Law on Secrecy of Bank Deposits (RA 1405) LAW ON SECRECY OF BANK DEPOSITS 1. De la Rama v. Villarosa, 8 SCRA 413 (1963) 2.

PNB v. Gancayco, 15 SCRA 91 (1965);

Comia, A.T

Filipino Saving and Mortgage Bank v. Purisima, 161 SCRA 576 (1988) 3. RCBC v. De Castro, 168 SCRA 49 (1988) 4. Mellon Bank, N.A. v. Magsino, 190 SCRA 633 (1990) 5. PCIB v. Court of Appeals, 193 SCRA 452 (1991) 6. Van Twest v. Court of Appeals, 230 SCRA 42 (1994) 7. Onate v. Abrogar, 241 SCRA 659 (1995) 8. Salvacion v. Central Bank, 278 SCRA 27 (1997) 9. Union Bank of the Philippines v. CA, 321 SCRA 563 (1999) 10. Marquez v. Desierto, 359 SCRA 772 (2001); Office of the Ombudsman v. Ibay, 364 SCRA 281 (2001) 11. Intengan v. Court of Appeals, 377 SCRA 63 (2002) 12. Republic of the Philippines v. Cabrini, Green and Ross, 489 SCRA 644 (2006) 13. Ejercito v. Sandiganbayan, 509 SCRA 190 (2006) 14. China Bank Corporation v. Court of Appeals, 511 SCRA 110 (2006) 15. Republic v. Eugenio, 545 SCRA 384 (2008)

Page 1 of 21

Law on Secrecy of Bank Deposits (RA 1405) LAW ON SECRECY OF BANK DEPOSITS 1. De la Rama v. Villarosa, 8 SCRA 413 (1963) FACTS:

Comia, A.T

-Lourdes de la Rama brought an action in the Court of first Instance of Negros Occidental against lessee Augusto R. Villarosa and the latter's surety, the Luzon Surety Co., Inc. for judicial confirmation of the cancellation, rescission and annulment of a contract of lease of sugarland, and the payment of the unpaid balance of the rental for the 195354 sugarcane crop year, the rental for the 1954-55 crop year, rental and partly the reasonable value for the use and occupation of the leased premises for the 1955-56 crop year, with stipulated attorney's fees, and interests, etc. -The court rendered a partial summary judgment decreeing the lease rescinded, cancelled and ordering defendant Augusto R. Villarosa to surrender and deliver to De la Rama or her representatives the possession of the leased premises, etc. -Luzon Surety appealed. -Upon Motion of De La Rama, the Lower Court issued an order for the issuance of writ of execution. -Accordingly, the sheriff garnished the deposit of Luson Surety with the Philippine Trust Company to the amount of P71,533.99. -Only the sum of P31,535.57 was paid to the sheriff. -CA modified the decision of the Trial Court with respect to the amount. -Luzon Surety thereafter invoked the provisions of Sec. 5 of Rule 39, of the Rules of Court and demanded that an interest of 6% should be paid on the difference between the sum actually garnished and the sum obtained in the final judgment. -Motion was denied. Hence, this appeal. HELD: -The mere garnishment of funds belonging to the party upon order of the court does not have the effect of delivering the money garnished to the sheriff or to the party in whose favor the attachment is issued. The fund is retained by the garnishee or the person holding the money for the defendant.

Page 2 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-The garnishee, or one in whose hands property is attached or garnished, is universally regarded as charged with its legal custody pending the outcome of the attachment of garnishment, unless, by local statute and practice, he is permitted to surrender or pay the garnished property or funds into court, to the attaching officer, or to a receiver or trustee appointed to receive them. -The effect of the garnishment, therefore, was to require the Philippine Trust Company, holder of the funds of the Luzon Surety Co., to set aside said amount from the funds of the Luzon Surety Co. and keep the same subject to the final orders of the Court. In the case at bar there was never in order to deliver the full amount garnished to the plaintiff-appellee; all that was ordered to be delivered after the judgment had become final was the amount found by the Court of Appeals to be due. The balance of the amount garnished, therefore, remained all the time in the possession of the bank as part of the funds of the Luzon Surety Co., although the same could not be disposed of by the owner.

