Banking Case Digests Finals -1

BSB Group Inc. vs. Sally Go G.R. No. 168644, 16 February 2010
Peralta, J:

same checks received by respondent, endorsed, and then deposited in her

personal account with Security Bank. CA affirmed RTCs decision.

FACTS: Petitioner, the BSB Group, Inc., is a duly organized domestic

corporation presided by its herein representative, Ricardo Bangayan
(Bangayan). Respondent Sally Go, alternatively referred to as Sally Sia Go
and Sally Go-Bangayan, is Bangayan's wife, who was employed in the
company as a cashier, and was engaged, among others, to receive and
account for the payments made by the various customers of the company.
In 2002, Bangayan filed with the Manila Prosecutor's Office a complaint for
estafaand/or qualified theft against respondent, alleging that several checks
representing the aggregate amount of P1,534,135.50 issued by the
company's customers in payment of their obligation were, instead of being
turned over to the company's coffers, indorsed by respondent who deposited
the same to her personal banking account maintained at Security Bank and
Trust Company (Security Bank) in Divisoria, Manila Branch. Upon a finding
that the evidence adduced was uncontroverted, the assistant city prosecutor
recommended the filing of the Information for qualified theft against
respondent.

ISSUE: Whether or not there is no difference between cash and check for
purposes of prosecuting respondent for theft of cash

Accordingly, respondent was charged before the Regional Trial Court of

Manila. She was found guilty; that in the commission of the said offense, said
accused acted with grave abuse of confidence, being then employed as
cashier by said complainant at the time of the commission of the said offense
and as such she was entrusted with the said amount of money.

Moreover, that there is no difference between cash and check is true in other
instances. In estafa by conversion, for instance, whether the thing converted
is cash or check, is immaterial in relation to the formal allegation in an
information for that offense; a check, after all, while not regarded as legal
tender, is normally accepted under commercial usage as a substitute for
cash, and the credit it represents instated monetary value is properly capable
of appropriation. And it is in this respect that what the offender does with the
check subsequent to the act of unlawfully taking it becomes material
inasmuch as this offense is a continuing one. In other words, in pursuing a
case for this offense, the prosecution may establish its cause by the
presentation of the checks involved. These checks would then constitute the
best evidence to establish their contents and to prove the elemental act of
conversion in support of the proposition that the offender has indeed
indorsed the same in his own name.

Respondent entered a negative plea when arraigned. The trial ensued. On

the premise that respondent had allegedly encashed the subject checks and
deposited the corresponding amounts thereof to her personal banking
account.
Petitioner, opposing respondent's move, argued for the relevancy of the
Metrobank account on the ground that the complaint-affidavit showed that
there were two checks which respondent allegedly deposited in an account
with the said bank. To this, respondent filed a supplemental motion to quash,
invoking the absolutely confidential nature of the Metrobank account under
the provisions of Republic Act(R.A.) No. 1405. The trial court did not sustain
respondent; hence, it denied the motion to quash for lack of merit.
Meanwhile, the prosecution was able to present in court the testimony of
Elenita Marasigan (Marasigan), the representative of Security Bank. In a
nutshell ,Marasigan's testimony sought to prove that between 1988 and
1989, respondent ,while engaged as cashier at the BSB Group, Inc., was able
to run away with the checks issued to the company by its customers, endorse
the same, and credit the corresponding amounts to her personal deposit
account with Security Bank. In the course of the testimony, the subject
checks were presented to Marasigan for identification and marking as the

HELD: In theft, the act of unlawful taking connotes deprivation of personal

property of one by another with intent to gain, and it is immaterial that the
offender is able or unable to freely dispose of the property stolen because the
deprivation relative to the offended party has already ensued from such act
of execution. The allegation of theft of money, hence, necessitates that
evidence presented must have a tendency to prove that the offender has
unlawfully taken money belonging to another. Interestingly, petitioner has
taken pains in attempting to draw a connection between the evidence
subject of the instant review, and the allegation of theft in the Information by
claiming that respondent had fraudulently deposited the checks in her own
name. But this line of argument works more prejudice than favor, because it
in effect, seeks to establish the commission, not of theft, but rather of some
other crime probably estafa.

PSB vs. Senate G.R. No. 200238, 20 November 2012

Perlas-Bernabe, J:
I.
THE FACTS
Philippine Savings Bank (PS Bank) and its President, Pascual M. Garcia III,
filed before the Supreme Court an original civil action for certiorari and
prohibition with application for temporary restraining order and/or writ of
preliminary injunction. The TRO was sought to stop the Senate, sitting as
impeachment court, from further implementing the Subpoena Ad
Testificandum et Duces Tecum, dated February 6, 2012, that it issued against
the Branch Manager of PS Bank, Katipunan Branch. The subpoena assailed by
petitioners covers the foreign currency denominated accounts allegedly

Banking Case Digests Finals -2

owned by the impeached Chief Justice Renato Corona of the Philippine

Supreme Court.
II.

