THIRD DIVISION
X, a complaint against the Javier spouses, Honorio Poblador, Jr., Domingo L. Jhocson,
G.R. No. 71479 October 18, 1990
MELLON BANK, N.A., petitioner,
vs.
HON. CELSO L. MAGSINO, in his capacity as Presiding Judge of Branch CLIX of the
Regional Trial Court at Pasig; MELCHOR JAVIER, JR., VICTORIA JAVIER; HEIRS OF
HONORIO POBLADOR, JR., namely: Elsa Alunan Poblador, Honorio Poblador III,
Rafael Poblador, Manuel Poblador, Ma. Regina Poblador, Ma. Concepcion Poblador
& Ma. Dolores Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO JHOCSON, JR.; JOSE
MARQUEZ; ROBERTO GARINO; ELNOR INVESTMENT CO., INC.; PARAMOUNT
FINANCE CORPORATION; RAFAEL CABALLERO; and TRI-ARC INVESTMENT and
MANAGEMENT CO., INC.respondents.
FERNAN, C.J.:
The issue in the instant special civil action of certiorari is whether or not, by virtue of
the principle of election of remedies, an action filed in California, U.S.A., to recover
real property located therein and to constitute a constructive trust on said property
precludes the filing in our jurisdiction of an action to recover the purchase price of said
real property.
On May 27, 1977, 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. Accordingly, the First National Bank requested the petitioner,
Mellon Bank, to effect the transfer. Unfortunately the wire sent by Mellon Bank to
Manufacturers Hanover Bank, a correspondent of Prudential Bank, indicated the
amount transferred as "US$1,000,000.00" instead of US$1,000.00. Hence
Manufacturers Hanover Bank transferred one million dollars less bank charges of
$6.30 to the Prudential Bank for the account of Victoria Javier.
On June 3, 1977, Javier opened a new dollar account (No. 343) in the Prudential Bank
and deposited $999,943.70. Immediately their, 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.
On June 14, 1977, Javier withdrew $475,000 from account No. 343 and converted it
into eight cashier's checks made out to the following: (a) F.C. Hagedorn & Co., Inc.,
two cheeks for the total amount of P1,000,000; (b) Elnor Investment Co., Inc., two
checks for P1,000,000; (c) Paramount Finance Corporation, two checks for P1,000,000;
and (d) M. Javier, Jr., two checks for P496,000. The first six checks were delivered to
Jose Marquez and Honorio Poblador, Jr.
It appears that Melchor Javier, Jr. had 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, Jr. Javier, without
having seen the property, agreed to buy it for P3,236,800 (US$437,405) although it
was actually appraised at around $38,500. Consequently, as Poblador's agent,
Marquez executed in Makati a deed of absolute sale in favor of the Javiers and had the
document notarized in Manila before an associate of Poblador. Marquez executed
another deed of sale indicating receipt of the purchase price and sent the deed to the
Kern County Registrar in California for registration.
Inasmuch as Poblador had requested that the purchase price should not be paid
directly to him, the payment of P3,000,000 was coursed through Elnor Investment Co.,
Inc., allegedly Poblador's personal holding company; Paramount Finance, allegedly
headed by Poblador's brother, and F.C. Hagedorn, allegedly a stock brokerage with
extensive dealings with Poblador. The payment was made through the
aforementioned six cashier's checks while the balance of P236,000 was paid in cash by
Javier who did not even ask for a receipt.
The two checks totalling P1,000,000 was delivered by Poblador to F.C. Hagedorn with
specific instructions to purchase Atlas, SMC and Philex shares. The four checks for
P2,000,000 with Elnor Investment and Paramount Finance as payees were delivered to
the latter to purchase "bearer" notes.
Meanwhile, in July, 1977, Mellon Bank filed a complaint docketed as No. 148056 in the
Superior Court of California, County of Kern, against Melchor Javier, Jane Doe Javier,
Honorio Poblador, Jrn, and Does I through V. In its first amended complaint to impose
constructive trust dated July 14, 1977, 1 Mellon Bank alleged that it had mistakenly
and inadvertently cause the transfer of the sum of $999,000.00 to Jane Doe Javier;
that it believes that the defendants had withdrawn said funds; that "the defendants
and each of them have used a portion of said funds to purchase real property located
in Kern County, California"; and that because of defendants' knowledge of Mellon
Bank's mistake and inadvertence and their use of the funds to purchase the property,
they and "each of them are involuntary or constructive trustees of the real property
and of any profits therefrom, with a duty to convey the same to plaintiff forthwith." It
prayed that the defendants and each of them be declared as holders of the property in
trust for the plaintiff; that defendants be compelled to transfer legal title and
possession of the property to the plaintiff; that defendants be made to pay the costs
of the suit, and that other reliefs be granted them.
On July 29, 1977, Mellon Bank also filed in the Court of First Instance of Rizal, Branch
Jr., Jose Marquez, Roberto Gariño, Elnor Investment Co., Inc., F.C. Hagedorn & Co., Inc.
and Paramount Finance Corporation. After its amendment, Rafael Caballero and Tri-
Arc Investment & Management Company, Inc. were also named defendants. 2
The amended and supplemental complaint alleged the facts set forth above and
added that Roberto Gariño, chief accountant of Prudential Bank, and who was the
reference of Mrs. Ventosa's dollar remittances to Victoria Javier, immediately
informed the Javiers of the receipt of US$1,000,000.00; that knowing the financial
circumstances of Mrs. Ventosa and the fact that a mistake had been committed, the
Javiers, with undue haste, took unlawful advantage of the mistake, withdrew the
whole amount and transferred the same to a "343 dollar account"; that, aided and
abetted by Poblador and Domingo L. Jhocson, the Javiers "compounded and
completed the conversion" of the funds by withdrawing from the account dollars or
pesos equivalent to US $975,000; that by force of law, the Javiers had been
constituted trustees of an implied trust for the benefit of Mellon Bank with a clear
duty to return to said bank the moneys mistakenly paid to them; that, upon request of
Mellon Bank and Manufacturers Hanover Bank, Prudential Bank informed the Javiers
of the erroneous transmittal of one million dollars first orally and later by letter-
demand; that conferences between the representatives of the Javiers, led by Jhocson
and Poblador, in the latter's capacity as legal and financial counsel, and
representatives of Mellon Bank, proved futile as the Javiers claimed that most of the
moneys had been irretrievably spent; that the Javiers could only return the amount if
the Mellon Bank should agree to make an absolute quitclaim and waiver of future
rights against them, and that in a scheme to conceal and dissipate the funds, through
the active participation of Jose Marquez, the Javiers bought the California property of
Poblador.
It further alleged that trust fund moneys totalling P3,000,000.00 were made payable
to Hagedorn Paramount and Elnor; that Hagedorn on instructions of Poblador,
purchased shares of stock at a stock exchange for P1,000,000.00 but later, it hastily
sold said shares at a loss of approximately P150,000.00 to the prejudice of the
plaintiff; that proceeds of the sale were deposited by Hagedorn in the name of
Poblador and/or the law office of Poblador, Nazareno, Azada, Tomacruz and Paredes;
that dividends declared on the shares were delivered by Hagedorn to Caballero after
the complaint had been filed and thereafter, Caballero deposited the dividends in his
personal account; that after receiving the P1,000,000.00 trust money, Paramount
issued promissory notes upon maturity of which Paramount released the amount to
unknown persons; that Elnor also invested P1,000,000.00 in Paramount for which the
latter also issued promissory notes; that after the filing of the complaint, counsel for
plaintiff requested Paramount not to release the amount after maturity; that in
evident bad faith, Elnor transferred the non-negotiable Paramount promissory notes
to Tri-Arc. that when the notes matured, Paramount delivered the proceeds of
P1,000,000.00 to Tri-Arc; that Poblador knew or should have known that the
attorney's fees he received from the Javiers came from the trust funds; and that
despite formal demands even after the filing of the complaint, the defendants refused
to return the trust funds which they continued concealing and dissipating.
It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and Gariño be ordered to
account for and pay jointly and severally unto the plaintiff US$999,000.00 plus
increments, additions, fruits and interests earned by the funds from receipt thereof
until fully paid; (b) the other defendants be ordered to account for and pay unto the
plaintiff jointly and severally with the Javiers to the extent of the amounts which each
of them may have received directly or indirectly from the US$999,000.00 plus
increments, additions, fruits and interests; (c) Marquez be held jointly and severally
liable with Poblador for the amount received by the latter for the sale of the 160-acre
lot in California City; and (d) defendants be likewise held liable jointly and severally for
attomey's fees and litigation expenses plus exemplary damages.
In due course, the defendants filed their answers and hearing of the case ensued. In
his testimony, Jose Marquez stated that Prudential Bank and Trust Company checks
Nos. 2530 and 2531 in the respective amounts of P100,000 and P900,000 payable to F.
C. Hagedorn were delivered to him by Melchor Javier, Jr. as partial consideration for
the sale of Poblador's property in California. After receiving the checks, Hagedorn
purchased shares of Atlas Mining, Philex, Marcopper and San Miguel Corporation for
Account No. 3000, which, according to Fred Hagedorn belonged to the law office of
Poblador. 3
F.C. Hagedorn & Co., Inc. then sold the shares for P874,490.75 as evidenced by HSBC
check No. 339736 for P400,000 and HSBC check No. 339737 for P474,490.75 payable
to "cash". Mellon Bank traced these checks to Account 2825-1 of the Philippine
Veterans Bank in the name of Cipriano Azada, Poblador's law partner and counsel to
the Javiers. 4
An employee of the Philippine Veterans Bank thereafter introduced the specimen
signature cards for Account No. 2825-1 thereby confirming Azada's ownership of the
account. Defendants objected to this testimony on the grounds of Azada's absence,
the confidentiality of the bank account, and the best evidence rule. The court
overruled the objection. Another employee of the Philippine Veterans Bank then
presented the ledger card for Account No. 2825-1, a check deposit slip and a daily
report of returned items. The defendants objected but they were again overruled by
the court.
Mellon Bank then subpoenaed Erlinda Baylosis of the Philippine Veterans Bank to
show that Azada deposited HSBC checks No. 339736 and 339737 amounting to
P874,490.75 in his personal current account with said bank. It also subpoenaed
Pilologo Red, Jr. of Hongkong & Shanghai Banking Corporation to prove that said
amount was returned by Azada to Hagedorn.
The testimonies of these witnesses were objected to by the defense on the grounds
of res inter alios acta, immateriality, irrelevancy and confidentiality. To resolve the
matter, the court ordered the parties to submit memoranda. The defendants'
objections were also discussed at the hearing on July 13, 1982. For the first time,
Poblador's counsel raised the matter of "election of remedies." 5
At the July 20, 1982 hearing, the lower court, then presided by Judge Eficio Acosta,
conditionally allowed the testimonies of Baylosis and Red. Baylosis afffirmed that
Azada deposited checks Nos. 339736 and 339737 in the total amount of P874,490.75
in his personal account with the Philippine Veterans Bank but almost simultaneously,
Azada issued his PVB check for the same amount in favor of Hagedorn Consequently,
Azada's check initially bounced. For his part, Red testified that Azada's check for
P874,490.75 was received by the Hongkong & Shanghai Banking Corporation and
credited to the account of Hagedorn .
The defendants then moved to strike off the testimonies of Baylosis and Red from the
record. Defendant Paramount Finance Corporation, which is not a party to the
California case, thereafter filed its memorandum raising the matter of "election of
remedies". It averred that inasmuch as the Mellon Bank had filed in California an
action to impose constructive trust on the California property and to recover the
same, Mellon Bank can no longer try to regain the purchase price of the same
property through Civil Case No. 26899. The other defendants adopted Paramount's
stand.
After Mellon Bank filed its reply to the memorandum of Paramount, on September 10,
1982, Judge Acosta issued a resolution ordering that the testimonies of Baylosis and
Red and the documents they testified on, which were conditionally allowed, be
stricken from the records. 6 Judge Acosta explained:
After a judicious evaluation of the arguments of the parties the Court is of the view
that in cases where money held in trust was diverted by the trustee, under the "rule of
trust pursuit" the beneficiary "may elect whether to accept the trust estate in its new
form or hold the trustee responsible for it in its original condition" (Lathrop vs.
Hampton, 31 Cal. 17; Zodos vs. Marefalos 48 Idaho 291; Bahle vs. Hasselbrach 64 NW
Eq. 334, 51 Sections 508-76 Am Jur. 2d p. 475), and that "an election to pursue one
remedy waives and bars pursuit of any inconsistent remedy"(76 Am Jur. 2d S253). The
instant complaint among others is for the recovery of the purchase price of the Kern
property as held in trust for the plaintiff while in the California case the plaintiff
maintains that the Kern property is held in trust for the plaintiff, which positions are
inconsistent with each other. Neither can the plaintiff now abandon his complaint for
the recovery of the Kern property and pursue his complaint for the recovery of the
purchase price of said property for "if he has first sought to follow the res, the plaintiff
cannot thereafter hold the trustee personally responsible" and "when once there has
been an election to do one of two things, you cannot retract it and do the other thing.
The election once made is finally made." (Fowler vs. Bowvery Savings Bank 113 N.Y.
450, 21 N.E. 172, 4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280, 23, Abb. N. Cos. 133065 C. J.
p. 980 Note 32).
The fact that the California case has been stayed pending determination of the instant
case only means that should this case be dismissed, the California case can proceed to
its final determination.
Furthermore, when the plaintiff filed the California case for the transfer of legal title
and possession of the Kern property to the plaintiff it in effect ratified the transaction
for "by taking the proceeds or product of a wrongful transfer of trust property or
funds, the beneficiary ratifies the transaction" (Board of Commissioner vs. Strawn
[CA6 Ohio] 157 F. 49, 76 Am Jur. 2d Section 253). Consequently the purchase price of
the California property received by defendant Poblador from Javier is no longer the
proper subject matter of litigation and the movement and disposition of the purchase
price is therefore within the scope of the absolutely confidential nature of bank
deposits as provided by Sec. 2, R.A. 1405 as amended by PD No. 1792.
Mellon Bank moved for reconsideration, alleging that said order prevented the
presentation of evidence on the purchase price of the California property; that the
California case cannot be considered a waiver of the pursuit of the purchase price as
even if said case was filed fifteen days prior to the filing of the original complaint in
this case, except for the Javiers, no other defendants raised in their answers the
affirmative defense of the filing of the California case; that after the amendment of
the complaint, none of the defendants raised the matter of "election of remedies" in
their answers; that realizing this procedural error, Paramount sought the amendment
of its answer to reflect the "defence" of "election of remedies"; that, disregarding its
previous orders allowing evidence and testimonies on Account No. 2825-1, the court
made a turnabout and ruled that the testimonies on said account were irrelevant and
confidential under Republic Act No. 1405; that Philippine law and jurisprudence does
not require the election of remedies for they favor availment of all remedies; that
even United States jurisprudence frowns upon election of remedies if it will lead to an
inequitable result; that, as held by this Court in Radiowealth vs. Javier, 7 there can be
no binding election of remedies before the decision on the merits is had; that until
Mellon Bank gets full recovery of the trust moneys, any contention of election of
remedy is premature, and that, the purchase price being the subject of litigation,
inquiring into its movement, including its deposit in banks, is allowed under Republic
Act No. 1405.
Defendants filed their respective comments and oppositions to the motion for
reconsideration. In its reply, the Mellon Bank presented proof to the effect that in the
California case, defendants filed motions to stake out the cross-complaint of Mellon
Bank, for summary judgment and to stay or dismiss the action on the ground of
inconvenient forum but the first two motions and the motion to dismiss were denied
"without prejudice to renew upon determination of the Philippine action." The motion
to stay proceedings was "granted until determination of the Philippine action." 8
On October 28, 1983, the lower court, through Judge Acosta, denied the motion for
reconsideration and ordered the continuation of the hearing (Rollo, p. 182). The
plaintiff filed a motion for the reconsideration of both the September 10, 1982 and
October 28, 1983 orders. After the parties had filed comments, opposition and reply,
the court, through Judge Celso L. Magsino, denied Mellon Bank's second motion for
reconsideration on the ground that it was "prescribed by the 1983 Interim Rules of
Court" in an order dated July 9, 1985. 9
The court ruled that the determination of the relevancy of the testimonies of Baylosis
and Red was "premised directly and principally" on whether or not Mellon Bank could
still recover the purchase price of the California property notwithstanding the filing of
the case in California to recover title and possession of the said property. After
quoting the resolution of September 10, 1982, the Court ruled that it was a "final
order or a definitive judgment with respect to the claim of plaintiff for the recovery" of
the purchase price of the California property. It stated:
The adjudication in the Order of September 10, 1982 and the Order of October 28,
1983, which has the effect of declaring that plaintiff has no cause of action against the
defendants for the recovery of the proceeds of the sale of Kern property in the
amount of Three Million Three Hundred Fifty Thousand Pesos (P3,500,000.00 [sic]) for
having filed a complaint for the recovery of the Kern property in the Superior Court of
California, County of Kern is a final and definitive disposition of the claim of the
plaintiff to recover in the instant action the proceeds of sale of said property against
the defendants. The issue of "election of remedy" by the plaintiff was lengthily and
thoroughly discussed and argued by the parties before the rendition of the resolution
of September 10, 1982, and in the motion for reconsideration and oppositions thereto
before its resolution in the Order of October 28, 1983. Such issue is a substantive one
as it refers to the existence of plaintiffs cause of action to recover the proceeds of the
sale of the Kern property in this action, and that issue was presented to the Court as if
a motion to dismiss or a preliminary hearing of an affirmative defense on the ground
that plaintiff has no cause of action, and was resolved against plaintiff in the Order of
September 10, 1982, after a full hearing of all the parties. Said Order of September 10,
1982 has the effect of putting an end to the controversy between the parties as to the
right of plaintiff to claim or recover the proceeds of the sale of the Kern property from
the defendants. It is therefore an adjudication upon the merits. 10
Hence, Mellon Bank filed the instant petition for certiorari claiming that the resolution
of September 10, 1982 and the orders of October 28, 1983 and July 9, 1985 are void
for being unlawful and oppressive exercises of legal authority, subversive of the fair
administration of justice, and in excess of jurisdiction. The petition is founded on its
allegations that: (a) the resolution of September 10, 1982 is interlocutory as it does
not dispose of Civil Case No. 26899 completely: (b) the evidence stricken from the
records is relevant on the basis of the allegations of the amended and supplemental
complaint, and (c) the doctrine of election of remedies, which has long been declared
obsolete in the United States, is not applicable in this case.
With the exception of the Javiers, all the respondents filed their respective comments
on the petition. Having failed to file said comment, the Javiers' counsel of record,
Azada, Tomacruz & Cacanindin, 11 was required to show cause why disciplinary action
should not be taken against it. And, having also failed to show cause, it was fined
P300.
In his motion for reconsideration of the resolution imposing said fine, Cipriano Azada
alleged that in Civil Case No. 26899, the Javiers were indeed represented by the law
firm of Poblador, Azada, Tomacruz & Cacanindin but he was never the lawyer of the
Javiers' in his personal capacity; that after the death of Honorio Poblador, Jr., he had
withdrawn from the partnership; that he is the counsel of the Administratrix of the
Estate of Honorio Poblador, Jr. for which he had filed a comment, and that should the
Court still require him to file comment for the Javiers despite the lack of client-lawyer
relationship, he would adopt the comment he had filed for the said Administratrix.12
In its effort to locate the Javiers so that their side could be heard, we required the
petitioner to furnish us with the Javiers' address as well as the name and address of
their counsel. 13 In compliance therewith, counsel for petitioner manifested that the
Javiers had two known addresses in San Juan, Metro Manila and in Sampaloc, Manila;
that since their conviction in Crim. Case No. CCC-VII 2369-P.C. of the Pasig Regional
Trial Court, the Javiers had gone into hiding and warrants for their arrest still remain
unserved; 14 that the Javiers' counsel of record in Civil Case No. 26899 is Atty. Cipriano
Azada; that the same counsel appeared for the Javiers in Criminal Case No. 39851 of
the Pasig Regional Trial Court which is a tax evasion case filed by the Republic of the
Philippines, and that during the hearings of the civil and tax evasion cases against the
Javiers, Atty. Cipriano Azada, Jr. represented them. 15
Inasmuch as copies of the resolution requiring comment on the petition and the
petition itself addressed to Melchor Javier were returned with the notations "moved"
and "deceased", the Court required that said copies be sent to Mrs. Javier herself and
that petitioner should inform the Court of the veracity of Javier's death. 16 A copy of
the resolution addressed to Mrs. Javier was returned also with the notation
"deceased." 17
Counsel for petitioner accordingly informed the Court that he learned that the Javiers
had fled the country and that he had no way of verifying whether Melchor Javier had
indeed died. 18
In view of these circumstances, the Javiers' comment on the petition shall be
dispensed with as the Court deems the pleadings filed by the parties sufficient bases
for resolving this case. The Javiers shall be served copies of this decision in accordance
with Section 6, Rule 13 of the Rules of Court by delivering said copies to the clerk of
court of the lower court, with proof of failure of both personal service and service by
mail.
We hold that the lower court gravely abused its discretion in ruling that the resolution
of September 10, 1982 is a "final and definitive disposition" of petitioner's claim for
the purchase price of the Kern property. The resolution is interlocutory and means no
more than what it states in its dispositive portion-the testimonies of Baylosis and Red
and the documents they testified on, should be stricken from the record.
That the resolution discusses the common-law principle of election of remedies, a
subject matter which shall be dealt with later, is beside the point. It is interlocutory
because the issue resolved therein is merely the admissibility of the plaintiff's
evidence. 19 As such, it does not dispose of the case completely but leaves something
more to be done upon its merits. 20 There are things left undone in Civil Case No.
26899 after the issuance of the September 10, 1982 resolution not only because of its
explicit dispositive portion but also due to the fact that even until now, the case is still
pending and being heard. 21
Furthermore, the lower court's holding in its July 9, 1985 order that petitioner's
second motion for reconsideration is proscribed by the 1983 Interim Rules of Court
which disallows such motion on a final order or judgment, should be rectified. As
explained above, the resolution of September 10, 1982 is not a final one. It also
contains conclusions on procedural matters which, if left unchecked, would prejudice
petitioner's substantive rights.
In effect, therefore, the July 9, 1985 order is a shortcut disposition of Civil Case No.
26899 in total disregard of petitioner's right to a thorough ventilation of its claims. By
putting a premium on procedural technicalities over the resolution of the merits of the
case, the lower court rode roughshod over the basic judicial tenet that litigations
should, as much as possible, be decided on their merits and not on
technicalities. 22 The trial court's patent grave abuse of discretion therefore forces us
to exercise supervisory authority to correct its errors notwithstanding the fact that
ordinarily, this Court would not entertain a petition for certiorari questioning the
legality and validity of an interlocutory order.23
Respondents' principal objection to the testimonies of Baylosis and Red is their alleged
irrelevance to the issues raised in Civil Case No. 26899. The fallacy of this objection
comes to fore upon a scrutiny of the complaint. Petitioner's theory therein is that after
the Javiers had maliciously appropriated unto themselves $999,000, the other private
respondents conspired and participated in the concealment and dissipation of said
amount. The testimonies of Baylosis and Red are therefore needed to establish the
scheme to hide the erroneously sent amount.
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. 24 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. 25
We view respondents' reliance on the procedural principle of election of remedies as
part of their ploy to terminate Civil Case No. 26899 prematurely. With the exception of
the Javiers, respondents failed to raise it as a defense in their answers and therefore,
by virtue of Section 2, Rule 9 of the Rules of Court, such defense is deemed
waived.26 Notwithstanding its lengthy and thorough discussion during the hearing and
in pleadings subsequent to the answers, the issue of election of remedies has not,
contrary to the lower court's assertion, been elevated to a "substantive one." Having
been waived as a defense, it cannot be treated as if it has been raised in a motion to
dismiss based on the nonexistence of a cause of action.
Moreover, granting that the defense was properly raised, it is inapplicable in this case.
In its broad sense, election of remedies refers to the choice by a party to an action of
one of two or more coexisting remedial rights, where several such rights arise out of
the same facts, but the term has been generally limited to a choice by a party between
inconsistent remedial rights, the assertion of one being necessarily repugnant to, or a
repudiation of, the other. In its technical and more restricted sense, election of
remedies is the adoption of one of two or more coexisting remedies, with the effect of
precluding a resort to the others. 27
As a technical rule of procedure, the purpose of the doctrine of election of remedies is
not to prevent recourse to any remedy, but to prevent double redress for a single
wrong. 28 It is regarded as an application of the law of estoppel, upon the theory that a
party cannot, in the assertion of his right occupy inconsistent positions which form the
basis of his respective remedies. However, when a certain state of facts under the law
entitles a party to alternative remedies, both founded upon the Identical state of facts,
these remedies are not considered inconsistent remedies. In such case, the invocation
of one remedy is not an election which will bar the other, unless the suit upon the
remedy first invoked shall reach the stage of final adjudication or unless by the
invocation of the remedy first sought to be enforced, the plaintiff shall have gained an
advantage thereby or caused detriment or change of situation to the other. 29 It must
be pointed out that ordinarily, election of remedies is not made until the judicial
proceedings has gone to judgment on the merits. 30
Consonant with these rulings, this Court, through Justice J.B.L. Reyes, opined that
while some American authorities hold that the mere initiation of proceedings
constitutes a binding choice of remedies that precludes pursuit of alternative courses,
the better rule is that no binding election occurs before a decision on the merits is had
or a detriment to the other party supervenes. 31 This is because the principle of
election of remedies is discordant with the modern procedural concepts embodied in
the Code of Civil Procedure which Permits a party to seek inconsistent remedies in his
claim for relief without being required to elect between them at the pleading stage of
the litigation. 32
It should be noted that the remedies pursued in the California case and in Civil Case
No. 26899 are not exactly repugnant or inconsistent with each other. If ever, they are
merely alternative in view of the inclusion of parties in the latter case who are not
named defendants in the former. The causes of action, although they all stem from
the erroneous transmittal of dollars, are distinct as shown by the complaints lengthily
set out above. The bar of an election of remedies does not apply to the assertion of
distinct causes of action against different persons arising out of independent
transactions. 33
As correctly pointed out by the petitioner, the doctrine of election of remedies is not
favored in the United States for being harsh. 34 Its application with regard to two cases
filed in two different jurisdictions is also circumscribed by jurisprudence on abatement
of suits. Thus, in Brooks Erection Co. v. William R. Montgomery & Associates, Inc., 35 it
is held:
The pendency of an action in the courts of one state or country is not a bar to the
institution of another action between the same parties and for the same cause of
action in a court of another state or country, nor is it the duty of the court in which the
latter action is brought to stay the same pending a determination of the earlier action,
even though the court in which the earlier action is brought has jurisdiction sufficient
to dispose of the entire controversy. Nevertheless, sometimes stated as a matter of
comity not of right, it is usual for the court in which the later action is brought to stay
proceedings under such circumstances until the earlier action is determined.
However, in view of the fact that the California court wherein the case for recovery of
the Kern property was first filed against the Javiers had stayed proceedings therein
until after the termination of Civil Case No. 26899, the court below can do no less than
expedite the disposition of said case.
We cannot dispose of this case without condemning in the strongest terms possible
the acts of chicanery so apparent from the records. The respective liabilities of the
respondents are still being determined by the court below. We must warn, however,
against the use of technicalities and obstructive tactics to delay a just settlement of
this case. The taking advantage of the petitioner's mistake to gain sudden and
undeserved wealth is marked by circumstances so brazen and shocking that any
further delay will reflect poorly on the kind of justice our courts dispense. The possible
involvement of lawyers in this sorry scheme stamps a black mark on the legal
profession. The Integrated Bar of the Philippines (IBP) must be made aware of the
ostensible participation, if not instigation, in the spiriting away of the missing funds.
The IBP must take the proper action at the appropriate time against all lawyers
involved in any misdeeds arising from this case.
WHEREFORE, the resolution of September 10, 1982 and the orders of October 28,
1982 and July 9, 1985 are hereby annulled. The lower court is ordered to proceed with
dispatch in the disposition of Civil case No. 26899, considering that thirteen (13) years
have gone by since the original erroneous remittance.
Service of this decision on the Javier spouses shall be in accordance with Section 6,
Rule 13 of the Rules of Court. A copy of this decision shall be served on the Integrated
Bar of the Philippines.
The decision is immediately executory. Costs against private respondents.
SO ORDERED.
 EN BANC
[G.R. No. 135882. June 27, 2001]
LOURDES T. MARQUEZ, in her capacity as Branch Manager, Union Bank of the
Philippines, petitioners, vs. HON. ANIANO A. DESIERTO, (in his capacity as
OMBUDSMAN, Evaluation and Preliminary Investigation Bureau, Office of the
Ombudsman, ANGEL C. MAYOR-ALGO, JR., MARY ANN CORPUZ-MANALAC and JOSE
T. DE JESUS, JR., in their capacities as Chairman and Members of the Panel,
respectively, respondents.
DECISION
PARDO, J.:
In the petition at bar, petitioner seeks to--
a. Annul and set aside, for having been issued without or in excess of jurisdiction or
with grave abuse of discretion amounting to lack of jurisdiction, respondents order
dated September 7, 1998 in OMB-0-97-0411, In Re: Motion to Cite Lourdes T. Marquez
for indirect contempt, received by counsel of September 9, 1998, and their order
dated October 14, 1998, denying Marquezs motion for reconsideration dated
September 10, 1998, received by counsel on October 20, 1998.
b. Prohibit respondents from implementing their order dated October 14, 1998, in
proceeding with the hearing of the motion to cite Marquez for indirect contempt,
through the issuance by this Court of a temporary restraining order and/or preliminary
injunction.[1]
The antecedent facts are as follows:
Sometime in May 1998, petitioner Marquez received an Order from the Ombudsman
Aniano A. Desierto dated April 29, 1998, to produce several bank documents for
purposes of inspection in camerarelative to various accounts maintained at Union
Bank of the Philippines, Julia Vargas Branch, where petitioner is the branch
manager. The accounts to be inspected are Account Nos. 011-37270, 240-020718,
245-30317-3 and 245-30318-1, involved in a case pending with the Ombudsman
entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al. The
order further states:
It is worth mentioning that the power of the Ombudsman to investigate and to require
the production and inspection of records and documents is sanctioned by the 1987
Philippine Constitution, Republic Act No. 6770, otherwise known as the Ombudsman
Act of 1989 and under existing jurisprudence on the matter. It must be noted that R.
A. 6770 especially Section 15 thereof provides, among others, the following powers,
functions and duties of the Ombudsman, to wit:
xxx
(8) Administer oaths, issue subpoena and subpoena duces tecum and take testimony
in any investigation or inquiry, including the power to examine and have access to
bank accounts and records;
(9) Punish for contempt in accordance with the Rules of Court and under the same
procedure and with the same penalties provided therein.
Clearly, the specific provision of R.A. 6770, a later legislation, modifies the law on the
Secrecy of Bank Deposits (R.A. 1405) and places the office of the Ombudsman in the
same footing as the courts of law in this regard.[2]
The basis of the Ombudsman in ordering an in camera inspection of the accounts is a
trail of managers checks purchased by one George Trivinio, a respondent in OMB-0-
97-0411, pending with the office of the Ombudsman.
It would appear that Mr. George Trivinio, purchased fifty one (51) Managers Checks
(MCs) for a total amount of P272.1 Million at Traders Royal Bank, United Nations
Avenue branch, on May 2 and 3, 1995. 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.[3]
On May 26, 1998, the FFIB panel met in conference with petitioner Lourdes T.
Marquez and Atty. Fe B. Macalino at the banks main office, Ayala Avenue, Makati City.
The meeting was for the purpose of allowing petitioner and Atty. Macalino to view the
checks furnished by Traders Royal Bank. After convincing themselves of the veracity of
the checks, Atty. Macalino advised Ms. Marquez to comply with the order of the
Ombudsman. Petitioner agreed to an in camera inspection set on June 3, 1998.[4]
However, on June 4, 1998, petitioner wrote the Ombudsman explaining to him that
the accounts in question cannot readily be identified and asked for time to respond to
the order. The reason forwarded by petitioner was that despite diligent efforts and
from the account numbers presented, we can not identify these accounts since the
checks are issued in cash or bearer. We surmised that these accounts have long been
dormant, hence are not covered by the new account number generated by the Union
Bank system. We therefore have to verify from the Interbank records archives for the
whereabouts of these accounts.[5]
The Ombudsman, responding to the request of the petitioner for time to comply with
the order, stated: firstly, it must be emphasized that Union Bank, Julia Vargas Branch
was the depositary bank of the subject Traders Royal Bank Managers Checks (MCs), as
shown at its dorsal portion and as cleared by the Philippine Clearing House, not the
International Corporate Bank.
Notwithstanding the fact that the checks were payable to cash or bearer, nonetheless,
the name of the depositor(s) could easily be identified since the account numbers x x x
where said checks were deposited are identified in the order.
Even assuming that the accounts xxx were already classified as dormant accounts, the
bank is still required to preserve the records pertaining to the accounts within a
certain period of time as required by existing banking rules and regulations.
And finally, the in camera inspection was already extended twice
from May 13, 1998 to June 3, 1998, thereby giving the bank enough time within which
to sufficiently comply with the order.[6]
Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner to
produce the bank documents relative to the accounts in issue. The order states:
Viewed from the foregoing, your persistent refusal to comply with Ombudsmans order
is unjustified, and is merely intended to delay the investigation of the case. Your act
constitutes disobedience of or resistance to a lawful order issued by this office and is
punishable as Indirect Contempt under Section 3(b) of R.A. 6770. The same may also
constitute obstruction in the lawful exercise of the functions of the Ombudsman which
is punishable under Section 36 of R.A. 6770.[7]
On July 10, 1998, petitioner together with Union Bank of the Philippines, filed a
petition for declaratory relief, prohibition and injunction[8] with the Regional Trial
Court, Makati City, against the Ombudsman.
The petition was intended to clear the rights and duties of petitioner. Thus, petitioner
sought a declaration of her rights from the court due to the clear conflict between R.
A. No. 6770, Section 15 and R. A. No. 1405, Sections 2 and 3.
Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman
and other persons acting under his authority were continuously harassing her to
produce the bank documents relative to the accounts in question. Moreover, on June
16, 1998, the Ombudsman issued another order stating that unless petitioner
appeared before the FFIB with the documents requested, petitioner manager would
be charged with indirect contempt and obstruction of justice.
In the meantime,[9] on July 14, 1998, the lower court denied petitioners prayer for a
temporary restraining order and stated thus:
After hearing the arguments of the parties, the court finds the application for a
Temporary Restraining Order to be without merit.
Since the application prays for the restraint of the respondent, in the exercise of his
contempt powers under Section 15 (9) in relation to paragraph (8) of R.A. 6770, known
as The Ombudsman Act of 1989, there is no great or irreparable injury from which
petitioners may suffer, if respondent is not so restrained. Respondent should he
decide to exercise his contempt powers would still have to apply with the court. x x
x Anyone who, without lawful excuse x x x refuses to produce documents for
inspection, when thereunto lawfully required shall be subject to discipline as in case of
contempt of Court and upon application of the individual or body exercising the power
in question shall be dealt with by the Judge of the First Instance (now RTC) having
jurisdiction of the case in a manner provided by law (section 580 of the Revised
Administrative Code). Under the present Constitution only judges may issue warrants,
hence, respondent should apply with the Court for the issuance of the warrant needed
for the enforcement of his contempt orders. It is in these proceedings where
petitioners may question the propriety of respondents exercise of his contempt
powers. Petitioners are not therefore left without any adequate remedy.
The questioned orders were issued with the investigation of the case of Fact-Finding
and Intelligence Bureau vs. Amado Lagdameo, et. el., OMB-0-97-0411, for violation of
R.A. 3019. Since petitioner failed to show prima facie evidence that the subject matter
of the investigation is outside the jurisdiction 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 the Ombudsman Act of 1989.[10]
On July 20, 1998, petitioner filed a motion for reconsideration based on the following
grounds:
a. Petitioners application for Temporary Restraining Order is not only to restrain the
Ombudsman from exercising his contempt powers, but to stop him from
implementing his Orders dated April 29,1998 and June 16,1998; and
b. The subject matter of the investigation being conducted by the Ombudsman at
petitioners premises is outside his jurisdiction.[11]
On July 23, 1998, the Ombudsman filed a motion to dismiss the petition for
declaratory relief[12] on the ground that the Regional Trial Court has no jurisdiction to
hear a petition for relief from the findings and orders of the Ombudsman, citing R. A.
No. 6770, Sections 14 and 27. On August 7, 1998, the Ombudsman filed an opposition
to petitioners motion for reconsideration dated July 20, 1998.[13]
(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,

