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LAW ON SECRECY OF BANK DEPOSITS (R.A. NO.

1988 and 1989, respondent, while engaged as cashier


1405) at the BSB Group, Inc., was able to run away with the
checks issued to the company by its customers,
A. Purpose
endorse the same, and credit the corresponding
BSB GROUP, INC. represented by its President amounts to her personal deposit account with Security
Mr. RICARDO BANGAYAN v. SALLY GO a.k.a. Bank. In the course of the testimony, the subject
SALLY GO-BANGAYAN G.R. No. 168644, 16 checks were presented to Marasigan for identification
February 2010, Peralta, J. and marking as the same checks received by
respondent, endorsed, and then deposited in her
R.A. No. 1405 has two allied purposes: it hopes to personal account with Security Bank. But before the
discourage private hoarding and at the same time testimony could be completed, respondent filed a
encourage the people to deposit their money in Motion to Suppress, seeking the exclusion of
banking institutions, so that it may be utilized by way Marasigans testimony and accompanying documents
of authorized loans and thereby assist in economic thus far received, bearing on the subject Security
development. Owing to this piece of legislation, the Bank account. This time respondent invokes, in
confidentiality of bank deposits remains to be a basic addition to irrelevancy, the privilege of confidentiality
state policy in the Philippines. under R.A. No. 1405.
FACTS.
The trial court, nevertheless, denied the motion as
BSB Group is duly organized domestic well as the subsequent MR filed. On appeal, the
corporation presided by Ricardo Bangayan. Sally Go is petition was granted and the testimony of the bank
Ricardos wife, who was employed in the company as a representative was ordered stricken out.
cashier, and was engaged, among others, to receive
and account for the payments made by the various ISSUE.
customers of the company. Ricardo filed a complaint
Does Marasigans testimony, as well as of the
for estafa and/or qualified theft against Sally Go,
corresponding checks allegedly deposited in said
alleging that several checks with an aggregate amount
account, have a direct relation to the subject matter of
of P1, 534, 135.50 issued by the companys customers
the case for qualified theft, hence, exempted under the
were, instead of being turned over to the companys
coverage of confidentiality under R.A. No. 1405?
coffers, indorsed by Sally Go to her personal banking
account maintained at Security Bank Divisoria. HELD.
Trial ensued and the prosecution moved for YES. R.A. No. 1405 has two allied purposes. It
the issuance of subpoena duces tecum/ad hopes to discourage private hoarding and at the same
testificandum against the managers or records time encourage the people to deposit their money in
custodian of Security Bank as well as of the Asian banking institutions, so that it may be utilized by way
Savings Bank (now Metrobank). The trial court of authorized loans and thereby assist in economic
granted the same and issued the corresponding development. Owing to this piece of legislation, the
subpoena. Sally Go filed a motion to quash the confidentiality of bank deposits remains to be a basic
subpoena addressed to Metrobank, noting that the state policy in the Philippines. Section 2 of the law
complaint filed with the prosecutor made no mention institutionalized this policy by characterizing as
of the said bank account to which she had allegedly absolutely confidential in general all deposits of
deposited the proceeds of the supposed checks. x x x whatever nature with banks and other financial
Petitioner argued for the relevancy of the Metrobank institutions in the country.
account on the ground that two checks were deposited
therein. Sally Go filed a supplemental motion to quash, Subsequent statutory enactments have
invoking the absolutely confidential nature of the expanded the list of exceptions to this policy yet the
Metrobank account under the provisions of R.A. No. secrecy of bank deposits still lies as the general rule,
1405. The trial court denied the motion to quash. falling as it does within the legally recognized zones of
privacy. There is, in fact, much disfavor to construing
Meanwhile, the prosecution was able to these primary and supplemental exceptions in a
present in court the testimony of Elenita Marasigan, manner that would authorize unbridled discretion,
the representative of Security Bank. In a nutshell, whether governmental or otherwise, in utilizing these
Marasigans testimony sought to prove that between exceptions as authority for unwarranted inquiry into
1
bank accounts. It is then perceivable that the present in cases where the money deposited or invested
legal order is obliged to conserve the absolutely is the subject matter of litigation.
confidential nature of bank deposits.
Facts1
In taking exclusion from the coverage of the
Sun Life filed a complaint for sum of money
confidentiality rule, petitioner posits that the account
against Onate, Econ Holdings and Brunner
maintained by respondent with Security Bank contains
Development. Sun Life alleges that Onate, as
the proceeds of the checks that she has fraudulently
president of Econ, offered to sell 46 million peso worth
appropriated to herself and, thus, falls under one of of treasury bills at a discounted price. Sun Life paid
the exceptions in Section 2 of R.A. No. 1405 that the the price by means of a check payable to Brunner.
money kept in said account is the subject matter in Brunner, through its President Dio, issued to it a
litigation. x x x In Union Bank of the Philippines v. receipt with undertaking to deliver the treasury bills
Court of Appeals, the Court noted that the inquiry into to Sun Life. Brunner and Dio delivered instead a
bank deposits allowable under R.A. No. 1405 must be promissory note, in which it was made to appear that
premised on the fact that the money deposited in the the transaction was a money placement instead of sale
account is itself the subject of the action. Given this of treasury bills.
perspective, we deduce that the subject matter of the
Sun Life moved to examine the accounts and ledgers
action in the case at bar is to be determined from the
of Brunner Development at Urban Bank and BPI. Also
indictment that charges respondent with the offense,
properties of the petitioners were already garnished
and not from the evidence sought by the prosecution notwithstanding the fact that they were served
to be admitted into the records. summons only after the garnishment.
It comes clear that the admission of testimonial and Issue
documentary evidence relative to respondents
Security Bank account serves no other purpose than to Was the attachment of the properties proper?
establish the existence of such account, its nature and
the amount kept in it. It constitutes an attempt by the Was the examination proper?
prosecution at an impermissible inquiry into a bank Ruling
deposit account the privacy and confidentiality of
which is protected by law. On this score alone, the 1. No, while the petition for a writ of
objection posed by respondent in her motion to preliminary attachment may be granted and the writ
suppress should have indeed put an end to the itself issued before the defendant is summoned, the
controversy at the very first instance it was raised writ of attachment cannot be implemented until
before the trial court. jurisdiction over the person of the defendant is
B. Prohibited Acts obtained. It is required at the very least that when
proper officer commences implementation of the writ
EMMANUEL C. OATE and ECON HOLDINGS of attachment service of summons should be
CORPORATION, petitioners, vs. HON. ZEUS C. simultaneously made if the court only acquired
ABROGAR, as Presiding Judge of Branch 150 of jurisdiction of the person of the defendant after the
the Regional Trial Court of Makati, and SUN attachment, such attachment is invalid.
LIFE ASSURANCE COMPANY OF CANADA,
respondents. BRUNNER DEVELOPMENT
2. No, the issue is whether the money paid to
CORPORATION, petitioner, vs. HON. ZEUS C.
Brunner was the consideration for the sale of treasury
ABROGAR, as Presiding Judge of Branch 150 of
bills, as Sun Life claims, or whether it was money
the Regional Trial Court of Makati, and SUN
LIFE ASSURANCE COMPANY OF CANADA, intended for placement, as petitioners allege.
respondents. G.R. No. 107303, 23 February 1995, Petitioners do not deny receipt of P39,526,500.82 from
MENDOZA, EN BANC Sun Life. Hence, whether the transaction is
considered a sale or money placement does not make
Key Doctrine: Whether the transaction is the money the "subject matter of litigation" within the
considered a sale or money placement does not meaning of Sec. 2 of Republic Act No. 1405 which
make the money the "subject matter of prohibits the disclosure or inquiry into bank deposits
litigation within the meaning of Sec. 2 of except "in cases where the money deposited or
Republic Act No. 1405 which prohibits the invested is the subject matter of litigation." Nor will it
disclosure or inquiry into bank deposits except

2
matter whether the money was "swindled" as Sun Life undersigned hereby agrees that such transfer will be
contends. made without any responsibility on the part of the
BANK, or its correspondents, for any loss occasioned
Further, The examination of bank books and records by errors, or delays in the transmission of message by
cannot be justified under Rule 57, Sec. 10 2. Since, as telegraph or cable companies or by the
correspondents or agencies, necessarily employed by
already stated, the attachment of petitioners'
this BANK in the transfer of this money, all risks for
properties was invalid, the examination ordered in
which are assumed by the undersigned."
connection with such attachment must likewise be
considered invalid. Under the rule, examination is only
proper where the property of the person examined has Subsequent to the purchase of the telegraphic
transfer, petitioner in turn issued and delivered eight
been validly attached.
Equitable Bank checks to his suppliers in different
amounts as payment for the merchandise that he
1
This is a resolution resolving the MR filed by Onate
obtained from them. When the checks were presented
2
Sec. 10. Examination of party whose property is
for payment, five of them bounced for insufficiency of
attached and persons indebted to him or controlling funds, while the remaining three were held overnight
his property; delivery of property to officer. Any for lack of funds upon presentment.
person owing debts to the party whose property is
attached or having in his possession or under his
control any credit or other personal property Upon verification by private respondent with
belonging to such party, may be required to attend the Gingoog Branch Office of PCIB, it was confirmed
before the court in which the action is pending, or that his telegraphic transfer had not yet been remitted
before a commissioner appointed by the court, and to Equitable Bank, Cagayan de Oro branch. In fact,
be examined on oath respecting the same. The party petitioner PCIB made the corresponding transfer of
whose property is attached may also be required to funds only on April 3, 1986, twenty one (21) days after
attend for the purpose of giving information the purchase of the telegraphic transfer on March
respecting his property, and may be examined on
13,1986.
oath. The court may, after such examination, order
personal property capable of manual delivery
belonging to him, in the possession of the person so Aggrieved, private respondent demanded from
required to attend before the court, to be delivered to petitioner PCIB that he be compensated for the
the clerk of the court, sheriff, or other proper officer resulting damage that he suffered due to petitioners
on such terms as may be just, having reference to failure to make the timely transfer of funds which led
any lien thereon or claims against the same, to await to the dishonor of his checks. In a letter, PCIBs
the judgment in the action. Branch Manager Rodolfo Villarmia acknowledged
their failure to transmit the telegraphic transfer on
PHILIPPINE COMMERCIAL INTERNATIONAL time as a result of their mistake in using the control
BANK, PETITIONER, VS. COURT OF APPEALS number twice and the petitioner banks failure to
AND RORY W. LIM, RESPONDENTS. G.R. No. request confirmation and act positively on the
disposition of the said telegraphic transfer.
97785, March 29, 1996, FRANCISCO, J .

Key Doctrine: The services being offered by a banking Nevertheless, petitioner refused to heed
institution like petitioner are imbued with public private respondents demand prompting the latter to
interest; any attempt to completely exempt one of the file a complaint for damages with the RTC of Gingoog
contracting parties from any liability in case of loss City. In his complaint, private respondent alleged that
notwithstanding its bad faith, fault or negligence, as a result of petitioners total disregard and gross
cannot be sanctioned for being inimical to public violation of its contractual obligation to remit and
interest and therefore contrary to public policy deliver the sum P200,000.00, private respondents
checks were dishonored for insufficient funds thereby
On March 13, 1986, private respondent Rory causing his business and credit standing to suffer
Lim delivered the amount of P200,000.00 for the considerably for which petitioner should be ordered to
purpose of obtaining a telegraphic transfer from pay damages.
petitioner PCIB in the same amount. The money was
to be transferred to Equitable Banking Corporation, In its decision dated July 27, 1988 the RTC of
Cagayan de Oro Branch, and credited to private Gingoog City held petitioner liable for breach of
respondents account at the said bank. Upon purchase contract and struck down the aforecited provision
of the telegraphic transfer, petitioner issued the found in petitioners telegraphic transfer application
corresponding receipt which contained the assailed form/receipt exempting it from any liability and
provision, to wit: In case of fund transfer, the declared the same to be invalid and unenforceable.