THE ISSUE

Should a TRO be issued against the impeachment court to enjoin it from

further implementing the subpoena with respect to the alleged foreign
currency denominated accounts of CJ Corona?
III. THE RULING
[The Court en banc ISSUED A TEMPORARY RESTRAINING ORDER enjoining the
respondents from implementing the subpoena. It also REQUIRED the
respondents to COMMENT on the [merits of the] petition.]
YES, a TRO should be issued against the impeachment court to enjoin it from
further implementing the subpoena with respect to the alleged foreign
currency denominated accounts of CJ Corona.
There are two requisite conditions for the issuance of a preliminary
injunction:
(1) the right to be protected exists prima facie, and
(2) the acts sought to be enjoined are violative of that right.
It must be
proven that the violation sought to be prevented would cause an irreparable
injustice.
A clear right to maintain the confidentiality of the foreign currency deposits
of the Chief Justice is provided under Section 8 of Republic Act No. 6426,
otherwise known as the Foreign Currency Deposit Act of the Philippines (RA
6426). This law establishes the absolute confidentiality of foreign currency
deposits:
xxx

xxx

xxx

Under R.A. No. 6426 there is only a single exception to the secrecy of foreign
currency deposits, that is, disclosure is allowed only upon the written
permission of the depositor. In Intengan v. Court of Appeals, the Court ruled
that where the accounts in question are U.S. dollar deposits, the applicable
law is not Republic Act No. 1405 but RA 6426. Similarly, in the recent case of
Government Service Insurance System v. 15th Division of the Court of
Appeals, the Court also held that RA 6426 is the applicable law for foreign
currency deposits and not Republic Act No. 1405. xxx.
xxx

xxx

xxx

The written consent under RA 6426 constitutes a waiver of the depositors

right to privacy in relation to such deposit. In the present case, neither the

prosecution nor the Impeachment Court has presented any such written
waiver by the alleged depositor, Chief Justice Renato C. Corona. Also, while
impeachment may be an exception to the secrecy of bank deposits under RA
1405, it is not an exemption to the absolute confidentiality of foreign
currency deposits under RA 6426.
GSIS vs. Industrial Bank of Korea G.R. No. 189206, 8 June 2011
Perez, J:
FACTS: On December 13, 1996, a surety bond was agreed with DOMSAT
HOLDINGS, INC. as the principal and the GSIS as administrator and the
obligees are Land Bank of the Philippines, Tong Yang Merchant Bank,
Industrial Bank of Korea and First Merchant Banking Corporation collectively
known as The Banks with the loan granted to DOMSAT of US $
11,000,000.00 to be used for the financing of the two-year lease of a Russian
Satellite from INTERSPUTNIK.
Domsat failed to pay the loan and GSIS refused to comply with its
obligation reasoning that Domsat did not use the loan proceeds for the
payment of rental for the satellite. GSIS alleged that Domsat, with Westmont
Bank as the conduit, transferred the U.S. $11 Million loan proceeds from the
Industrial Bank of Korea to Citibank New York account of Westmont Bank and
from there to the Binondo Branch of Westmont Bank. The Banks filed a
complaint before the RTC of Makati against Domsat and GSIS.
GSIS requested for the issuance of a subpoena duces tecum to the
custodian of records of Westmont Bank to produce bank ledger covering the
account of Domsat with the Westmont Bank (now United Overseas Bank) and
other pertinent documents. The RTC issued the subpoena but nonetheless,
the RTC then granted the second motion for reconsideration by The Banks
to quash the subpoena granted to GSIS.
GSIS assailed its case to the CA and CA partially granted its petition
allowing it to look into documents but not the bank ledger because the US $
11,000,000.00 deposited by Domsat to Westmont Bank is covered by R.A.
6426 or the Bank Secrecy Law.
GSIS now filed a petition for certiorari in the Supreme Court for the
decision of CA allowing the quashal by the RTC of a subpoena for the
production of bank ledger.
ISSUE: Whether or not the deposited US $ 11,000,000.00 by Domsat, Inc. to
Westmont Bank is covered by R.A. 6426 as what The Banks contend or it is
covered by R.A. 1405 as what GSIS contends.
RULING: The Supreme Court ruled in favor of R.A. 6426 and thereby
AFFIRMING the decision of Court of Appeals.

Banking Case Digests Finals -3

R.A. 1405 was enacted on 1955 while R.A. 6426 was enacted on 1974. These
two laws both support the confidentiality of bank deposits. There is no
conflict between them. Republic Act No. 1405 was enacted for the purpose of
giving encouragement to the people to deposit their money in banking
institutions and to discourage private hoarding so that the same may be
properly utilized by banks in authorized loans to assist in the economic
development of the country. It covers all bank deposits in the Philippines and
no distinction was made between domestic and foreign deposits. Thus,
Republic Act No. 1405 is considered a law of general application. On the other
hand, Republic Act No. 6426 was intended to encourage deposits from
foreign lenders and investors. It is a special law designed especially for
foreign currency deposits in the Philippines. A general law does not nullify a
specific or special law. Generalia specialibus non derogant. Therefore, it is
beyond cavil that Republic Act No. 6426 applies in this case.
Intengan v. Court of Appeals affirmed the above-cited principle and
categorically declared that for foreign currency deposits, such as U.S. dollar
deposits, the applicable law is Republic Act No. 6426.
In said case, Citibank filed an action against its officers for persuading their
clients to transfer their dollar deposits to competitor banks. Bank records,
including dollar deposits of petitioners, purporting to establish the deception
practiced by the officers, were annexed to the complaint. Petitioners now
complained that Citibank violated Republic Act No. 1405. Supreme Court
ruled that since the accounts in question are U.S. dollar deposits, the
applicable law therefore is not Republic Act No. 1405 but Republic Act No.
6426.
Marquez vs. Desierto G.R. No. 135882, 27 June 2001
Pardo, J:
FACTS: Respondent Ombudsman Desierto ordered petitioner Marquez to
produce several bank documents for purposes of inspection in camera
relative to various accounts maintained at Union Bank of the Philippines, Julia
Vargas Branch, where petitioner is the branch manager.
The order 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.
Petitioner wanted to be clarified first as to how she would comply with the
orders without her breaking any law, particularly RA. No. 1405.
ISSUE: Whether the order of the Ombudsman to have an in camera
inspection of the questioned account is allowed as an exception to the law on
secrecy of bank deposits (R.A. No.1405).