On August 19, 1998, the lower court denied petitioners motion for
reconsideration,[14] and also the Ombudsmans motion to dismiss.[15]
On August 21, 1998, petitioner 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).[16]
On August 31, 1998, petitioner filed with the Ombudsman an opposition to the motion
to cite her in contempt on the ground that the filing thereof was premature due to the
petition pending in the lower court.[17] Petitioner likewise reiterated that she had no
intention to disobey the orders of the Ombudsman. However, she wanted to be
clarified as to how she would comply with the orders without her breaking any law,
particularly R. A. No. 1405.[18]
Respondent Ombudsman panel set the incident for hearing on September 7,
1998.[19] After hearing, the panel issued an order dated September 7, 1998, ordering
petitioner and counsel to appear for a continuation of the hearing of the contempt
charges against her.[20]
On September 10, 1998, petitioner filed with the Ombudsman a motion for
reconsideration of the above order.[21] Her motion was premised on the fact that there
was a pending case with the Regional Trial Court, Makati City,[22] which would
determine whether obeying the orders of the Ombudsman to produce bank
documents would not violate any law.
The FFIB opposed the motion,[23] and on October 14, 1998, the Ombudsman denied
the motion by order the dispositive portion of which reads:
Wherefore, respondent Lourdes T. Marquezs motion for reconsideration is hereby
DENIED, for lack of merit. Let the hearing of the motion of the Fact Finding Intelligence
Bureau (FFIB) to cite her for indirect contempt be intransferrably set to 29 October
1998 at 2:00 oclock p.m. at which date and time she should appear personally to
submit her additional evidence. Failure to do so shall be deemed a waiver thereof.[24]
Hence, the present petition.[25]
(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[27]
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.
Zones of privacy are recognized and protected in our laws. The Civil Code provides
that "[e]very person shall respect the dignity, personality, privacy and peace of mind
of his neighbors and other persons" and punishes as actionable torts several acts for
meddling and prying into the privacy of another. It also holds a public officer or
employee or any private individual liable for damages for any violation of the rights
and liberties of another person, and recognizes the privacy of letters and other private
communications. The Revised Penal Code makes a crime of the violation of secrets by
an officer, the revelation of trade and industrial secrets, and trespass to dwelling.
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.[28]
IN VIEW WHEREOF, we GRANT the petition. We order the Ombudsman to cease and
desist from requiring Union Bank Manager Lourdes T. Marquez, or anyone in her place
to comply with the order dated October 14, 1998, and similar orders. No costs.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban,
Quisumbing, Buena, Gonzaga-Reyes, Ynares-Santiago, De Leon, Jr., and Sandoval-
Gutierrez, JJ., concur.