3
Upon appeal by petitioner to the Court of Appeals, Having established that petitioner acted
respondent court affirmed with modifications the fraudulently and in bad faith, we find it implausible to
judgment of the trial court. absolve petitioner from its wrongful acts on account of
the assailed provision exempting it from any liability.
ISSUE In Geraldez vs. Court of Appeals, it was unequivocally
declared that notwithstanding the enforceability of a
Is the assailed provision found in the contractual limitation, responsibility arising from a
application form/receipt exempting petitioner from fraudulent act cannot be exculpated because the same
any liability in case of loss resulting from errors or is contrary to public policy. Indeed, Article 21 of the
delays in the transfer of funds valid? Civil Code is quite explicit in providing that "[a]ny
person who willfully causes loss or injury to another in
RULING
a manner that is contrary to morals, good customs or
NO. public policy shall compensate the latter for the
damage." Freedom of contract is subject to the
limitation that the agreement must not be against
The prohibition against this type of contractual public policy and any agreement or contract made in
stipulation is treated by law as void which may not be violation of this rule is not binding and will not be
ratified or waived by a contracting party. Article 1409 enforced.
of the Civil Code states:
UNION BANK OF THE PHILIPPINES, vs. COURT
OF APPEALS and ALLIED BANK CORPORATION,
"ART. 1409. The following contracts are inexistent and
G.R. No. 134699, December 23, 1999,
void from the beginning: (1) Those whose cause,
KAPUNAN, J.
object or purpose is contrary to law, morals, good
customs, public order or public policy; KEY DOCTRINE.
xxx xxx xxx By the terms of R.A. No. 1405, the money
deposited itself should be the subject matter of the
These contracts cannot be ratified. Neither can the litigation.
right to set up the defense of illegality be FACTS.
waived." Undoubtedly, the services being
offered by a banking institution like petitioner A check in the amount of 1 million pesos was
are imbued with public drawn against Account No. 0111-01854-8 with Allied
Bank payable to the order of Alvarez. The payee
deposited the check with Union Bank who credited the
interest. The use of telegraphic transfers have now P1,000,000.00 to the account of Mr. Alvarez. Union
become commonplace among businessmen because it Bank sent the check for clearing through the
facilitates commercial transactions. Any attempt to Philippine Clearing House Corporation. When the
completely exempt one of the contracting parties from check was presented for payment, a clearing
discrepancy was committed by Union Banks clearing
any liability in case of loss notwithstanding its bad
staff when the 1 Million Pesos was erroneously under-
faith, fault or negligence, as in the instant case, encoded to 1 Thousand Pesos.
cannot be sanctioned for being inimical to public
interest and therefore contrary to public policy.
Resultingly, there being no dispute that petitioner Union Bank filed a petition for the
acted fraudulently and in bad faith, the award of examination of Account No. 111-01854-8. The RTC
moral[26] and exemplary damages were proper. held that the case was not one where the money
deposited is the subject matter of the litigation.

Moreover, that petitioner failed to discharge


Union Bank in its complaint filed before the
its obligation to transmit private respondents PCHC, Arbicom Case, clearly stated that its cause of
telegraphic transfer on time in accordance with their action against defendant arose from Allied Banks
agreement is already a settled matter as the same is deliberate violation of the provisions of the PCHC Rule
no longer disputed in this petition. Neither is the Book, Sec. 25.3, specifically on Under-Encoding of
finding of respondent Court of Appeals that petitioner check. A reading of petitioner collecting banks
acted fraudulently and in bad faith in the performance complaint in the Arbicom case shows that its thrust is
of its obligation, being contested by petitioner. directed against respondent drawee banks alleged
Perforce, we are bound by these factual failure to inform the former of the under-encoding. On
considerations. the other hand, the petition before the Supreme Court
reveals that the true purpose for the examination is to
aid petitioner in proving the extent of Allied Banks
liability.
4
ISSUE. caused existing bank clients/depositors to divert their
money from Citibank, N.A., such as those placed in
Is the money deposited is covered by the term peso and dollar deposits and money placements, to
subject matter of litigation? products offered by other companies that were
RULING. commanding higher rate of yields. This was done by
first transferring bank clients monies to Torrance and
The petitioner is fishing for information so it Global which in turn placed the monies of the bank
can determine the culpability of private respondent clients in securities, shares of stock and other
and the amount of damages it can recover from the certificates of third parties. It also appeared that out
latter. It does not seek recovery of the very money
contained in the deposit. The subject matter of the of these transactions, they derived substantial
dispute may be the amount of P999,000.00 that financial gains.
petitioner seeks from private respondent as a result of
the latters alleged failure to inform the former of the Intengan, Rosario Neri and Rita Brawner were
discrepancy; but it is not the P999,000.00 deposited in identified as the bank clients whose accounts have
the drawers account. By the terms of R.A. No. 1405, been diverted to Torrance/Global. Their bank records
the money deposited itself should be the subject were disclosed and annexed in the complaint against
matter of the litigation.
Santos and Genuino. The complaints were
subsequently amended to include a charge of estafa.
That petitioner feels a need for such Intengan, et al. sought for their exclusion and the
information in order to establish its case against physical withdrawal of their bank records attached.
private respondent does not, by itself, warrant the The assistant provincial prosecutor recommended the
examination of the bank deposits. The necessity of
the inquiry, or the lack thereof, is immaterial since dismissal of Intengan, et al.s complaints. It was
the case does not come under any of the exceptions overruled by the provincial prosecutor but directed
allowed by the Bank Deposits Secrecy Act. *From the filing of Informations against Citibanks officers for
DC alleged violation of R.A. 1405 (Bank Secrecy Law). The
DOJ Secretary ordered the withdrawal of the
C. Deposits Covered
Informations against Citibanks officers.
CARMEN LL. INTENGAN, et al. v. COURT OF
Before the CA, Intengan, et al.s petition to
APPEALS, et al. G.R. No. 128996, 15 February
reverse the DOJ resolution was denied, explaining that
2002, SECOND DIVISION (De Leon, Jr., J.) the disclosure of their bank records were essential in
the complete prosecution of the case against Santos
DOCTRINE OF THE CASE
and Genuino.
When the accounts in question are U.S. dollar
ISSUE:
deposits, the applicable law is not Republic Act No.
1405 (Bank Secracy Law) but R.A. 6426 (Foreign 1. Did Citibanks officers violate the Bank Secrecy
Currency Deposit Act of the Philippines). Thus, under Law when they disclosed Intengan, et al.s bank
R.A. No. 6426 there is only a single exception to the records in the complaint where the latter are not
secrecy of foreign currency deposits, that is, involved?
disclosure is allowed only upon the written permission
of the depositor. 2. Can Citibanks officers still be prosecuted for
violating R.A. 6426?
FACTS

Citibank filed a complaint, for violation of


RULING:
section 31 vis--vis section 144 of the Corporation
Code, against its officers, Dante L. Santos (Treasurer 1. NO. Actually, this case should have been studied
of the Global Consumer Group of the bank) and more carefully by all concerned. The finest legal minds
Marilou Genuino (Asst. Vice President in the Santos in the country - from the parties respective counsel,
office). the Provincial Prosecutor, the DOJ, the OSG, and the
CA - all appear to have overlooked a single fact which
In the investigation, Santos and Genuino, dictates the outcome of the entire controversy. A
contrary to their disclosures and the aforementioned circumspect review of the record shows us the reason.
bank policy, appeared to have been actively engaged The accounts in question are U.S. dollar deposits;
in business endeavors that were in conflict with the consequently, the applicable law is not Republic Act
No. 1405 but R.A. 6426 (Foreign Currency Deposit
business of the bank. It was found that with the use of
Act of the Philippines).
2 companies in which they have personal financial
interest, namely Torrance Development Corporation Thus, under R.A. No. 6426 there is only a
and Global Pacific Corporation, they managed or single exception to the secrecy of foreign currency

5
deposits, that is, disclosure is allowed only upon the including investments in bonds issued by the
written permission of the depositor. Incidentally, the Government of the Philippines, its political
acts of Citibanks officers complained of happened subdivisions and its instrumentalities, are hereby
before the enactment on September 29, 2001 of R.A. considered as of an absolutely confidential nature and
No. 9160 (Anti-Money Laundering Act of 2001). may not be examined, inquired or looked into by any
person, government official, bureau or office, except
A case for violation of Republic Act No. 6426 upon written permission of the depositor, or in cases
should have been the proper case brought against of impeachment, or upon order of a competent court
in cases of bribery or dereliction of duty of public
private respondents. Citibanks officers Lim and Reyes
officials, or in cases where the money deposited or
admitted that they had disclosed details of Intengan, invested is the subject matter of the litigation.
et al.s dollar deposits without the latters written
permission. It does not matter if that such disclosure In the criminal case for plunder of People v.
was necessary to establish Citibanks case against Estrada, et al., the Special Prosecution Panel filed a
Dante L. Santos and Marilou Genuino. Lims act of Request for Issuance of Subpoena Duces Tecum for
disclosing details of petitioners bank records the issuance of a subpoena directing the President of
regarding their foreign currency deposits, with the Export and Industry Bank (EIB, formerly Urban Bank)
authority of Reyes, would appear to belong to that or his/her authorized representative to certain
species of criminal acts punishable by special laws, documents during the hearings in relation to Ejercitos
called malum prohibitum.
trust and savings account as well as Urban Bank
2. NO. Per available records, Citibanks officers may Managers Check and its corresponding application
no longer be haled before the courts for violation of forms. The Prosecution also filed the same request but
Republic Act No. 6426. Vic Lim made the disclosure in directed to the authorized representative of Equitable-
September of 1993 in his affidavit submitted before PCI Bank to produce statements of account pertaining
the Provincial Fiscal. In her complaint-affidavit,
to certain accounts in the name of "Jose Velarde" and
Intengan stated that she learned of the revelation of
the details of her foreign currency bank account on to testify thereon. Sandiganbayan granted both
October 14, 1993; Neri on October 24, 1993; and requests and subpoenas were issued. The Prosecution
Brawner on January 5, 1994. Prescription has set in. filed another Request for Issuance of Subpoena for the
President of EIB or his/her authorized representative
The filing of the complaint or information in
to produce the same documents subject of the
the case at bar for alleged violation of Republic Act
Subpoena Duces Tecum and to testify thereon on the
No. 1405 did not have the effect of tolling the
prescriptive period. For it is the filing of the hearings scheduled and subsequent dates until
complaint or information corresponding to the completion of the testimony which was also granted.
correct offense which produces that effect.
Ejercito filed a letter in the Sandiganbayan
It may well be argued that the foregoing expressing his concern regarding the subpoena of his
disquisition would leave petitioners with no remedy in bank account that the prosecution may have breached
law. We point out, however, that the confidentiality of bank secrecy laws and asking to hold in abeyance the
foreign currency deposits mandated by Republic Act subpoena for at least 10 days to enable him to take
No. 6426, as amended by Presidential Decree No. appropriate legal steps since he needs to consult a
1246, came into effect as far back as 1977. Hence, lawyer regarding his right as a depositor. Associate
ignorance thereof cannot be pretended. Even during Justice Edilberto Sandoval, advised that his remedy
the pendency of this appeal, nothing prevented was to file a motion to quash, and he was given up to
Intengan, et al. from filing a complaint charging the 12:00 noon the following day. Ejercito, unassisted by
correct offense against Citibanks officers. This was counsel, filed a Motion to Quash Subpoena Duces
not done, as everyone involved was content to submit Tecum/Ad Testificandum praying that the subpoenas
the case on the basis of an alleged violation of issued be quashed, claiming that his bank accounts
Republic Act No. 1405 (Bank Secrecy Law), however, are covered by The Secrecy of Bank Deposits Law and
incorrectly invoked. do not fall under any of the exceptions. He further
claimed that the specific identification of documents in
JOSEPH VICTOR EJERCITO v. SANDIGANBAYAN the questioned subpoenas, including details on dates
AND PEOPLE OF THE PHILIPPINES G.R. No. and amounts, could only have been made possible by
157294-95, November 30, 2006, EN BANC an earlier illegal disclosure by the EIB and PDIC in its
(Ynares-Santiago, J.) capacity as receiver of the then Urban Bank.

Key Doctrine: All deposits of whatever nature with Before the Motion to Quash was resolved by
banks or banking institutions in the Philippines the Sandiganbayan, the prosecution filed another

6
Request for the Issuance of Subpoena Duces funds" by Urban Bank for and in behalf of petitioner.
Tecum/Ad Testificandum again to direct the President The money deposited under Trust Account No. 858,
of the EIB to produce the same documents subject of was, therefore, intended not merely to remain with the
previous subpoenas except the Bank of Commerce MC bank but to be invested by it elsewhere. To hold that
#0256254 in the amount of P2M as Bank of this type of account is not protected by R.A. 1405
Commerce MC #0256256 in the amount of P200M would encourage private hoarding of funds that could
was instead requested. The request covered additional otherwise be invested by banks in other ventures,
documents regarding another savings account. The contrary to the policy behind the law.
prosecution also filed the same directed to Aurora C. Section 2 of the same law in fact even more
Baldoz, Vice President-CR-II of the PDIC for her to clearly shows that the term "deposits" was intended to
produce several documents on the scheduled be understood broadly: All deposits of whatever
hearings. The subpoenas prayed for in both requests nature with banks or banking institutions in the
were issued by the Sandiganbayan. Ejercito, assisted Philippines including investments in bonds issued by
by counsel, filed an Urgent Motion to Quash the Government of the Philippines, its political
Subpoenae Duces Tecum/Ad Testificandum praying subdivisions and its instrumentalities, are hereby
that the subpoena directed to Aurora Baldoz be considered as of an absolutely confidential nature and
quashed for the same reasons which he cited in the may not be examined, inquired or looked into by any
Motion to Quash he had earlier filed. Sandiganbayan person, government official, bureau or office, except
denied both his motions as well as his MR. upon written permission of the depositor, or in cases
of impeachment, or upon order of a competent court
ISSUE: in cases of bribery or dereliction of duty of public
officials, or in cases where the money deposited or
Is Ejercitos trust account covered by the term invested is the subject matter of the litigation.
deposit as used in RA 1405?
The phrase "of whatever nature" proscribes
HELD: any restrictive interpretation of "deposits." Moreover,
it is clear from the immediately quoted provision that,
Yes. The contention that trust accounts are not
generally, the law applies not only to money which is
covered by the term "deposits," as used in R.A. 1405,
by the mere fact that they do not entail a creditor- deposited but also to those which are invested. This
debtor relationship between the trustor and the bank, further shows that the law was not intended to apply
does not lie. An examination of the law shows that the only to "deposits" in the strict sense of the word.
term "deposits" used therein is to be understood Otherwise, there would have been no need to add the
broadly and not limited only to accounts which give phrase "or invested." Clearly, therefore, R.A. 1405 is
rise to a creditor-debtor relationship between the broad enough to cover Trust Account No. 858.
depositor and the bank. The policy behind the law is
laid down in Section 1: It is hereby declared to be the The protection afforded by the law is, however,
policy of the Government to give encouragement to not absolute, there being recognized exceptions
the people to deposit their money in banking thereto, as above-quoted Section 2 provides. In the
institutions and to discourage private hoarding so that present case, two exceptions apply, to wit: (1) the
the same may be properly utilized by banks in examination of bank accounts is upon order of a
authorized loans to assis t in the economic competent court in cases of bribery or dereliction of
development of the country. duty of public officials, and (2) the money deposited or
invested is the subject matter of the litigation.
If the money deposited under an account may
be used by banks for authorized loans to third D. Exceptions
persons, then such account, regardless of whether it
creates a creditor-debtor relationship between the PHILIPPINE NATIONAL BANK and EDUARDO Z.
depositor and the bank, falls under the category of ROMUALDEZ, in his capacity as President of the
accounts which the law precisely seeks to protect for PNB, plaintiffs-appellants, vs. EMILIO A.
the purpose of boosting the economic development of GANCAYCO and FLORENTINO FLOR, Special
the country. Prosecutors of the DOJ, defendants-appellees.
[G.R. No. L-18343, September 30, 1965,
REGALA, J . ]
Trust Account No. 858 is, without doubt, one Section 8 of the Anti-Graft Law is intended to amend
such account. The Trust Agreement between section 2 of Republic Act No. 1405 by providing
petitioner and Urban Bank provides that the trust additional exception to the rule against the
account covers "deposit, placement or investment of disclosure of bank deposits. Cases of unexplained

