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a.) Immediately upon the filing of this petition, an Order be issued Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli,
restraining the respondents from applying and enforcing Section 113 of Central Criminal Case for Serious Illegal Detention and four (4) counts of Rape. On
Bank Circular No. 960; the same day, petitioners filed with the Regional Trial Court of Makati Civil
Case for damages with preliminary attachment against Greg Bartelli. On the
b.) After hearing, judgment be rendered: day there was a scheduled hearing for Bartelli's petition for bail the latter
escaped from jail.
1.) Declaring the respective rights and duties of petitioners and
respondents; The court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of
Warrant of Arrest and Hold Departure Order.
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to
the provisions of the Constitution, hence void; because its provision that Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated
"Foreign currency deposits shall be exempt from attachment, garnishment, or February 22, 1989 granting the application of herein petitioners, for the
any other order or process of any court, legislative body, government agency issuance of the writ of preliminary attachment.
or any administrative body whatsoever
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of
i.) has taken away the right of petitioners to have the bank deposit of Garnishment on China Banking Corporation. In a letter dated March 13, 1989
defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic
in petitioners' favor in violation of substantive due process guaranteed by the Act No. 1405 as its answer to the notice of garnishment served on it. On March
Constitution; 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply to China
Banking Corporation saying that the garnishment did not violate the secrecy
ii.) has given foreign currency depositors an undue favor or a class of bank deposits since the disclosure is merely incidental to a garnishment
privilege in violation of the equal protection clause of the Constitution; properly and legally made by virtue of a court order which has placed the
subject deposits in custodia legis. In answer to this letter of the Deputy Sheriff
iii.) has provided a safe haven for criminals like the herein respondent of Makati, China Banking Corporation, in a letter dated March 20, 1989,
Greg Bartelli y Northcott since criminals could escape civil liability for their invoked Section 113 of Central Bank Circular No. 960 to the effect that the
wrongful acts by merely converting their money to a foreign currency and dollar deposits or defendant Greg Bartelli are exempt from attachment,
depositing it in a foreign currency deposit account with an authorized bank. garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body, whatsoever.
The antecedent facts:
Petitioner deserves to receive the damages awarded to her by the court. But The resolution of this question is important for the protection of nationals who
this petition for declaratory relief can only be entertained and treated as a are victimized in the forum by foreigners who are merely passing through.
petition for mandamus to require respondents to honor and comply with the
writ of execution in Civil Case No. 89-3214. . . . Respondents China Banking Corporation and Central Bank of the
Philippines refused to honor the writ of execution issued in Civil Case No. 89-
This Court has no original and exclusive jurisdiction over a petition for 3214 on the strength of the following provision of Central Bank Circular No.
declaratory relief. However, exceptions to this rule have been recognized. 960:
Thus, where the petition has far-reaching implications and raises questions
that should be resolved, it may be treated as one for mandamus. Sec. 113. Exemption from attachment. Foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process
The reason for imposing exemplary or corrective damages is due to the of any court, legislative body, government agency or any administrative body
wanton and bestial manner defendant had committed the acts of rape during whatsoever.
a period of serious illegal detention of his hapless victim, the minor Karen
Sec. 8. Secrecy of Foreign Currency Deposits. All foreign currency Obviously, the foreign currency deposit made by a transient or a tourist is not
deposits authorized under this Act, as amended by Presidential Decree No. the kind of deposit encouraged by PD Nos. 1034 and 1035 and given
1035, as well as foreign currency deposits authorized under Presidential incentives and protection by said laws because such depositor stays only for
Decree No. 1034, are hereby declared as and considered of an absolutely a few days in the country and, therefore, will maintain his deposit in the bank
confidential nature and, except upon the written permission of the depositor, only for a short time.
in no instance shall such foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether Respondent Greg Bartelli, as stated, is just a tourist or a transient. He
judicial or administrative or legislative or any other entity whether public or deposited his dollars with respondent China Banking Corporation only for
private: Provided, however, that said foreign currency deposits shall be exempt safekeeping during his temporary stay in the Philippines.
from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever. For the reasons stated above, the Solicitor General thus submits that the dollar
deposit of respondent Greg Bartelli is not entitled to the protection of Section
The purpose of PD 1246 in according protection against attachment, 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment,
garnishment and other court process to foreign currency deposits is stated in garnishment or other court processes.
its whereases, viz.:
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and
WHEREAS, in order to assure the development and speedy growth of the PD No. 1246, insofar as it amends Section 8 of R.A. No. 6426 are hereby held
Foreign Currency Deposit System and the Offshore Banking System in the to be INAPPLICABLE to this case because of its peculiar circumstances.