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 order of the
Ombudsman to have an in camerainspection of the questioned account is allowed as
an exception to the law on secrecy of bank deposits (R. A. No. 1405).

An examination of the secrecy of bank deposits law (R. A. No. 1405) would reveal the
following exceptions:

1. Where the depositor consents in writing;

2. 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. No. 3019, in cases of unexplained wealth as held in the case of PNB vs.
Gancayco[26]

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,
 EN BANC
G.R. No. L-18343 September 30, 1965
PHILIPPINE NATIONAL BANK and EDUARDO Z. ROMUALDEZ, in his capacity as
President of the Philippine National Bank, plaintiffs-appellants,
vs.
EMILIO A. GANCAYCO and FLORENTINO FLOR, Special Prosecutors of the Dept. of
Justice, defendants-appellees.
REGALA, J.:
The principal question presented in this case is whether a bank can be compelled to
disclose the records of accounts of a depositor who is under investigation for
unexplained wealth.
This question arose when defendants Emilio A. Gancayco and Florentino Flor, as
special prosecutors of the Department of Justice, required the plaintiff Philippine
National Bank to produce at a hearing to be held at 10 a.m. on February 20, 1961 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. In declining to reveal its records, the plaintiff bank invoked
Republic Act No. 1405 which provides:
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.
The plaintiff bank also called attention to the penal provision of the law which reads:
SEC. 5. Any 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 thousand
pesos or both, in the discretion of the court.
On the other hand, the defendants cited the Anti-Graft and Corrupt Practices Act
(Republic Act No. 3019) in support of their claim of authority and demanded anew
that plaintiff Eduardo Z. Romualdez, as bank president, produce the records or he
would be prosecuted for contempt. The law invoked by the defendant states:
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.
institutions and to discourage private hoarding so that the same may be utilized by
banks in authorized loans to assist in the economic development of the country."
Contrary to their claim that their position effects a reconciliation of the provisions of
the two laws, plaintiffs are actually making the provisions of Republic Act No. 1405
prevail over those of the Anti-Graft Law, because even without the latter law the
balance standing to the depositor's credit can be considered provided its disclosure is
made in any of the cases provided in Republic Act No. 1405.
The truth is that these laws are so repugnant to each other than no reconciliation is
possible. Thus, while Republic Act No. 1405 provides that bank deposits are
"absolutely confidential ... and [therefore] may not be examined, inquired or looked
into," except in those cases enumerated therein, the Anti-Graft Law directs in
mandatory terms that bank deposits "shall be taken into consideration in the
enforcement of this section, notwithstanding any provision of law to the contrary."
The only conclusion possible is that 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.
Indeed, it is said that if the new law is inconsistent with or repugnant to the old law,
the presumption against the intent to repeal by implication is overthrown because the
inconsistency or repugnancy reveals an intent to repeal the existing law. And whether
a statute, either in its entirety or in part, has been repealed by implication is ultimately
a matter of legislative intent. (Crawford, The Construction of Statutes, Secs. 309-310.
Cf. Iloilo Palay and Corn Planters Ass'n v. Feliciano, G.R. No. L-24022, March 3, 1965).
The recent case of People v. De Venecia, G.R. No. L-20808, July 31, 1965 invites
comparison with this case. There it was held:
The result is that although sec. 54 [Rev. Election Code] prohibits a classified civil
service employee from aiding any candidate, sec. 29 [Civil Service Act of 1959] allows
such classified employee to express his views on current political problems or issues,
or to mention the name of his candidate for public office, even if such expression of
views or mention of names may result in aiding one particular candidate. In other
words, the last paragraph of sec. 29 is an exception to sec. 54; at most, an amendment
to sec. 54.
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.
WHEREFORE, the decision appealed from is affirmed, without pronouncement as to
costs.

Because of the threat of prosecution, plaintiffs filed an action for declaratory

judgment in the Manila Court of First Instance. After trial, during which Senator Arturo
M. Tolentino, author of the Anti-Graft and Corrupt Practices Act testified, the court
rendered judgment, 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.1awphîl.nèt

From that judgment, plaintiffs appealed to this Court. In brief, plaintiffs' position is
that section 8 of the Anti-Graft Law "simply means that such bank deposits may be
included or added to the assets of the Government official or employee for the
purpose of computing his unexplained wealth if and when the same are discovered or
revealed in the manner authorized by Section 2 of Republic Act 1405, which are (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;
and (4) In cases where the money deposited or invested is the subject matter of the
litigation."