7
wealth are similar to cases of bribery or dereliction and any person who enters upon its discharge does so
of duty and no reason is seen why these two classes with the full knowledge that his life, so far as relevant
of cases cannot be excepted from the rule making to his duty, is open to public scrutiny.
bank deposits confidential.
1
SEC. 2. All deposits of whatever nature with banks or
Defendants Emilio A. Gancayco and Florentino banking institutions in the Philippines including
Flor, as special prosecutors of the DOJ, required the investments in bonds issued by the Government of the
plaintiff PNB to produce at a hearing the records of Philippines, its political subdivisions and its
the bank deposits of Ernesto T. Jimenez, former instrumentalities, are hereby considered as of an
administrator of the Agricultural Credit and absolutely confidential nature and may not be
Cooperative Administration, who was then under examined, inquired or looked into by any person,
investigation for unexplained wealth. government official, bureau or office, except upon
written permission of the depositor, or in cases of
PNB declined to reveal its records, invoking impeachment, or upon order of a competent court in
the Sec. 21 of the Law on Secrecy of Bank Deposits. cases of bribery or dereliction of duty of public
On the other hand, the defendants cited Sec. 82 of the officials, or in cases where the money deposited or
Anti-Graft and Corrupt Practices Act (RA 3019) in invested is the subject matter of the litigation.
support of their claim of authority.
2
SEC. 8. Dismissal due to unexplained wealth. If in
PNB filed an action for declaratory judgment
accordance with the provisions of Republic Act
before the CFI-Manila. The court rendered judgement,
Numbered One thousand three hundred seventy-nine,
sustaining the power of the defendants to compel the
a public official has been found to have acquired
disclosure of bank accounts of ACCFA Administrator
during his incumbency, whether in his name or in the
Jimenez. The court said that, by enacting section 8 of,
name of other persons, an amount of property and/or
the Anti-Graft and Corrupt Practices Act, Congress
money manifestly out of proportion to his salary and to
clearly intended to provide an additional ground for
his other lawful income, that fact shall be a ground for
the examination of bank deposits. Without such
dismissal or removal. Properties in the name of the
provision, the court added prosecutors would be
spouse and unmarried children of such public official
hampered if not altogether frustrated in the
may be taken into consideration, when their
prosecution of those charged with having acquired
acquisition through legitimate means cannot be
unexplained wealth while in public office. Hence, this
satisfactorily shown. Bank deposits shall be taken
petition.
into consideration in the enforcement of this
ISSUE: Can a bank be compelled to disclose the section, notwithstanding any provision of law to
records of accounts of a depositor who is under the contrary.
investigation for unexplained wealth?
BANCO FILIPINO SAVINGS AND MORTGAGE
RULING: YES. BANK vs. HON. FIDEL PURISIMA, and HON.
VICENTE ERICTA and JOSE DEL FIERO, G.R. No.
Section 8 of the Anti-Graft Law is intended to L-56429 May 28, 1988, J. Narvasa
amend section 2 of Republic Act No. 1405 by
providing additional exception to the rule against the Manuel Caturla, a special agent of the Bureau of
disclosure of bank deposits. Customs was accused by the BIR of having acquired
property manifestly out of proportion to his salary and
With regard to the claim that disclosure would
other lawful income. In the course of the investigation
be contrary to the policy making bank deposits
thereof, the Tanodbayan issued a subpoena duces
confidential, it is enough to point out that while
tecum to Banco Fiipino, commanding its
section 2 of Republic Act 1405 declares bank deposits
representative to appear at the Office of the
to be "absolutely confidential," it nevertheless allows
Tanodbayan and furnish the latter with duly certified
such disclosure in the following instances: (1) Upon
copies of the records in all its branches, of the loans,
written permission of the depositor; (2) In cases of
savings and time deposits and other banking
impeachment; (3) Upon order of a competent court in
transactions, dating back to 1969, appearing in the
cases of bribery or dereliction of duty of public
names of Caturla, his wife, Purita, their children
officials; (4) In cases where the money deposited is the
and/or Pedro Escuyos.
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 Caturla moved to quash the subpoena duces tecum
cases cannot be excepted from the rule making bank arguing that compliance therewith would result in a
deposits confidential. The policy as to one cannot be violation of Sections 2 and 3 of the Law on Secrecy of
different from the policy as to the other. This policy Bank Deposits. Then Tanodbayan Ericta not only
denied the motion for lack of merit, and directed
express the motion that a public office is a public trust
compliance with the subpoena, but also expanded its
8
scope through a second subpoena duces tecum, this The other provision involved in the declaratory action
time requiring production by BF of the bank records of is Section 8 of R.A. No. 3019. It reads:
Siargao Agro-Industrial Corporation, Pedro Escuyos or
his wife, Emeterio Escuyos, Purita Caturla, Lucia Sec. 8. Dismissal due to unexplained wealth. If a
Escuyos, etc. Two other subpoena of substantially the public official has been found to have acquired during
same tenor as the second were released by the his incumbency, whether in his name or in the name of
Tanodbayan's Office. other persons, an amount of property and/or money
BF took over from Caturla in the effort to nullify the manifestly out of proportion to this salary and to his
subpoenae. It filed a complaint for declaratory relief other lawful income, that fact shall be a ground for
with the CFI of Manila. BF Bank prayed for a judicial dismissal or removal. Properties in the name of the
declaration as to whether its compliance with the spouse and unmarried children of such public official
subpoenae duces tecum would constitute an may be taken into consideration, when their
infringement of the provisions of Sections 2 and 3 of acquisition through legitimate means cannot be
R.A. No. 1405 in relation to Section 8 of R.A. No. satisfactorily shown.
3019. Respondent Judge Purisima issued an Order
denying for lack of merit the application by BF Bank Bank deposits shall be taken into consideration
for a preliminary injunction and/or restraining order. in the enforcement of this section,
notwithstanding any prohibition of law to the
Issue: Does the Law on Secrecy of Bank Deposits contrary.
preclude production by subpoena duces tecum of bank
records of transactions by or in the names of the wife, The inquiry into illegally acquired property extends to
children and friends of a special agent of the Bureau cases where such property is concealed by being held
of Customs, accused before the Tanodbayan of having by or recorded in the name of other persons. This
allegedly acquired property manifestly out of proposition is made clear by R.A. No. 3019 which
proportion to his salary and other lawful income, in quite categorically states that the term, "legitimately
violation of the "Anti-Graft and Corrupt Practices Act?" acquired property of a public officer or employee shall
NO not include .. property unlawfully acquired by the
respondent, but its ownership is concealed by its
Held:
being recorded in the name of, or held by,
respondent's spouse, ascendants, descendants,
BF argues that subpoenae in question are in the relatives or any other persons."
nature of "fishing expeditions" or "general warrants"
since they authorize indiscriminate inquiry into bank To sustain the petitioner's theory, and restrict the
records; that, assuming that such an inquiry is inquiry only to property held by or in the name of the
allowed, it is constitutionally impermissible with government official or employee, or his spouse and
respect to private individuals or public officials not unmarried children is unwarranted in the light of the
under investigation on a charge of violating said Act. provisions of the statutes in question, and would make
available to persons in government who illegally
The provisions of R.A. No. 1405 subject of BF's acquire property an easy and fool-proof means of
declaratory action, read as follows: evading investigation and prosecution; all they would
have to do would be to simply place the property in
Sec. 2. All deposits of whatever nature with banks or the possession or name of persons other than their
banking institutions in the Philippines including spouse and unmarried children. This is an absurdity
investments in bonds issued by the Government of the that we will not ascribe to the lawmakers.
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an RIZAL COMMERCIAL BANKING CORPORATION,
absolutely confidential nature and may not be petitioner, vs. THE HONORABLE PACIFICO P. DE
examined, inquired or looked into by any person, CASTRO and PHILIPPINE VIRGINIA TOBACCO
government official, bureau or office, except upon ADMINISTRATION, respondents G.R. No. L-34548
written permission of the depositor, or in cases of November 29, 1988, CORTES, J.
impeachment, or upon order of a competent court in
Key Doctrine: by virtue of the order of garnishment,
cases of bribery or dereliction of duty of public
the same was placed in custodia legis and therefore,
officials, or in cases where the money deposited or from that time on, RCBC was holding the funds
invested is the subject matter of litigation. subject to the orders of the court a quo. That the
sheriff, upon delivery of the check to him by RCBC
Sec. 3. It shall be unlawful for any official or employee encashed it and turned over the proceeds thereof to
of a banking institution to disclose to any person other the plaintiff was no longer the concern of RCBC as the
than those mentioned in Section two hereof any responsibility over the garnished funds passed to the
information concerning said deposits. court. Thus, no breach of trust or dereliction of duty
9
can be attributed to RCBC in delivering its depositor's Notice of Garnishment; rather, the release of the
funds pursuant to a court order which was merely in funds was made pursuant to the aforesaid Order.
the exercise of its power of control over such funds.
In the second place, the bank had already filed a reply
to the Notice of Garnishment stating that it had in its
custody funds belonging to the PVTA, which, in fact
In a civil case entitled "Badoc Planters, Inc. versus was the basis of the plaintiff in filing a motion to
Philippine Virginia Tobacco Administration (PVTA), et secure delivery of the garnished amount to the sheriff.
al.," which was an action for recovery of unpaid
tobacco deliveries, an Order (Partial Judgment) was Lastly, the bank, upon the receipt of the Notice of
issued by the Hon. San Diego, then Presiding Judge, Garnishment, duly informed PVTA thereof to enable
ordering the defendants therein to pay jointly and the latter to take the necessary steps for the
severally, the plaintiff Badoc Planters, Inc. (hereinafter protection of its own interest.
referred to as "BADOC") within 48 hours the Moreover, by virtue of the order of garnishment, the
aggregate amount of P206,916.76, with legal interests same was placed in custodia legis and therefore, from
thereon. that time on, RCBC was holding the funds subject to
BADOC filed an Urgent Ex-Parte Motion for a Writ of the orders of the court a quo. That the sheriff, upon
Execution of the said Partial Judgment which was delivery of the check to him by RCBC encashed it and
granted on the same day by the herein respondent turned over the proceeds thereof to the plaintiff was
judge who acted in place of the Hon. Judge San Diego no longer the concern of RCBC as the responsibility
who had just been elevated as a Justice of the Court of over the garnished funds passed to the court. Thus, no
Appeals. Accordingly, the Branch Clerk of Court on the breach of trust or dereliction of duty can be attributed
very same day, issued a Writ of Execution addressed to to RCBC in delivering its depositor's funds pursuant to
Special Sheriff Faustino Rigor, who then issued a a court order which was merely in the exercise of its
Notice of Garnishment addressed to RCBC, requesting power of control over such funds.
a reply to said garnishment as to any property which Another issue: Are the PVTA funds public funds
PVTA might have in the possession or control of RCBC.
exempt from garnishment?
Upon an Urgent Ex-Parte Motion filed by BADOC, the
respondent Judge issued an Order granting the Ex- Ruling: The Court holds that they are not.
Parte Motion and directing the herein petitioner "to
Republic Act No. 2265 created the PVTA as an
deliver in check the amount garnished to Sheriff
ordinary corporation with all the attributes of a
Faustino Rigor and Sheriff Rigor in turn is ordered to
corporate entity subject to the provisions of the
cash the check and deliver the amount to the
Corporation Law. Hence, it possesses the power "to
plaintiff's representative and/or counsel on record." In
sue and be sued" and "to acquire and hold such assets
compliance with said Order, petitioner delivered to
and incur such liabilities resulting directly from
Sheriff Rigor a certified check in the sum of P
operations authorized by the provisions of this Act or
206,916.76.
as essential to the proper conduct of such operations."
Respondent PVTA filed a Motion for Reconsideration
Among the specific powers vested in the PVTA are: 1)
which was granted for failure of plaintiff BADOC to
appear on the hearing dates, setting aside the Orders to buy Virginia tobacco grown in the Philippines for
of Execution and of Payment and the Writ of Execution resale to local bona fide tobacco manufacturers and
and ordering petitioner and BADOC "to restore, jointly leaf tobacco dealers; 2) to contracts of any kind as
and severally, the account of PVTA with the said bank may be necessary or incidental to the attainment of its
by reimbursing the PVTA of the amount of P 206, purpose. It is clear that PVTA has been endowed with
916.76 with interests at the legal rate. a personality distinct and separate from the
government which owns and controls it. Accordingly,
Issue: If in compliance with the court order, the bank
this Court has heretofore declared that the funds of
(RCBC) delivered the garnished amount to the sheriff,
the PVTA can be garnished since "funds of public
who in turn delivered it to the judgment creditor, but
corporation which can sue and be sued were not
subsequently, the order of the court directing payment
exempt from garnishment" [Philippine National Bank
was set aside by the same judge, should the bank be
v. Pabalan, G.R. No. L-33112, June 15, 1978, 83 SCRA
held solidarily liable with the judgment creditor to its
595, 598.]
depositor for reimbursement of the garnished funds?
Also, "garnishment was the appropriate remedy for
Ruling: No. RCBC is absolved from reimbursing the
the prevailing party which could proceed against the
funds garnished!
funds of a corporate entity even if owned or controlled
In the first place, it should be pointed out that RCBC by the government" inasmuch as "by engaging in a
did not deliver the amount on the strength solely of a particular business thru the instrumentality of a
corporation, the government divests itself pro hac vice
10
of its sovereign character, so as to render the Mellon Bank filed a complaint in the Superior Court of
corporation subject to the rules of law governing California, County of Kern, against Javier spouses to
private corporations" [Philippine National Bank v. CIR, impose constructive trust of the property theyve
G.R No. L-32667, January 31, 1978, 81 SCRA 314, purchased from the money mistakenly and
319.] erroneously transferred to their account. Mellon Bank
also filed in the Court of First Instance of Rizal,
MELLON BANK, N.A. vs. HON. CELSO L. Branch X, a complaint against the Javier spouses,
MAGSINO, G.R. No. 71479, October 18, 1990, Honorio Poblador, etc to recover the amount they
FERNAN, C.J., THIRD DIVISION
received for the sale of the California City property.
Doctrine
In due course, it was found out that the checks
Section 2 of Republic Act No. 1405 on the secrecy of originally issued by Javier spouses were already
bank deposits allows the disclosure of bank deposits negotiated and now were deposited to an account in
in cases where the money deposited is the subject the Philippine Veterans Bank in the name of Cipriano
matter of the litigation. Inasmuch as Civil Case is Azada, Poblador's law partner and counsel to the
aimed at recovering the amount converted by the Javiers. Mellon Bank then subpoenaed Erlinda
Javiers for their own benefit, necessarily, an inquiry Baylosis of Veterans Bank to show that Azada
into the whereabouts of the illegally acquired amount
deposited HSBC checks amounting to P874,490.75 in
extends to whatever is concealed by being held or
recorded in the name of persons other than the one his personal current account with said bank and
responsible for the illegal acquisition Pilologo Red, Jr. of HSBC to prove that said amount
was returned by Azada to Hagedorn one of the
Facts companies connected with Poblador. The testimonies
of these witnesses were objected to by the defense on
Dolores Ventosa requested the transfer of $1,000 from the grounds of res inter alios acta, immateriality,
the First National Bank of Moundsville, West Virginia, irrelevancy and confidentiality and then moved to
U.S.A. to Victoria Javier in Manila through the strike off the testimonies from the record of the case
Prudential Bank. To effect the transfer, the First in violation of Republic Act No. 1405 the Secrecy of
National Bank requested the petitioner, Mellon Bank, Bank Deposits. The CFI ordered that the testimonies
which mistakenly indicated in its wire sent to be stricken from the records. Mellon Bank moved for
Manufacturers Hanover Bank (correspondent of reconsideration but denied. Hence, this petition.
Prudential Bank) the amount transferred as
"US$1,000,000.00" instead of US$1,000.00. Issue
Manufacturers Hanover Bank transferred one million
dollars less bank charges of $6.30 to the Prudential Whether or not disclosure of bank deposits in cases
Bank for the account of Victoria Javier. where the money is the subject matter of litigation
violates RA 1405.
Javier opened a new dollar account in the Prudential
Bank and deposited $999,943.70. Immediately, Ruling
Victoria Javier and her husband, Melchor Javier, Jr.,
made withdrawals from the account, deposited them Private respondents' protestations that to allow the
in several banks only to withdraw them later in an questioned testimonies to remain on record would be
apparent plan to conceal, "launder" and dissipate the in violation of the provisions of Republic Act No. 1405
erroneously sent amount. 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
Melchor Javier, requested Jose Marquez, a realtor, to of the litigation.
look for properties for sale in the United States.
Marquez offered a 160-acre lot in the Mojave Desert in Inasmuch as Civil Case No. 26899 is aimed at
California City which was owned by Honorio Poblador. recovering the amount converted by the Javiers for
Without having seen the property, Javier agreed to buy their own benefit, necessarily, an inquiry into the
said property. The payment of the purchased property whereabouts of the illegally acquired amount extends
was made through six cashier's checks withdrawn to whatever is concealed by being held or recorded in
from dollar account while the balance of P236,000 was the name of persons other than the one responsible
paid in cash by Javier who did not even ask for a for the illegal acquisition.
receipt. Inasmuch as Poblador had requested that the
purchase price should not be paid directly to him, the PHILIPPINE COMMERCIAL & INDUSTRIAL
payment was coursed through six companies in which BANK and JOSE HENARES, petitioners, vs. THE
he is financially related with. HON. COURT OF APPEALS and MARINDUQUE
MINING AND INDUSTRIAL CORPORATION,

