Mellon Bank vs.

Magsino

through V. In its first amended complaint to impose constructive trust. The testimonies of

G.R. No. 71479

these witnesses were objected to by the defense on the grounds of res inter alios acta,

October 18, 1990

immateriality, irrelevancy and confidentiality due to RA 1405. The Javier spouses also
contend that inasmuch as the Mellon Bank had filed in California an action to impose

Section 2 of said law allows the disclosure of bank deposits in cases where the money

constructive trust on the California property and to recover the same.

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

Issue: (1) Whether or not an account deposit which is relevant and material to the

inquiry into the whereabouts of the illegally acquired amount extends to whatever is

resolution of the case may be covered under R.A. No. 1405. (2) Whether or not the

concealed by being held or recorded in the name of persons other than the one responsible

principle of election of remedies bars recovery of Mellon Bank

for the illegal acquisition.

Held:
Facts: 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

1) Whether or not an account deposit which is relevant and material to the resolution of

Prudential Bank. Accordingly, the First National Bank requested the petitioner, Mellon

the case may be covered under R.A. No. 1405.

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

Yes. Section 2 of said law allows the disclosure of bank deposits in cases where the money

US$1,000,000.00 instead of US$1,000.00. Hence Manufacturers Hanover Bank

deposited is the subject matter of the litigation. 24 Inasmuch as Civil Case No. 26899 is

transferred one million dollars less bank charges of $6.30 to the Prudential Bank for the

aimed at recovering the amount converted by the Javiers for their own benefit, necessarily,

account of Victoria Javier.

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

Javier withdrew $475,000 from account No. 343 and converted it into eight cashiers

responsible for the illegal acquisition.

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)

2) Whether or not the principle of election of remedies bars recovery of Mellon Bank

Paramount Finance Corporation, two checks for P1,000,000; and (d) M. Javier, Jr., two
checks for P496,000. Javier also brought several properties in the United States including

The spouses Javiers reliance on the procedural principle of election of remedies as part of

the one of his lawyer, Poblador.

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

Mellon Bank filed a complaint docketed as No. 148056 in the Superior Court of California,

Section 2, Rule 9 of the Rules of Court, such defense is deemed waived. 26

County of Kern, against Melchor Javier, Jane Doe Javier, Honorio Poblador, Jrn, and Does I

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 courts 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.

LOURDES T. MARQUEZ vs. HON. ANIANO A. DESIERTO, et al.

purchased on May 2 and 3, 1995, 51 MCs for a total amount of P272.1 Million at Traders

G.R. No. 135882

Royal Bank (TRB) UN Ave. Branch.

June 27, 2001

P70.6M were deposited and credited to an account maintained at the UBP.

FACTS: In May 1998, petitioner Marquez received an Order from the Ombudsman Aniano

On May 26, 1998, the FFIB panel met with petitioner Marquez and Atty. Fe B. Macalino at

A. Desierto dated April 29, 1998, to produce several bank documents for purposes of

the banks main office in Makati City, for the purpose of allowing petitioner and Atty.

inspection in camera relative to various accounts maintained at Union Bank of the

Macalino to view the checks furnished by TRB. After convincing themselves of the veracity

Philippines (UBP) Julia Vargas Branch where petitioner was the branch manager.

of the checks, Atty. Macalino advised Ms. Marquez to comply with the order of the

The

Out of the 51 MCs, eleven 11 MCs in the amount of

accounts to be inspected were involved in a case pending with the Ombudsman entitled,

Ombudsman. Petitioner agreed to an in camera inspection set on June 3, 1998.

However,

Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al, for violation of RA

on June 4, 1998, Marquez wrote the Ombudsman that the accounts in question could not

3019 Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates

readily be identified since the checks were issued in cash or bearer, and asked for time to

Authority and AMARI. The Order was grounded on Section 15 of RA 6770 (Ombudsman

respond to the order. Marquez surmised that these accounts had long been dormant,

Act of 1989) which provides, among others, the following powers, functions and duties of

hence were not covered by the new account number generated by the UB system, thus

the Ombudsman, to wit:

sought to verify from the Interbank records archives for the whereabouts of these
accounts.

(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

The Ombudsman, responding to the request of Marquez for time to comply with the order,

accounts and records;

stated that UBP-Julia Vargas, not Interbank, was the depositary bank of the subject TRB
MCs as shown at its dorsal portion and as cleared by the Philippine Clearing House.

(9)

Punish for contempt in accordance with the Rules of Court and under the same

procedure and with the same penalties provided therein.