In support of their position, plaintiffs contend, first, that the Anti-Graft Law (which
took effect on August 17, 1960) is a general law which cannot be deemed to have
impliedly repealed section 2 of Republic Act No. 1405 (which took effect on Sept. 9,
1955), because of the rule that repeals by implication are not favored. Second, they
argue that to construe section 8 of the Anti-Graft Law as allowing inquiry into bank
deposits would be to negate the policy expressed in section 1 of Republic Act No. 1405
which is "to give encouragement to the people to deposit their money in banking
 EN BANC
G.R. Nos. 157294-95 November 30, 2006
JOSEPH VICTOR G. EJERCITO, Petitioner,
vs.
SANDIGANBAYAN (Special Division) and PEOPLE OF THE PHILIPPINES, Respondents.
DECISION
CARPIO MORALES, J.:
The present petition for certiorari under Rule 65 assails the Sandiganbayan
Resolutions dated February 7 and 12, 2003 denying petitioner Joseph Victor G.
Ejercito’s Motions to Quash Subpoenas Duces Tecum/Ad Testificandum, and
Resolution dated March 11, 2003 denying his Motion for Reconsideration of the first
two resolutions.
The three resolutions were issued in Criminal Case No. 26558, "People of the
Philippines v. Joseph Ejercito Estrada, et al.," for plunder, defined and penalized in R.A.
7080, "AN ACT DEFINING AND PENALIZING THE CRIME OF PLUNDER."
In above-stated case of People v. Estrada, et al., the Special Prosecution Panel1 filed on
January 20, 2003 before the Sandiganbayan 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 produce the
following documents during the hearings scheduled on January 22 and 27, 2003:
I. For Trust Account No. 858;
1. Account Opening Documents;
2. Trading Order No. 020385 dated January 29, 1999;
3. Confirmation Advice TA 858;
4. Original/Microfilm copies, including the dorsal side, of the following:
a. Bank of Commerce MC # 0256254 in the amount
of P2,000,000.00;
b. Urban bank Corp. MC # 34181 dated November 8, 1999 in
the amount of P10,875,749.43;
c. Urban Bank MC # 34182 dated November 8, 1999 in the
amount of P42,716,554.22;
d. Urban Bank Corp. MC # 37661 dated November 23, 1999 in
the amount of P54,161,496.52;
5. Trust Agreement dated January 1999:
Trustee: Joseph Victor C. Ejercito
Nominee: URBAN BANK-TRUST DEPARTMENT
Special Private Account No. (SPAN) 858; and
6. Ledger of the SPAN # 858.
II. For Savings Account No. 0116-17345-9
SPAN No. 858
1. Signature Cards; and
2. Statement of Account/Ledger
III. Urban Bank Manager’s Check and their corresponding Urban Bank Manager’s
Check Application Forms, as follows:
1. MC # 039975 dated January 18, 2000 in the amount of P70,000,000.00;
2. MC # 039976 dated January 18, 2000 in the amount of P2,000,000.00;
3. MC # 039977 dated January 18, 2000 in the amount of P2,000,000.00;
4. MC # 039978 dated January 18, 2000 in the amount of P1,000,000.00;
The Special Prosecution Panel also filed on January 20, 2003, a Request for Issuance of
Subpoena Duces Tecum/Ad Testificandum 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.
The Sandiganbayan granted both requests by Resolution of January 21, 2003 and
subpoenas were accordingly issued.
The Special Prosecution Panel filed still another Request for Issuance of Subpoena
Duces Tecum/Ad Testificandum dated January 23, 2003 for the President of EIB or
his/her authorized representative to produce the same documents subject of the
Subpoena Duces Tecum dated January 21, 2003 and to testify thereon on the hearings
scheduled on January 27 and 29, 2003 and subsequent dates until completion of the
testimony. The request was likewise granted by the Sandiganbayan. A Subpoena
Duces Tecum/Ad Testificandum was accordingly issued on January 24, 2003.
Petitioner, claiming to have learned from the media that the Special Prosecution Panel
had requested for the issuance of subpoenas for the examination of bank accounts
belonging to him, attended the hearing of the case on January 27, 2003 and filed
before the Sandiganbayan a letter of even date expressing his concerns as follows,
quoted verbatim:
Your Honors:
It is with much respect that I write this court relative to the concern of subpoenaing
the undersigned’s bank account which I have learned through the media.
I am sure the prosecution is aware of our banking secrecy laws everyone supposed to
observe. But, instead of prosecuting those who may have breached such laws, it
seems it is even going to use supposed evidence which I have reason to believe could
only have been illegally obtained.
The prosecution was not content with a general request. It even lists and identifies
specific documents meaning someone else in the bank illegally released confidential
information.
If this can be done to me, it can happen to anyone. Not that anything can still shock
our family. Nor that I have anything to hide. Your Honors.
But, I am not a lawyer and need time to consult one on a situation that affects every
bank depositor in the country and should interest the bank itself, the Bangko Sentral
ng Pilipinas, and maybe the Ombudsman himself, who may want to investigate, not
exploit, the serious breach that can only harm the economy, a consequence that may
have been overlooked. There appears to have been deplorable connivance.
xxxx
I hope and pray, Your Honors, that I will be given time to retain the services of a
lawyer to help me protect my rights and those of every banking depositor. But the one
I have in mind is out of the country right now.
May I, therefore, ask your Honors, that in the meantime, the issuance of the subpoena
be held in abeyance for at least ten (10) days to enable me to take appropriate legal
steps in connection with the prosecution’s request for the issuance of subpoena
concerning my accounts. (Emphasis supplied)
From the present petition, it is gathered that the "accounts" referred to by petitioner
in his above-quoted letter areTrust Account No. 858 and Savings Account No. 0116-
17345-9.2
In open court, the Special Division of the Sandiganbayan, through Associate Justice
Edilberto Sandoval, advised petitioner that his remedy was to file a motion to quash,
for which he was given up to 12:00 noon the following day, January 28, 2003.
Petitioner, unassisted by counsel, thus filed on January 28, 2003 a Motion to Quash
Subpoena Duces Tecum/Ad Testificandum praying that the subpoenas previously
issued to the President of the EIB dated January 21 and January 24, 2003 be quashed.3
In his Motion to Quash, petitioner claimed that his bank accounts are covered by R.A.
No. 1405 (The Secrecy of Bank Deposits Law) and do not fall under any of the
exceptions stated therein. 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 thereof by the EIB
and the Philippine Deposit Insurance Corporation (PDIC) in its capacity as receiver of
the then Urban Bank.
The disclosure being illegal, petitioner concluded, the prosecution in the case may not
be allowed to make use of the information.
Before the Motion to Quash was resolved by the Sandiganbayan, the prosecution filed
another Request for the Issuance of Subpoena Duces Tecum/Ad Testificandum dated
January 31, 2003, again to direct the President of the EIB to produce, on the hearings
scheduled on February 3 and 5, 2003, the same documents subject of the January 21
and 24, 2003 subpoenas with the exception of the Bank of Commerce MC #0256254 in
the amount ofP2,000,000 as Bank of Commerce MC #0256256 in the amount
of P200,000,000 was instead requested. Moreover, the request covered the following
additional documents:
IV. For Savings Account No. 1701-00646-1:
1. Account Opening Forms;
2. Specimen Signature Card/s; and
3. Statements of Account.
The prosecution also filed a Request for the Issuance of Subpoena Duces Tecum/Ad
Testificandum bearing the same date, January 31, 2003, directed to Aurora C. Baldoz,
Vice President-CR-II of the PDIC for her to produce the following documents on the
scheduled hearings on February 3 and 5, 2003:
1. Letter of authority dated November 23, 1999 re: SPAN [Special Private
Account Number] 858;
 2. Letter of authority dated January 29, 2000 re: SPAN 858;
3. Letter of authority dated April 24, 2000 re: SPAN 858;
4. Urban Bank check no. 052092 dated April 24, 2000 for the amount of
P36, 572, 315.43;
5. Urban Bank check no. 052093 dated April 24, 2000 for the amount of
P107,191,780.85; and
6. Signature Card Savings Account No. 0116-17345-9. (Underscoring
supplied)
The subpoenas prayed for in both requests were issued by the Sandiganbayan on
January 31, 2003.
On February 7, 2003, petitioner, this time assisted by counsel, filed an Urgent Motion
to Quash Subpoenae Duces Tecum/Ad Testificandum praying that the subpoena dated
January 31, 2003 directed to Aurora Baldoz be quashed for the same reasons which he
cited in the Motion to Quash4 he had earlier filed.
On the same day, February 7, 2003, the Sandiganbayan issued a Resolution denying
petitioner’s Motion to Quash Subpoenae Duces Tecum/Ad Testificandum dated
January 28, 2003.
Subsequently or on February 12, 2003, the Sandiganbayan issued a Resolution denying
petitioner’s Urgent Motion to Quash Subpoena Duces Tecum/Ad Testificandum dated
February 7, 2003.
Petitioner’s Motion for Reconsideration dated February 24, 2003 seeking a
reconsideration of the Resolutions of February 7 and 12, 2003 having been denied by
Resolution of March 11, 2003, petitioner filed the present petition.
Raised as issues are:
1. Whether petitioner’s Trust Account No. 858 is covered by the term
"deposit" as used in R.A. 1405;
2. Whether petitioner’s Trust Account No. 858 and Savings Account No.
0116-17345-9 are excepted from the protection of R.A. 1405; and
3. Whether the "extremely-detailed" information contained in the Special
Prosecution Panel’s requests for subpoena was obtained through a prior
illegal disclosure of petitioner’s bank accounts, in violation of the "fruit of
the poisonous tree" doctrine.
Respondent People posits that Trust Account No. 8585 may be inquired into, not
merely because it falls under the exceptions to the coverage of R.A. 1405, but because
it is not even contemplated therein. For, to respondent People, the law applies only to
"deposits" which strictly means the money delivered to the bank by which a creditor-
debtor relationship is created between the depositor and the bank.
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:
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 assist in the economic development of the country. (Underscoring
supplied)
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.6 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:
SECTION 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. (Emphasis and
underscoring supplied)
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.
Petitioner contends that since plunder is neither bribery nor dereliction of duty, his
accounts are not excepted from the protection of R.A. 1405. Philippine National Bank
v. Gancayco7 holds otherwise:
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 expresses the notion 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.
Undoubtedly, cases for plunder involve unexplained wealth. Section 2 of R.A. No. 7080
states so.
SECTION 2. Definition of the Crime of Plunder; Penalties. — Any public officer who, by
himself or in connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of overt or
criminal acts as described in Section 1(d) hereof, in the aggregate amount or total
value of at least Seventy-five million pesos (P75,000,000.00), shall be guilty of the
crime of plunder and shall be punished by life imprisonment with perpetual absolute
disqualification from holding any public office. Any person who participated with said
public officer in the commission of plunder shall likewise be punished. In the
imposition of penalties, the degree of participation and the attendance of mitigating
and extenuating circumstances shall be considered by the court. The court shall
declare any and all ill-gotten wealth and their interests and other incomes and assets
including the properties and shares of stock derived from the deposit or investment
thereof forfeited in favor of the State. (Emphasis and underscoring supplied)
An examination of the "overt or criminal acts as described in Section 1(d)" of R.A. No.
7080 would make the similarity between plunder and bribery even more pronounced
since bribery is essentially included among these criminal acts. Thus Section 1(d)
states:
d) "Ill-gotten wealth" means any asset, property, business enterprise or material
possession of any person within the purview of Section Two (2) hereof, acquired by
him directly or indirectly through dummies, nominees, agents, subordinates and or
business associates by any combination or series of the following means or similar
schemes.
1) Through misappropriation, conversion, misuse, or malversation of
public funds or raids on the public treasury;
2) By receiving, directly or indirectly, any commission, gift, share,
percentage, kickbacks or any other form of pecuniary benefit from any
person and/or entity in connection with any government contract or
project or by reason of the office or position of the public officer
concerned;
3) By the illegal or fraudulent conveyance or disposition of assets
belonging to the National Government or any of its subdivisions, agencies
 or instrumentalities or government-owned or -controlled corporations and
their subsidiaries;
4) By obtaining, receiving or accepting directly or indirectly any shares of
stock, equity or any other form of interest or participation including
promise of future employment in any business enterprise or undertaking;
5) By establishing agricultural, industrial or commercial monopolies or
other combinations and/or implementation of decrees and orders
intended to benefit particular persons or special interests; or
6) By taking undue advantage of official position, authority, relationship,
connection or influence to unjustly enrich himself or themselves at the
expense and to the damage and prejudice of the Filipino people and the
Republic of the Philippines. (Emphasis supplied)
Indeed, all the above-enumerated overt acts are similar to bribery such that, in each
case, it may be said that "no reason is seen why these two classes of cases cannot be
excepted from the rule making bank deposits confidential."8
The crime of bribery and the overt acts constitutive of plunder are crimes 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 with the full knowledge that his
life, so far as relevant to his duty, is open to public scrutiny" applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases
of bribery must also apply to cases of plunder.
Respecting petitioner’s claim that the money in his bank accounts is not the "subject
matter of the litigation," the meaning of the phrase "subject matter of the litigation"
as used in R.A. 1405 is explained in Union Bank of the Philippines v. Court of
Appeals,9 thus:
Petitioner contends that the Court of Appeals confuses the "cause of action" with the
"subject of the action". InYusingco v. Ong Hing Lian, petitioner points out, this Court
distinguished the two concepts.
x x x "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 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 respect to which the
controversy has arisen, concerning which the wrong has been done, and this ordinarily
is the property or the contract and its subject matter, or the thing in dispute."
The argument is well-taken. We note with approval the difference between the
‘subject of the action’ from the ‘cause of action.’ We also find petitioner’s definition of
the phrase ‘subject matter of the action’ is consistent with the term ‘subject matter of
the litigation’, as the latter is used in the Bank Deposits Secrecy Act.
In Mellon Bank, N.A. v. Magsino, where the petitioner bank inadvertently caused the
transfer of the amount of US$1,000,000.00 instead of only US$1,000.00, the Court
sanctioned the examination of the bank accounts where part of the money was
subsequently caused to be deposited:
‘x x x Section 2 of [Republic Act No. 1405] 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."
Clearly, Mellon Bank involved a case where the money deposited was the subject
matter of the litigation since the money deposited was the very thing in dispute. x x x"
(Emphasis and underscoring supplied)
The plunder case now pending with the Sandiganbayan necessarily involves an inquiry
into the whereabouts of the amount purportedly acquired illegally by former
President Joseph Estrada.
In light then of this Court’s pronouncement in Union Bank, the subject matter of the
litigation cannot be limited to bank accounts under the name of President Estrada
alone, but must include those accounts to which the money purportedly acquired
illegally or a portion thereof was alleged to have been transferred. Trust Account No.
858 and Savings Account No. 0116-17345-9 in the name of petitioner fall under this
description and must thus be part of the subject matter of the litigation.
In a further attempt to show that the subpoenas issued by the Sandiganbayan are
invalid and may not be enforced, petitioner contends, as earlier stated, that the
information found therein, given their "extremely detailed" character, could only have
been obtained by the Special Prosecution Panel through an illegal disclosure by the
bank officials concerned. Petitioner thus claims that, following the "fruit of the
poisonous tree" doctrine, the subpoenas must be quashed.
Petitioner further contends that even if, as claimed by respondent People, the
"extremely-detailed" information was obtained by the Ombudsman from the bank
officials concerned during a previous investigation of the charges against President
Estrada, such inquiry into his bank accounts would itself be illegal.
Petitioner relies on Marquez v. Desierto10 where the Court held:
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. (Underscoring supplied)
As no plunder case against then President Estrada had yet been filed before a court of
competent jurisdiction at the time the Ombudsman conducted an investigation,
petitioner concludes that the information about his bank accounts were acquired
illegally, hence, it may not be lawfully used to facilitate a subsequent inquiry into the
same bank accounts.
Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails.
R.A. 1405, it bears noting, nowhere provides that an unlawful examination of bank
accounts shall render the evidence obtained therefrom inadmissible in evidence.
Section 5 of R.A. 1405 only states that "[a]ny 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 thousand pesos or both, in the discretion of the court."
The case of U.S. v. Frazin,11 involving the Right to Financial Privacy Act of 1978 (RFPA)
of the United States, is instructive.
Because the statute, when properly construed, excludes a suppression remedy, it
would not be appropriate for us to provide one in the exercise of our supervisory
powers over the administration of justice. Where Congress has both established a
right and provided exclusive remedies for its violation, we would "encroach upon the
prerogatives" of Congress were we to authorize a remedy not provided for by
statute. United States v. Chanen,549 F.2d 1306, 1313 (9th Cir.), cert. denied, 434 U.S.
825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977).
The same principle was reiterated in U.S. v. Thompson:12
x x x When Congress specifically designates a remedy for one of its acts, courts
generally presume that it engaged in the necessary balancing of interests in
determining what the appropriate penalty should be. SeeMichaelian, 803 F.2d at
1049 (citing cases); Frazin, 780 F.2d at 1466. Absent a specific reference to an
exclusionary rule, it is not appropriate for the courts to read such a provision into the
act.
Even assuming arguendo, however, that the exclusionary rule applies in principle to
cases involving R.A. 1405, the Court finds no reason to apply the same in this
particular case.
Clearly, the "fruit of the poisonous tree" doctrine13 presupposes a violation of law. If
there was no violation of R.A. 1405 in the instant case, then there would be no
"poisonous tree" to begin with, and, thus, no reason to apply the doctrine.
How the Ombudsman conducted his inquiry into the bank accounts of petitioner is
recounted by respondent People of the Philippines, viz:
x x x [A]s early as February 8, 2001, long before the issuance of the Marquez ruling,
the Office of the Ombudsman, acting under the powers granted to it by the
Constitution and R.A. No. 6770, and acting on information obtained from various
sources, including impeachment (of then Pres. Joseph Estrada) related reports, articles
and investigative journals, issued a Subpoena Duces Tecum addressed to Urban Bank.
(Attachment "1-b") It should be noted that the description of the documents sought to
be produced at that time included that of numbered accounts 727, 737, 747, 757, 777
and 858 and included such names as Jose Velarde, Joseph E. Estrada, Laarni Enriquez,
Guia Gomez, Joy Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin Garcia.
The subpoena did not single out account 858.
xxxx
Thus, on February 13, 2001, PDIC, as receiver of Urban Bank, issued a certification as
to the availability of bank documents relating to A/C 858 and T/A 858 and the non-
availability of bank records as to the other accounts named in the subpoena.
(Attachments "2", "2-1" and "2-b)
Based on the certification issued by PDIC, the Office of the Ombudsman on February
16, 2001 again issued aSubpoena Duces Tecum directed to Ms. Corazon dela Paz, as
Interim Receiver, directing the production of documents pertinent to account A/C 858
and T/C 858. (Attachment "3")
In compliance with the said subpoena dated February 16, 2001, Ms. Dela Paz, as
interim receiver, furnished the Office of the Ombudsman certified copies of
documents under cover latter dated February 21, 2001:
1. Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-18-99, 11-22-
99, 1-07-00, 04-03-00 and 04-24-00;
2. Report of Unregularized TAFs & TDs for UR COIN A & B Placements of
Various Branches as of February 29, 2000 and as of December 16, 1999;
and
3. Trading Orders Nos. A No. 78102 and A No. 078125.
Trading Order A No. 07125 is filed in two copies – a white copy which showed "set up"
information; and a yellow copy which showed "reversal" information. Both copies
have been reproduced and are enclosed with this letter.
We are continuing our search for other records and documents pertinent to your
request and we will forward to you on Friday, 23 February 2001, such additional
records and documents as we might find until then. (Attachment "4")
The Office of the Ombudsman then requested for the manger’s checks, detailed in
the Subpoena Duces Tecumdated March 7, 2001. (Attachment "5")
PDIC again complied with the said Subpoena Duces Tecum dated March 7, 2001 and
provided copies of the manager’s checks thus requested under cover letter
dated March 16, 2001. (Attachment "6")14 (Emphasis in the original)
The Sandiganbayan credited the foregoing account of respondent People.15 The Court
finds no reason to disturb this finding of fact by the Sandiganbayan.
The Marquez ruling notwithstanding, the above-described examination by the
Ombudsman of petitioner’s bank accounts, conducted before a case was filed with a
court of competent jurisdiction, was lawful.
For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner
about four months beforeMarquez was promulgated on June 27, 2001.
While judicial interpretations of statutes, such as that made in Marquez with respect
to R.A. No. 6770 or the Ombudsman Act of 1989, are deemed part of the statute as of
the date it was originally passed, the rule is not absolute.
Columbia Pictures, Inc. v. Court of Appeals16 teaches:
It is consequently clear that a judicial interpretation becomes a part of the law as of
the date that law was originally passed, subject only to the qualification that when a
doctrine of this Court is overruled and a different view is adopted, and more so
when there is a reversal thereof, the new doctrine should be
applied prospectively and should not apply to parties who relied on the old doctrine
and acted in good faith. (Emphasis and underscoring supplied)
When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of
Bank Deposits Law in Marquez, that "before an in camera inspection may be allowed
there must be a pending case before a court of competent jurisdiction", it was, in fact,
reversing an earlier doctrine found in Banco Filipino Savings and Mortgage Bank v.
Purisima17.
Banco Filipino involved subpoenas duces tecum issued by the Office of the
Ombudsman, then known as the Tanodbayan,18 in the course of its preliminary
investigation of a charge of violation of the Anti-Graft and Corrupt Practices Act.
While the main issue in Banco Filipino was whether R.A. 1405 precluded the
Tanodbayan’s issuance of subpoena duces tecum of bank records in the name of
persons other than the one who was charged, this Court, citing P.D. 1630,19 Section
10, the relevant part of which states:
(d) He may issue a subpoena to compel any person to appear, give sworn testimony,
or produce documentary or other evidence the Tanodbayan deems relevant to a
matter under his inquiry,
held that "The power of the Tanodbayan to issue subpoenae ad testificandum and
subpoenae duces tecum at the time in question is not disputed, and at any rate does
not admit of doubt."20
As the subpoenas subject of Banco Filipino were issued during a preliminary
investigation, in effect this Court upheld the power of the Tandobayan under P.D.
1630 to issue subpoenas duces tecum for bank documentsprior to the filing of a case
before a court of competent jurisdiction.
Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite
the fact that the subpoena power of the Ombudsman under R.A. 6770 was essentially
the same as that under P.D. 1630. Thus Section 15 of R.A. 6770 empowers the Office
of the Ombudsman to
(8) Administer oaths, issue subpoena and subpoena duces tecum, and take testimony
in any investigation or inquiry, including the power to examine and have access to
bank accounts and records;
A comparison of this provision with its counterpart in Sec. 10(d) of P.D. 1630 clearly
shows that it is only more explicit in stating that the power of the Ombudsman
includes the power to examine and have access to bank accounts and records which
power was recognized with respect to the Tanodbayan through Banco Filipino.
The Marquez ruling that there must be a pending case in order for the Ombudsman to
validly inspect bank records in camera thus reversed a prevailing doctrine.21 Hence, it
may not be retroactively applied.
The Ombudsman’s inquiry into the subject bank accounts prior to the filing of any case
before a court of competent jurisdiction was therefore valid at the time it was
conducted.
Likewise, the Marquez ruling that "the account holder must be notified to be present
during the inspection" may not be applied retroactively to the inquiry of the
Ombudsman subject of this case. This ruling is not a judicial interpretation either of
R.A. 6770 or R.A. 1405, but a "judge-made" law which, as People v.
Luvendino22 instructs, can only be given prospective application:
x x x The doctrine that an uncounselled waiver of the right to counsel is not to be
given legal effect was initially a judge-made one and was first announced on 26 April
1983 in Morales v. Enrile and reiterated on 20 March 1985 in People v. Galit. x x x
While the Morales-Galit doctrine eventually became part of Section 12(1) of the 1987
Constitution, that doctrine affords no comfort to appellant Luvendino for the
requirements and restrictions outlined in Morales and Galithave no retroactive
effect and do not reach waivers made prior to 26 April 1983 the date of promulgation
ofMorales. (Emphasis supplied)
In fine, the subpoenas issued by the Ombudsman in this case were legal, hence,
invocation of the "fruit of the poisonous tree" doctrine is misplaced.
At all events, even if the challenged subpoenas are quashed, the Ombudsman is not
barred from requiring the production of the same documents based solely on
information obtained by it from sources independent of its previous inquiry.
In particular, the Ombudsman, even before its inquiry, had already possessed
information giving him grounds to believe that (1) there are bank accounts bearing the
number "858," (2) that such accounts are in the custody of Urban Bank, and (3) that
the same are linked with the bank accounts of former President Joseph Estrada who
was then under investigation for plunder.
Only with such prior independent information could it have been possible for the
Ombudsman to issue the February 8, 2001 subpoena duces tecum addressed to the
President and/or Chief Executive Officer of Urban Bank, which described the
documents subject thereof as follows:
(a) bank records and all documents relative thereto pertaining to all bank accounts
(Savings, Current, Time Deposit, Trust, Foreign Currency Deposits, etc…) under
the account names of Jose Velarde, Joseph E. Estrada, Laarni Enriquez, Guia Gomez,
Joy Melendrez, Peach Osorio, Rowena Lopez, Kevin or Kelvin Garcia, 727, 737, 747,
757, 777 and 858. (Emphasis and underscoring supplied)
The information on the existence of Bank Accounts bearing number "858" was,
according to respondent People of the Philippines, obtained from various sources
including the proceedings during the impeachment of President Estrada, related
reports, articles and investigative journals.23 In the absence of proof to the contrary,
this explanation proffered by respondent must be upheld. To presume that the
information was obtained in violation of R.A. 1405 would infringe the presumption of
regularity in the performance of official functions.
Thus, with the filing of the plunder case against former President Estrada before the
Sandiganbayan, the Ombudsman, using the above independent information, may now
proceed to conduct the same investigation it earlier conducted, through which it can
eventually obtain the same information previously disclosed to it by the PDIC, for it is
an inescapable fact that the bank records of petitioner are no longer protected by R.A.
1405 for the reasons already explained above.1âwphi1