11
respondents. G.R. No. 84526, January 28, 1991, Sheriff of Negros Occidental for the amount of
SARMIENTO, J.: P37,466.18, which was the exact balance of the
Marinduque Mining Co.s account as of that day.
Key Doctrine: The prohibition against examination of
or inquiry into a bank deposit under Republic Act On the following day, April 30, 1976, at about
1405 does not preclude its being garnished to insure 1:00 o'clock in the afternoon, the deputy sheriff
satisfaction of a judgment. Indeed there is no real returned to the bank in order to encash the check but
inquiry in such a case, and if existence of the deposit before the actual encashment, Henares once again
inquired about any existing restraining order from the
is disclosed the disclosure is purely incidental to the
NLRC and upon being told that there was none, the
execution process. latter allowed the said encashment.
Facts: On July 6, 1976, Marinduque Mining Co.filed a
complaint before the RTC Manila, Branch II, against
An action was filed with the National Labor
the petitioners and Damian Rojas, the Deputy
Relations Commission (NLRC) by a group of laborers
Provincial Sheriff of Negros Occidental, then
who obtained a favorable judgment for payment of
defendants, alleging that the former's current deposit
backwages amounting to P205,853.00 against the
with the PCIB was levied upon, garnished, and with
private respondent (Marinduque Mining and Industrial
undue haste unlawfully allowed to be withdrawn, and
Corporation). The said Commission issued a writ of
notwithstanding the alleged unauthorized disclosure
execution directing the Deputy Sheriff of Negros
of the said current deposit and unlawful release
Occidental, one Damian Rojas, to enforce the
thereof, the latter have failed and refused to restore
aforementioned judgment. The deputy sheriff went to
the amount of P37,466.18 to the former's account
the mining site of the private respondent and served
despite repeated demands.
the writ of execution on the persons concerned, but
nothing seemed to have happened thereat. Then, the The trial court rendered its judgment in favor
Sheriff prepared on his own a Notice of Garnishment of the private respondent Marinduque Mining Co. On
dated addressed to six (6) banks, all located in appeal, respondent court (CA), first reversed the said
Bacolod City, one of which being the Petitioner PCIB judgment of the lower court, but however, on the
herein, directing the bank concerned to immediately motion for reconsideration filed by the private
issue a check in the name of the Deputy Provincial respondent, subsequently annulled and set aside its
Sheriff of Negros Occidental in an amount equivalent said decision in the resolution. It held that petitioners
to the amount of the garnishment and that proper were liable. Then, it denied the petitioner's (PCIB)
own motion for reconsideration. Hence, this petition.
receipt would be issued therefor.
Issues:
Incidentally, the house lawyer of Marinduque
Mining, Atty. Alejano, acting on a tip regarding the 1. Whether or not petitioners had legal basis in
existence of the said notice of garnishment, releasing the garnished deposit of private
communicated with the bank manager, the petitioner respondent to the sheriff. (YES)
Jose Henares, verbally at first at around 2:00 o'clock
in the afternoon of that day, April 29, 1976, and later 2. Whether or not petitioners violated Republic Act
confirmed in a formal letter received by the petitioner No. 1405, otherwise known as the Secrecy of Bank
Henares at about 5:00 o'clock of that same day, Deposits Act, when they allowed the sheriff to
requesting the withholding of any release of the garnish the deposit of private respondent. (NO)
deposit of the private respondent Marinduque Mining
Co. with the petitioner bank (PCIB). Ruling:
Meanwhile, at about 9:30 in the morning of
April 29, 1976, the deputy sheriff presented the Notice The petition is impressed with merit.
of Garnishment and the Writ of Execution attached
therewith to the petitioner Henares and later in the 1. The crux of the instant controversy boils down to
afternoon, demanded from the latter, under pain of the question of whether or not a bank is liable for
contempt, the release of the deposit of the private releasing its depositor's funds on the strength of
the notice of garnishment made by the deputy
respondent. Henares, upon knowing from the Acting
sheriff pursuant to a writ of execution issued by
Provincial Sheriff that there was no restraining order the NLRC.
from the NLRC and on the favorable advice of the
bank's legal counsel, issued a debit memo for the full
balance of the Marinduque Mining Co. account with The respondent court (CA) in its decision, cited the
the petitioner bank (PCIB). Thereafter, he issued a case of De la Rama vs. Villarosa, wherein the amount
manager's check in the name of the Deputy Provincial garnished was not actually taken possession of by the
12
sheriff, even from the time of garnishment, because depositor against the bank. The Court therefore sees
the judgment debtor was able to appeal to the Court of no application for Sec. 39, Rule 39 of the Rules of
Appeals and obtain from the Court an injunction Court invoked by the private respondent as to
prohibiting execution of the judgment. De la Rama is necessitate the "examination of the debtor of the
not exactly on all fours with the facts of the case at judgment debtor."
bar.
Rather, SC finds the immediate release of
On the contrary, the uncontroverted statements in the funds by the petitioners on the strength of
the deposition of the petitioner Henares that he had the notice of garnishment and writ of execution,
previously sought the advice of the bank's counsel and whose issuance, absent any patent defect, enjoys
that he had checked twice with the Acting Provincial the presumption of regularity, sufficiently
Sheriff who had informed him of the absence of any
supported by Sec. 41, Rule 39 of the Rules of
restraining order, belie any allegation of undue and
indecent haste in the release of the said deposit in Court which reads:
question.
xxx xxx xxx

After an execution against property has


Section 8, Rule 57 of the Rules of Court
issued, a person indebted to the judgment
provides: debtor, may pay to the officer holding the
Effect of attachment of debts and credits. execution the amount of his debt or so much
All persons having in their possession or under thereof as may be necessary to satisfy the
their control any credits or other similar execution, and the officer's receipt shall be a
personal property belonging to the party sufficient discharge for the amount so paid or
against whom attachment is issued, or owing directed to be credited by the judgment
any debts to the same, at the time of service creditor on the execution.
upon them of a copy of the order of
attachment and notice as provided in the last
preceding section, shall be liable to the
applicant of the amount of such credits, debts Finally, SC likewise takes cognizance of the
or other property, until the attachment be subject of the judgment sought to be enforced in the
discharged, or any judgment recovered by him writ of execution in question, namely, laborers'
be satisfied, unless such property be delivered backwages. It believes that the petitioners should
or transferred, or such debts be paid, to the
rather be commended for having acted with urgent
clerk, sheriff or other proper officer of the
court issuing the attachment. dispatch despite attempts by the private respondent,
as with so many scheming employers, to frustrate or
unjustifiably delay the prompt satisfaction of final
judgments which often result in undue prejudice to
Garnishment is considered as a specie of the legitimate claims of labor.
attachment for reaching credits belonging to
the judgment debtor and owing to him from a 2. NO. SC finds no violation whatsoever by the
stranger to the litigation. Under the above- petitioners of Republic Act No. 1405, otherwise
cited rule, the garnishee [the third person] is known as the Secrecy of Bank Deposits Act.
obliged to deliver the credits, etc. to the The Court in China Banking Corporation vs. Ortega
proper officer issuing the writ and "the law had the occasion to dispose of this issue when
exempts from liability the person having in his it stated, thus: It is clear from the discussion
possession or under his control any credits or
of the conference committee report on Senate
other personal property belonging to the
defendant, . . . if such property be delivered or Bill No. 351 and House Bill No. 3977, which
transferred, . later became Republic Act 1405, that the
prohibition against examination of or inquiry
into a bank deposit under Republic Act 1405
. . to the clerk, sheriff, or other officer of the
does not preclude its being garnished to
court in which the action is pending."
insure satisfaction of a judgment. Indeed there
Moreover, there is no issue concerning the is no real inquiry in such a case, and if
indebtedness of the petitioner bank to the private existence of the deposit is disclosed the
respondent since the latter has never denied the disclosure is purely incidental to the execution
existence of its deposit with the former, the said process. It is hard to conceive that it was ever
deposit being considered a credit in favor of the within the intention of Congress to enable
debtors to evade payment of their just debts,
13
even if ordered by the Court, through the bank. Thus, Alexander sought an injunctive writ to
expedient of converting their assets into cash prevent private respondent from withdrawing the
and depositing the same in a bank. money.