2. PNB v. Gancayco, 15 SCRA 91 (1965); Filipino Saving and Mortgage Bank v. Purisima, 161 SCRA 576 (1988) FACTS: -Ernesto Jimenez was the former administrator of the Agricultural Credit and Cooperative Administration (ACCA). -He was investigated for unexplained wealth. -The special prosecutors of DOJ Emilio Gancayco and Florentino Flor required Philippine National Bank to produce at a hearing the records of the bank deposits of Jimenez. -PNB declined to reveal its records invoking RA 1405. -On the other hand, the special prosecutors demanded anew that Eduardo Romualdez, as bank president, produce the records or he would be prosecuted for contempt citing the Anti-Graft and Corrupt Practices Act (3019). - Because of the threat of prosecution, plaintiffs filed an action for declaratory judgment -. After trial, during which Senator Arturo M. Tolentino, author of the Anti-Graft and Corrupt Practices Act testified, the court rendered judgment, sustaining the power of the defendants to compel the disclosure of bank accounts of ACCFA Administrator Jimenez. The court said that, by enacting section 8 of, the Anti-Graft and Corrupt Practices Act, Congress clearly intended to provide an additional ground for the examination of bank deposits. Without such provision, the court added prosecutors would be hampered if not altogether frustrated in the prosecution of those charged with having acquired unexplained wealth while in public office.
Page 3 of 21

Law on Secrecy of Bank Deposits (RA 1405) -PNB appealed the decision. ISSUE:

Comia, A.T

-Whether or not a bank can be compelled to disclosed the records of accounts of a depositor who is under investigation for unexplained wealth. HELD: - While Republic Act No. 1405 provides that bank deposits are "absolutely confidential ... and [therefore] may not be examined, inquired or looked into," except in those cases enumerated therein, the Anti-Graft Law directs in mandatory terms that bank deposits "shall be taken into consideration in the enforcement of this section, notwithstanding any provision of law to the contrary." The only conclusion possible is that section 8 of the Anti-Graft Law is intended to amend section 2 of Republic Act No. 1405 by providing additional exception to the rule against the disclosure of bank deposits. - With regard to the claim that disclosure would be contrary to the policy making bank deposits confidential, it is enough to point out that while section 2 of Republic Act 1405 declares bank deposits to be "absolutely confidential," it nevertheless allows such disclosure in the following instances: (1) Upon written permission of the depositor; (2) In cases of impeachment; (3) Upon order of a competent court in cases of bribery or dereliction of duty of public officials; (4) In cases where the money deposited is the subject matter of the litigation. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to the other. This policy express the motion that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.

3. RCBC v. De Castro, 168 SCRA 49 (1988) FACTS: -In an action for recovery of unpaid tobacco deliveries, Phil. Virginia Tobacco Administration was ordered to pay BADOC Planters Inc. within 48 hours. -Upon Motion of BADOC, a writ of execution was issued. -Accordingly, Special sheriff Faustino Rigor issued a notice of garnishment addressed to the Gen. Manager and/or cahier of Rizal Banking Corporation. -Upon receipt of such notice RCBC duly informed PVTA thereof, to enable the latter to take the necessary steps for its protection.
Page 4 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-On the very next day, however, RCBC was served with the order requiring it to deliver in check the amount garnished to the designated sheriff and sheriff in turn, to cash the check and deliver the amount to judgement creditor. -RCBC complied and delivered a certified check. -PVTA filed a motion for reconsideration -BADOC failed to appear on the scheduled dates of hearing. -The case was dismissed for failure to prosecute and BADOC and RCBC were ordered to jointly and severally restore the account of PVTA with RCBC. -Only RCBC filed a petition for review of the order of CFI. ISSUE: - Whether or not the bank should be held solidarily liable with the judgment creditor for reimbursement of the garnished funds delivered to the sheriff who in turn delivered it to the judgment creditor in compliance with acourt order. HELD: -There was nothing irregular in the delivery of the funds of PVTA by check to the sheriff, whose custody is equivalent to the custody of the court, he being a court officer. The order of the court was composed of two parts, requiring: 1) RCBC to deliver in check the amount garnished to the designated sheriff and 2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record. It must be noted that in delivering the garnished amount in check to the sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a check does not produce the effect of payment until it has been cashed. [Article 1249, Civil Code.] -Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering its depositor's funds pursuant to a court order which was merely in the exercise of its power of control over such funds.