Since conducting such an inquiry would, however, only result in the disclosure of the
same documents to the Ombudsman, this Court, in avoidance of what would be a
time-wasteful and circuitous way of administering justice,24 upholds the challenged
subpoenas.

Respecting petitioner’s claim that the Sandiganbayan violated his right to due process
as he was neither notified of the requests for the issuance of the subpoenas nor of the
grant thereof, suffice it to state that the defects were cured when petitioner
ventilated his arguments against the issuance thereof through his earlier quoted letter
addressed to the Sandiganbayan and when he filed his motions to quash before the
Sandiganbayan.

IN SUM, the Court finds that the Sandiganbayan did not commit grave abuse of
discretion in issuing the challenged subpoenas for documents pertaining to
petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9 for the
following reasons:

1. These accounts are no longer protected by the Secrecy of Bank Deposits

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 cases of bribery or dereliction of duty of public
officials, and (2) the money deposited or invested is the subject matter of
the litigation. Exception (1) applies since the plunder case pending against
former President Estrada is analogous to bribery or dereliction of duty,
while exception (2) applies because the money deposited in petitioner’s
bank accounts is said to form part of the subject matter of the same
plunder case.

2. The "fruit of the poisonous tree" principle, which states that once the
primary source (the "tree") is shown to have been unlawfully obtained,
any secondary or derivative evidence (the "fruit") derived from it is also
inadmissible, does not 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 this case since the primary source for the detailed
information regarding petitioner’s bank accounts – the investigation
previously conducted by the Ombudsman – was lawful.

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 subject bank accounts that it earlier conducted last February-March
2001, there being a plunder case already pending against former President
Estrada. To quash the challenged subpoenas would, therefore, be
pointless since the Ombudsman may obtain the same documents by
another route. Upholding the subpoenas avoids an unnecessary delay in
the administration of justice.

WHEREFORE, the petition is DISMISSED. The Sandiganbayan Resolutions dated

February 7 and 12, 2003 and March 11, 2003 are upheld.

The Sandiganbayan is hereby directed, consistent with this Court’s ruling in Marquez v.
Desierto, to notify petitioner as to the date the subject bank documents shall be
presented in court by the persons subpoenaed.