Philippines, certain incentives were provided for under the two Systems such Respondents are hereby REQUIRED to COMPLY with the writ of execution
as confidentiality of deposits subject to certain exceptions and tax exemptions issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y
on the interest income of depositors who are nonresidents and are not Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the
engaged in trade or business in the Philippines; dollar deposit of respondent Greg Bartelli y Northcott in such amount as would
satisfy the judgment.
WHEREAS, making absolute the protective cloak of confidentiality over such
foreign currency deposits, exempting such deposits from tax, and SO ORDERED.
guaranteeing the vested rights of depositors would better encourage the inflow
of foreign currency deposits into the banking institutions authorized to accept
such deposits in the Philippines thereby placing such institutions more in a
Finally, it is contended that RCBC was bound to inquire into the legality and
propriety of the Writ of Execution and Notice of Garnishment issued against
the funds of the PVTA deposited with said bank. But the bank was in no
position to question the legality of the garnishment since it was not even a
party to the case. As correctly pointed out by the petitioner, it had neither the
personality nor the interest to assail or controvert the orders of respondent
Judge. It had no choice but to obey the same inasmuch as it had no standing
at all to impugn the validity of the partial judgment rendered in favor of the
plaintiff or of the processes issued in execution of such judgment.
SO ORDERED.
Respondent entered a negative plea when arraigned. The trial ensued. On the
premise that respondent had allegedly encashed the subject checks and to be addressed by considering whether they have such direct relation to the
deposited the corresponding amounts thereof to her personal banking fact in issue as to induce belief in its existence or non-existence; or whether
account, the prosecution moved for the issuance of subpoena duces tecum they relate collaterally to a fact from which, by process of logic, an inference
/ad testificandum against the respective managers or records custodians of may be made as to the existence or non-existence of the fact in issue.35
Security Banks Divisoria Branch, as well as of the Asian Savings Bank (now
Metropolitan Bank & Trust Co. [Metrobank]), The fact in issue appears to be that respondent has taken away cash in the
amount of 1,534,135.50 from the coffers of petitioner.
To this, respondent filed a supplemental motion to quash, invoking the
absolutely confidential nature of the Metrobank account under the provisions Moreover, that there is no difference between cash and check is true in other
of Republic Act (R.A.) No. 1405.15 The trial court did not sustain respondent; instances. In estafa by conversion, for instance, whether the thing converted
hence, it denied the motion to quash for lack of merit. is cash or check, is immaterial in relation to the formal allegation in an
information for that offense; a check, after all, while not regarded as legal
Meanwhile, the prosecution was able to present in court the testimony of tender, is normally accepted under commercial usage as a substitute for cash,
Elenita Marasigan (Marasigan), the representative of Security Bank. But and the credit it represents in stated monetary value is properly capable of
before the testimony could be completed, respondent filed a Motion to appropriation. And it is in this respect that what the offender does with the
Suppress, seeking the exclusion of Marasigans testimony and accompanying check subsequent to the act of unlawfully taking it becomes material inasmuch
R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding Mr. Ramos: Into the very nature of such deposit.
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 In taking exclusion from the coverage of the confidentiality rule, petitioner in
assist in economic development. Owing to this piece of legislation, the the instant case posits that the account maintained by respondent with
confidentiality of bank deposits remains to be a basic state policy in the Security Bank contains the proceeds of the checks that she has fraudulently
Philippines. Section 2 of the law institutionalized this policy by characterizing appropriated to herself and, thus, falls under one of the exceptions in Section
as absolutely confidential in general all deposits of whatever nature with banks
and other financial institutions in the country. in litigation.
The measure of protection afforded by the law has been explained in China In other words, it can hardly be inferred from the indictment itself that the
Banking Corporation v. Ortega.46 That case principally addressed the issue Security Bank account is the ostensible subject of the prosecutions inquiry.
of whether the prohibition against an examination of bank deposits precludes Without needlessly expanding the scope of what is plainly alleged in the
garnishment in satisfaction of a judgment. Ruling on that issue in the negative, Information, the subject matter of the action in this case is the money
the Court found guidance in the relevant portions of the legislative amounting to 1,534,135.50 alleged to have been stolen by respondent, and
deliberations on Senate Bill No. 351 and House Bill No. 3977, which later not the money equivalent of the checks which are sought to be admitted in
became the Bank Secrecy Act, and it held that the absolute confidentiality rule evidence. Thus, it is that, which the prosecution is bound to prove with its
in R.A. No. 1405 actually aims at protection from unwarranted inquiry or evidence, and no other.
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 It comes clear that the admission of testimonial and documentary evidence
any given bank account. 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
Mr. Ramos: The attachment will only apply after the court has pronounced a bank deposit account the privacy and confidentiality of which is protected by
sentence declaring the liability of such person. But where the primary aim is to law. On this score alone, the objection posed by respondent in her motion to
SO ORDERED.
