and/or her daughter as payees,
deposited with China Bank, may not be looked into
under the law on secrecy of foreign currency deposits.
This Court highlighted the exception to the non-
disclosure of foreign currency deposits, i.e., in the
case of a written permission of the depositor, and
ruled that respondent, as owner of the funds
25
unlawfully taken and which are undisputably now
deposited with China Bank, he has the right to inquire
into the said deposits. Applying Section 8 of Republic
Act No. 6426, absent the written permission from
Domsat, Westmont Bank cannot be legally compelled
to disclose the bank deposits of Domsat, otherwise, it
might expose itself to criminal liability under the same
act.
The basis for the application of subpoena is to
prove that the loan intended for Domsat by the Banks
and guaranteed by GSIS, was diverted to a purpose
other than that stated in the surety bond. The Banks,
however, argue that GSIS is in fact liable to them for
the proper applications of the loan proceeds and not
vice-versa. We are however not prepared to rule on
the merits of this case lest we pre-empt the findings of
the lower courts on the matter.
26