SO ORDERED.
 EN BANC
G.R. No. L-34964 January 31, 1973
CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants,
vs.
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of
Manila, Branch VIII, and VICENTE G. ACABAN, respondents-appellees.
MAKALINTAL, J.:
The only issue in this petition for certiorari to review the orders dated March 4, 1972
and March 27, 1972, respectively, of the Court of First Instance of Manila in its Civil
Case No. 75138, is whether or not a banking institution may validly refuse to comply
with a court process garnishing the bank deposit of a judgment debtor, by invoking the
provisions of Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against
Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista
for the collection of a sum of money. Upon motion of the plaintiff the trial court
declared the defendants in default for failure to answer within the reglementary
period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the
plaintiff's evidence. On January 20, 1970 judgment by default was rendered against
the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of
the defendant B & B Forest Development Corporation with the China Banking
Corporation. Accordingly, a notice of garnishment was issued by the Deputy Sheriff of
the trial court and served on said bank through its cashier, Tan Kim Liong. In reply, the
bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic
Act No. 1405 which, it was alleged, prohibit the disclosure of any information relative
to bank deposits. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for
contempt of court.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However,
Tan Kim Liong was ordered "to inform the Court within five days from receipt of this
order whether or not there is a deposit in the China Banking Corporation of defendant
B & B Forest Development Corporation, and if there is any deposit, to hold the same
intact and not allow any withdrawal until further order from this Court." Tan Kim Liong
moved to reconsider but was turned down by order of March 27, 1972. In the same
order he was directed "to comply with the order of this Court dated March 4, 1972
within ten (10) days from the receipt of copy of this order, otherwise his arrest and
confinement will be ordered by the Court." Resisting the two orders, the China
Banking Corporation and Tan Kim Liong instituted the instant petition.
The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:
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 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.
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.
Sec. 5. Any violation of this law will subject offender upon conviction, to an
imprisonment of not more than five years or a fine of not more than twenty thousand
pesos or both, in the discretion of the court.
The petitioners argue that the disclosure of the information required by the court
does not fall within any of the four (4) exceptions enumerated in Section 2, and that if
the questioned orders are complied with Tan Kim Liong may be criminally liable under
Section 5 and the bank exposed to a possible damage suit by B & B Forest
Development Corporation. Specifically referring to this case, the position of the
petitioners is that the bank deposit of judgment debtor B & B Forest Development
Corporation cannot be subject to garnishment to satisfy a final judgment against it in
view of the aforequoted provisions of law.
We do not view the situation in that light. The lower court did not order an
examination of or inquiry into the deposit of B & B Forest Development Corporation,
as contemplated in the law. It merely required Tan Kim Liong to inform the court
whether or not the defendant B & B Forest Development Corporation had a deposit in
the China Banking Corporation only for purposes of the garnishment issued by it, so
that the bank would hold the same intact and not allow any withdrawal until further
order. It will be noted 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 it was not the intention of the lawmakers to place bank deposits beyond the
reach of execution to satisfy a final judgment. Thus:
Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the
Committee on Ways and Means to clarify this further. Suppose an individual has a tax
case. He is being held liable by the Bureau of Internal Revenue for, say, P1,000.00
worth of tax liability, and because of this the deposit of this individual is attached by
the Bureau of Internal Revenue.
Mr. RAMOS. The attachment will only apply after the court has pronounced sentence
declaring the liability of such person. But where the primary aim is to determine
whether he has a bank deposit in order to bring about a proper assessment by the
Bureau of Internal Revenue, such inquiry is not authorized by this proposed law.
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the
attachment or garnishment of money deposited is allowed. Let us assume, for
instance, that there is a preliminary attachment which is for garnishment or for
holding liable all moneys deposited belonging to a certain individual, but such
attachment or garnishment will bring out into the open the value of such deposit. Is
that prohibited by this amendment or by this law?
Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the
inquiry is made only for the purpose of satisfying a tax liability already declared for the
protection of the right in favor of the government; but when the object is merely to
inquire whether he has a deposit or not for purposes of taxation, then this is fully
covered by the law.
Mr. MARCOS. And it protects the depositor, does it not?
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the existence and the
amount of the deposit.
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment
or attachment of the deposit is not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as
well as the substantive law on the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the
liability of an individual for taxation purposes and this judgment is sought to be
executed ... in the execution of that judgment, does this bill, or this proposed law, if
approved, allow the investigation or scrutiny of the bank deposit in order to execute
the judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the
deposit is half a million, will this bill allow scrutiny into the deposit in order that the
judgment may be executed?
Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation
to the Government, but not to determine whether a deposit has been made in evasion
of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery of
a sum of money the plaintiff wishes to attach the properties of the defendant to
insure the satisfaction of the judgment. Once the judgment is rendered, does the
gentleman mean that the plaintiff cannot attach the bank deposit of the defendant?
Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to which
I replied that outside the very purpose of this law it could be reached by attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?
Mr. RAMOS. That is so.
(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July
27, 1955).
It is sufficiently clear from the foregoing discussion of the conference committee
report of the two houses of Congress 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 the 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.
WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively,
are hereby affirmed, with costs against the petitioners-appellants.
Republic of the Philippines
COURT OF APPEALS
MANILA
SPECIAL THIRTEENTH DIVISION
HILARIO P. SORIANO, Petitioner, - versus - HON. MERCEDITA N. GUTIERREZ,
Undersecretary of Justice, and MELINDA S. MANUZON, Respondents.
TAYAG, J:
Before this Court is a Petition for Certiorari under Rule 65 of the Rules of Court seeking
to annul and set aside as having been issued by public respondent Undersecretary of
Justice, with grave abuse of discretion amounting to excess of jurisdiction, the
following: (1) Resolution dated February 13, 2003 1 of the Department of Justice
dismissing the petitioner's petition for review of the Resolution of the Office of the
City Prosecutor of Manila dated February 14, 2002 2 ; and (2) Resolution dated August
27, 2004 3 of the Department of Justice denying petitioner's Motion for
Reconsideration.
The facts, as alleged in the petition, are as follows: On September 29, 2000, Mrs.
Melinda S. Manuzon, the former Head of the Treasury Department of RBSM, executed
an affidavit where she disclosed that on December 1997, herein complainant Hilario P.
Soriano opened the following accounts with the San Miguel Branch of RBSM bank 4 :
a) Savings Account No. 0104-08338-7 Signatories – Mr. Hilario Soriano and Mr.
Marces Perez
b) Savings Account No. 0104-08339-5 Signatories – Mr. Hilario Soriano and Mrs.
Melinda Manuzon
Mrs. Manuzon later on submitted the said affidavit with the Department of Justice,
City of Manila.
Thus, on August 13, 2001, Mr. Soriano filed a criminal complaint against Mrs.
Manuzon for Violation of R.A. 1405, otherwise known as the Secrecy of Bank Deposits
Law.
In her Counter-Affidavit, Mrs. Manuzon alleged that the prohibitions under R.A. 1405
do not apply to a bank under receivership like in the case of RBSM.
In response thereto, Mr. Soriano filed his Reply-Affidavit where he stated that there is
nothing under R.A. 1405, as amended, which stated that the prohibitions stated
therein does not apply to a bank under receivership, much less, if the bank is already
undergoing liquidation.
On October 30, 2001, Mrs. Manuzon filed her Rejoinder Affidavit where she reiterated
her claim that R.A. 1405, as amended, does not apply to bank under receivership.
equivalent to lack of jurisdiction. (Nepomuceno vs. Court of Appeals, 303 SCRA 679
[Feb. 15, 1999] citing Nable, 72 Phil. 278 [1941]; Abad Santos v. Province of Tarlac, 66
Phil. 480; Alafriz v. Nable, 62 Phil. 278; Republic of the Philippines v. Villarama, Jr., 278
SCRA 736; Lalican v. Vergara, 276 SCRA 158).” In the case at bench, there is no
showing that public respondent DOJ exceeded its jurisdiction in rendering the assailed
Resolutions. Neither public respondent DOJ rendered the assailed Resolutions with
grave abuse of discretion. Petitioner in this case has not proven such allegation of
grave abuse of discretion on the part of the DOJ. What is being sought here is the
annulment of the Resolutions by the public respondent DOJ so that the filing of an
information/complaint for Violation of R.A. 1405, as amended, otherwise known as
the Secrecy of Bank Deposits Law may prosper against private respondent Melinda S.
Manuzon, who executed an affidavit allegedly narrating the accounts of the petitioner.
Such demand would involve an interpretation of the said law – R.A. 1405, which is
certainly beyond the province of the extraordinary writ of certiorari. But even then, as
held by the public respondent DOJ, the Assistant City Prosecutor's finding that there
was no violation whatsoever by the private respondent of Republic Act No. 1405 has
basis at all. First, it must be noted that the RBSM (Rural Bank of San Miguel) was
placed under receivership on January 21, 2000, and it has been then under liquidation.
Private respondent executed the affidavit on September 29, 2000 – long after RBSM
was closed by BSP. Under Section 30 of R.A. 7653, otherwise known as the New
Central Bank Act, when a bank is placed under receivership or liquidation, it
presupposes that the BSP Monetary Board (MB) had already forbidden the bank from
doing business in the Philippines and, the MB had designated the Philippine Deposit
Insurance Corporation (PDIC) as the bank's statutory receiver.
Thus, logically, having forbidden to do business, RBSM could no longer perform the
functions of a banking institution, and the only reason for its existence is to wind up its
corporate affairs, gather its assets and settle its obligations. Thus, the disclosure by
private respondent of the bank account is not a prohibited act under R.A. 1405
inasmuch as RBSM is not anymore a “banking institution” within the spirit and letter of
the law. Second, it cannot be gainsaid that petitioner's alleged act of irregularities will
be covered by the impunity offered by R.A. 1405, as amended. To sustain petitioner's
theory would make available to person who made anomalies an easy means of
evading prosecution. It must be stressed that the execution of the affidavit relates to
whether the petitioner diverted/misappropriated RBSM funds. Thus, the disclosure is
purely incidental. It is hard to conceive that it was ever within the intention of
Congress to consider such disclosure within the purview of the prohibition of the Bank
Secrecy Law under R.A. 1405. Finally, the action of public respondent DOJ dismissing
petitioner's Petition for Review and in denying the Motion for Reconsideration, if
erroneous, is an error of judgment not error of jurisdiction, and therefore, certiorari
cannot lie. 9
WHEREFORE, in view of the foregoing, the instant petition is DENIED for lack of merit.
The assailed Resolutions of the Department of Justice in I.S. No. 01H-32320 are
AFFIRMED.
SO ORDERED.

On February 14, 2002, Assistant City Prosecutor Pedro B. Salonga issued the
questioned resolution recommending the dismissal of the complaint for Violation of
R.A. 1405 against Mrs. Melinda S. Manuzon.

On appeal, the public respondent affirmed the Assistant City Prosecutor's resolution in
this manner:

xxx xxx xxx “Under Section 12, in relation to Section 7, of Deparment Circular No.
70 dated July 3, 2000, the Secretary of Justice may motu propio dismiss outright
the appeal if there is no showing of any reversible error in the questioned
resolution or when the issues raised therein are too unsubstantial to require
consideration. We carefully examined the petition and its attachments and
found no such error committed by the prosecutor that would justify a reversal of
the assailed resolution which is in accord with the law and evidence on the
matter. CONSEQUENTLY, the petition for review is hereby DISMISSED. SO
ORDERED.” 7