HELD: No. 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
Ejercito vs. Sandiganbayan G.R. Nos. 157294-95, 30 November
2006
Carpio Morales, J:
FACTS: The Office of the Ombudsman requested the Sandiganbayan to issue
subpoena duces tecum against the Urban Bank relative to the case against
President Joseph Estrada.
Ms. Dela Paz, receiver of the Urban Bank, furnished the Office of the
Ombudsman certified copies of manager checks detailed in thesubpoena
duces tecum. The Sandiganbayan granted the same.
However, Ejercito claims that the subpoenas issued by the Sandiganbayan
are invalid and may not be enforced because the information found therein,
given their extremely detailed character and could only have been
obtained by the Special Prosecution Panel through an illegal disclosure by the
bank officials. Ejercito thus contended that, following the fruit of the
poisonous tree doctrine, the subpoenas must be quashed. Moreover, the
extremely-detailed information obtained by the Ombudsman from the bank
officials concerned during a previous investigation of the charges against
him, such inquiry into his bank accounts would itself be illegal.
ISSUE: Whether or not subpoena duces tecum/ad testificandum may be
issued to order the production of statement of bank accounts even before a
case for plunder is filed in court
HELD: The Supreme Court held that plunder is analogous to bribery, and
therefore, the exception to R.A. 1405 must also apply to cases of plunder. The
court also reiterated the ruling in Marquez v. Desierto 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 pending case before
the court of competent jurisdiction.
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, he 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. Thus, his attempt to make
the exclusionary rule applicable to the instant case fails.

Banking Case Digests Finals -4

The high Court, however, rejected the arguments of the petitioner Ejercito
that the bank accounts which where demanded from certain banks even
before the case was filed before the proper court is inadmissible in evidence
being fruits of poisonous tree. This is because the Ombudsman issued the
subpoenas bearing on the bank accounts of Ejercito about four months
before Marquez 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. Thus, the Court
referred to the teaching of Columbia Pictures Inc., v. Court of Appeals, that: 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.
China Banking Corp. vs. Ortega - G.R. No. L-34964, 31 January 1973
Macalintal, J:
FACTS: Tan Kim Liong was ordered to inform the Court 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 the Court. Petitioners in
this case refuse to comply with a court process garnishing the bank deposit
of a judgment debtor by invoking the provisions of Republic Act No. 1405
( Secrecy of Bank Deposits Act) which allegedly prohibits the disclosure of
any information concerning to bank deposits.
ISSUE: Whether or not a banking institution may validly refuse to comply with
a court processes garnishing the bank deposit of a judgment debtor, by
invoking the provisions of Republic Act No. 1405.
HELD: No. The lower court did not order an examination of or inquiry into
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 the 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 is sufficiently clear that the prohibition against examination
of or inquiry into bank deposit under RA 1405 does not preclude its being
garnished to insure satisfaction of a judgment. Indeed there is no real inquiry
in such a case, and the existence of the deposit is disclosed the disclosure is
purely incidental to the execution process. WHEREFORE, the orders of the
lower court dated March 4 and 27, 1972, respectively, are hereby affirmed,
with costs against the petitioners-appellants.
Salvacion vs. Central Bank of the Philippines G.R. No. 94723, 21
August 1997