Page 5 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

... The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under the sole control of such court - It may be concluded that the charge of breach of trust and/or dereliction of duty as well as lack of prudence in effecting the immediate payment of the garnished amount is totally unfounded. Upon receipt of the Notice of Garnishment, RCBC duly informed PVTA thereof to enable the latter to take the necessary steps for its protection. However, right on the very next day after its receipt of such notice, RCBC was already served with the Order requiring delivery of the garnished amount. Confronted as it was with a mandatory directive, disobedience to which exposed it to a contempt order, it had no choice but to comply.

4. Mellon Bank, N.A. v. Magsino, 190 SCRA 633 (1990) FACTS: - Dolores Ventosa requested the transfer of $1,000 from the First National Bank of Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the Prudential Bank. Accordingly, the First National Bank requested the petitioner, Mellon Bank, to effect the transfer. -Unfortunately the wire sent by Mellon Bank to Manufacturers Hanover Bank, a correspondent of Prudential Bank, indicated the amount transferred as "US$1,000,000.00" instead of US$1,000.00. Hence Manufacturers Hanover Bank transferred one million dollars less bank charges of $6.30 to the Prudential Bank for the account of Victoria Javier. -Javier opened a new dollar account in the Prudential Bank and deposited $999,943.70. Immediately, Victoria Javier and her husband, Melchor Javier, Jr., made withdrawals from the account, deposited them in several banks only to withdraw them later in an apparent plan to conceal, "launder" and dissipate the erroneously sent amount. -Formal demands of Mellon Bank and Manufacturers Hanover Bank, through Prudential Bank proved futile. -Hence Mellon Bank filed a complaint praying that that the Javiers and each of them who used a portion of said funds be declared as holders of the property in trust for it and later be compelled to transfer legal title and possession. -During trial, Mellon Bank sought to introduce testimonies which revealed in formation on the bank account of various persons whom it believed were responsible for the acquisitions to aid and abet Javiers in dissipating the funds. -The admission of the testimonies were objected to on the ground that it violates RA 1405.
Page 6 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-Initially the Lower Court conditionally allowed the testimonies. -Said testimonies were moved to be stricken off. -The motion was granted. -Motion for Reconsideration was denied, hence Mellon bank filed the instant petition. HELD: -Republic Act No. 1405 on the secrecy of bank deposits, Section 2 of said law allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation. Inasmuch as Civil is aimed at recovering the amount converted by the Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to whatever is concealed by being held or recorded in the name of persons other than the one responsible for the illegal acquisition

5. PCIB v. Court of Appeals, 193 SCRA 452 (1991) FACTS:

- The instant case originated from an action filed with the National Labor Relations Commission (NLRC) by a group of laborers who obtained therefrom a favorable judgment for the payment of against the Marinduque Minings and Industrial Corporations. -To enforce the judgment, Commission issued a writ of execution directing the Deputy Sheriff of Negros Occidental, one Damian Rojas, to enforce the aforementioned judgment. Accordingly, the deputy sheriff went to the mining site of the Marinduque Minings and Industrial Corporations and served the writ of execution on the persons concerned, but nothing seemed to have happened thereat. -Thereafter, the Sheriff prepared on his own a Notice of Garnishment addressed to six (6) banks, all located in Bacolod City, one of which being the petitioner herein, directing the bank concerned to immediately issue a check in the name of the Deputy Provincial Sheriff of Negros Occidental in an amount equivalent to the amount of the garnishment and that proper receipt would be issued therefor. -Incidentally, the house lawyer of the Marinduque Minings and Industrial Corporations, Atty. Rexes V. Alejano, acting on a tip regarding the existence of the said notice of garnishment, communicated with the bank manager, the
Page 7 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