Its Motion for Reconsideration having been denied, petitioner filed the instant
petition anchored on the following ground, hence: The Resolution dismissing the
petition as well as the Resolution denying herein petitioner's motion for
reconsideration, were issued with grave abuse of discretion amounting to lack of
jurisdiction since the dismissal has no support in fact and in law. 8 The petition lacks
merit. It should be noted, in the first place, that the sole office of a writ of certiorari is
the correction of errors of jurisdiction including the commission of grave abuse of
discretion amounting to lack or excess of jurisdiction. The familiar rule is that grave
abuse of discretion exists when the questioned act of the DOJ was exercised
capriciously and whimsically as is equivalent to lack or in excess of jurisdiction. It does
not include correction of public respondent DOJ's findings which hardly qualifies as
grave abuse of discretion. In a long line of cases, the Supreme Court held: “Grave
abuse of discretion implies such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, or in other words where the power is exercised in an
arbitrary or despotic manner by reason of passion or personal hostility, and it must be
so patent and gross as to amount to an invasion of positive duty or to a virtual refusal
to preform the duty enjoined or to act at all in contemplation of the law. There is
grave abuse of discretion where the respondent acts in a capricious, whimsical,
arbitrary or despotic manner in the exercise of his judgment as to be said to be
 EN BANC
[G.R. No. 94723. August 21, 1997]
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural
Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E.
SALVACION, petitioners, vs. CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING
CORPORATION and GREG BARTELLI y NORTHCOTT, respondents.
DECISION
TORRES, JR., J.:
In our predisposition to discover the original intent of a statute, courts become the
unfeeling pillars of the status quo. Little do we realize that statutes or even
constitutions are bundles of compromises thrown our way by their framers. Unless we
exercise vigilance, the statute may already be out of tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing of this petition, an Order be issued restraining the
respondents from applying and enforcing Section 113 of Central Bank Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respective rights and duties of petitioners and respondents;
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provision
of the Constitution, hence void; because its provision that Foreign currency deposits
shall be exempt from attachment, garnishment, or any other order to process of any
court, legislative body, government agency or any administrative body whatsoever
i.) has taken away the right of petitioners to have the bank deposit of defendant Greg
Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners favor in
violation of substantive due process guaranteed by the Constitution;
ii.) has given foreign currency depositors an undue favor or a class privilege in violation
of the equal protection clause of the Constitution;
iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y
Northcott since criminals could escape civil liability for their wrongful acts by merely
converting their money to a foreign currency and depositing it in a foreign currency
deposit account with an authorized bank.
The antecedents facts:
On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured
petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein,
Greg Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and
was able to rape the child once on February 4, and three times each day on February
5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby,
rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal
Jail. The policemen recovered from Bartelli the following items: 1.) Dollar Check No.
368, Control No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No.
104-108758-8 (Peso Acct.); 3.) Dollar Account China Banking Corp., US $/A#54105028-
2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6
pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg
Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos.
802, 803, 804, and 805 for four (4) counts of Rape. On the same day, petitioners filed
with the Regional Trial Court of Makati Civil Case No. 89-3214 for damages with
preliminary attachment against Greg Bartelli. On February 24, 1989, the day there was
a scheduled hearing for Bartellis petition for bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscals Urgent Ex-Parte Motion for the
Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the
accused Greg Bartelli y Northcott, the criminal cases were archived in an Order dated
February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22,
1989 granting the application of herein petitioners, for the issuance of the writ of
preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU
Insurance Corporation in the amount P100,000.00, a Writ of Preliminary Attachment
was issued by the trial court on February 28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on
China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of
Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to the
notice of garnishment served on it. On March 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 of bank deposits since the disclosure is merely
incidental to a garnishment 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 of Makati, China Banking Corporation, in a letter dated March 20, 1989,
invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar
deposits of defendant 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.
This prompted the counsel for petitioners to make an inquiry with the Central Bank in
a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any
exception or whether said section has been repealed or amended since said section
has rendered nugatory the substantive right of the plaintiff to have the claim sought to
be enforced by the civil action secured by way of the writ of preliminary attachment as
granted to the plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank
responded as follows:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmea Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section
113, CB Circular No. 960 (1983).
The cited provision is absolute in application. It does not admit of any exception, nor
has the same been repealed nor amended.
The purpose of the law is to encourage dollar accounts within the countrys banking
system which would help in the development of the economy. There is no intention to
render futile the basic rights of a person as was suggested in your subject letter. The
law may be harsh as some perceive it, but it is still the law. Compliance is, therefore,
enjoined.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director[1]
Meanwhile, on April 10, 1989, the trial court granted petitioners motion for leave to
serve summons by publication in the Civil Case No. 89-3214 entitled Karen
Salvacion. et al. vs. Greg Bartelli y Northcott. Summons with the complaint was
published in the Manila Times once a week for three consecutive weeks. Greg Bartelli
failed to file his answer to the complaint and was declared in default on August 7,
1989. After hearing the case ex-parte, the court rendered judgment in favor of
petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant,
ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E.
Salvacion the amount of P150,000.00 each or a total of P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorneys fees in an amount equivalent to 25% of the total amount of
damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondents Greg Bartelli which gave rise to the award were
related in graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of Makati but
was able to escape therefrom on February 24, 1989 as per report of the Jail Warden of
Makati to the Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court
of Makati, Branch 136, where he was charged with four counts of Rape and Serious
Illegal Detention (Crim. Cases Nos. 802 to 805).Accordingly, upon motion of plaintiffs,
through counsel, summons was served upon defendant by publication in the Manila
Times, a newspaper of general circulation as attested by the Advertising Manager of
the Metro Media Times, Inc., the publisher of the said newspaper. Defendant,
however, failed to file his answer to the complaint despite the lapse of the period of
sixty (60) days from the last publication; hence, upon motion of the plaintiffs through
counsel, defendant was declared in default and plaintiffs were authorized to present
their evidence ex parte.
In support of the complaint, plaintiffs presented as witness the minor Karen E.
Salvacion, her father, Federico N. Salacion, Jr., a certain Joseph Aguilar and a certain
Liberato Mandulio, who gave the following testimony:
Karen took her first year high school in St. Marys Academy in Pasay City but has
recently transferred to Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema
Square, with her friend Edna Tangile whiling away her free time. At about 3:30 p.m.
while she was finishing her snack on a concrete bench in front of Plaza Fair, an
American approached her. She was then alone because Edna Tangile had already left,
and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He sat beside
her when he talked to her. He said he was a Math teacher and told her that he has a
sister who is a nurse in New York. His sister allegedly has a daughter who is about
Karens age and who was with him in his house along Kalayaan Avenue. (TSN, Aug. 15,
1989, pp. 4-5).
The American asked Karen what was her favorite subject and she told him its
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. (Id.,
pp.5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendants
house along Kalayaan Avenue. (Id., p.6)
When they reached the apartment house, Karen notices that defendants alleged niece
was not outside the house but defendant told her maybe his niece was inside. When
Karen did not see the alleged niece inside the house, defendant told her maybe his
niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen became
nervous because his niece was not there. Defendant got a piece of cotton cord and
tied Karens hands with it, and then he undressed her. Karen cried for help but
defendant strangled her. He took a packing tape and he covered her mouth with it and
he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just near the
door. He tied her feet and hands spread apart to the bed posts. He knelt in front of her
and inserted his finger in her sex organ.She felt severe pain. She tried to shout but no
sound could come out because there were tapes on her mouth. When defendant
withdrew his finger it was full of blood and Karen felt more pain after the withdrawal
of the finger. (Id., p.8)
He then got a Johnsons Baby Oil and he applied it to his sex organ as well as to her sex
organ. After that he forced his sex organ into her but he was not able to do so. While
he was doing it, Karen found it difficult to breathe and she perspired a lot while feeling
severe pain. She merely presumed that he was able to insert his sex organ a little,
because she could not see. Karen could not recall how long the defendant was in that
position. (Id., pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to take
a shower and he untied her hands. Karen could only hear the sound of the water while
the defendant, she presumed, was in the bathroom washing his sex organ. When she
took a shower more blood came out from her. In the meantime, defendant changed
the mattress because it was full of blood. After the shower, Karen was allowed by
defendant to sleep. She fell asleep because she got tired crying. The incident
happened at about 4:00 p.m. Karen had no way of determining the exact time because
defendant removed her watch.Defendant did not care to give her food before she
went to sleep. Karen woke up at about 8:00 oclock the following morning. (Id., pp. 9-
10)
The following day, February 5, 1989, a Sunday, after breakfast of biscuit and coke at
about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For lunch,
they also took biscuit and coke.She was raped for the second time at about 12:00 to
2:00 p.m. In the evening, they had rice for dinner which defendant had stored
downstairs; it was he who cooked the rice that is why it looks like lugaw. For the third
time, Karen was raped again during the night. During those three times defendant
succeeded in inserting his sex organ but she could not say whether the organ was
inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not tie her
hands and feet nor put a tape on her mouth anymore but she did not cry for help for
fear that she might be killed; besides, all those windows and doors were closed. And
even if she shouted for help, nobody would hear her. She was so afraid that if
somebody would hear her and would be able to call a police, it was still possible that
as she was still inside the house, defendant might kill her. Besides, the defendant did
not leave that Sunday, ruling out her chance to call for help. At nighttime he slept with
her again. (TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the morning for
thirty minutes after breakfast of biscuits; again in the afternoon; and again in the
evening. At first, Karen did not know that there was a window because everything was
covered by a carpet, until defendant opened the window for around fifteen minutes or
less to let some air in, and she found that the window was covered by styrofoam and
plywood. After that, he again closed the window with a hammer and he put the
styrofoam, plywood, and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although defendant left but
kept the door closed. She went to the bathroom and saw a small window covered by
styrofoam and she also spotted a small hole. She stepped on the bowl and she cried
for help through the hole. She cried: Maawa na po kayo sa akin. Tulungan nyo akong
makalabas dito. Kinidnap ako! Somebody heard her. It was a woman, probably a
neighbor, but she got angry and said she was istorbo. Karen pleaded for help and the
woman told her to sleep and she will call the police. She finally fell asleep but no
policeman came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 oclock the following morning, and she saw defendant in bed, this
time sleeping. She waited for him to wake up. When he woke up, he again got some
food but he always kept the door locked. As usual, she was merely fed with biscuit and
coke. On that day, February 7, 1989, she was again raped three times. The first at
about 6:30 to 7:00 a.m., the second at about 8:30 9:00, and the third was after lunch
at 12:00 noon. After he had raped her for the second time he left but only for a short
while. Upon his return, he caught her shouting for help but he did not understand
what she was shouting about. After she was raped the third time, he left the
house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted
for help. After shouting for about five minutes, she heard many voices. The voices
were asking for her name and she gave her name as Karen Salvacion. After a while,
she heard a voice of a woman saying they will just call the police. They were also
telling her to change her clothes. She went from the bathroom to the room but she
did not change her clothes being afraid that should the neighbors call the police and
the defendant see her in different clothes, he might kill her. At that time she was
wearing a T-shirt of the American bacause the latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and opened the door. He asked her if she had asked for
help because there were many policemen outside and she denied it. He told her to
change her clothes, and she did change to the one she was wearing on Saturday. He
instructed her to tell the police that she left home and willingly; then he went
downstairs but he locked the door. She could hear people conversing but she could
not understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were conversing downstairs, she
knocked repeatedly at the door as hard as she could. She heard somebody going
upstairs and when the door was opened, she saw a policeman. The policeman asked
her name and the reason why she was there. She told him she was
kidnapped. Downstairs, he saw about five policemen in uniform and the defendant
was talking to them. Nakikipag-areglo po sa mga pulis, Karen added. The policeman
told him to just explain at the precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of the
house. They rode the car of a certain person she called Kuya Boy together with
defendant, the policeman, and two of her neighbors whom she called Kuya Bong
Lacson and one Ate Nita. They were brought to Sub-Station I and there she was
investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her
mother together with some of their neighbors. Then they were brought to the second
floor of the police headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator. The written
statement she gave to the police was marked Exhibit A. Then they proceeded to the
National Bureau of Investigation together with the investigator and her parents. At the
NBI, a doctor, a medico-legal officer, examined her private parts. It was already 3:00 in
early morning, of the following day when they reached the NBI, (TSN, Aug. 15, 1989, p.
22) The findings of the medico-legal officer has been marked as Exhibit B.
She was studying at the St. Marys Academy in Pasay City at the time of the Incident
but she subsequently transferred to Apolinario Mabini, Arellano University, situated
along Taft Avenue, because she was ashamed to be the subject of conversation in the
school. She first applied for transfer to Jose Abad Santos, Arellano University along
Taft Avenue near the Light Rail Transit Station but she was denied admission after she
told the school the true reason for her transfer. The reason for their denial was that
they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her brother and
sister anymore, and she is always in a state of shock; she has been absent-minded and
is ashamed even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be
restless or sad. (Id., p. 11) The father prays for P500,000.00 moral damages for Karen
for this shocking experience which probably, she would always recall until she reaches
old age, and he is not sure if she could ever recover from this experience. (TSN, Sept.
24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice was
published in the Manila Bulletin once a week for three consecutive weeks. After the
lapse of fifteen (15) days from the date of the last publication of the notice of
judgment and the decision of the trial court had become final, petitioners tried to
execute on Bartellis dollar deposit with China Banking Corporation. Likewise, the bank
invoked Section 113 of Central Bank Circular No. 960.
Thus, petitioners decided to seek relief from this Court.
The issues raised and the arguments articulated by the parties boil down to two:
May this Court entertain the instant petition despite the fact that original jurisdiction
in petitions for declaratory relief rests with the lower court? She Section 113 of
Central Bank 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?
Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960
providing that Foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever. should be adjudged as
unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to
have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the
judgment rendered in petitioners favor in violation of substantive due process
guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue
favor or a class privilege n violation of the equal protection clause of the
Constitution; 3.) it has provided a safe haven for criminals like the herein respondent
Greg Bartelli y Northcott since criminal could escape civil liability for their wrongful
acts by merely converting their money to a foreign currency and depositing it in a
foreign currency deposit account with an authorized bank; and 4.) The Monetary
Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its
delegated quasi- legislative power when it took away: a.) the plaintiffs substantive
right to have the claim sought to be enforced by the civil action secured by way of the
writ of preliminary attachment as granted by Rule 57 of the Revised Rules of
Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way
of the writ of execution out of the bank deposit of the judgment debtor as granted to
the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its
power to do so.
On the other hand, respondent Central Bank, in its Comment alleges that the
Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its power
or authority because the subject Section is copied verbatim from a portion of R.A. No.
6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants
exemption from attachment or garnishment to foreign currency deposits, but the law
(R.A. 6426 as amended) itself; that it does not violate the substantive due process
guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to
be reasonable; c.) it is enforced according to regular methods of procedure; and d.) it
applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign currency
deposits from attachment, garnishment or any other order process of any court, is to
assure the development and speedy growth of the Foreign Currency Deposit System
and the Offshore Banking System in the Philippines; that another reason is to
encourage the inflow of foreign currency deposits into the banking institutions
thereby placing such institutions more in a position to properly channel the same to
loans and investments in the Philippines, thus directly contributing to the economic
development of the country; that the subject section is being enforced according to
the regular methods of procedure; and that it applies to all currency deposits made by
any person and therefore does not violate the equal protection clause of the
Constitution.
Respondent Central Bank further avers that the questioned provision is needed to
promote the public interest and the general welfare; that the State cannot just stand
idly by while a considerable segment of the society suffers from economic distress;
that the State had to take some measures to encourage economic development; and
that in so doing persons and property may be subjected to some kinds of restraints or
burdens to secure the general welfare or public interest. Respondent Central Bank
also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some
properties are exempted from execution/attachment especially provided by law and
R.A. No. 6426 as amended is such a law, in that it specifically provides, among others,
that foreign currency deposits shall be exempted from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or any
administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons similar
to that of respondent Central Bank, also stated that respondent China Bank is not
unmindful of the inhuman sufferings experienced by the minor Karen E. Salvacion
from the beastly hands of Greg Bartelli; that it is not only too willing to release the
dollar deposit of Bartelli which may perhaps partly mitigate the sufferings petitioner
has undergone; but it is restrained from doing so in view of R.A. No. 6426 and Section
113 of Central Bank Circular No. 960; and that despite the harsh effect to these laws
on petitioners, CBC has no other alternative but to follow the same.
This court finds the petition to be partly meritorious.
Petitioner deserves to receive the damages awarded to her by the court. But this
petition for declaratory relief can only be entertained and treated as a petition for
mandamus to require respondents to honor and comply with the writ of execution in
Civil Case No. 89-3214.
The Court has no original and exclusive jurisdiction over a petition for declatory
relief.[2] 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.[3]
Here is a child, a 12-year old girl, who in her belief that all Americans are good and in
her gesture of kindness by teaching his alleged niece the Filipino language as
requested by the American, trustingly went with said stranger to his apartment, and
there she was raped by said American tourist Greg Bartelli. Not once, but ten
times. She was detained therein for four (4) days. This American tourist was able to
escape from the jail and avoid punishment. On the other hand, the child, having
received a favorable judgment in the Civil Case for damages in the amount of more
than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and
besmirched reputation she had suffered and may continue to suffer for a long, long
time; and knowing that this person who had wronged her has the money, could not,
however get the award of damages because of this unreasonable law. This questioned
law, therefore makes futile the favorable judgment and award of damages that she
and her parents fully deserve. As stated by the trial court in its decision,
Indeed, after hearing the testimony of Karen, the Court believes that it was
indoubtedly a shocking and traumatic experience she had undergone which could
haunt her mind for a long, long time, the mere recall of which could make her feel so
humiliated, as in fact she had been actually humiliated once when she was refused
admission at the Abad Santos High School, Arellano University, where she sought to
transfer from another school, simply because the school authorities of the said High
School learned about what happened to her and allegedly feared that they might be
implicated in the case.
xxx
The reason for imposing exemplary or corrective damages is due to the wanton and
bestial manner defendant had committed the acts of rape during a period of serious
illegal detention of his hapless victim, the minor Karen Salvacion whose only fault was
in her being so naive and credulous to believe easily that defendant, an American
national, could not have such a bestial desire on her nor capable of committing such
heinous crime. Being only 12 years old when that unfortunate incident happened, she
has never heard of an old Filipino adage that in every forest there is a snake, xxx.[4]
If Karens sad fate had happened to anybodys own kin, it would be difficult for him to
fathom how the incentive for foreign currency deposit could be more important than
his childs right to said award of damages; in this case, the victims claim for damages
from this alien who had the gall to wrong a child of tender years of a country where he
is mere visitor. This further illustrates the flaw in the questioned provisions.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the
countrys economy was in a shambles; when foreign investments were minimal and
presumably, this was the reason why said statute was enacted. But the realities of the
present times show that the country has recovered economically; and even if not, the
questioned law still denies those entitled to due process of law for being unreasonable
and oppressive. The intention of the questioned law may be good when enacted. The
law failed to anticipate the inquitous effects producing outright injustice and
inequality such as as the case before us.
It has thus been said that-
But I also know,[5] that laws and institutions must go hand in hand with the progress of
the human mind. As that becomes more developed, more enlightened, as new
discoveries are made, new truths are disclosed and manners and opinions change with
the change of circumstances, institutions must advance also, and keep pace with the
times We might as well require a man to wear still the coat which fitted him when a
boy, as civilized society to remain ever under the regimen of their barbarous
ancestors.
In his comment, the Solicitor General correctly opined, thus:
"The present petition has far-reaching implications on the right of a national to obtain
redress for a wrong committed by an alien who takes refuge under a law and
regulation promulgated for a purpose which does not contemplate the application
thereof envisaged by the allien. More specifically, the petition raises the question
whether the protection against attachment, garnishment or other court process
accorded to foreign currency deposits PD No. 1246 and CB Circular No. 960 applies
when the deposit does not come from a lender or investor but from a mere transient
who is not expected to maintain the deposit in the bank for long.
The resolution of this question is important for the protection of nationals who are
victimized in the forum by foreigners who are merely passing through.
xxx
xxx Respondents China Banking Corporation and Central Bank of the Philippines
refused to honor the writ of execution issued in Civil Case No. 89-3214 on the strength
of the following provision of Central Bank Circular No. 960:
Sec. 113 Exemption from attachment. Foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever.
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No.
6426:
Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall
promulgate such rules and regulations as may be necessary to carry out the provisions
of this Act which shall take effect after the publication of such rules and regulations in
the Official Gazette and in a newspaper of national circulation for at least once a week
for three consecutive weeks. In case the Central Bank promulgates new rules and
regulations decreasing the rights of depositors, the rules and regulations at the time
the deposit was made shall govern.
The aforecited Section 113 was copied from Section 8 of Republic Act No. 6426. As
amended by P.D. 1246, thus:
Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreign currency deposits
authorized under this Act, as amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential Decree No. 1034, 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 deposits shall
be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever.
The purpose of PD 1246 in according protection against attachment, garnishment and
other court process to foreign currency deposits is stated in its whereases, viz.:
WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035,
certain Philippine banking institutions and branches of foreign banks are authorized to
accept deposits in foreign currency;
WHEREAS, under provisions of Presidential Decree No. 1034 authorizing the
establishment of an offshore banking system in the Philippines, offshore banking units
are also authorized to receive foreign currency deposits in certain cases;
WHEREAS, in order to assure the development and speedy growth of the Foreign
Currency Deposit System and the Offshore Banking System in the Philippines, certain
incentives were provided for under the two Systems such as confidentiality subject to
certain exceptions and tax exemptions on the interest income of depositors who are
nonresidents and are not engaged in trade or business in the Philippines;
WHEREAS, making absolute the protective cloak of confidentiality over such foreign
currency deposits, exempting such deposits from tax, and guaranteeing the vested
right 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 position to properly channel the same to
loans and investments in the Philippines, thus directly contributing to the economic
development of the country;
Thus, one of the principal purposes of the protection accorded to foreign currency
deposits is to assure the development and speedy growth of the Foreign Currency
Deposit system and the Offshore Banking in the Philippines (3rd Whereas).
The Offshore Banking System was established by PD No. 1034. In turn, the purposes of
PD No. 1034 are as follows:
WHEREAS, conditions conducive to the establishment of an offshore banking system,
such as political stability, a growing economy and adequate communication facilities,
among others, exist in the Philippines;
WHEREAS, it is in the interest of developing countries to have as wide access as
possible to the sources of capital funds for economic development;
WHEREAS, an offshore banking system based in the Philippines will be advantageous
and beneficial to the country by increasing our links with foreign lenders, facilitating
the flow of desired investments into the Philippines, creating employment
opportunities and expertise in international finance, and contributing to the national
development effort.
WHEREAS, the geographical location, physical and human resources, and other
positive factors provide the Philippines with the clear potential to develop as another
financial center in Asia;
On the other hand, the Foreign Currency Deposit system was created by PD No.
1035. Its purpose are as follows:
WHEREAS, the establishment of an offshore banking system in the Philippines has
been authorized under a separate decree;
WHEREAS, a number of local commercial banks, as depository bank under the Foreign
Currency Deposit Act (RA No. 6426), have the resources and managerial competence
to more actively engage in foreign exchange transactions and participate in the grant
of foreign currency loans to resident corporations and firms;
WHEREAS, it is timely to expand the foreign currency lending authority of the said
depository banks under RA 6426 and apply to their transactions the same taxes as
would be applicable to transaction of the proposed offshore banking units;
It is evident from the above [Whereas clauses] that the Offshore Banking System and
the Foreign Currency Deposit System were designed to draw deposits from
foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of
PD No. 1035). It is these depositors that are induced by the two laws and given
protection and incentives by them.
Obviously, the foreign currency deposit made by a transient or a tourist is not the kind
of deposit encourage 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.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his
dollars with respondent China Banking Corporation only for safekeeping during his
temporary stay in the Philippines.
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 113 of
Central Bank Circular No. 960 and PD No. 1246 against attachment, garnishment or
other court processes.[6]
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. Ninguno non
deue enriquecerse tortizerzmente con damo de otro.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. (Padilla vs. Padilla, 74 Phil. 377)
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.
Call it what it may but is there no conflict of legal policy here? Dollar against
Peso? Upholding the final and executory judgment of the lower court against the
Central Bank Circular protecting the foreign depositor? Shielding or protecting the
dollar deposit of a transient alien depositor against injustice to a national and victim of
a crime? This situation calls for fairness legal tyranny.
We definitely cannot have both ways and rest in the belief that we have served the
ends of justice.
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No.
1246, insofar as it amends Section 8 of R.A. 6426 are hereby held to be INAPPLICABLE
to this case because of its peculiar circumstances. Respondents are hereby REQUIRED
to COMPLY with the writ of execution issued in Civil Case No. 89-3214, Karen
Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to
RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in
such amount as would satisfy the judgment.
SO ORDERED.