Notwithstanding the fact that the checks were payable to cash or bearer, the name of the
depositor(s) could easily be identified since the account numbers where said checks were
deposited were identified in the order.

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

Even assuming that the accounts were already classified as dormant accounts, the bank

footing as the courts of law in this regard.

was still required to preserve the records pertaining to the accounts within a certain
period of time as required by existing banking rules and regulations.

The basis of the Ombudsman in ordering an in camera inspection of the accounts was a
trail of managers checks (MCs) purchased by one George Trivinio, a respondent in

On June 16, 1998, the Ombudsman issued an order directing Marquez to produce the

OMB-0-97-0411, pending with the office of the Ombudsman. It appeared that Trivinio

bank documents relative to the accounts in issue, stating that her persistent refusal to

comply with the order is unjustified, was merely intended to delay the investigation of the

1. Whether or not Marquez may be cited for indirect contempt for her failure to produce

case, constitutes disobedience of or resistance to a lawful order issued by the office and is

the documents requested by the Ombudsman.

punishable as Indirect Contempt under Section 3(b) of R.A. 6770.

2. Whether or not the order of the Ombudsman to have an in camera inspection of the
On July 10, 1998, Marquez together with UBP filed a petition for declaratory relief,

questioned account is allowed as an exception to the law on secrecy of bank deposits (RA

prohibition and injunction with the Makati RTC against the Ombudsman allegedly because

1405).

the Ombudsman and other persons acting under his authority were continuously
harassing her to produce the bank documents relative to the accounts in question.

HELD: An examination of the secrecy of bank deposits law (RA 1405) would reveal the

Moreover, on June 16, 1998, the Ombudsman issued another order stating that unless she

following exceptions:

appeared before the FFIB with the documents requested, Marquez would be charged with
indirect contempt and obstruction of justice.

1.

Where the depositor consents in writing;

2.

Impeachment case;

The lower court denied petitioners prayer for a temporary restraining order stating that

3.

By court order in bribery or dereliction of duty cases against public officials;

since petitioner failed to show prima facie evidence that the subject matter of the

4.

Deposit is subject of litigation;

investigation is outside the jurisdiction of the Office of the Ombudsman, no writ of

5.

Sec. 8, R. A. No. 3019, in cases of unexplained wealth as held in the case of PNB vs.

injunction may be issued by the RTC to delay the investigation pursuant to Section 14 of

Gancayco

the Ombudsman Act of 1989.

We rule that before an in camera inspection may be allowed, there must be a pending
Petitioner filed a motion for reconsideration but was denied.

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

On August 21, 1998, petitioner received a copy of the motion to cite her for contempt. On

court of competent jurisdiction.

The bank personnel and the account holder must be

August 31, 1998, petitioner filed with the Ombudsman an opposition to the motion to cite

notified to be present during the inspection, and such inspection may cover only the

her in contempt on the ground that the filing thereof was premature due to the petition

account identified in the pending case.

pending in the lower court. 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

In Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on

would comply with the orders without her breaking any law, particularly RA 1405.

Secrecy of Bank Deposits, as amended, declares bank deposits to be absolutely

confidential except:

ISSUES:
(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

private individual liable for damages for any violation of the rights and liberties of another

reasonable ground to believe that a bank fraud or serious irregularity has been or is being

person, and recognizes the privacy of letters and other private communications.

committed and that it is necessary to look into the deposit to establish such fraud or

Revised Penal Code makes a crime of the violation of secrets by an officer, the revelation

irregularity,

of trade and industrial secrets, and trespass to dwelling. Invasion of privacy is an offense

The

in special laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the
(2) In an examination made by an independent auditor hired by the bank to conduct its

Intellectual Property Code.

regular audit provided that the examination is for audit purposes only and the results
thereof shall be for the exclusive use of the bank,

Ombudsman is ordered 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

(3) Upon written permission of the depositor,

similar orders.

(4) In cases of impeachment,

(5) Upon order of a competent court in cases of bribery or dereliction of duty of public
officials, or

(6) In cases where the money deposited or invested is the subject matter of the litigation

In the case at bar, there is yet no pending litigation before any court of competent
authority. What is existing is an investigation by the office of the Ombudsman. In short,
what the Office of the Ombudsman would wish to do is to fish for additional evidence to
formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly, there was no
pending case in court which would warrant the opening of the bank account for
inspection.

Zones of privacy are recognized and protected in our laws.

The Civil Code provides that

every 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

CHINA BANKING CORPORATION and TAN KIM LIONG vs. HON. WENCESLAO ORTEGA, as
Presiding Judge of the Court of First Instance of Manila, Branch VIII, and VICENTE G.