In the case of People v. Estrada, et al., the Special Prosecution Panel filed Raised as issues are:
before the Sandiganbayan a Request for Issuance of Subpoena Duces Tecum
for the issuance of a subpoena directing the President of Export and Industry 1. Whether petitioners Trust Account No. 858 is covered by the term "deposit"
Bank (EIB, formerly Urban Bank) or his/her authorized representative to as used in R.A. 1405;
produce the following documents during the hearings scheduled on January
22 and 27, 2003: I. For Trust Account No. 858; II. For Savings Account No. 2. Whether petitioners Trust Account No. 858 and Savings Account No. 0116-
0116-17345-9 17345-9 are excepted from the protection of R.A. 1405; and
The Special Prosecution Panel also filed a Request for Issuance of Subpoena 3. Whether the "extremely-detailed" information contained in the Special
Duces Tecum/Ad Testificandum directed to the authorized representative of Prosecution Panels requests for subpoena was obtained through a prior illegal
Equitable-PCI Bank to produce statements of account pertaining to certain disclosure of petitioners bank accounts, in violation of the "fruit of the
accounts in the name of "Jose Velarde" and to testify thereon. poisonous tree" doctrine.
The Sandiganbayan granted both requests by Resolution and subpoenas The contention that trust accounts are not covered by the term "deposits," as
were accordingly issued. 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 Special Prosecution Panel filed still another Request for Issuance of the law shows that the term "deposits" used therein is to be understood broadly
Subpoena Duces Tecum/Ad Testificandum for the President of EIB or his/her and not limited only to accounts which give rise to a creditor-debtor relationship
authorized representative to produce the same documents subject of the between the depositor and the bank.
Subpoena Duces Tecum and to testify thereon on the hearings scheduled. The
request was likewise granted by the Sandiganbayan. A Subpoena Duces The policy behind the law is laid down in Section 1:
Tecum/Ad Testificandum was accordingly issued.
SECTION 1. It is hereby declared to be the policy of the Government to give
Petitioner, claiming to have learned from the media that the Special encouragement to the people to deposit their money in banking institutions and
Prosecution Panel had requested for the issuance of subpoenas for the to discourage private hoarding so that the same may be properly utilized by
examination of bank accounts belonging to him, attended the hearing of the banks in authorized loans to assist in the economic development of the
case on January 27, 2003 and filed before the Sandiganbayan a letter of even country. (Underscoring supplied)
date expressing his concerns confidentiality of information.
If the money deposited under an account may be used by banks for authorized
Petitioner, unassisted by counsel filed a Motion to Quash Subpoena Duces loans to third persons, then such account, regardless of whether it creates a
Tecum/Ad Testificandum praying that the subpoenas previously issued to the creditor-debtor relationship between the depositor and the bank, falls under
President of the EIB be quashed. the category of accounts which the law precisely seeks to protect for the
purpose of boosting the economic development of the country.
Section 2 of the same law in fact even more clearly shows that the term The crime of bribery and the overt acts constitutive of plunder are crimes
"deposits" was intended to be understood broadly: committed by public officers, and in either case the noble idea that "a public
office is a public trust and any person who enters upon its discharge does so
SECTION 2. All deposits of whatever nature with banks or banking institutions with the full knowledge that his life, so far as relevant to his duty, is open to
in the Philippines including investments in bonds issued by the Government of public scrutiny" applies with equal force.
the Philippines, its political subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature and may not be examined, Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable
inquired or looked into by any person, government official, bureau or office, in cases of bribery must also apply to cases of plunder.
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 Respecting petitioners claim that the money in his bank accounts is not the
public officials, or in cases where the money deposited or invested is the "subject matter of the litigation," the meaning of the phrase "subject matter of
subject matter of the litigation. the litigation" as used in R.A. 1405 is explained in Union Bank of the
Philippines v. Court of Appeals,9 thus:
The phrase "of whatever nature" proscribes any restrictive interpretation of
"deposits." Moreover, it is clear from the immediately quoted provision that, Petitioner contends that the Court of Appeals confuses the "cause of action"
generally, the law applies not only to money which is deposited but also to with the "subject of the action". In Yusingco v. Ong Hing Lian, petitioner points
those which are invested. This further shows that the law was not intended to out, this Court distinguished the two concepts.
apply only to "deposits" in the strict sense of the word. Otherwise, there would
have been no need to add the phrase "or invested." "The cause of action is the legal wrong threatened or committed, while the
object of the action is to prevent or redress the wrong by obtaining some legal
Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858. relief; but the subject of the action is neither of these since it is not the wrong
or the relief demanded, the subject of the action is the matter or thing with
The protection afforded by the law is, however, not absolute, there being respect to which the controversy has arisen, concerning which the wrong has
recognized exceptions thereto, as above-quoted Section 2 provides. In the been done, and this ordinarily is the property or the contract and its subject
present case, two exceptions apply, to wit: (1) the examination of bank matter, or the thing in dispute."