FIRST DIVISION
G.R. No. 140687 December 18, 2006
CHINA BANKING CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and JOSE "JOSEPH" GOTIANUY as substituted
by ELIZABETH GOTIANUY LO, respondents.
DECISION
CHICO-NAZARIO, J.:
A Complaint for recovery of sums of money and annulment of sales of real properties
and shares of stock docketed as CEB-21445 was filed by Jose "Joseph" Gotianuy
against his son-in-law, George Dee, and his daughter, Mary Margaret Dee, before the
Regional Trial Court (RTC) of Cebu City, Branch 58.
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 Banking
Corporation (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 Dee's name without any consideration. Jose Gotianuy, died during the
pendency of the case before the trial court.1 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. The details of the said
checks are:
1) CITIBANK CHECK NO. 69003194405412 dated September 29 1997 in the
amount of US$5,937.52 payable to GOTIANUY: JOSE AND/OR DEE: MARY
MARGARET;
2) CITIBANK CHECK NO. 69003194405296 dated September 29 1997 in the
amount of US$7,197.59 payable to GOTIANUY: JOSE AND/OR DEE: MARY
MARGARET;
3) CITIBANK CHECK NO. 69003194405414 dated September 29 1997 in the
amount of US$1,198.94 payable to GOTIANUY: JOSE AND/OR DEE: MARY
MARGARET;
4) CITIBANK CHECK NO. 69003194405413 dated September 29 1997 in the
amount of US$989.04 payable to GOTIANUY: JOSE AND/OR DEE: MARY
MARGARET;
5) CITIBANK CHECK NO. 69003194405297 dated October 01 1997 in the
amount of US$766,011.97 payable to GOTIANUY: JOSE AND/OR DEE:
MARY MARGARET; and
6) CITIBANK CHECK NO. 69003194405339 dated October 09 1997 in the
amount of US$83,053.10 payable to GOTIANUY: JOSE AND/OR DEE: MARY
MARGARET.2
Upon motion of Elizabeth Gotianuy Lo, the trial court3 issued a subpoena to Cristota
Labios and Isabel Yap, employees of China Bank, to testify on the case. The Order of
the trial court dated 23 February 1999, states:
Issue a subpoena ad testificandum requiring MS. ISABEL YAP and
CRISTOTA LABIOS of China Banking Corporation, Cebu Main Branch, corner
Magallanes and D. Jakosalem Sts., Cebu City, to appear in person and to
testify in the hearing of the above entitled case on March 1, 1999 at 8:30
in the morning, with regards to Citibank Checks (Exhs. "AAA" to "AAA-5")
and other matters material and relevant to the issues of this case.4
China Bank moved for a reconsideration. Resolving the motion, the trial court issued
an Order dated 16 April 1999 and held:
The Court is of the view that as the foreign currency fund (Exhs. "AAA" to
"AAA-5") is deposited with the movant China Banking Corporation, Cebu
Main Branch, Cebu City, the disclosure only as to the name or in whose
name the said fund is deposited is not violative of the law. Justice will be
better served if 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 in the case at bar.
Premises considered, the motion for reconsideration is denied partly and
granted partly, in the sense that Isabel Yap and/or Cristuta Labios are
directed to appear before this Court and to testify at the trial of this case
on April 20, 1999, May 6 & 7, 1999 at 10:00 o'clock in the morning and
only for the purpose of disclosing in whose name or names is the foreign
currency fund (Exhs. "AAA" to "AAA-5") deposited with the movant Bank
and not to other matters material and relevant to the issues in the case at
bar.5
From this Order, China Bank filed a Petition for Certiorari6 with the Court of Appeals.
In a Decision7 dated 29 October 1999, the Court of Appeals denied the petition of
China Bank and affirmed the Order of the RTC.
In justifying its conclusion, the Court of Appeals ratiocinated:
From the foregoing, it is pristinely clear the law specifically encompasses
only the money or funds in foreign currency deposited in a bank. Thus, the
coverage of the law extends only to the foreign currency deposit in the
CBC account where Mary Margaret Dee deposited the Citibank checks in
question and nothing more.
It has to be pointed out that the April 16, 1999 Order of the court of origin
modified its previous February 23, 1999 Order such that the CBC
representatives are directed solely to divulge "in whose name or names is
the foreign currency fund (Exhs. "AAA" to "AAA-5") deposited with the
movant bank." It precluded inquiry on "other materials and relevant to the
issues in the case at bar." We find that the directive of the court below
does not contravene the plain language of RA 6426 as amended by P.D.
No. 1246.
The contention of petitioner that the [prescription] on absolute
confidentiality under the law in question covers even the name of the
depositor and is beyond the compulsive process of the courts is palpably
untenable as the law protects only the deposits itself but not the name of
the depositor. To uphold the theory of petitioner CBC is reading into the
statute "something that is not within the manifest intention of the
legislature as gathered from the statute itself, for to depart from the
meaning expressed by the words, is to alter the statute, to legislate and
not to interpret, and judicial legislation should be avoided. Maledicta
expositio quae corrumpit textum – It is a dangerous construction which is
against the words. Expressing the same principle is the maxim: Ubi lex non
distinguit nec nos distinguere debemos, which simply means that where
the law does not distinguish, we should not make any distinction."
(Gonzaga, Statutes and their Construction, p. 75.)8
From the Decision of the Court of Appeals, China Bank elevated the case to this Court
based on the following issues:
I
THE HONORABLE COURT OF APPEALS HAS INTERPRETED THE PROVISION
OF SECTION 8 OF R.A. 6426, AS AMENDED, OTHERWISE KNOWN AS THE
FOREIGN CURRENCY DEPOSIT ACT, IN A MANNER CONTRARY TO THE
LEGISLATIVE PURPOSE, THAT IS, TO PROVIDE ABSOLUTE CONFIDENTIALITY
OF WHATEVER INFORMATION RELATIVE TO THE FOREIGN CURRENCY
DEPOSIT.
II
PRIVATE RESPONDENT IS NOT THE OWNER OF THE QUESTIONED FOREIGN
CURRENCY DEPOSIT. THUS, HE CANNOT INVOKE THE AID OF THE COURT IN
COMPELLING THE DISCLOSURE OF SOMEONE ELSE'S FOREIGN CURRENCY
DEPOSIT ON THE FLIMSY PRETEXT THAT THE CHECKS (IN FOREIGN
CURRENCY) HE HAD ISSUED MAY HAVE ENDED UP THEREIN.
III
PETITIONER CAN RIGHTLY INVOKE THE PROVISION OF SEC. 8, R.A. 6426, IN
BEHALF OF THE FOREIGN CURRENCY DEPOSITOR, OWING TO ITS SOLEMN
OBLIGATION TO ITS CLIENT TO EXERCISE EXTRAORDINARY DILIGENCE IN
THE HANDLING OF THE ACCOUNT.9
As amended by Presidential Decree No. 1246, the law reads:
SEC. 8. Secrecy of Foreign Currency Deposits. – All foreign currency
deposits authorized under this Act, as amended by Presidential Decree No.
1035, as well as foreign currency deposits authorized under Presidential
Decree No. 1034, 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 deposits shall be exempt from attachment, garnishment,
or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever. (As amended by PD No.
1035, and further amended by PD No. 1246, prom. Nov. 21, 1977)
(Emphasis supplied.)
Under the above provision, the law provides that all foreign currency deposits
authorized under Republic Act No. 6426, as amended by Sec. 8, Presidential Decree
No. 1246, Presidential Decree No. 1035, as well as foreign currency deposits
authorized under Presidential Decree 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.
This much was pronounced in the case of Intengan v. Court of Appeals,10 where 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.
It must be remembered that under the whereas clause of Presidential Decree No.
1246 which amended Sec. 8 of Republic Act No. 6426, the Foreign Currency Deposit
System including the Offshore Banking System under Presidential Decree 1034 were
intended to draw deposits from foreign lenders and investors, and we quote:
Whereas, in order to assure the development and speedy growth of the
Foreign Currency Deposit System and the Offshore Banking System in the
Philippines, certain incentives were provided for under the two Systems
such as confidentiality of deposits subject to certain exceptions and tax
exemptions on the interest income of depositors who are nonresidents
and are not engaged in trade or business in the Philippines;
Whereas, making absolute the protective cloak of confidentiality over such
foreign currency deposits, exempting such deposits from tax, and
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 position to properly channel the same to loans and investments
in the Philippines, thus directly contributing to the economic development
of the country.
As to the deposit in foreign currencies entitled to be protected under the
confidentiality rule, Presidential Decree No. 1034,11 defines deposits to mean funds in
foreign currencies which are accepted and held by an offshore banking unit in the
regular course of business, with the obligation to return an equivalent amount to the
owner thereof, with or without interest.12
It is in this light that the court in the case of Salvacion v. Central Bank of the
Philippines,13 allowed the inquiry of the foreign currency deposit in question mainly
due to the peculiar circumstances of the case such that a strict interpretation of the
letter of the law would result to rank injustice. Therein, Greg Bartelli y Northcott, an
American tourist, was charged with criminal cases for serious illegal detention and
rape committed against then 12 year-old Karen Salvacion. A separate civil case for
damages with preliminary attachment was filed against Greg Bartelli. The trial court
issued an Order granting the Salvacions' application for the issuance of a writ of
preliminary attachment. A notice of garnishment was then served on China Bank
where Bartelli held a dollar account. China Bank refused, invoking the secrecy of bank
deposits. The Supreme Court ruled: "In fine, the application of the law depends on the
extent of its justice x x x It would be unthinkable, that the questioned law exempting
foreign currency deposits from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body
whatsoever would be used as a device by an accused x x x for wrongdoing, and in so
doing, acquitting the guilty at the expense of the innocent.14
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 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 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.
The Court of Appeals, in allowing the inquiry, considered Jose Gotianuy, a co-depositor
of Mary Margaret Dee. It reasoned that since Jose Gotianuy is the named co-payee of
the latter in the subject checks, which checks were deposited in China Bank, then, Jose
Gotianuy is likewise a depositor thereof. On that basis, no written consent from Mary
Margaret Dee is necessitated.
We agree in the conclusion arrived at by the Court of Appeals.
The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee are co-
payees of various Citibank checks;15 (2) Mary Margaret Dee withdrew these checks
from Citibank;16 (3) Mary Margaret Dee admitted in her Answer to the Request for
Admissions by the Adverse Party sent to her by Jose Gotianuy17 that she withdrew the
funds from Citibank upon the instruction of her father Jose Gotianuy and that the
funds belonged exclusively to the latter; (4) these checks were endorsed by Mary
Margaret Dee at the dorsal portion; and (5) Jose Gotianuy discovered that these
checks were deposited with China Bank as shown by the stamp of China Bank at the
dorsal side of the checks.
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. The April 16, 1999 Order perforce must be sustained.19 (Emphasis
supplied.)
One more point. It must be remembered that in the complaint of Jose Gotianuy, he
alleged that his US dollar deposits with Citibank were illegally taken from him. On the
other hand, China Bank employee Cristuta Labios testified that Mary Margaret Dee
came to China Bank and deposited the money of Jose Gotianuy in Citibank US dollar
checks to the dollar account of her sister Adrienne Chu.20 This fortifies our conclusion
that an inquiry into the said deposit at China Bank is justified. At the very least, Jose
Gotianuy as the owner of these funds is entitled to a hearing on the whereabouts of
these funds.
All things considered and in view of the distinctive circumstances attendant to the
present case, we are constrained to render a limited pro hac vice ruling.21 Clearly it
was not the intent of the legislature when it enacted the law on secrecy on foreign
currency deposits to perpetuate injustice. This Court is of the view that the allowance
of the inquiry would be in accord with the rudiments of fair play,22 the upholding of
fairness in our judicial system and would be an avoidance of delay and time-wasteful
and circuitous way of administering justice.23
WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court
of Appeals dated 29 October 1999 affirming the Order of the RTC, Branch 58, Cebu
City dated 16 April 1999 is AFFIRMED and this case is ordered REMANDED to the trial
court for continuation of hearing with utmost dispatch consistent with the above
disquisition. No costs.
SO ORDERED.