Torres, Jr., J:
FACTS: Greg Bartelli, an American tourist, was arrested for committing four
counts of rape and serious illegal detention against Karen Salvacion. Police
recovered from him several dollar checks and a dollar account in the China
Banking Corp. He was, however, able to escape from prison. In a civil case
filed against him, the trial court awarded Salvacion moral, exemplary and
attorneys fees amounting to almost P1,000,000.00.
Salvacion tried to execute the judgment on the dollar deposit of Bartelli with
the China Banking Corp. but the latter refused arguing that Section 11 of
Central Bank Circular No. 960 exempts foreign currency deposits from
attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever.
Salvacion therefore filed this action for declaratory relief in the Supreme
Court.
ISSUE: Should Section 113 of Central Bank Circular No. 960 and Section 8 of
Republic Act No. 6426, as amended by PD 1246, otherwise known as the
Foreign Currency Deposit Act be made applicable to a foreign transient?
HELD: NO.
The provisions of Section 113 of Central Bank Circular No. 960 and PD No.
1246, insofar as it amends Section 8 of Republic Act No. 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 the civil case and to release to petitioners the dollar deposit of Bartelli in
such amount as would satisfy the judgment.
Supreme Court ruled that the questioned law makes futile the favorable
judgment and award of damages that Salvacion and her parents fully
deserve. It then proceeded to show that the economic basis for the
enactment of RA No. 6426 is not anymore present; and even if it still exists,
the questioned law still denies those entitled to due process of law for being
unreasonable and oppressive. The intention of the law may be good when
enacted. The law failed to anticipate the iniquitous effects producing outright
injustice and inequality such as the case before us.
The SC adopted the comment of the Solicitor General who argued that the
Offshore Banking System and the Foreign Currency Deposit System were
designed to draw deposits from foreign lenders and investors and,
subsequently, to give the latter protection. However, the foreign currency
deposit made by a transient or a tourist is not the kind of deposit encouraged
by PD Nos. 1034 and 1035 and given incentives and protection by said laws
because such depositor stays only for a few days in the country and,
therefore, will maintain his deposit in the bank only for a short time.

Banking Case Digests Finals -5

Considering that Bartelli is just a tourist or a transient, he is not entitled to

the protection of Section 113 of Central Bank Circular No. 960 and PD No.
1246 against attachment, garnishment or other court processes.
Further, the SC said: 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.
Republic vs. Eugenio G.R. No. 174629, 14 February 2008
Tinga, J:
Facts: Under the authority granted by the Resolution, the AMLC filed an
application to inquire into or examine the deposits or investments of Alvarez,
Trinidad, Liongson and Cheng Yong before the RTC of Makati, Branch 138,
presided by Judge (now Court of Appeals Justice) Sixto Marella, Jr. The
application was docketed as AMLC No. 05-005. The Makati RTC heard the
testimony of the Deputy Director of the AMLC, Richard David C. Funk II, and
received the documentary evidence of the AMLC.[14] Thereafter, on 4 July
2005, the Makati RTC rendered an Order (Makati RTC bank inquiry order)
granting the AMLC the authority to inquire and examine the subject bank
accounts of Alvarez, Trinidad, Liongson and Cheng Yong, the trial court being
satisfied that there existed p]robable cause [to] believe that the deposits in
various bank accounts, details of which appear in paragraph 1 of the
Application, are related to the offense of violation of Anti-Graft and Corrupt
Practices Act now the subject of criminal prosecution before the
Sandiganbayan as attested to by the Informations, Exhibits C, D, E, F, and G
Pursuant to the Makati RTC bank inquiry order, the CIS proceeded to inquire
and examine the deposits, investments and related web accounts of the four.
[16]
Meanwhile, the Special Prosecutor of the Office of the Ombudsman, Dennis
Villa-Ignacio, wrote a letter dated 2 November 2005, requesting the AMLC to
investigate the accounts of Alvarez, PIATCO, and several other entities
involved in the nullified contract. The letter adverted to probable cause to
believe that the bank accounts were used in the commission of unlawful
activities that were committed a in relation to the criminal cases then
pending before the Sandiganbayan. Attached to the letter was a
memorandum on why the investigation of the [accounts] is necessary in the
prosecution of the above criminal cases before the Sandiganbayan. In
response to the letter of the Special Prosecutor, the AMLC promulgated on 9
December 2005 Resolution No. 121 Series of 2005,[19] which authorized the
executive director of the AMLC to inquire into and examine the accounts

named in the letter, including one maintained by Alvarez with DBS Bank and
two other accounts in the name of Cheng Yong with Metrobank. The
Resolution characterized the memorandum attached to the Special
Prosecutors letter as extensively justif[ying] the existence of probable cause
that the bank accounts of the persons and entities mentioned in the letter
are related to the unlawful activity of violation of Sections 3(g) and 3(e) of
Rep. Act No. 3019, as amended.
Issue: Whether or not the bank accounts of respondents can be examined.
Held: Any exception to the rule of absolute confidentiality must be
specifically legislated. Section 2 of the Bank Secrecy Act itself prescribes
exceptions whereby these bank accounts may be examined by any person,
government official, bureau or offial; namely when: (1) upon written
permission of the depositor; (2) in cases of impeachment; (3) the
examination of bank accounts is upon order of a competent court in cases of
bribery or dereliction of duty of public officials; and (4) the money deposited
or invested is the subject matter of the litigation. Section 8 of R.A. Act No.
3019, the Anti-Graft and Corrupt Practices Act, has been recognized by this
Court as constituting an additional exception to the rule of absolute
confidentiality, and there have been other similar recognitions as well.
The AMLA also provides exceptions to the Bank Secrecy Act. Under Section
11, the AMLC may inquire into a bank account upon order of any competent
court in cases of violation of the AMLA, it having been established that there
is probable cause that the deposits or investments are related to unlawful
activities as defined in Section 3(i) of the law, or a money laundering offense
under Section 4 thereof. Further, in instances where there is probable cause
that the deposits or investments are related to kidnapping for ransom,
[certain violations of the Comprehensive Dangerous Drugs Act of
2002,hijacking and other violations under R.A. No. 6235, destructive arson
and murder, then there is no need for the AMLC to obtain a court order
before it could inquire into such accounts. It cannot be successfully argued
the proceedings relating to the bank inquiry order under Section 11 of the
AMLA is a litigation encompassed in one of the exceptions to the Bank
Secrecy Act which is when money deposited or invested is the subject matter
of the litigation. The orientation of the bank inquiry order is simply to serve
as a provisional relief or remedy. As earlier stated, the application for such
does not entail a full-blown trial. Nevertheless, just because the AMLA
establishes additional exceptions to the Bank Secrecy Act it does not mean
that the later law has dispensed with the general principle established in the
older law that all deposits of whatever nature with banks or banking
institutions in the Philippines x x x are hereby considered as of an absolutely
confidential nature. Indeed, by force of statute, all bank deposits are
absolutely confidential, and that nature is unaltered even by the legislated
exceptions referred to above.
PDIC vs. Citibank G.R. No. 170290, 11 April 2012