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 . where the money deposited was the subject matter of the litigation since
matter of the litigation. the money deposited was the very thing in dispute. x x x"
Petitioner contends that since plunder is neither bribery nor dereliction of duty, The plunder case now pending with the Sandiganbayan necessarily involves
his accounts are not excepted from the protection of R.A. 1405. Philippine an inquiry into the whereabouts of the amount purportedly acquired illegally by
National Bank v. Gancayco holds otherwise: former President Joseph Estrada.
Petitioners attempt to make the exclusionary rule applicable to the instant IN SUM, the Court finds that the Sandiganbayan did not commit grave abuse
case fails. R.A. 1405, it bears noting, nowhere provides that an unlawful of discretion in issuing the challenged subpoenas for documents pertaining to
examination of bank accounts shall render the evidence obtained therefrom petitioners Trust Account No. 858 and Savings Account No. 0116-17345-9 for
inadmissible in evidence. Section 5 of R.A. 1405 only states that "[a]ny the following reasons:
violation of this law will subject the offender upon conviction, to an
imprisonment of not more than five years or a fine of not more than twenty 1. These accounts are no longer protected by the Secrecy of Bank Deposits
thousand pesos or both, in the discretion of the court." Law, there being two exceptions to the said law applicable in this case, namely:
(1) the examination of bank accounts is upon order of a competent court in
Clearly, the "fruit of the poisonous tree" doctrine presupposes a violation of cases of bribery or dereliction of duty of public officials, and (2) the money
law. If there was no violation of R.A. 1405 in the instant case, then there would deposited or invested is the subject matter of the litigation. Exception (1)
be no "poisonous tree" to begin with, and, thus, no reason to apply the doctrine. applies since the plunder case pending against former President Estrada is
analogous to bribery or dereliction of duty, while exception (2) applies because
In fine, the subpoenas issued by the Ombudsman in this case were legal, the money deposited in petitioners bank accounts is said to form part of the
hence, invocation of the "fruit of the poisonous tree" doctrine is misplaced. subject matter of the same plunder case.
At all events, even if the challenged subpoenas are quashed, the Ombudsman 2. The "fruit of the poisonous tree" principle, which states that once the primary
is not barred from requiring the production of the same documents based source (the "tree") is shown to have been unlawfully obtained, any secondary
solely on information obtained by it from sources independent of its previous or derivative evidence (the "fruit") derived from it is also inadmissible, does not
inquiry. apply in this case. In the first place, R.A. 1405 does not provide for the
application of this rule. Moreover, there is no basis for applying the same in
In particular, the Ombudsman, even before its inquiry, had already possessed this case since the primary source for the detailed information regarding
information giving him grounds to believe that (1) there are bank accounts petitioners bank accounts the investigation previously conducted by the
bearing the number "858," (2) that such accounts are in the custody of Urban Ombudsman was lawful.
Bank, and (3) that the same are linked with the bank accounts of former
President Joseph Estrada who was then under investigation for plunder. 3. At all events, even if the subpoenas issued by the Sandiganbayan were
quashed, the Ombudsman may conduct on its own the same inquiry into the
The information on the existence of Bank Accounts bearing number "858" was, subject bank accounts that it earlier conducted last February-March 2001,
according to respondent People of the Philippines, obtained from various there being a plunder case already pending against former President Estrada.
sources including the proceedings during the impeachment of President To quash the challenged subpoenas would, therefore, be pointless since the
SO ORDERED.
Sometime in May 1998, petitioner Marquez received an Order from the Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner
Ombudsman Aniano A. Desierto dated April 29, 1998, to produce several bank to produce the bank documents relative to accounts in issue.
documents for purposes of inspection in camera relative to various accounts
maintained at Union Bank of the Philippines, where petitioner is the branch On July 10,1998, petitioner together with Union Bank of the Philippines, filed a
manager. The accounts to be inspected are Account Nos. 011-37270, 240- petition for declaratory relief, prohibition and injunctions8 with the Regional
020718, 245-30317-3 and 245-30318-1, involved in a case pending with the Trial Court, Makati City, against the Ombudsman. Petitioner prayed for a
Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado temporary restraining order (TRO) because the Ombudsman and the other
Lagdameo, et al. persons acting under his authority were continuously harassing her to produce
the bank documents relatives to the accounts in question.