petitioner Jose Henares, verbally at first at around 2:00 o'clock in the afternoon of that day, and later confirmed in a formal letter received by Henares at about 5:00 o'clock of that same day, requesting the withholding of any release of the deposit of the private respondent with the petitioner bank. -Meanwhile, at about 9:30 in the morning the deputy sheriff presented the Notice of Garnishment and the Writ of Execution attached therewith to Henares and later in the afternoon, demanded from the latter, under pain of contempt, the release of the deposit of the Marinduque Minings and Industrial Corporations. -Henares, upon knowing from the Acting Provincial Sheriff that there was no restraining order from the National Labor Relations Commission and on the favorable advice of the bank's legal counsel, issued a debit memo for the full balance of the private respondent's account with the petitioner bank. Thereafter, he issued a manager's check in the name of the Deputy Provincial Sheriff of Negros Occidental for the amount of P37,466.18, which was the exact balance of the private respondent's account as of that day. -On the following day, at about 1:00 o'clock in the afternoon, the deputy sheriff returned to the bank in order to encash the check but before the actual encashment, the Henares once again inquired about any existing restraining order from the NLRC and upon being told that there was none, the latter allowed the said encashment. -Marinduque Minings and Industrial Corporations filed a against the petitioners and Damian Rojas, the Deputy Provincial Sheriff of Negros Occidental, then defendants, alleging that the former's current deposit with the petitioner bank was levied upon, garnished, and with undue haste unlawfully allowed to be withdrawn, and notwithstanding the alleged unauthorized disclosure of the said current deposit and unlawful release thereof, the latter have failed and refused to restore the amount of P37,466.18 to the former's account despite repeated demands. -TC affirmed by CA, rendered judgment in favor of Marinduque Mining. ISSUE: -Whether or not a bank is liable for releasing its depositor's funds on the strength of the notice of garnishment made by the deputy sheriff pursuant to a writ of execution issued by the National Labor Relations Commission (NLRC). HELD: -The prohibition against examination or inquiry into a bank deposit under RA 1405 does not preclude its being garnished to ensure satisfaction of a judgment since the disclosure is purely incidental to the execution process and it was not the intention of the legislature to place bank deposits beyond the reach of judgment creditor.

6. Van Twest v. Court of Appeals, 230 SCRA 42 (1994)
Page 8 of 21

Law on Secrecy of Bank Deposits (RA 1405) FACTS:

Comia, A.T

-Alexander Van Twest and Gloria Anacleto opened a joint foreign currency savings account with Interbank to hold funds which "belonged entirely and exclusively" to Van Twest, to "facilitate the funding of certain business undertakings" of both of them and which funds were to be "temporarily (held) in trust" by Gloria Anacleto, who "shall turnover the same to plaintiff upon demand." -Van Twest further alleged that withdrawals from the account were always made through their joint signatures; that when his business relationship with Gloria Anacleto turned sour, the latter unilaterally closed their joint account, withdrew the remaining balance of and placed the money in her own personal account with the same bank. -Van Twest thus sought an injunctive writ to prevent Gloria Anacleto from withdrawing the money at any time and thereby defeat Van Twest's main and pending action. -The RTC granted the writ of preliminary injunction. -CA reversed the order holding that Anacleto is a co-owner of the funds who could unilaterally control the application thereof. -Hence, petition for review seeking the reinstatement of writ of preliminary injunction. -Anacleto contends for the first time that the personal currency deposit she is maintaining is exempt from process issued by courts pursuant to RA 6426. ISSUE: -Whether or not Anacleto may invoke RA 6426. HELD: - Anacleto’s contentions do not persuade. Her belated invocation of the provisions of R.A. No. 6426 as amended violates basic procedural due process by interposing a new matter before this Court the consideration of which would further delay a final disposition on the propriety of petitioner of petitioner's application for an injunctive writ. -On a substantive, the Court holds that the privileges extended by the statute cited by private respondent are actually enjoyed, and are invocable only, by the petitioner, both because private respondent's transactions fall outside the ambit of the statute, and because petitioner is the owner of the foreign exchange fund subject of this case. This conclusion is anchored on the consistent and contemporaneous administrative construction by the Central Bank of the basic statute, as manifested in the relevant circulars issued by it in implementation of that law, which are entitled to great respect by the courts.