The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:

ACABAN, G.R. No. L-34964, January 31, 1973

Sec. 2. All deposits of whatever nature with banks or banking institutions in the
FACTS: On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against

Philippines including investments in bonds issued by the Government of the Philippines,

Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for

its political subdivisions and its instrumentalities, are hereby considered as of absolutely

the collection of a sum of money. Upon motion of the plaintiff the trial court declared the

confidential nature and may not be examined, inquired or looked into by any person,

defendants in default for failure to answer within the reglementary period, and authorized

government official, bureau or office, except upon written permission of the depositor, or

the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiffs evidence. On

in cases of impeachment, or upon order of a competent court in cases of bribery or

January 20, 1970 judgment by default was rendered against the defendants.

dereliction of duty of public officials, or in cases where the money deposited or invested is
the subject matter of the litigation.

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.

Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose

Accordingly, a notice of garnishment was issued by the Deputy Sheriff of the trial court

to any person other than those mentioned in Section two hereof any information

and served on said bank through its cashier, Tan Kim Liong. In reply, the bank cashier

concerning said deposits.

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.

Sec. 5. Any violation of this law will subject offender upon conviction, to an imprisonment

Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of court.

of not more than five years or a fine of not more than twenty thousand pesos or both, in
the discretion of the court.

In an order dated March 4, 1972 the trial court denied the plaintiffs motion. However, Tan
Kim Liong was ordered to inform the Court within five days from receipt of this order

The petitioners argue that the disclosure of the information required by the court does

whether or not there is a deposit in the China Banking Corporation of defendant B & B

not fall within any of the four (4) exceptions enumerated in Section 2, and that if the

Forest Development Corporation, and if there is any deposit, to hold the same intact and

questioned orders are complied with Tan Kim Liong may be criminally liable under Section

not allow any withdrawal until further order from this Court. Tan Kim Liong moved to

5 and the bank exposed to a possible damage suit by B & B Forest Development

reconsider but was turned down by order of March 27, 1972. In the same order he was

Corporation. Specifically referring to this case, the position of the petitioners is that the

directed to comply with the order of this Court dated March 4, 1972 within ten (10) days

bank deposit of judgment debtor B & B Forest Development Corporation cannot be

from the receipt of copy of this order, otherwise his arrest and confinement will be

subject to garnishment to satisfy a final judgment against it in view of the aforequoted

ordered by the Court. Resisting the two orders, the China Banking Corporation and Tan

provisions of law.

Kim Liong instituted the instant petition.

ISSUE:
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment
Whether or not a banking institution may validly refuse to comply with a court process

or garnishment of money deposited is allowed. Let us assume, for instance, that there is a

garnishing the bank deposit of a judgment debtor, by invoking the provisions of Republic

preliminary attachment which is for garnishment or for holding liable all moneys

Act No. 1405.

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

HELD:

this law?

We do not view the situation in that light. The lower court did not order an examination of

Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the

or inquiry into the deposit of B & B Forest Development Corporation, as contemplated in

inquiry is made only for the purpose of satisfying a tax liability already declared for the

the law. It merely required Tan Kim Liong to inform the court whether or not the

protection of the right in favor of the government; but when the object is merely to

defendant B & B Forest Development Corporation had a deposit in the China Banking

inquire whether he has a deposit or not for purposes of taxation, then this is fully covered

Corporation only for purposes of the garnishment issued by it, so that the bank would

by the law.

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

Mr. MARCOS. And it protects the depositor, does it not?

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

Mr. RAMOS. Yes, it protects the depositor.

judgment. Thus:
Mr. MARCOS. The law prohibits a mere investigation into the existence and the amount of
Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the

the deposit.

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

Mr. RAMOS. Into the very nature of such deposit.

liability, and because of this the deposit of this individual is attached by the Bureau of
Internal Revenue.

Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment or

attachment of the deposit is not allowed?

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

Mr. RAMOS. No, without judicial authorization.

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. 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. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?

Mr. RAMOS. Yes. That is the effect.

Mr. RAMOS. That is so.

Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the liability

(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27,

of an individual for taxation purposes and this judgment is sought to be executed in the

1955).

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?

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

Mr. RAMOS. To satisfy a judgment which has become executory.

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

Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the

existence of the deposit is disclosed the disclosure is purely incidental to the execution

deposit is half a million, will this bill allow scrutiny into the deposit in order that the

process. It is hard to conceive that it was ever within the intention of Congress to enable

judgment may be executed?

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.

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.