Banking Case Digests Finals -6

Mendoza, J:

ISSUE: Whether or not a branch of a bank has a separate legal Personality.

FACTS: Petitioner Philippine Deposit Insurance Corporation (PDIC) is a

government instrumentality created by virtue of Republic Act (R.A.) No. 3591,
as amended by R.A. No. 9302.
Respondent Citibank, N.A. (Citibank) is a banking corporation while
respondent Bank of America, S.T. & N.A. (BA) is a national banking
association, both of which are duly organized and existing under the laws of
the United States of America and duly licensed to do business in the
Philippines, with offices in Makati City.

HELD: No. A branch has no separate legal personality. This Court is of the
opinion that the key to the resolution of this controversy is the relationship of
the Philippine branches of Citibank and BA to their respective head offices
and their other foreign branches.

In 1977, PDIC conducted an examination of the books of account of

Citibank. It discovered that Citibank, in the course of its banking business,
from September 30, 1974 to June 30, 1977, received from its head office and
other foreign branches a total of P11,923,163,908.00 in dollars, covered by
Certificates of Dollar Time Deposit that were interest-bearing with
corresponding maturity dates. These funds, which were lodged in the books
of Citibank under the account Their Account-Head Office/Branches-Foreign
Currency, were not reported to PDIC as deposit liabilities that were subject
to assessment for insurance. As such, in a letter dated March 16, 1978, PDIC
assessed Citibank for deficiency in the sum of P1,595,081.96.
Similarly, sometime in 1979, PDIC examined the books of accounts of BA
which revealed that from September 30, 1976 to June 30, 1978, BA received
from its head office and its other foreign branches a total of P629,311,869.10
in dollars, covered by Certificates of Dollar Time Deposit that were interestbearing with corresponding maturity dates and lodged in their books under
the account Due to Head Office/Branches. Because BA also excluded these
from its deposit liabilities, PDIC wrote to BA on October 9, 1979, seeking the
remittance of P109,264.83 representing deficiency premium assessments for
dollar deposits.
Believing that litigation would inevitably arise from this dispute, Citibank
and BA each filed a petition for declaratory relief before the Court of First
Instance (now the Regional Trial Court) of Rizal on July 19, 1979 and
December 11, 1979, respectively. In their petitions, Citibank and BA sought a
declaratory judgment stating that the money placements they received from
their head office and other foreign branches were not deposits and did not
give rise to insurable deposit liabilities under Sections 3 and 4 of R.A. No.
3591 (the PDIC Charter) and, as a consequence, the deficiency assessments
made by PDIC were improper and erroneous.
The cases were then
consolidated.
On June 29, 1998, the Regional Trial Court, Branch 163, Pasig City (RTC)
promulgated its Decision in favor of Citibank and BA. Aggrieved, PDIC
appealed to the CA which affirmed the ruling of the RTC in its October 27,
2005 Decision. Hence, this petition.

The Court begins by examining the manner by which a foreign

corporation can establish its presence in the Philippines. It may choose to
incorporate its own subsidiary as a domestic corporation, in which case such
subsidiary would have its own separate and independent legal personality to
conduct business in the country. In the alternative, it may create a branch in
the Philippines, which would not be a legally independent unit, and simply
obtain a license to do business in the Philippines.
In the case of Citibank and BA, it is apparent that they both did not
incorporate a separate domestic corporation to represent its business
interests in the Philippines. Their Philippine branches are, as the name
implies, merely branches, without a separate legal personality from their
parent company, Citibank and BA. Thus, being one and the same entity, the
funds placed by the respondents in their respective branches in the
Philippines should not be treated as deposits made by third parties subject to
deposit insurance under the PDIC Charter. The purpose of the PDIC is to
protect the depositing public in the event of a bank closure. It has already
been sufficiently established by US jurisprudence and Philippine statutes that
the head office shall answer for the liabilities of its branch. Now, suppose the
Philippine branch of Citibank suddenly closes for some reason. Citibank N.A.
would then be required to answer for the deposit liabilities of Citibank
Philippines. If the Court were to adopt the posture of PDIC that the head
office and the branch are two separate entities and that the funds placed by
the head office and its foreign branches with the Philippine branch are
considered deposits within the meaning of the PDIC Charter, it would result to
the incongruous situation where Citibank, as the head office, would be placed
in the ridiculous position of having to reimburse itself, as depositor, for the
losses it may incur occasioned by the closure of Citibank Philippines. Surely
our law makers could not have envisioned such a preposterous circumstance
when they created PDIC.
Finally, the Court agrees with the CA ruling that there is nothing in the
definition of a bank and a banking institution in Section 3(b) of the PDIC
Charter[27] which explicitly states that the head office of a foreign bank and
its other branches are separate and distinct from their Philippine branches.
There is no need to complicate the matter when it can be solved by
simple logic bolstered by law and jurisprudence. Based on the foregoing, it is
clear that the head office of a bank and its branches are considered as one
under the eyes of the law. While branches are treated as separate business
units for commercial and financial reporting purposes, in the end, the head