Page 9 of 21

Law on Secrecy of Bank Deposits (RA 1405) 7. Onate v. Abrogar, 241 SCRA 659 (1995) FACTS:

Comia, A.T

- Oñate offered to sell to Sunlife Assurance Company of Canada treasury bills at a discounted price. -Sunlife paid the price by means of a check payable to Brunner Development Corporation. -Brunner issued to it receipt with the undertaking to deliver the treasury bills to Sunlife. -However, Brunner delivered instead promissory note in which it was made to appear that the transaction was a money placement instead of sale of treasury bills. -Hence, Sunlife sued Oñate, Econ and Brunner for the delivery of the treasury bills. -During trial, the judge ordered the examination of the books of accounts and ledgers of Brunner at the Urban Bank and the records of account of Oñate at BPI, even orderedPNB to produce the records regarding certain checks deposited in it. -The court orders were based on the allegations of Sunlife that the money paid by it to Brunner was subsequently withdrawn from Urban Bank after it had been deposited by Brunner and then transferred to Oñate’s account in the BPI and to the unnamed account in the PNB. -These orders were contended by Oñate as a fishing expedition which the trial court should not have allowed. ISSUE: -Whether or not the examination of the bank account in this case is prohibited by RA 1405. HELD: -The examination of the bank account in which the money paid by an insurance company for treasury bills was deposited is prohibited by RA 1405 even if the insurance company sued the seller of the treasury bills for failure to deliver the treasury bills, for the money is not subject matter of the litigation. -Whether the transaction is considered a sale or money placement does not make the money the “subject matter” of litigation within the meaning of Sec.2 of RA 1405 which prohibits the disclosure or inquiry into bank deposits except “in cases where the money deposited or interested is the subject matter of litigation” nor will it matter whether the money was swindled as Sunlife contends.
Page 10 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-However, since the attachment of the properties was invalid, the examination ordered with such attachment must also be considered invalid. 8. Salvacion v. Central Bank, 278 SCRA 27 (1997) FACTS: -Greg Bartelli, an American tourist coaxed and lured Karen Salvacion, 12 years old to go with him to his apartment and raped her there for several times. -However, Bartelli was able to escape from jail and avoid punishment. -The criminal cases were archived pending the arrest of Bartelli. -On the other hand, Karen received a favorable judgment in the civil case for damage -After the decision of the trial court become final, Karen tried to execute on Bartelli’s dollar account with China Banking Corporation. -Accordingly, the sheriff served a Notice of Garnishment on China Banking. -China Banking invoked Section 113 of CB Circular 960 to the effect that the dollar deposits of Bartelli are exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. -Upon inquiry with CB on whether Sec 113 of CB Circular 960 has any exception, CB responded that the provision is ABSOLUTE, the purpose being to encourage dollar accounts within the country’s banking system which would help in the development of the economy and that there is no intention to render futile the basic rights of a person, but it is the law though the law maybe harsh as some perceive it. Compliance is still enjoined. -Hence, this petition for declaratory relief. ISSUE: -Whether or not the peculiar circumstances of the case warrants the execution on the foreign currency account despite the exemption from court processes under RA 6426. HELD: -The provisions of Sec 113 of CB circular 960 and PD 1246, in so far as it amends Section 8 of RA 6426 are inapplicable to this case because of its peculiar circumstances. CBC is required to comply with the writ of execution and release to Karen the dollar deposit of Bartelli in such amount would satisfy the judgment.
Page 11 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-Provisions of The application of the law depend on the extent of its justice.