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 In the meantime,9 on July 14, 1998, the lower court denied petitioner's prayer
respondent in OMB-097-0411, pending with the office of the Ombudsman. for a temporary restraining order and stated us:
It would appear that Mr. George Trivinio, purchased fifty one (51) Managers "The questioned orders were issued with the investigation of the case of Fact-
Checks (MCs) for a total amount of P272.1 Million at Traders Royal Bank, Finding and Intelligence Bureau vs. Amado Lagdameo, et. al., OMB-0-97-
United Nations Avenue branch, on May 2 and 3, 1995. Out of the 51 MCs, 0411, for violation of RA. 3019. Since petitioner failed to show prima facie
eleven (11) MCs in the amount of P70.6 million, were deposited and credited evidence that the subject matter of the investigation is outside the jurisdiction
to an account maintained at the Union Bank, Julia Vargas Branch.3 of the Office of the Ombudsman, no writ of injunction may be issued by this
Court to delay this investigation pursuant to section 14 of Ombudsman Act of
After convincing themselves of the veracity of the checks, Atty. Macalino 1989."
advised Ms. Marquez to comply with the order of the Ombudsman. Petitioner
agreed to an in camera inspection set on June 3, 1998. The issue is whether petitioner may be cited for indirect contempt for her failure
to produce the documents requested by the Ombudsman. And whether the
However, on June 4,1998, petitioner wrote the Ombudsman explaining to him order of the Ombudsman to have an in camera inspection of the questioned
that the accounts in question cannot readily be identified and asked for time to account is allowed as an exception to the law on secrecy of bank deposits
respond to the order. The reason forwarded by the petitioner was that "despite (R.A. No.1405).
diligent efforts and from the accounts numbers presented, we can not identify
these accounts since the checks are issued in cash or bearer. We surmised An examination of the secrecy of bank deposits law (R.A. No.1405) would
that these accounts have long been dormant, hence are not covered by the reveal the following exceptions: 1. Where the depositor consents in writing; 2.
new account number generated by the Union Bank system. We therefore have Impeachment case; 3. By court order in bribery or dereliction of duty cases
against public officials; 4. Deposit is subject of litigation; 5. Sec. 8, R.A.
The order of the Ombudsman to produce for in camera inspection the subject SO ORDERED .
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.
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.
A Complaint for recovery of sums of money and annulment of sales of real CA said: The contention of petitioner that the [prescription] on absolute
properties and shares of stock docketed as CEB-21445 was filed by Jose confidentiality under the law in question covers even the name of the depositor
"Joseph" Gotianuy against his son-in-law, George Dee, and his daughter, Mary and is beyond the compulsive process of the courts is palpably untenable as
Margaret Dee, before the Regional Trial Court (RTC) of Cebu City, Branch 58. the law protects only the deposits itself but not the name of the depositor.
Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among ISSUES. xxxx..
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 Under Sec. 8 of PD 1246, the law provides that all foreign currency deposits
these amounts from Citibank N.A. through checks which she allegedly authorized under Republic Act No. 6426, as amended by Sec. 8, Presidential
deposited at China Banking Corporation (China Bank). He likewise accused Decree No. 1246, Presidential Decree No. 1035, as well as foreign currency
his son-in-law, George Dee, husband of his daughter, Mary Margaret, of deposits authorized under Presidential Decree No. 1034 are considered
transferring his real properties and shares of stock in George Dee's name absolutely confidential in nature and may not be inquired into. There is only
without any consideration. Jose Gotianuy, died during the pendency of the one exception to the secrecy of foreign currency deposits, that is, disclosure is
case before the trial court.1 He was substituted by his daughter, Elizabeth allowed upon the written permission of the depositor.
Gotianuy Lo. The latter presented the US Dollar checks withdrawn by Mary
Margaret Dee from his US dollar placement with Citibank. With the foregoing, we are now tasked to determine the single material issue
of whether or not petitioner China Bank is correct in its submission that the
Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to Citibank dollar checks with both Jose Gotianuy and/or Mary Margaret Dee as
Cristota Labios and Isabel Yap, employees of China Bank, to testify on the payees, deposited with China Bank, may not be looked into under the law on
case. secrecy of foreign currency deposits. As a corollary issue, sought to be
resolved is whether Jose Gotianuy may be considered a depositor who is
China Bank moved for a reconsideration. Resolving the motion, the trial court entitled to seek an inquiry over the said deposits.
issued an Order dated 16 April 1999 and held:
The Court of Appeals, in allowing the inquiry, considered Jose Gotianuy, a co-
The Court is of the view that as the foreign currency fund (Exhs. "AAA" to depositor of Mary Margaret Dee. It reasoned that since Jose Gotianuy is the
"AAA-5") is deposited with the movant China Banking Corporation, Cebu Main named co-payee of the latter in the subject checks, which checks were
Branch, Cebu City, the disclosure only as to the name or in whose name the deposited in China Bank, then, Jose Gotianuy is likewise a depositor thereof.
said fund is deposited is not violative of the law. Justice will be better served if On that basis, no written consent from Mary Margaret Dee is necessitated.
the name or names of the depositor of said fund shall be disclosed because
such a disclosure is material and important to the issues between the parties We agree in the conclusion arrived at by the Court of Appeals.
in the case at bar.