Since there is no evidence that the petitioners The RTC granted the writ of preliminary injunction.
themselves divulged the information that the private However, the CA reversed the order holding that
respondent had an account with the petitioner bank Gloria is a co-owner of the funds who could
unilaterally control its application.
and it is undisputed that the said account was
properly the object of the notice of garnishment and Gloria contends that the personal currency deposit she
writ of execution carried out by the deputy sheriff, a is maintaining is exempt from process issued by the
duly authorized officer of the court, we cannot courts pursuant to RA 6426 (Foreign Currency Deposit
therefore hold the petitioners liable under R.A. 1405. Act).

The petitioners are therefore absolved from any ISSUE: WON Anacleto may invoke RA 6426.
liability for the disclosure and release of the private
respondent's deposit to the custody of the deputy RULING: NO.
sheriff in satisfaction of the final judgment for the
laborers' backwages. Private respondent's contentions do not persuade. Her
belated invocation of the provisions of R.A. No. 6426
ALEXANDER VAN TWEST and THE HON. as amended violates basic procedural due process by
SALVADOR P. DE GUZMAN, in his capacity as interposing a new matter before this Court the
Presiding Judge of the Regional Trial Court of consideration of which would further delay a final
Makati, Branch 142, petitioners, vs. THE HON. disposition on the propriety of petitioner of
COURT OF APPEALS and GLORIA ANACLETO, petitioner's application for an injunctive writ.
respondents. G.R. No. 106253 February 10, 1994
FELICIANO, J. On a substantive, the Court holds that the privileges
extended by the statute cited by private respondent
Key Doctrine: Where the foreign currency deposits
are actually enjoyed, and are invocable only, by the
belonged to one of the depositors and were held in
petitioner, both because private respondent's
trust for him by the other depositor who unilaterally
transactions fall outside the ambit of the statute, and
closed the joint account and transferred the funds to
because petitioner is the owner of the foreign
her personal account, the latter cannot invoke the
exchange fund subject of this case. This conclusion is
exemption from court process under RA 6426 because
anchored on the consistent and contemporaneous
she is not the owner of the deposit in the account.
administrative construction by the Central Bank of the
Consequently, the depositor who owned the funds can
basic statute, as manifested in the relevant circulars
have her enjoined from making withdrawals from her
issued by it in implementation of that law, which are
personal account.
entitled to great respect by the courts.
On March 1990, petitioner Alexander Van Twest filed a
complaint against private respondent Gloria Anacleto Section 8 of R.A. No. 6426 (the Foreign Currency
and International Corporate Bank ("Interbank") for Deposit Act), as amended by P.D. No. 1246, are hereby
recovery of a sum of money with prayer for a writ of declared as and considered of an absolutely
preliminary injunction, before Branch 142 of the confidential nature and, except upon the written
Regional Trial Court of Makati, Van Twest alleged that permission of the depositor, in no instance shall such
he and private respondent opened a joint foreign foreign currency deposits be examined, inquired or
currency savings account with Interbank to hold funds looked into by any person, government official, bureau
which "belonged entirely and exclusively" to or office, whether judicial or administrative or
petitioner, to "facilitate the funding of certain business legislative or any other entity whether public or
undertakings" of both of them and which funds were private: Provided, however, that said foreign currency
to be "temporarily (held) in trust" by private shall be exempt from attachment, garnishment, or any
respondent, who "shall turnover the same to plaintiff other order or process of any court, legislative body,
upon demand." government agency or any administrative body
whatsoever.
Petitioner further alleged that withdrawals from the
account were always made through their joint Section one hundred-two of Circular No. 960, Series of
signatures; that when his business relationship with 1983, provides in relevant part:
private respondent turned sour, the latter unilaterally
closed their joint account, withdrew the remaining
balance of Deutschmark (DM) 269,777.37 and placed a. Foreign exchange purchased from authorized
the money in her own personal account with the same agent banks in accordance with existing

14
regulations such as excess travel funds; unspent Key Doctrine: Before an in camera inspection may be
financial assistance of dependents abroad of allowed, there must be a pending case before a court
Philippine residents; foreign exchange acquired of competent jurisdiction. Further, the account must
from any resident persons, firm, association and
be clearly identified, the inspection limited to the
corporation; and transfers to foreign currency
deposit account or receipt from another foreign subject matter of the pending case before the court of
currency deposit account, whether for payment of competent jurisdiction. The bank personnel and the
legitimate obligation or otherwise, are not eligible account holder must be notified to be present during
for deposit under the System. the inspection, and such inspection may cover only the
account identified in the pending case.
xxx xxx xxx
Facts
This Circular was in force at the time private
respondent undertook her questioned transactions; Sometime in May 1998, petitioner Marquez received
thus, such local transfer from the original joint foreign an Order from the Ombudsman Aniano A. Desierto to
currency account to another (personal) foreign produce several bank documents for purposes of
inspection in camera relative to various accounts
currency account, was not an eligible foreign currency
maintained at Union Bank of the Philippines, Julia
deposit within the coverage of R.A. No. 6426 and not
Vargas Branch, where petitioner Marquez is the
entitled to the benefit of the confidentiality provisions
branch manager. The accounts to be inspected are
of R.A. No. 6426. Circular No. 960 was superseded by
involved in a case pending with the Ombudsman
Circular No. 1318, Series of 1992, which did not entitled, Fact-Finding and Intelligence Bureau (FFIB)
reenact and continue the administrative provision v. Amado
above-mentioned (Section 102).

Section forty-nine, Chapter five of the same Circular, Lagdameo, et al. The basis of the Ombudsman in
dealing with the Offshore Banking System, stated in ordering an in camera inspection of the accounts is a
part: trail managers checks purchased by one George
Trivinio, a respondent in OMB-097-0411, pending with
d. "Deposit" shall refer to funds in foreign the office of the Ombudsman. Trivinio, purchased 51
currencies which are accepted and held by an Managers Checks (MCs) for P272.1 Million at Traders
OBU business, with the obligation to return an Royal Bank. Out of the 51 MCs, eleven (11) MCs in the
equivalent amount to the owner thereof, with or amount of P70.6 million, were deposited and credited
without interest;
to an account maintained at the Union Bank, Julia
Vargas Branch.

In other words, although transfers from one foreign Marquez wrote the Ombudsman explaining to
currency deposit account to another foreign currency him that the accounts in question cannot readily be
deposit account in the Philippines are now eligible identified and asked for time to respond to the order.
deposits under the Central Bank's Foreign Currency But the Ombudsman issued an order directing
Deposit System, private respondent is still not entitled
Marquez to produce the bank documents relative to
to the confidentiality provisions of the relevant
circulars. For, as noted earlier, private respondent is accounts in issue. Thereafter, Marquez together with
not the owner of such foreign currency funds and her Union Bank of the Philippines, filed a petition for
personal deposit account is not, under Section 49 of declaratory relief with the RTC Makati City, against
Circular No. 1318, protected by this Circular. the Ombudsman to clear the rights and duties of
Marquez due to the clear conflict between RA
Circular No. 1318 was superseded for a brief period
by Circular No. 1353, Series of 1992, which in turn No.6770, Section 15 and R.A. No. 1405, Sections 2
was superseded by Circular No. 1389, Series of 1993. and 3.
Circular No. 1389 is the current implementing
issuance for R.A. No. 6426; the relevant provisions Marquez received a copy of the motion to cite
(Sections 74 and 49) of Circular No. 1318 have been her for contempt, filed with the Office of the
incorporated en toto in the current Circular. Ombudsman by Agapito B. Rosales, Director, Fact
Finding and Intelligence Bureau (FFIB). However,
LOURDES T. MARQUEZ, in her capacity as
Marquez filed with the Ombudsman an opposition to
Branch Manager, Union Bank of the
Philippines, petitioners, vs. HON. ANIANO A. the motion to cite her in contempt and wanted to be
DESIERTO G.R. No. 135882. June 27, 2001, clarified as to how she would comply with the orders
PARDO, J. without her breaking any law, particularly RA. No.
1405.
15
Issue: with the Sandiganbayan. Clearly, there was no
pending case in court which would warrant the
Whether the order of the Ombudsman to have an in
opening of the bank account for inspection. Zone of
camera inspection of the questioned account is
privacy are recognized and protected in our laws.
allowed as an exception to the law on secrecy of bank
Invasion of privacy is an offense in special laws like
deposits (R.A. No.1405)
the Anti-Wiretapping Law, the Secrecy of Bank
Ruling: Deposits Act, and the Intellectual Property Code.