Eventually, if we rule that the

questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any court. Legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that “in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. “Ninguno non deue enriquecerse tortizerzmente con damo de otro.” Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience. -It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country’s economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the inquitous effects producing outright injustice and inequality such as as the case before us. -It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent. -Call it what it may – but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime? This situation calls for fairness against legal tyranny.

9. Union Bank of the Philippines v. CA, 321 SCRA 563 (1999)

FACTS: - A check in the amount of One Million Pesos (P1,000,000.00) was drawn against Account No. 0111-01854-8 with Allied Bank payable to the order of one Jose Ch. Alvarez. The payee deposited the check with Union Bank who credited the P1,000,000.00 to the account of Mr. Alvarez. -Union Bank sent the check for clearing through the Philippine Clearing House Corporation (PCHC). When the check was presented for payment, a clearing discrepancy was committed by Union Bank’s clearing staff when the amount of One Million Pesos (P1,000,000.00) was erroneously “under-encoded” to One Thousand Pesos (P1,000.00) only. -Union Bank only discovered the under-encoding almost a year later. -Thus, Union Bank Notified Allied Bank of the discrepancy by way of a charge slip for Nine Hundred Ninety-Nine Thousand Pesos (P999,000.00) for automatic debiting against the account of Allied Bank.
Page 12 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-The latter, however, refused to accept the charge slip “since [the] transaction was completed per your [Union Bank’s] original instruction and client’s account is now insufficiently funded.” -Subsequently, Union Bank filed a complaint against Allied Bank before the PCHC Arbitration Committee (Arbicom), alleging that Allied Bank should have informed it of the under coding pursuant to the Section 25 of PCHC handbook which states that: “The receiving bank should inform the erring bank about the under coding of the amount not later than 10 am of the following clearing day.” -The judgment on the arbitration case was held in abeyance pending the resolution of the petition filed by Union Bank. -RTC, affirmed by CA dismissed the petition holding that case of Union Bank does not fall under any of the exceptions to warrant a disclosure of or inquiry into the ledger/books of account in dispute. -CA held that the case was not one where the money deposited is the subject matter of the litigation, particularly nowhere in Union Bank’s complaint does it mention of the amount it seeks to recover from the Account itself, but seeks of P999,000 only as an incident of its alleged opportunity losses and interest as a result of its own employee’s admitted error in encoding the check. -Hence, this petition. ISSUE: -Whether or not the case at bar falls under the last exeption. HELD: -A collecting bank which sued the drawee bank to recover the deficiency between the amount credited to the account of the depositor and the amount obtained from the drawee bank because the latter had erroneously undercoded the amount of the check it presented for clearing from P1M to P1,000 is not entitled to examine the account of the drawer of the check, because the money in the account of the drawer is not the subject matter of the litigation. The collecting bank was only fishing for information so it could determine the culpability of the drawee bank and the amounts of damages it could recover from the latter. It does not seek the recovery of the very money contained in the deposit. The subject matter of the dispute may be the amount of P999,000 that the ollecting bank seeks from the drawee bank as a result of the latter’s alleged failure to inform the former of the discrepancy ; but it is not the P999,000 deposited in the drawer’s account. By the terms of RA 1405, the “money deposited” itself should be the subject matter of the litigation. 10. Marquez v. Desierto, 359 SCRA 772 (2001); Office of the Ombudsman v. Ibay, 364 SCRA 281 (2001) FACTS:
Page 13 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