The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee
Premises considered, the motion for reconsideration is denied partly and are co-payees of various Citibank checks;15 (2) Mary Margaret Dee withdrew
granted partly, in the sense that Isabel Yap and/or Cristuta Labios are directed these checks from Citibank;16 (3) Mary Margaret Dee admitted in her Answer
Thus, with this, 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.
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.18
On this score, the observations of the Court of Appeals are worth reiterating:
Furthermore, it is indubitable that the Citibank checks were drawn against the
foreign currency account with Citibank, NA. The monies subject of said checks
originally came from the late Jose Gotianuy, the owner of the account. Thus,
he also has legal rights and interests in the CBC account where said monies
were deposited. More importantly, the Citibank checks (Exhibits "AAA" to
"AAA-5") readily demonstrate (sic) that the late Jose Gotianuy is one of the
payees of said checks. Being a co-payee thereof, then he or his estate can be
considered as a co-depositor of said checks. Ergo, 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.
SO ORDERED.
In a decision of the NLRC, it vacated the decision of Labor Arbiter Velasquez, Be that as it may, we do not find, however, any contumacious act to have been
Jr. and remanded the case to the Regional Arbitration Branch VII, Cebu City, committed by both the public and private respondents, either individually or
for further proceedings. collectively. As it were, there was never an attempt on their part to subvert or
hold at bay the final implementation of the executory Decision of the Court in
Following the NLRCs denial of their motion for reconsideration, petitioners the main case. Quite the contrary, recognizing the executory character of this
went to this Court on a petition for certiorari in G.R. 105892. Courts Decision in question, respondent Labor Arbiter Nicasio Anion issued
In a Decision3 promulgated on January 28, 1998, the Court granted the a writ of execution for its implementation. For their part, the private
certiorari petition, reversed and set aside the assailed decision and resolution respondents did not actually or maliciously resist the writ thus issued. What
of the NLRC and reinstated with modifications the decision of Labor Arbiter they opposed was the garnishment of the bank accounts allegedly jointly
Velasquez, Jr., owned by respondent Marguerite Lhuillier and two others, not the writ of
execution itself. We hold, however, that such accounts, even if joint as claimed
On April 28, 1998, the Decision became final and executory and an Entry of by the private respondents, are subject to garnishment. It is in the nature of
Judgment was made thereon in the Book of Entries of Judgment. joint accounts that anyone of the depositors has access to the entire funds
therein. If, afterwards, there should be squabbling amongst the supposed joint
On April 8, 1999, herein public respondent Labor Arbiter Nicasio C. Anion, by depositors as to the share of each, they can sort it out amongst themselves.
way enforcing this Courts Decision in G.R. No. 105892, issued a writ of
execution commanding the Deputy Sheriff to: REINSTATE the petitioners. We reiterate for the purpose of clarity that private respondent Marguerite
Should you fail to collect said sum in cash, you are hereby authorized to cause Lhuillier is personally liable under this Courts Decision in dispute. Her co-
the satisfaction of the same on the movable or immovable properties of the respondent Agencia Cebuana is a sole proprietorship without a juridical
respondent not exempt from execution. personality of its own. But while the position taken by the public and private
respondents that the judgment in question is not enforceable against
IN VIEW WHEREOF, and finding no contumacious act on the part of the herein
respondents, the instant petition is DISMISSED but the respondent Labor
Arbiter Nicasio C. Ainon is DIRECTED to IMMEDIATELY IMPLEMENT this
Courts Decision in G.R. No. 105892.
No Costs.
SO ORDERED.