Banking Case Digests Finals -7

office remains responsible and answerable for the liabilities of its branches
which are under its supervision and control. As such, it is unreasonable for
PDIC to require the respondents, Citibank and BA, to insure the money
placements made by their home office and other branches.
Deposit
insurance is superfluous and entirely unnecessary when, as in this case, the
institution holding the funds and the one which made the placements are one
and the same legal entity.
PDIC vs. Abad G.R. No. 126911, 30 April 2003
Carpio Morales, J:
FACTS: Prior to May 22, 1997, respondents had 71 certificates of time
deposits denominated as "Golden Time Deposits" (GTD) with an aggregate
face value of P1,115,889.96. May 22, 1987, a Friday, the Monetary Board
(MB) of the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas,
issued Resolution 5052 prohibiting Manila Banking Corporation to do business
in the Philippines, and placing its assets and affairs under receivership. The
Resolution, however, was not served on MBC until Tuesday the following
week, or on May 26, 1987, when the designated Receiver took over. On May
25, 1987 - the next banking day following the issuance of the MB Resolution,
respondent Jose Abad was at the MBC at 9:00 a.m. for the purpose of preterminating the71 aforementioned GTDs and re-depositing the fund
represented thereby into 28 new GTDs in denominations of P40,000.00 or
less under the names of herein respondents individually or jointly with each
others Of the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew the
value thereof in the total amount of P320,000.00. Respondents thereafter
filed their claims with the PDIC for the payment of the remaining 20 insured
GTDs. February 11, 1988, PDIC paid respondents the value of 3 claims in the
total amount of P120,000.00. PDIC, however, withheld payment of the 17
remaining claims after Washington Solidum, Deputy Receiver of MBC-Iloilo,
submitted a report to the PDIC that there was massive conversion and
substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
Because of the report, PDIC entertained serious reservation in recognizing
respondents' GTDs as deposit liabilities of MBC-Iloilo. Thus, PDIC filed a
petition for declaratory relief against respondents with the RTC of Iloilo City,
for a judicial declaration determination of the insurability of respondents' GTD
sat MBC-Iloilo. In their Answer respondents set up a counterclaim against
PDIC whereby they asked for payment of their insured deposits. The Trial
Court ordered petitioners to pay the balance of the deposit insurance to
respondents. The Court of Appeals affirmed the decision of the lower court.
Petitioner posits that the trial court erred in ordering it to pay the balance of
the deposit insurance to respondents, maintaining that the instant petition
stemmed from a petition for declaratory relief which does not essentially
entail an executory process, and the only relief that should have been
granted by the trial court is a declaration of the parties' rights and duties. As
such, petitioner continues, no order of payment may arise from the case as
this is beyond the office of declaratory relief proceedings.

ISSUE: Whether or not the trial court order the payment of the balance even
if the petition stemmed from a petition for declaratory relief which does not
essentially entail an executor process.
HELD: YES. Without doubt, a petition for declaratory relief does not
essentially entail an executory process. There is nothing in its nature,
however, that prohibits a counter claim from being set-up in the same action.
There is nothing in the nature of a special civil action for declaratory relief
that prescribes the filing of a counterclaim based on the same transaction,
deed or contract subject of the complaint. A special civil action is after all not
essentially different from an ordinary civil action, which is generally governed
by Rules 1 to 56 of the Rules of Court, except that the former deals with a
special subject matter which makes necessary some special regulation. But
the identity between their fundamental nature is such that the same rules
governing ordinary civil suits may and do apply to special civil actions if not
inconsistent with or if they may serve to supplement the provisions of the
peculiar rules governing special laws.
PDIC vs. Aquero G.R. No. 118917, 22 December 1997
Kapunan, J:
FACTS: On September 22, 1983, plaintiffs-appellees invested in money
market placements with the Premiere Financing Corporation (PFC) in the sum
of P10,000.00 each for which they were issued by the PFC corresponding
promissory notes and checks. On the same date (September 22, 1983), John
Francis Cotaoco, for and in behalf of plaintiffs-appellees, went to the PFC to
encash the promissory notes and checks, but the PFC referred him to the
Regent Saving Bank (RSB). Instead of paying the promissory notes and
checks, the RSB, upon agreement of Cotaoco, issued the subject 13
certificates of time deposit with Nos. 09648 to 09660, inclusive, each stating,
among others, that the same certifies that the bearer thereof has deposited
with the RSB the sum of P10,000.00; that the certificate shall bear 14%
interest per annum; that the certificate is insured up toP15,000.00 with the
PDIC; and that the maturity date thereof is on November 3, 1983 (Exhs. B,
B-1 to B-12).
On the aforesaid maturity dated (November 3, 1983), Cotaoco went to the
RSB to encash the said certificates. Thereat, RSB Executive Vice President
Jose M. Damian requested Cotaoco for a deferment or an extension of a few
days to enable the RSB to raise the amount to pay for the same (Exh. D).
Cotaoco agreed. Despite said extension, the RSB still failed to pay the value
of the certificates. Instead, RSB advised Cotaoco to file a claim with the
PDIC.
Meanwhile, on June 15, 1984, the Monetary Board of the Central Bank issued
Resolution No. 788 (Exh. 2, Records, p. 159) suspending the operations of
the RSB. Eventually, the records of RSB were secured and its deposit