- Marquez received an Order from the Ombudsman Aniano A. Desierto, to produce several bank documents for purposes of inspection in camera relative to various accounts maintained at Union Bank of the Philippines, Julia Vargas Branch, where Marquez is the branch manager. The accounts to be inspected are involved in a case pending with the Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al. -Marquez failed to comply with the order due to the fact that the bank could not identify the account since the checks were issued in cash or bearer. -OMB found the explanation unacceptable and warned Marquez that her failure to comply would subject her in pain of contempt and prosecution for obstruction. -Instead of complying, Marquez together with Union Bank filed a petition for declaratory relief seeking a definite ruling as regards her rights under RA 1405 and the power of OMB to inspect bank deposit under Sec. 15 RA6770 -Prayer for TRO was denied by TC. -OMB moved to dismiss but was denied. ISSUE: -Whether or not the order of the OMB to have an in camera inspection of the questioned account pending investigation at its office is allowed as an exception to the law on secrecy of bank deposits. HELD: -Before an in camera inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case. In Union Bank of the Philippines v. Court of Appeals, we held that “Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be “absolutely confidential” except: (1) In an examination made in the course of a special or general examination of a bank that is specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the deposit to establish such fraud or irregularity, (2) In an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank, (3) Upon written permission of the depositor,
Page 14 of 21

Law on Secrecy of Bank Deposits (RA 1405) (4) In cases of impeachment,

Comia, A.T

(5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or (6) In cases where the money deposited or invested is the subject matter of the litigation In the case at bar, there is yet no pending litigation before any court of competent authority. What is existing is an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly, there was no pending case in court which would warrant the opening of the bank account for inspection.

11. Intengan v. Court of Appeals, 377 SCRA 63 (2002) FACTS: -Citibank filed a complaint for violation of section 31 in relation to section 144 of the Corporation Code against two (2) of its officers, Dante L. Santos and Marilou Genuino for allegedly managing and causing existing bank clients/depositors to divert their money from Citibank to products offered by other companies that were commanding higher rate of yields. -This was done by transferring bank clients monies to Torrance Development Corporation and Global Pacific Corporation, two companies in which they have financial interests, who in turn placed the monies of the bank clients in securities, shares of stock and other certificates. -Out of these transactions, they both derived substantial financial gains. -When these anomalous/ highly irregular activities were discovered Citibank filed a complaint for violation of Sec. 31 of the Corporation Code against Santos and Genuino. -Documents were presented to substantiate the case, which included documents pertaining to US dollar deposits of Intengan, Neri and Brawner. -As an incident thereto, Intengan et al., filed their respective motions for the exclusion and physical withdrawal of their bank records that were attached. -Thereafter the Provincial Prosecutor directed the filing of information against Officers of Citibank for violation of RA 1405. -On appeal, DOJ secretary ordered the withdrawal of the informations. -Appellate court sustained DOJ
Page 15 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-Hence, this petition. HELD: -A case for violation of Republic Act No. 6426 should have been the proper case brought against private respondents. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners’ dollar deposits without the latter’s written permission. It does not matter if that such disclosure was necessary to establish Citibank’s case against Dante L. Santos and Marilou Genuino. Lim’s act of disclosing details of petitioners’ bank records regarding their foreign currency deposits, with the authority of Reyes, would appear to belong to that species of criminal acts punishable by special laws, called malum prohibitum. -Ordinarily, the dismissal of the instant petition would have been without prejudice to the filing of the proper charges against private respondents. The matter would have ended here were it not for the intervention of time, specifically the lapse thereof. So as not to unduly prolong the settlement of the case, we are constrained to rule on a material issue even though it was not raised by the parties. We refer to the issue of prescription. -The filing of the complaint or information in the case at bar for alleged violation of Republic Act No. 1405 did not have the effect of tolling the prescriptive period. For it is the filing of the complaint or information corresponding to the correct offense which produces that effect. -It may well be argued that the foregoing disquisition would leave petitioners with no remedy in law. We point out, however, that the confidentiality of foreign currency deposits mandated by Republic Act No. 6426, as amended by Presidential Decree No. 1246, came into effect as far back as 1977. Hence, ignorance thereof cannot be pretended. On one hand, the existence of laws is a matter of mandatory judicial notice; on the other, ignorantia legis non excusat. Even during the pendency of this appeal, nothing prevented the petitioners from filing a complaint charging the correct offense against private respondents. This was not done, as everyone involved was content to submit the case on the basis of an alleged violation of Republic Act No. 1405 (Bank Secrecy Law), however, incorrectly invoked 12. Republic of the Philippines v. Cabrini, Green and Ross, 489 SCRA 644 (2006) FACTS: -In the exercise of its power under Sec. 10 of RA 9160, the Anti-money Laundering Council (AMLC) issued freeze orders against various bank accounts. -The frozen bank accounts were previously found prima facie to be related to the unlawful activities of respondents. -Under RA 9160, a freeze order issued by AMLC is effective for a period not exceeding 15 days unless extended “upon order of the court”.