MENDOZA, J.: Aggrieved, PDIC appealed to the CA which affirmed the ruling of the RTC in
its October 27, 2005 Decision. In so ruling, the CA found that the money
Petitioner Philippine Deposit Insurance Corporation (PDIC) is a government placements were received as part of the banks internal dealings by Citibank
instrumentality created by virtue of Republic Act (R.A.) No. 3591, as amended and BA as agents of their respective head offices. This showed that the head
by R.A. No. 9302.2 office and the Philippine branch were considered as the same entity. Thus, no
bank deposit could have arisen from the transactions between the Philippine
Respondent Citibank, N.A. (Citibank) is a banking corporation while branch and the head office because there did not exist two separate
respondent Bank of America, S.T. & N.A. (BA) is a national banking contracting parties to act as depositor and depositary.14 Secondly, the CA
association, both of which are duly organized and existing under the laws of called attention to the purpose for the creation of PDIC which was to protect
the United States of America and duly licensed to do business in the the deposits of depositors in the Philippines and not the deposits of the same
Philippines, with offices in Makati City. bank through its head office or foreign branches.15 Thirdly, because there was
no law or jurisprudence on the treatment of inter-branch deposits between the
In 1977, PDIC conducted an examination of the books of account of Citibank. Philippine branch of a foreign bank and its head office and other branches for
It discovered that Citibank, in the course of its banking business, from purposes of insurance, the CA was guided by the procedure observed by the
September 30, 1974 to June 30, 1977, received from its head office and other FDIC which considered inter-branch deposits as non-assessable.16 Finally,
foreign branches a total of 11,923,163,908.00 in dollars, covered by the CA cited Section 3(f) of R.A. No. 3591, which specifically excludes
Certificates of Dollar Time Deposit that were interest-bearing with obligations payable at the office of the bank located outside the Philippines
corresponding maturity dates. These funds, which were lodged in the books of from the definition of a deposit or an insured deposit. Since the subject money
Citibank under the account "Their Account-Head Office/Branches-Foreign placements were made in the respective head offices of Citibank and BA
Currency," were not reported to PDIC as deposit liabilities that were subject to located outside the Philippines, then such placements could not be subject to
assessment for insurance.5 As such, in a letter dated March 16, 1978, PDIC assessment under the PDIC Charter.
assessed Citibank for deficiency in the sum of 1,595,081.96.6
Hence, this petition.
Similarly, sometime in 1979, PDIC examined the books of accounts of BA
which revealed that from September 30, 1976 to June 30, 1978, BA received The sole question to be resolved in this case is whether the funds placed in
from its head office and its other foreign branches a total of 629,311,869.10 the Philippine branch by the head office and foreign branches of Citibank and
in dollars, covered by Certificates of Dollar Time Deposit that were interest- BA are insurable deposits under the PDIC Charter and, as such, are subject
bearing with corresponding maturity dates and lodged in their books under the to assessment for insurance premiums.
account "Due to Head Office/Branches."7 Because BA also excluded these
from its deposit liabilities, PDIC wrote to BA on October 9, 1979, seeking the The Courts Ruling
remittance of 109,264.83 representing deficiency premium assessments for
dollar deposits.8 The Court rules in the negative.
In their petitions, Citibank and BA sought a declaratory judgment stating that A branch has no separate legal personality;
the money placements they received from their head office and other foreign Purpose of the PDIC
branches were not deposits and did not give rise to insurable deposit liabilities
under Sections 3 and 4 of R.A. No. 3591 (the PDIC Charter) and, as a
Where a bank maintains branches, each branch becomes a separate business Finally, the Court agrees with the CA ruling that there is nothing in the definition
entity with separate books of account. A depositor in one branch cannot issue of a "bank" and a "banking institution" in Section 3(b) of the PDIC Charter
checks or drafts upon another branch or demand payment from such other which explicitly states that the head office of a foreign bank and its other
branch, and in many other respects the branches are considered separate branches are separate and distinct from their Philippine branches.
corporate entities and as distinct from one another as any other bank.
Nevertheless, when considered with relation to the parent bank they are not There is no need to complicate the matter when it can be solved by simple
independent agencies; they are, what their name imports, merely branches, logic bolstered by law and jurisprudence. Based on the foregoing, it is clear
and are subject to the supervision and control of the parent bank, and are that the head office of a bank and its branches are considered as one under
instrumentalities whereby the parent bank carries on its business, and are the eyes of the law. While branches are treated as separate business units for
established for its own particular purposes, and their business conduct and commercial and financial reporting purposes, in the end, the head office
policies are controlled by the parent bank and their property and assets belong remains responsible and answerable for the liabilities of its branches which are
to the parent bank, although nominally held in the names of the particular under its supervision and control. As such, it is unreasonable for PDIC to
branches. require the respondents, Citibank and BA, to insure the money placements
made by their home office and other branches. Deposit insurance is
This ruling was later reiterated in the more recent case of United States v. superfluous and entirely unnecessary when, as in this case, the institution
BCCI Holdings Luxembourg26 where the United States Court of Appeals, holding the funds and the one which made the placements are one and the
District of Columbia Circuit, emphasized that "while individual bank branches same legal entity.