The order of the Ombudsman to produce for in OFFICE OF THE OMBUDSMAN v. HON.
camera inspection the subject accounts with the Union FRANCISCO B. IBAY, in his capacity as Presiding
Bank of the Philippines, Julia Vargas Branch, is based Judge of the RTC Makati, UNION BANK OF THE
on a pending investigation at the Office of the PHILIPPINES, and LOURDES T. MARQUEZ, in
Ombudsman against Amado Lagdameo, et. al. for her capacity as Branch Manager of UBP Julia
violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to Vargas Branch G. R. No. 137538, September 3,
the Joint Venture Agreement between the Public 2001, QUISUMBING J.
Estates Authority and AMARI. We rule that before an
in camera inspection may be allowed, there must be a KEY DOCTRINE: Before an in camera inspection of
pending case before a court of competent jurisdiction. bank accounts may be allowed, there must be a
Further, the account must be clearly identified, the pending case before a court of competent jurisdiction.
inspection limited to the subject matter of the pending Further, the account must be clearly identified, and
case before the court of competent jurisdiction. The the inspection limited to the subject matter of the
bank personnel and the account holder must be pending case before the court of competent
notified to be present during the inspection, and such jurisdiction. The bank personnel and the account
inspection may cover only the account identified in the holder must be notified to be present during the
pending case. inspection, and such inspection may cover only the
account identified in the pending case. In the present
In Union Bank of the Philippines v. Court of case, since there is no pending litigation yet before a
Appeals, we held that "Section 2 of the Law on court of competent authority, but only an investigation
Secrecy of Bank Deposits, as amended, declares bank by the Ombudsman on the so-called scam, any order
deposits to be "absolutely confidential" except: (1) In for the opening of the bank account for inspection is
an examination made in the course of a special or clearly premature and legally unjustified.
general examination of a bank that is specifically
authorized by the Monetary Board after being Petitioner OMBUDSMAN conducted an
satisfied that there is reasonable ground to believe investigation on the alleged scam on the Public
that a bank fraud or serious irregularity has been or is Estates Authority-Amari Coastal Bay Development
being committed and that it is necessary to look into Corporation. Initial result of the investigation revealed
the deposit to establish such fraud or irregularity, (2) that the alleged anomaly was committed through the
In an examination made by an independent auditor issuance of checks which were subsequently deposited
hired by the bank to conduct its regular audit in several financial institutions.
provided that the examination is for audit purposes
The OMBUDSMAN issued an order directing
only and the results thereof shall be for the exclusive
private respondent Lourdes Marquez, (MARQUEZ)
use of the bank, (3) Upon written permission of the
branch manager of Union Bank of the Philippines
depositor, (4) In cases of impeachment, (5) Upon order
branch at Julia Vargas Avenue, Pasig City, to produce
of a competent court in cases of bribery or dereliction
several bank documents for in camera inspection
of duty of public officials, or (6) In cases where the
relative to three Account Numbers, reportedly
money deposited or invested is the subject matter of
maintained in the said branch.
the litigation".
The documents referred to include bank
In the case at bar, there is yet no pending
account application forms, signature cards,
litigation before any court of competent authority.
transactions history, bank statements, bank ledgers,
What is existing is an investigation by the Office of the
debit and credit memos, deposit and withdrawal slips,
Ombudsman. In short, what the office of the
application for purchase of managers checks, used
ombudsman would wish to do is to fish for additional
managers checks and check microfilms. The
evidence to formally charge Amado Lagdameo, et. al.,
inspection would be done in camera wherein the bank
16
records would be examined without bringing the The bank personnel and the account holder must be
documents outside the bank premises. notified to be present during the inspection, and such
inspection may cover only the account identified in the
In the event of her failure to comply as pending case. In the present case, since there is no
directed, MARQUEZ was ordered to show cause why pending litigation yet before a court of competent
she should not be cited for contempt by the authority, but only an investigation by the
OMBUDSMAN and why she should not be charged for Ombudsman on the so-called scam, any order for the
obstruction. Instead of complying with the order of opening of the bank account for inspection is clearly
OMBUDSMAN, private respondent MARQUEZ filed a premature and legally unjustified.
petition for declaratory relief with an application for
temporary restraining order and/or preliminary CHINA BANKING CORPORATION vs THE
injunction before the RTC Makati City, presided by HONORABLE COURT OF APPEALS and JOSE
respondent Judge Francisco Ibay. JOSEPH GOTIANUY as substituted by
ELIZABETH GOTIANUY LO G.R. No. 140687 |
December 18, 2006 | CHICO-NAZARIO, J.
In her petition, private respondent averred
that under Sections 2 and 3 of R.A. 1405 (Law on In the case of Intengan v. Court of Appeals, it was
Secrecy of Bank Deposits), she had the legal held that the only exception to the secrecy of foreign
obligation not to divulge any information relative to all currency deposits is in the case of a written
permission of the depositor.
deposits of whatever nature with banks in the
Philippines. But the Ombudsmans Order cited Section Facts: A Complaint for recovery of sums of money
15 (8) of R.A. 6770 stating that the Ombudsman had and annulment of sales of real properties and shares
the power to examine and have access to bank of stock was filed by Jose Joseph Gotianuy against his
son-in-law, George Dee, and his daughter, Mary
accounts and records. MARQUEZ, therefore, sought a
Margaret Dee, before the RTC of Cebu City.
definite ruling and/or guidelines as regards her rights
as well as Ombudsmans power to inspect bank Jose Gotianuy accused his daughter Mary Margaret
deposits under the cited provisions of law. Dee of stealing, among his other properties, US dollar
deposits with Citibank N.A. amounting to not less than
ISSUE: Whether or not an order for the opening of the P35,000,000.00 and US$864,000.00. Mary Margaret
bank account for inspection is legally justified Dee received these amounts from Citibank N.A.
through checks which she allegedly deposited at
RULING: NO China Bank. He likewise accused his son-in-law,
George Dee, husband of his daughter, Mary Margaret,
In this case, the controversy concerns the of transferring his real properties and shares of stock
in George Dees name without any consideration. Jose
extent of the power of petitioner to examine bank
Gotianuy, died during the pendency of the case before
accounts under Section 15 (8) of R.A. 6770 vis--vis the the trial court. He was substituted by his daughter,
duty of banks under Republic Act 1405 not to divulge Elizabeth Gotianuy Lo. The latter presented the US
any information relative to deposits of whatever Dollar checks withdrawn by Mary Margaret Dee from
nature. his US dollar placement with Citibank wherein it could
be gleaned that both Margaret Dee and Jose Gotianuy
Circumstances considered, we hold that public are named as co-payees.
respondent (Judge Ibay) has jurisdiction to take Upon motion of Elizabeth Gotianuy Lo, the trial court
cognizance of the petition for declaratory relief. issued a subpoena to Cristota Labios and Isabel Yap,
employees of China Bank, to testify on the case.
In any event, the relief being sought by private
respondent MARQUEZ in her action for declaratory China Bank moved for a reconsideration. Resolving
relief before the RTC of Makati City has been squarely the motion, the trial court issued an ordre allowing the
said witnesses to testify but only in so far as to
addressed by our decision in Marquez vs. Desierto.
disclose the name the said foreign currency fund is
deposited which is not violative of the law.
In that case, we ruled that before an in camera
inspection of bank accounts may be allowed, there China Bank appealed before the CA, but CA affirmed
must be a pending case before a court of competent RTC.
jurisdiction. Further, the account must be clearly
identified, and the inspection limited to the subject ISSUE: Whether or not petitioner China Bank is
correct in its submission that the Citibank dollar
matter of the pending case before the court of checks with both Jose Gotianuy and/or Mary Margaret
competent jurisdiction. Dee as payees, deposited with China Bank, may not be
looked into under the law on secrecy of foreign
17
currency deposits. As a corollary issue, sought to be under R.A. No. 1405 must be premised on the fact
resolved is whether Jose Gotianuy may be considered that the money deposited in the account is itself the
a depositor who is entitled to seek an inquiry over the subject of the action.
said deposits.
Facts: An Information for qualified theft was filed
RULING: NO, China Bank is not correct. The law against respondent Sally Go (wife of Ricardo
provides that all foreign currency deposits authorized Bangayan), the companys cashier on the strength of
under RA No. 6426, as amended by Sec. 8, PD No. the complaint filed by BSB Group as represented by
1246, PD No. 1035, as well as foreign currency
Ricardo Bangayan alleging that several checks
deposits authorized under PD No. 1034 are considered
absolutely confidential in nature and may not be representing the total amount of P1,534,135.50 issued
inquired into. There is only one exception to the by the companys customers in payment of their
secrecy of foreign currency deposits, that is, obligation were, instead of being turned over to the
disclosure is allowed upon the written permission companys coffers, indorsed by respondent who
of the depositor. deposited the same to her personal banking account
maintained at Security Bank in Divisoria, Manila
It must be remembered that the Citibank checks that Branch.
were deposited to China Bank named Jose Gotianuy
and Margaret Dee as co- payees, therefore as held by During the course of the trial, on the premise that
CA and affirmed by the Supreme Court, Jose Gotianuy
respondent had allegedly encashed the subject checks
is considered as a co-depositor. On that basis, no
written consent from Mary Margaret Dee is and deposited the corresponding amounts thereof to
necessitated. her personal banking account, the prosecution moved
for the issuance of subpoena duces tecum /ad
A depositor, in cases of bank deposits, is one who pays testificandum against the respective managers or
money into the bank in the usual course of business, records custodians of Security Banks Divisoria
to be placed to his credit and subject to his check or
Branch, as well as of the Asian Savings Bank (now
the beneficiary of the funds held by the bank as
trustee. Metrobank), in Jose Abad Santos, Tondo, Manila
Branch. The trial court granted the motion and issued
Since the late Jose Gotianuy is a co-depositor of the the corresponding subpoena.
CBC account, then his request for the assailed
subpoena is tantamount to an express permission of a Respondent filed a motion to quash the subpoena
depositor for the disclosure of the name of the account addressed to Metrobank averring that there was no
holder. mention of the said bank in the complaint-affidavit
filed and is therefore irrelevant. There was however
Also, it is worth to note that in this case, there is no no mention made as to the irrelevancy of the Security
issue as to the source of the funds. Mary Margaret Bank account.
Dee declared the source to be Jose Gotianuy. There is
likewise no dispute that these funds in the form of Petitioner opposed the motion to quash arguing that
Citibank US dollar Checks are now deposited with Metrobank is relevant because there were two checks
China Bank. which was deposited in an account with the said bank.

As the owner of the funds unlawfully taken and which To this, respondent filed a supplemental motion to
are undisputably now deposited with China Bank, Jose quash, invoking the absolutely confidential nature of
Gotianuy has the right to inquire into the said the Metrobank account under the provisions of R.A.
deposits. No. 1405. The trial court did not sustain respondent;
hence, it denied the motion to quash for lack of merit.
BSB GROUP, INC., represented by its President,
Mr. RICARDO BANGAYAN vs SALLY GO a.k.a. Meanwhile, the prosecution was able to present in
SALLY GO-BANGAYAN G.R. No. 168644 | February court the testimony of Elenita Marasigan, the
16, 2010 | PERALTA, J. representative of Security Bank. She mainly testified
on how Sally Go was able to run away with the checks,
R.A. No. 1405 has two allied purposes. It hopes to endorse the same and credit the corresponding
discourage private hoarding and at the same time amounts to her personal deposit account with Security
encourage the people to deposit their money in Bank.
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic Before Marasigans testimony could be completed,
development. respondent filed a Motion to Suppress, seeking the
exclusion of Marasigans testimony and accompanying
What indeed constitutes the subject matter in documents thus far received,bearing on the subject
litigation in relation to Sec. 2 of R.A. No. 1405 has Security Bank account. This time respondent invokes,
been pointedly and amply addressed in Union Bank of in addition to irrelevancy, the privilege of
the Philippines v. Court of Appeals, in which the Court confidentiality under R.A. No. 1405.
noted that the inquiry into bank deposits allowable

18
The trial court denied the motion. On appeal, CA In this case, it can hardly be inferred from the
reversed RTCs decision. indictment itself that the Security Bank account is the
ostensible subject of the prosecutions inquiry. Without
On appeal to Supreme Court, petitioner argues that needlessly expanding the scope of what is plainly
the said evidence had a direct relation to the subject alleged in the Information, the subject matter of the
matter of the case for qualified theft and, hence, action in this case is the money amounting to
brings the case under one of the exceptions to the P1,534,135.50 alleged to have been stolen by
coverage of confidentiality under R.A. 1405. respondent, and not the money equivalent of the
Respondent on the other hand, maintains that the checks which are sought to be admitted in
money represented by the Security Bank account was evidence. Thus, it is that, which the prosecution is
neither relevant nor material to the case, because bound to prove with its evidence, and no other.
nothing in the criminal information suggested that the
Rizal Commercial Banking Corporation, petitioner,
money therein deposited was the subject matter of the
vs. Hi-Tri Development Corporation and Luz R.
case. More in point, respondent opined that admitting
Bakunawa, respondents. G.R. No. 192413||June 13,
the testimony of Marasigan, as well as the evidence 2012||SERENO, J.
pertaining to the Security Bank account, would violate
the secrecy rule under R.A. No. 1405. In case the bank complies with the provisions of the
law and the unclaimed balances are eventually
ISSUE: Whether or not the testimony of Marasigan escheated to the Republic, the bank shall not
and the accompanying documents are violative of the thereafter be liable to any person for the same.
absolutely confidential nature of bank deposits and,
hence, excluded by operation of R.A. No. 1405.
However, when the managers check was never
RULING: YES, the subject pieces of evidence are negotiated or presented for payment to the bank, the
inadmissible. procurer of the check retained ownership of the funds;
hence, proper notice should have been given to the
R.A. No. 1405 has two allied purposes. It hopes to latter for compliance with the law.
discourage private hoarding and at the same time
encourage the people to deposit their money in FACTS:
banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic
development. Owing to this piece of legislation, the Spouses Bakunawa are owners of 6 parcels of
confidentiality of bank deposits remains to be a basic land which Teresita Millan offered to buy for P 6.7M
state policy in the Philippines. Section 2 of the law with the promise that she will clear whatever
institutionalized this policy by characterizing as obstacles there may be to effect the sale. The spouses
absolutely confidential in general all deposits of gave to Millan their TCTs and in turn, Millan made a
whatever nature with banks and other financial down payment (DP) of P1,019,514.29 . Millan however
institutions in the country. The absolute confidentiality was not able to clear said obstacles and as a result,
rule in R.A. No. 1405 actually aims at protection from the Spouses rescinded the sale and offered to return
unwarranted inquiry or investigation if the purpose of to Millan her DP. Since Millan refused to accept back
such inquiry or investigation is merely to determine the DP, the spouses in 1991, through their company
the existence and nature, as well as the amount of the Hi-Tri took a Managers Check from RCBC in the
deposit in any given bank account. The absolute amount of P1,019,514.29 made payable to Millans
confidentiality is, however, subject to certain company Rosmil Realty and used this as one of their
exceptions provided by law. basis for a case against Millan which they filed to
recover their TCTs.
In taking exclusion from the coverage of the
confidentiality rule, petitioner in the instant case In 2003, during the pendency of the
posits that the account maintained by respondent with abovementioned case and without the knowledge of
the spouses, RCBC reported the P1,019,514.29-credit
Security Bank contains the proceeds of the checks
existing in favor of Rosmil to the Bureau of Treasury
that she has fraudulently appropriated to herself and,
as among its "unclaimed balances". Subsequently in
thus, falls under one of the exceptions in Section
2006, the Republic filed for Escheat.
2 of R.A. No. 1405 that the money kept in said
account is the subject matter in litigation. In April 2008, the spouses were able to settle
amicably their dispute with Rosmil. They intended
What indeed constitutes the subject matter in
RCBC Managers Check to cover part of the
litigation in relation to Section 2 of R.A. No. 1405 as
settlement, only to find out that the said amount was
pointed out in Union Bank of the Philippines v. Court
already subject of the escheat proceedings. A month
of Appeals, in which the Court noted that the inquiry
thereafter, RTC declared such amount escheated to
into bank deposits allowable under R.A. No. 1405 must
the Republic. The CA upon appeal reversed the RTCs
be premised on the fact that the money deposited in
the account is itself the subject of the action. decision and ruled that the banks failure to notify
respondents to intervene in the escheat proceedings