Banking Case Digests Finals -8

liabilities were eventually determined. On December 7, 1984, the Monetary

Board issued Resolution No. 1496 (Exh. 1) liquidating the RSB.
Subsequently, a masterlist or inventory of the RSB assets and liabilities was
prepared. However, the certificates of time deposit of plaintiffs-appellees
were not included in the list on the ground that the certificates were not
funded by the PFC or duly recorded as liabilities of RSB.
On September 4, 1984, plaintiffs-appellees filed with the PDIC their
respective claims for the amount of the certificates (Exhs. C, C-1, to C12). Sabina Yu, James Ngkaion, Elaine Ngkaion and Jeffrey Ngkaion, who
have similar claims on their certificates of time deposit with the RSB, likewise
filed their claims with the PDIC. To their dismay, PDIC refused the aforesaid
claims on the ground that the Traders Royal Bank Check No. 299255 dated
September 22, 1983 for the amount of P125,846.07 (Exh. B) issued by PFC
for the aforementioned certificates was returned by the drawee bank for
having been drawn against insufficient funds; and said check was not
replaced by the PFC, resulting in the cancellation of the certificates as
indebtedness or liabilities of RSB.
Consequently, on March 31, 1987, private respondents filed an action for
collection against PDIC, RSB and the Central Bank.
On September 14, 1987, the trial court, declared the Central Bank in default
for failing to file an answer.
On May 29, 1989, the trial court rendered its decision ordering the
defendants therein to pay plaintiffs, jointly and severally, the amount
corresponding to the latters certificates of time deposit.
Both PDIC and RSB appealed.
ISSUE: Whether or not PDIC can be held liable for value of the certificates of
time deposit held by the petitioners.
HELD: NO. Whenever an insured bank shall have been closed on account of
insolvency,
payment of the insured deposits in such bank shall be made by the
Corporation as soon as possible. The term deposit means the unpaid
balance of money or its equivalent received by a bank in the usual course of
business and for which it has given or is obliged to give credit to a
commercial, checking, savings, time or thrift account or which is evidence by
passbook, check and/or certificate of deposit printed or issued in accordance
with Central Bank rules and regulations and other applicable laws, together
with such other obligations of a bank which, consistent with banking usage
and practices, the Board of Directors shall determine and prescribe by
regulations to be deposit liabilities of the Bank. These pieces of evidence
convincingly show that the subject CTDs were indeed issued without RSB

receiving any money therefor. No deposit, as defined in Section 3 (f) of R.A.

No. 3591, therefore came into existence. Accordingly, petitioner PDIC cannot
be held liable for value of the certificates of time deposit held by private
respondents.
Development Bank of the Philippines vs. Arcilla G.R. No. 161397,
30 June 2005
Callejo, Sr., J:
Facts:
Atty. Felipe Arcilla Jr. was employed by the DBP. After he was assigned to the
legal department, he decided to avail of a loan under the Individual Housing
Project (IHP) of the bank for the payment of the parcel of land purchased by
him and for its construction. When Arcilla resigned grom DBP, the bank
notified him that his loan has been converted to a regular housing loan.
Arcilla agreed to the reservation by the DBP of its right to increase the rate of
interest on the loan, as well as all other fees and charges on loans and
advances pursuant to such policy as it may adopt from time to time during
the period of the loan.
Issue:
Whether or not DBP violated RA 3765 otherwise known as The Truth in
Lending Act.
Ruling:
Section 1 of R.A. No. 3765 provides that prior to the consummation of a loan
transaction, the bank, as creditor, is obliged to furnish a client with a clear
statement, in writing, setting forth, to the extent applicable and in
accordance with the rules and regulations prescribed by the Monetary Board
of the Central Bank of the Philippines, the following information:
1. the cash price or delivered price of the property or service to be
acquired;
2. the amounts, if any, to be credited as down payment and/or trade-in;
3. the difference between the amounts set forth under clauses (1) and (2);
4. the charges, individually itemized, which are paid or to be paid by such
person in connection with the transaction but which are not incident to the
extension of credit;
5. the total amount to be financed;
6.
the finance charges expressed in terms of pesos and centavos; and
7. the percentage that the finance charge bears to the total amount to be
financed expressed as a simple annual rate on the outstanding unpaid
balance of the obligation.
If the borrower is not duly informed of the data required by the law prior to
the consummation of the availment or drawdown, the lender will have no
right to collect such charge or increases thereof, even if stipulated in the
promissory note. However, such failure shall not affect the validity or
enforceability of any contract or transaction.