may be treated as independent of one another, each branch, unless separately
incorporated, must be viewed as a part of the parent bank rather than as an Funds not a deposit under the definition
independent entity." of the PDIC Charter;
Excluded from assessment
In addition, Philippine banking laws also support the conclusion that the head
office of a foreign bank and its branches are considered as one legal entity. As explained by the respondents, the transfer of funds, which resulted from
Section 75 of R.A. No. 8791 (The General Banking Law of 2000) and Section the inter-branch transactions, took place in the books of account of the
5 of R.A. No. 7221 (An Act Liberalizing the Entry of Foreign Banks) both require respective branches in their head office located in the United States. Hence,
the head office of a foreign bank to guarantee the prompt payment of all the because it is payable outside of the Philippines, it is not considered a deposit
liabilities of its Philippine branch. pursuant to Section 3(f) of the PDIC Charter:
All things considered, the Court finds that the funds in question are not deposits
within the definition of the PDIC Charter and are, thus, excluded from
assessment.
WHEREFORE, the petition is DENIED. The October 27, 2005 Decision of the
Court of Appeals in CA-G.R. CV No. 61316 is AFFIRMED.
As stated above, the charter empowers the PDIC to conduct an investigation b. Special Examination An examination conducted at any time in
of a bank and to appoint examiners who shall have the power to examine any coordination with the BSP, by an affirmative vote of a majority of all the
insured bank. Such investigators are authorized to conduct investigations on members of the PDIC Board of Directors, without need of prior MB approval,
frauds, irregularities and anomalies committed in banks, based on an if there is a threatened or impending bank closure as determined by the PDIC
examination conducted by the PDIC and the BSP or on complaints from Board of Directors.
depositors or from other government agencies.
the process of examination covers a wider scope than that of investigation.
The distinction between the power to investigate and the power to examine is
emphasized by the existence of two separate sets of rules governing the Examination involves an evaluation of the current status of a bank and
procedure in the conduct of investigation and examination. Regulatory determines its compliance with the set standards regarding solvency, liquidity,
Issuance (RI) No. 2005-02 or the PDIC Rules on Fact-Finding Investigation of asset valuation, operations, systems, management, and compliance with
Fraud, Irregularities and Anomalies Committed in Banks covers the procedural banking laws, rules and regulations.
requirements of the exercise of the PDICs power of investigation. On the other
hand, RI No. 2009-05 sets forth the guidelines for the conduct of the power of Investigation, on the other hand, is conducted based on specific findings of
examination. certain acts or omissions which are subject of a complaint or a Final Report of
Examination.
The definitions provided under the two aforementioned regulatory issuances
elucidate on the distinction between the power of examination and the power Clearly, investigation does not involve a general evaluation of the status of a
of investigation. bank. An investigation zeroes in on specific acts and omissions uncovered via
an examination, or which are cited in a complaint.
Section 2 of RI No. 2005-02 states that its coverage shall be applicable to "all
fact-finding investigations on fraud, irregularities and/or anomalies committed An examination entails a review of essentially all the functions and facets of a
in banks that are conducted by PDIC based on: [a] complaints from depositors bank and its operation. It necessitates poring through voluminous documents,
or other government agencies; and/or [b] final reports of examinations of banks and requires a detailed evaluation thereof. Such a process then involves an
conducted by the Bangko Sentral ng Pilipinas and/or PDIC." intrusion into a banks records.
Thus, RI No. 2005-02 defines an "investigation" as a "fact-finding examination, In contrast, although it also involves a detailed evaluation, an investigation
study or inquiry for determining whether the allegations in a complaint or centers on specific acts of omissions and, thus, requires a less invasive
findings in a final report of examination may properly be the subject of an assessment.
administrative, criminal or civil action."
The practical justification for not requiring the Monetary Board approval to
In 2009, to clarify procedural matters, PDIC released RI No. 2009-05 or the conduct an investigation of banks is the administrative hurdles and paperwork
Rules and Regulations on Examination of Banks. Section 2 thereof it entails, and the correspondent time to complete those additional steps or
differentiated between the two types of examination as follows: requirements. As in other types of investigation, time is always of essence, and
it is prudent to expedite the proceedings if an accurate conclusion is to be
Section 2. Types of Examination arrived at, as an investigation is only as precise as the evidence on which it is
based.
a. Regular Examination - An examination conducted independently or jointly A PDIC investigation is conducted to "determine[e] whether the allegations in
with the BSP. It requires the prior approval of the PDIC Board of Directors and a complaint or findings in a final report of examination may properly be the
subject of an administrative, criminal or civil action."
Indeed, while in a literary sense, the two terms may be used interchangeably,
under the PDIC Charter, examination and investigation refer to two different
processes. To reiterate, an examination of banks requires the prior consent of
the Monetary Board, whereas an investigation based on an examination
report, does not.
SO ORDERED.