19
and to present evidence to substantiate their claim is proceedings. It should be emphasized that escheat is
violation of right to due process. not a proceeding to penalize depositors for failing to
deposit to or withdraw from their accounts but rather
ISSUE: a proceeding whereby the State compels the
surrender to it of unclaimed deposit balances. It is not
the intent of the law to force depositors into
WON the allocated funds represented by the
unnecessary litigation and defense of their rights, as
Managers Check may be escheated in favor of the
the State is only interested in escheating balances that
Republic
have been abandoned and left without an owner.
RULING:
DOA ADELA EXPORT INTERNATIONAL, INC.,
NO. The funds allocated for the payment of Petitioner, vs. TRADE AND INVESTMENT
the Managers Check must be excluded from the DEVELOPMENT CORPORATION (TIDCORP), AND
escheat proceedings. THE BANK OF THE PHILIPPINE ISLANDS (BPI),
Respondents. G.R. No. 201931||February 11, 2015||
Act No. 3936, as amended, outlines the proper
procedure to be followed by in filing a sworn VILLARAMA, JR., J.:
statement with the Treasurer concerning dormant
accounts and their escheat. Accordingly, banks and A stipulation in the Joint Motion to Approve
other similar institutions are under obligation to Compromise Agreement that petitioner waives its
communicate with owners of dormant accounts before right to confidentiality of its bank deposits requires
filing a sworn statement. The purpose of this initial the both the written consent of the depositor and
notice is for a bank to determine whether an inactive conformity of its receiver.
account has indeed been unclaimed, abandoned,
forgotten, or left without an owner. Should it fail to FACTS:
comply with the legally outlined procedure to the
prejudice of the depositor, the bank shall be liable to Petitioner Doa Adela Export International,
any person for the same. Inc. filed a Petition for Voluntary Insolvency.
Thereafter, RTC issued an order declaring petitioner
RCBC contends that there is no need to send as insolvent and staying all civil proceedings against it
prior notice to the spouses since they are no longer and appointing Atty. Arlene Gonzales as receiver who
owners of the unclaimed balance because the funds later on filed a motion for parties to enter into Dacion
represented by the Managers Check were deemed En Pago by Compromise Agreement. Several creditors
transferred to the credit of the payee upon issuance of of Doa Adela including TIDCORP and BPI
the check. The proper party then entitled to the subsequently filed a Joint Motion to Approve
notices was the payee Rosmil and not the spouses. Agreement which contained the following provision
among others:
This contention is erroneous. The mere
issuance of a managers check does not ipso facto 5. WAIVER OF CONFIDENTIALITY. The
work as an automatic transfer of funds to the account petitioner and the members of its Board of
of the payee. In case the procurer of the managers or Directors shall waive all rights to
cashiers check retains custody of the instrument, confidentiality provided under the
does not tender it to the intended payee or fails to provisions of Republic Act No. 1405, as
make an effective delivery, there exist an undelivered amended, otherwise known as the Law on
instrument. Secrecy of Bank Deposits, and Republic
Act No. 8791, otherwise known as The
In the present case, it is undisputed that there General Banking Law of 2000.
was no effective delivery of the check, rendering the
instrument incomplete. Presentment of the check to In 2011, RTC approved the Agreement. Doa
the bank for payment did not occur. An order to debit Adela sought partial reconsideration assailing the
the account of Hi-Tri was never made. In fact, RCBC waiver of confidentiality provision in the BPI-TIDCORP
confirms that the Managers Check was never Joint Motion to Approve Agreement. According to it,
negotiated or presented for payment to its Ermita R.A. No. 1405 requires the express and written
Branch, and that the allocated fund is still held by the consent of the depositor to make the waiver effective.
bank. As a result, the assigned fund is deemed to This was denied by RTC on the ground of estoppel
remain part of the account of Hi-Tri which procured holding that Doa Adela s silence or acquiescence is
the Managers Check. In addition thereto, RCBC does tantamount to an admission that binds it to the
not dispute the fact that the spouses retained custody compromise agreement especially the waiver of
of the instrument. confidentiality of bank deposits. Hence, the petition to
the Supreme Court.
As it is obvious from the foregoing acts that
the spouses have not abandoned their claim over the ISSUE:
fund, the allocated deposit subject of the Managers
Check should then be excluded from the escheat

20
WON the Doa Adela is bound by the waiver of plaintiff pay 6% interest on the difference between the
confidentiality provision in the BPI-TIDCORP total sum actually garnished and the sum actually
obtained in the final judgment.
Joint Motion to Approve Agreement.
FACTS:
RULING:
In 1959, the CFI Manila in a civil case decreed
NO. The waiver of confidentiality in the Joint a contract of lease between plaintiff Lourdes de la
Motion to Approve Agreement lacks the required Rama and Villarosa rescinded and ordered the latter
written consent of petitioner and conformity of the and his surety, Luzon Surety Co. to pay de la Rama a
receiver, thus petitioner is not bound by the said total amount of P71,533.99. Pursuant to a writ of
provision. execution, the sheriff garnished the deposit of Luzon
Surety with the Philippine Trust Co. for
R.A. No. 1405 or the Law on Secrecy of Bank abovementioned amount.
Deposits provides for exceptions when records of
deposits may be disclosed. One of which is where In the meantime and on July 1958, Luzon
there is a written permission of the depositor. Surety Co. perfected an appeal. Before the
garnishment could be complied with by the garnishee
In this case, the Joint Motion to Approve (Philippine Trust), Luzon Surety filed a petition for
Agreement was executed by BPI and TIDCORP only. certiorari with preliminary injunction with the CA. The
There was no written consent given by petitioner or its injunction was then granted and by virtue of such, the
representative that it is waiving the confidentiality of garnishee did not deliver to the sheriff any portion of
its bank deposits. The provision on the waiver of the the amount garnished and de la Rama never received
confidentiality of petitioners bank deposits was any amount either in full or partial satisfaction of the
merely inserted in the agreement. It is clear therefore original judgment of the trial court then under
that petitioner is not bound by the said provision since execution.
it was without the express consent of petitioner who
was not a party and signatory to the said agreement. In 1960, the CA acting on the appeal issued
decision ordering Luzon Surety to pay De la Rama the
Neither can petitioner be deemed to have sum of P33,002.72 plus legal sheriffs fee (total of
given its permission by failure to interpose its P31,535.57)
objection during the proceedings. It is an elementary
rule that a waiver must not only be voluntary, but must Thereafter, Luzon Surety invoking section 5
have been made knowingly and intelligently. Mere Rule 39 of Rules of Court, filed with the lower court a
silence on the part of the holder of the right should verified motion for the restitution of the difference
not be construed as a surrender thereof. between the total sum actually garnished (P71,533.99)
and the sum actually obtain in the final judgment
In addition, the provision on the waiver of the (P31,535.57) and demand that de la Rama pay interest
confidentiality requires the approval and conformity of thereon at the rate of 6% per annum.
Atty. Gonzales as receiver since all the properties of
the petitioner have been assigned and conveyed to De la Rama opposed the motion, alleging that
her. In this case there is no showing that Atty. by virtue of preliminary injunction issued by the CA,
Gonzales signified her conformity to such waiver. the sheriff was never able to collect from the
Philippine Trust Company any portion of the amount
Consistent with the doctrine of relativity of garnished, and so section 5 of Rule 39, invoked has no
contracts, a judgment based entirely on a compromise application, there being no property belonging to the
agreement is binding only on the parties to the defendant company which has been delivered to the
compromise the court approved, and not upon the sheriff on the plaintiff and which has to be restituted.
parties who did not take part in the compromise
agreement. On August 6, 1960, the lower court denied the
motion of the Luzon Surety. It likewise issued a writ of
E. Garnishment of Deposits, including Foreign execution directing the sheriff to enforce the judgment
Deposits of the CA on the sum of P33,002.72 out of a total of
P71,533.99 then under garnishment and in the
LOURDES DE LA RAMA, plaintiff-appellee, vs. possession of the Philippine Trust Co.
AUGUSTO R. VILLAROSA, ET AL., defendants,
ISSUE: WON an interest on the difference between
LUZON SURETY COMPANY, INC., defendant-
the total sum garnished and the sum actually obtain in
appellant. G.R. No. L-17927||June 29, 1963|| the final judgment be awarded to Luzon Surety.
LABRADOR, J.:
RULING:
Where an amount of P71,533.99 of the bank deposits
of the defendant was garnished, but only the sum of NO. There are various reasons why the
P31,535.57 was paid to the sheriff on execution of petition for interest on the balance of the amount
judgment, the defendant cannot demand that the

21
garnished cannot be awarded to the defendant- G.R. No. 84526. January 28, 1991, J. Sarmiento,
appellant. Jr., Second Division
In the first place, the total sum garnished was The prohibition against examination of or inquiry into
not actually taken possession of by the sheriff because a bank deposit under Republic Act 1405 does not
the order for the execution of the judgment of the preclude its being garnished to insure satisfaction of a
lower court was suspended in time by the appeal and judgment. Indeed there is no real inquiry in such a
the preliminary injunction issue on appeal. As a matter case, and if existence of the deposit is disclosed the
of fact, it was only on August 6, 1960 that the plaintiff- disclosure is purely incidental to the execution
appellee was able to secure a full satisfaction of the process. It is hard to conceive that it was ever within
judgment. the intention of Congress to enable debtors to evade
In the second place, the mere garnishment of payment of their just debts, even if ordered by the
funds belonging to the party upon order of the court Court, through the expedient of converting their
does not have the effect of delivering the money assets into cash and depositing the same in a bank.
garnished to the sheriff or to the party in whose favor
FACTS: A group of laborers obtained a favorable
the attachment is issued. The fund is retained by the
judgment with the NLRC for the payment of
garnishee or the person holding the money for the
backwages amounting to P205,853.00 against
defendant.
Marinduque Mining and Industrial Corporation
(MMIC).
The garnishee, or one in whose hands
property is attached or garnished, is NLRC issued a writ of execution directing the Deputy
universally regarded as charged with its Sheriff of Negros Occidental, one Damian Rojas, to
legal custody pending the outcome of the enforce the aforementioned judgment. Deputy sheriff
attachment of garnishment, unless, by went to the mining site of the MMIC and served the
local statute and practice, he is permitted writ of execution on the persons concerned, but
to surrender or pay the garnished property nothing seemed to have happened thereat.
or funds into court, to the attaching
officer, or to a receiver or trustee Thereafter, the Sheriff prepared on his own a Notice of
appointed to receive them. Garnishment dated April 29, 1976 addressed to six (6)
The effect of the garnishment, therefore, was banks, all located in Bacolod City, one of which being
to require the Philippine Trust Company, holder of the PCIB, directing the bank concerned to immediately
funds of the Luzon Surety Co., to set aside said issue a check in the name of the Deputy Provincial
amount from the funds of the Luzon Surety Co. and Sheriff of Negros Occidental in an amount equivalent
keep the same subject to the final orders of the Court. to the amount of the garnishment and that proper
In the case, there was never an order to deliver the receipt would be issued therefor.
full amount garnished to the plaintiff-appellee; all that
was ordered to be delivered after the judgment had Incidentally, the house lawyer of the MMIC, Atty.
become final was the amount found by the Court of Rexes V. Alejano, acting on a tip regarding the
Appeals to be due. The balance of the amount existence of the said notice of garnishment,
garnished, therefore, remained all the time in the communicated with the bank manager, Jose Henares,
possession of the bank as part of the funds of the verbally at first at around 2:00 o'clock in the afternoon
Luzon Surety Co., although the same could not be of that day, April 29, 1976, and later confirmed in a
disposed of by the owner. formal letter received by the Henares at about 5:00
o'clock of that same day, requesting the withholding of
In the third place, the motion by the any release of the deposit of MMIC with the PCIB.
defendant-appellant for the payment of damages or
interest was presented when the judgment had Meanwhile, at about 9:30 in the morning of April 29,
already become final. Damages incident to the 1976, the deputy sheriff presented the Notice of
issuance of an attachment may only be claimed before Garnishment and the Writ of Execution to the Henares
final judgment and later in the afternoon, demanded from the latter,
under pain of contempt, the release of the deposit of
Lastly, there was an absence of any allegation MMIC.
to the effect that the garnishment of appellant's funds
in the Philippine Trust Company caused actual Henares upon knowing from the Acting Provincial
damages to defendant-appellant, (e.g. that the funds Sheriff that there was no restraining order from the
could not be utilized to pay a pending obligation as a NLRC and on the favorable advice of the bank's legal
result of which interest was paid on such obligation). counsel, issued a debit memo for the full balance of
MMICs account with PCIB. Thereafter, he issued a
PHILIPPINE COMMERCIAL & INDUSTRIAL manager's check in the name of the Deputy Provincial
BANK VS. COURT OF APPEALS Sheriff of Negros Occidental for the amount of