Banking Case Digests Finals -9

United Coconut Planters Bank vs. Sps. Beluso G.R. No. 159912, 17
August 2007
Chico-Nazario, J:
Facts: In 1996, UCPB granted the spouses Beluso a Promissory Notes Line
under a Credit Agreement whereby the latter could avail from the former
credit of up to a maximum amount of P1.2 Million pesos for a term ending in
April 1997. In addition to the promissory notes, the spouses Beluso also
constituted a real estate mortgage over parcels of land in Roxas City.
Subsequently, the said Credit Arrangement was amended to extend the
amount of the Promissory Notes Line to a maximum of P2.35 Million pesos
and to extend the term thereof to February 1998.
The spouses executed three promissory notes which were renewed several
times. In 1997, the payment of the principal and interest of the latter two
promissory notes were debited from the spouses Belusos account with UCPB;
yet, a consolidated loan for P1.3 Million was again released to the spouses
Beluso under one promissory note with a due date of 28 February 1998.
To completely avail themselves of the P2.35 Million credit line extended to
them by UCPB, the spouses Beluso executed two more promissory notes for a
total of P350 thousand. However, the spouses Beluso alleged that the
amounts covered by these last two promissory notes were never released or
credited to their account and, thus, claimed that the principal indebtedness
was only P2 Million.
In any case, UCPB applied interest rates on the different promissory notes
ranging from 18% to 34%. During the term of these promissory notes, the
Belusos were able to pay the total sum of about P760 thousand. However,
they failed to pay for the interest and penalty on their obligations. As a result,
UCPB demanded that they pay their total obligation of P2.9 millionbut the
spouses Beluso failed to comply therewith. Thereafter, UCPB foreclosed the
properties mortgaged by the spouses Beluso to secure their credit line,
which, by that time, already ballooned to nearly P3.8 million.
Two months after the foreclosure, the spouses Beluso filed a Petition for
Annulment, Accounting and Damages against UCPB with the RTC of Makati
City. UCPB moved to dismiss the case on the ground that the spouses Beluso
instituted another case before the RTC of Roxas City, involving the same
parties and issues. UCPB claims that while the Roxas City case initially
appears to be a different action, as it prayed for the issuance of a temporary
restraining order and/or injunction to stop foreclosure of spouses Belusos
properties, it poses issues which are similar to those of the present case.
The spouses Beluso claim that the issue in the Roxas City case is the
propriety of the foreclosure before the true account of spouses Beluso is
determined. On the other hand, the issue in the Makati case is the validity of

the interest rate provision. The spouses Beluso claim that the Roxas City case
has become moot because, before RTC Roxas City could act on the
restraining order, UCPB proceeded with the foreclosure and auction sale. As
the act sought to be restrained has already been accomplished, the spouses
Beluso had to file a different action, that of Annulment of the Foreclosure Sale
with RTC Makati.
RTC ruled in favor of the Belusos. CA affirmed.
Issue: Whether or not the case should be dismissed due to forum shopping
Held: YES. Even if it is assumed for the sake of argument, however, that only
one cause of action is involved in the two civil actions, namely, the violation
of the right of the spouses Beluso not to have their property foreclosed for an
amount they do not owe, the Rules of Court nevertheless allows the filing of
the second action. The case in Roxas City was dismissed before the filing of
the case with RTC Makati, since the venue of litigation as provided for in the
Credit Agreement is in Makati City.
Rule 16, Section 5 bars the refiling of an action previously dismissed only in
the following instances:
(a) That the cause of action is barred by a prior judgment or by the statute of
limitations;
(b) That the claim or demand set forth in the plaintiffs pleading has been
paid, waived, abandoned, or otherwise extinguished; and
(c) That the claim on which the action is founded is unenforceable under the
provisions of the statute of frauds.
When an action is dismissed on the motion of the other party, it is only when
the ground for the dismissal of an action is either of those aforementioned
that the action cannot be refiled. As regards all the other grounds, the
complainant is allowed to file same action, but should take care that, this
time, it is filed with the proper court or after the accomplishment of the
erstwhile absent condition precedent, as the case may be.
The MR filed by the Belusos in the Roxas City case that has not yet been
resolved upon the filing of the Makati case does not change the SCs findings.
It is indeed the general rule that in cases where there are two pending
actions between the same parties on the same issue, it should be the later
case that should be dismissed. However, this rule is not absolute. In the case
of Allied Banking v. CA, it was ruled that: Even if this is not the purpose for
the filing of the first action, it may nevertheless be dismissed if the later
action is the more appropriate vehicle for the ventilation of the issues
between the parties.

Banking Case Digests Finals -10

Applying the said ruling in the case at bar, the Court found that the Makati
City case is the more proper action in view of the execution of the foreclosure
sale. Moreover, Makati is the proper venue of the action as mandated by the

Credit Agreement. Hence, the Court deemed that the Makati Case is the more
appropriate vehicle for litigating the issues between the parties, as compared
to the Roxas City case.