6.
China Banking v CA  W/N China Bank is correct that the Citibank dollar checks with both Jose
GR NO. 140687
18 December 2006
By: Migs
Topic: Security Bank Deposit
Petitioners: China Banking Corporation
Respondents: Court of Appeals and Jose “Joseph” Gotianuy as substituted by
Elizabeh Gotianuy
Ponente: Chico-Nazario, J.
DOCTRINE: The law provides that all foreign currency deposits 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.
FACTS:
 A complaint for recovery of sums of money and annulment of sales of
real properties and shares of stock was filed by Jose against his son-in-
law, George Dee, and his daughter, Mary.
 Jose accused his daughter Mary of stealing US dollar deposits from
Citibank amounting around P35,000,000 and $864,000; that Mary
received these through checks that she deposited at China Bank.
 Jose also accused his son-in-law George of transferring his real properties
and shares of stock in his name without any consideration.
 Jose died during the case and he was substituted by his other daughter,
Elizabeth, who then presented the US Dollar checks withdrawn by Mary
from his placement with Citibank. A total of 6 checks were presented that
were payable to Jose and/or Mary.
 RTC: Issued a subpoena to Labios and Yap, employees of China Bank to
testify on the case. China Bank then moved for a reconsideration; hence,
the court ordered that the disclosure of the foreign currency fund will be
only to the extent of “in whose name the said fund is deposited”, which is
not violative of the law. Therefore, Labios and Yap are directed to appear
for the purpose of disclosing in whose name the foreign currency fund is.
China Bank appealed.
 CA: Denied China Bank and affirmed the RTC. The contention of China
Bank 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 deposit itself but not the name of the depositor.
ISSUE:
and Mary as payees, deposited with China Bank, may not be looked into
under the law on secrecy of foreign currency deposits? NO
HELD/RATIO: China Bank argues that the CA erred in its interpretation of Sec. 8, RA
6426 such that it runs contrary to its legislative purpose, which is to provide
absolute confidentiality of whatever information relative to the foreign currency
deposit.
Sec. 8, RA 6426 as amended by PD 1246 reads: 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 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.
As to the deposit in foreign currencies entitled to be protected under the
confidentiality rule, Presidential Decree No. 1034, 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. Salvacion v Central Bankalso works
as an exception wherein due to the peculiar circumstances of the case (this is a
criminal case involving an American who raped a 12-year old Filipina) such a strict
interpretation would result to rank injustice.
In this case, since Jose is the named co- payee of the latter in the subject checks,
which checks were deposited in China Bank, then, Jose is likewise a depositor
thereof. On that basis, no written consent from Mary is necessitated.
There is no issue as to the source of the funds. Mary declared the source to be Jose.
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, 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.

The Court’s pro hac vice ruling: 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.

Wherefore, the petition is denied.