22
P37,466.18, which was the exact balance of MMICs reason for the rule is self evident. To expose
account as of that day. garnishees to risks for obeying court orders and
processes would only undermine the
On the following day, April 30, 1976, at about 1:00 administration of justice.
o'clock in the afternoon, the deputy sheriff returned to
the bank in order to encash the check but before the The immediate release of the funds by the petitioners
actual encashment, Henares once again inquired on the strength of the notice of garnishment and writ
about any existing restraining order from the NLRC of execution, whose issuance, absent any patent
and upon being told that there was none, the latter defect, enjoys the presumption of regularity.
allowed the said encashment.
The prohibition against examination of or inquiry into
MMIC filed a complaint before the RTC against PCIB
a bank deposit under Republic Act 1405 does not
and the Sheriff, alleging that the former's current
preclude its being garnished to insure satisfaction of a
deposit with the PCIB was levied upon, garnished, and
judgment. PCIB are therefore absolved from any
with undue haste unlawfully allowed to be withdrawn,
liability for the disclosure and release of the MMICs
and notwithstanding the alleged unauthorized
deposit to the custody of the deputy sheriff in
disclosure of the said current deposit and unlawful
satisfaction of the final judgment for the laborers'
release thereof, the latter have failed and refused to
backwages.
restore the amount of P37,466.18 to the former's
account despite repeated demands. SALVACION VS. CENTRAL BANK OF THE
ISSUE: Whether or not PCIB is liable for releasing PHILIPPINES G.R. No. 94723. August 21, 1997, J.
MMICs funds on the strength of the notice of Torres, Jr., En Banc
garnishment made by the deputy sheriff pursuant to a
writ of execution issued by the NLRC. If we rule that the questioned Section 113 of Central
Bank Circular No. 960 which exempts from
RULING: NO. PCIB is not liable for releasing MMICs attachment, garnishment, or any other order or
funds on the strength of the notice of garnishment process of any court, legislative body, government
made by the deputy sheriff pursuant to a writ of agency or any administrative body whatsoever, is
execution issued by the NLRC. applicable to a foreign transient, injustice would
result especially to a citizen aggrieved by a foreign
There is no evidence that PCIB themselves divulged guest
the information that MMIC had an account with the
PCIB and it is undisputed that the said account was FACTS: In February 4, 1989, Karen Salvacion, then 12
properly the object of the notice of garnishment and years old, was at the Plaza Fair Makati Cinema Square
writ of execution carried out by the deputy sheriff, a with a friend when Greg Bartelli y Northcott, an
duly authorized officer of the court. American tourist, approached her and introduced
himself as a Math teacher. He told her that he has a
Garnishment is considered as a specie of attachment sister who is a nurse in New York who has a daughter
for reaching credits belonging to the judgment debtor who is about Karen's age staying with him in his house
and owing to him from a stranger to the litigation. The along Kalayaan Avenue. The American asked Karen
garnishee [the third person] is obliged to deliver the what was her favorite subject and she told him it's
credits, etc. to the proper officer issuing the writ and Pilipino. He then invited her to go with him to his
"the law exempts from liability the person having in house where she could teach Pilipino to his niece. He
his possession or under his control any credits or even gave her a stuffed toy to persuade her to teach
other personal property belonging to the defendant, . . his niece.
. if such property be delivered or transferred, . . . to
the clerk, sheriff, or other officer of the court in Upon reaching his apartment, Greg Bartelli led Karen
which the action is pending." upstairs. Upon entering the bedroom, Greg locked the
door and proceeded to tie up and undress Karen. Greg
The cases more in point to the present controversy are committed several acts of rape on the child over the
the recent decisions in Engineering Construction Inc. period of four days. Greg raped Karen once on
v. National Power Corporation and Rizal Commercial February 4, and three times each day on February 5,
Banking Corporation (RCBC) vs. De Castro where the 6, and 7. During this time, she was kept locked in the
Court absolved both garnishees, MERALCO and bedroom and merely fed with biscuit and coke.
RCBC, respectively, from any liability for their prompt
compliance in the release of garnished funds, On the fourth day of her ordeal (Feb 7), Karen was
able to alert the attention of some neighbors by calling
Applying the case of at bar, MERALCO, as garnishee, for help through the bathroom window. Policemen
after having been judicially compelled to pay the arrived and Karen was rescued.
amount of the judgment represented by funds in its
possession belonging to the judgment debtor or NPC, Greg Bartelli was arrested and detained at the Makati
should be released from all responsibilities over such Municipal Jail. The policemen recovered from Bartelli
amount after delivery thereof to the sheriff. The the following items: (a) Dollar Check for US 3,903.20

23
(b) COCOBANK Bank Book (Peso Acct.) (c) Dollar The provisions of Section 113 of CB Circular No. 960
Account with China Banking Corp (d) a Teddy Bear and PD No. 1246, insofar as it amends Section 8 of
used in seducing Karen, and some other personal R.A. No. 6426 are held to be inapplicable to the
items. present case because of its peculiar circumstances.
China Banking Corp. was ordered to comply with the
Informations were filed against Greg Bartelli charging writ of execution and to release to petitioners the
him with Serious Illegal Detention and four (4) counts dollar deposit of Greg Bartelli y Northcott in such
of Rape. On February 24, 1989, the day there was a amount as would satisfy the judgment.
scheduled hearing for Bartelli's petition for bail, the
latter escaped from jail. In fine, the application of the law depends on the
extent of its justice. Eventually, if we rule that the
Meanwhile, petitioners also filed with the RTC a civil questioned Section 113 of Central Bank Circular No.
suit for damages with preliminary attachment against 960 which exempts from attachment, garnishment, or
Greg Bartelli. A Writ of Preliminary Attachment was any other order or process of any court. Legislative
granted and issued by the trial court. The Deputy body, government agency or any administrative body
Sheriff served a Notice of Garnishment on China whatsoever, is applicable to a foreign transient,
Banking Corporation. injustice would result especially to a citizen aggrieved
by a foreign guest like accused Greg Bartelli. This
China Banking Corp. invoked the secrecy of bank would negate Article 10 of the New Civil Code which
deposits under Republic Act No. 1405. The bank also provides that in case of doubt in the interpretation or
invoked Section 113 of Central Bank Circular No. 960 application of laws, it is presumed that the lawmaking
to the effect that the dollar deposits (of Greg Bartelli) body intended right and justice to prevail. Simply
are exempt from attachment, garnishment, or any stated, when the statute is silent or ambiguous, this is
other order or process of any court, legislative body, one of those fundamental solutions that would respond
government agency or any administrative body, to the vehement urge of conscience.
whatsoever.
It would be unthinkable, that the questioned Section
When petitioners made an inquiry with the Central 113 of Central Bank No. 960 would be used as a
Bank regarding the application of Section 113 of CB device by accused Greg Bartelli for wrongdoing, and
Circular No. 960, the Central Bank replied that the in so doing, acquitting the guilty at the expense of the
provision is absolute in application and admits of no innocent.
exception.
NOTE: As to the issue of whether the Supreme Court
Petitioners thereafter filed a petition for declaratory may entertain the petition for declaratory relief
relief directly with the Supreme Court. despite the fact that original jurisdiction thereof rests
with the lower court, the Supreme Court held that it
ISSUE: Should Section 113 of CB Circular No. 960 has no original and exclusive jurisdiction over a
and Section 8 of R.A. 6426, as amended by P.D. 1246, petition for declaratory relief. However, exceptions to
otherwise known as the Foreign Currency Deposit Act, this rule have been recognized. Thus, where the
be made applicable to a foreign transient? petition has far-reaching implications and raises
questions that should be resolved, it may be treated as
RULING: No. The Offshore Banking System and the one for mandamus.
Foreign Currency Deposit System were designed to
draw deposits from foreign lenders and investors and, GOVERNMENT SERVICE INSURANCE SYSTEM v.
subsequently, to give the latter protection. THE HONORABLE 15th DIVISION OF THE
COURT OF APPEALS and INDUSTRIAL BANK OF
KOREA, TONG YANG MERCHANT BANK,
However, the foreign currency deposit made by a HANAREUM BANKING CORP., LAND BANK OF
transient or a tourist is not the kind of deposit THE PHILIPPINES, WESTMONT BANK and
encouraged by PD Nos. 1034 and 1035 and given DOMSAT HOLDINGS, INC., G.R. No. 189206,
incentives and protection by said laws because
June 8, 2011, FIRST DIVISION, PEREZ, J.
such depositor stays only for a few days in the
country and, therefore, will maintain his deposit Applying Section 8 of Republic Act No. 6426,
in the bank only for a short time. absent the written permission from Domsat, Westmont
Considering that Bartelli is just a tourist or a Bank cannot be legally compelled to disclose the bank
transient, he is not entitled to the protection of deposits of Domsat, otherwise, it might expose itself
Section 113 of Central Bank Circular No. 960 and PD to criminal liability under the same act.
No. 1246 against attachment, garnishment or other
FACTS:
court processes.
Banks agreed to lend United States (U.S.) $11
Million to Domsat for the purpose of financing the
lease and/or purchase of a Gorizon Satellite from the
24
International Organization of Space Communications Can Westmont bank be legally compelled to
(Intersputnik). The controversy originated from a disclose the account of Domsat in favor of
surety agreement by which Domsat obtained a surety GSIS?
bond from GSIS to secure the payment of the loan
from the Banks. We quote the terms of the Surety RULING: NO.
Bond in its entirety. When Domsat failed to pay the
These two laws both support the confidentiality of
loan, GSIS refused to comply with its obligation
bank deposits. There is no conflict between them.
reasoning that Domsat did not use the loan proceeds
Republic Act No. 1405 was enacted for the purpose of
for the payment of rental for the satellite. GSIS
giving encouragement to the people to deposit their
alleged that Domsat, with Westmont Bank as the
money in banking institutions and to discourage
conduit, transferred the U.S. $11 Million loan
private hoarding so that the same may be properly
proceeds from the Industrial Bank of Korea to Citibank
utilized by banks in authorized loans to assist in the
New York account of Westmont Bank and from there
economic development of the country. It covers all
to the Binondo Branch of Westmont Bank. The Banks
bank deposits in the Philippines and no distinction was
filed a complaint before the RTC of Makati against
made between domestic and foreign deposits. Thus,
Domsat and GSIS. The RTC issued a subpoena decus
Republic Act No. 1405 is considered a law of general
tecum. A motion to quash was filed by the banks on
application. On the other hand, Republic Act No. 6426
three grounds: 1) the subpoena is unreasonable,
was intended to encourage deposits from foreign
oppressive and does not establish the relevance of the
lenders and investors. It is a special law designed
documents sought; 2) request for the documents will
especially for foreign currency deposits in the
violate the Law on Secrecy of Bank Deposits; and 3)
Philippines. A general law does not nullify a specific or
GSIS failed to advance the reasonable cost of
special law. Generalia specialibus non derogant.
production of the documents. Domsat also joined the
Therefore, it is beyond cavil that Republic Act No.
banks' motion to quash through its
6426 applies in this case. Intengan v. Court of Appeals
Manifestation/Comment. The RTC issued an Order
affirmed the above-cited principle and categorically
denying the motion to quash for lack of merit. RTC
declared that for foreign currency deposits, such as
denied MR. Second MR was granted.
U.S. dollar deposits, the applicable law is Republic Act
Undaunted, petitioner now argues that No. 6426. In said case, Citibank filed an action against
paragraph 2, Section 27 of CB Circular 1389 is its officers for persuading their clients to transfer
applicable because Domsat's $11,000,000.00 loan their dollar deposits to competitor banks. Bank
from respondent banks was intended to be paid to a records, including dollar deposits of petitioners,
foreign supplier Intersputnik and, therefore, should purporting to establish the deception practiced by the
have been paid directly to Intersputnik and not officers, were annexed to the complaint. Petitioners
deposited into Westmont Bank. The fact that it was now complained that Citibank violated Republic Act
deposited to the local bank Westmont Bank, petitioner No. 1405. This Court ruled that since the accounts in
claims violates the circular and makes the deposit lose question are U.S. dollar deposits, the applicable law
its confidentiality status under R.A. 6426. However, a therefore is not Republic Act No. 1405 but Republic
reading of the entire Section 27 of CB Circular 1389 Act No. 6426.
reveals that the portion quoted by the petitioner refers
only to the procedure/conditions of drawdown for The above pronouncement was reiterated in
service of debts using foreign exchange. The above- China Banking Corporation v. Court of Appeals, where
said provision relied upon by the petitioner does not in respondent accused his daughter of stealing his dollar
any manner prescribe the conditions before any deposits with Citibank. The latter allegedly received
foreign currency deposit can be entitled to the the checks from Citibank and deposited them to her
confidentiality provisions of R.A. 6426. Court of account in China Bank. The subject checks were
Appeals held that Domsat's deposit with Westmont presented in evidence. A subpoena was issued to
Bank cannot be examined. GSIS invokes Republic Act employees of China Bank to testify on these checks.
No. 1405 to justify the issuance of the subpoena while China Bank argued that the Citibank dollar checks
the banks cite Republic Act No. 6426 to oppose it. The with both respondent and/or her daughter as payees,
core issue is which of the two laws should apply in the deposited with China Bank, may not be looked into
instant case. under the law on secrecy of foreign currency deposits.
This Court highlighted the exception to the non-
ISSUE:
disclosure of foreign currency deposits, i.e., in the
case of a written permission of the depositor, and
ruled that respondent, as owner of the funds

25
unlawfully taken and which are undisputably now The basis for the application of subpoena is to
deposited with China Bank, he has the right to inquire prove that the loan intended for Domsat by the Banks
into the said deposits. Applying Section 8 of Republic and guaranteed by GSIS, was diverted to a purpose
Act No. 6426, absent the written permission from other than that stated in the surety bond. The Banks,
Domsat, Westmont Bank cannot be legally compelled however, argue that GSIS is in fact liable to them for
to disclose the bank deposits of Domsat, otherwise, it the proper applications of the loan proceeds and not
might expose itself to criminal liability under the same vice-versa. We are however not prepared to rule on
act. the merits of this case lest we pre-empt the findings of
the lower courts on the matter.

26