Page 16 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-Accordingly, before the lapse of the period of effectivity of its freeze orders, the AMLC filed with the CA petitions for extension of effectivity of its freeze orders. -The AMLC invoked the jurisdiction of the CA in the belief that the power given to the CA to issue temporary restraining order (TRO) or writ of injunction carried with it the power to extend the effectivity of a freeze order. -However, CA disagreed with AMLC and dismissed the petitions, ruling that it was not vested by RA. 9160 with the power to extend freeze order issued by AMLC. ISSUE: -Which Court has jurisdiction to extend the effectivity of a freeze order? HELD: -The amendment of RA 9194 by RA 9160 erased any doubt on the jurisdiction of the CA over extension of Freeze orders. -As the law now stands, it is solely the CA which has the authority to issue a freeze order as well as extend its effectivity. -It also has the exclusive jurisdiction to extend existing freeze orders previously issued by the AMLC vis-à-vis accounts and deposits related to money laundering activities.

13. Ejercito v. Sandiganbayan, 509 SCRA 190 (2006) FACTS: -[In the case of Pp. v. Estrada] Special Prosecution Panel (composed of the Ombudsman, the Special Prosecutor, Deputy Special Prosecutor, Asst. Ombudsman, Special Prosecution III and SP II), filed before Sandiganbayan a request for the issuance of subpoena duces tecum directing the president of Export and Industry Bank (EIB) or his/her representative to produce documents relating to the acts therein specified. -The Special Prosecution Panel likewise requested for issuance of Subpoena Duces Tecum / Ad testificandum directed to the authorized representative of Equitable-PCI Bank to produce statements of accounts in the name of Jose Velarde and testify thereon. -Estrada, claiming to have learned from the media that the Special Prosecution Panel had requested for the issuance of subpoenas the examination of bank accounts belonging to him, attended the hearing of the case and
Page 17 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

filed before the Sandiganbayan a letter of opposition and requested that he be given time to retain the services of a lawyer and prayed that the issuance of the subpoena be held in abeyance for at least 10 days to enable him to take appropriate legal steps. -In open court, Associate Justice Sandoval of Sandiganbayan advised Estrada that his remedy was to file a motion to quash, for which he was given up to 12nn the following day. -Estrada unassisted by counsel filed a motion to quash claiming that his bank accounts are covered by RA 1405 and do not fall under any of the exceptions stated therein. -Other requests for issuance of Subpoena’s were filed, and thus issued, hence, motion to quash was filed by Estrada but was denied by Sandiganbayan. Sandiganbayan further denied Motion for reconsideration. ISSUES:

1. Whether or not Estrada’s Account is covered by the term “deposit” as used in RA 1405.
2. Whether or not Estrada’s Trust and Savings accounts are excepted from the protection of RA 1405. HELD: -An examination of RA 1405 shows that the term “deposits” used therein is to be understood broadly and not limited to accounts which give rise to a creditor-debtor relationship between the depositor and the bank. If the money deposited under an account may be used by banks for authorized loans to third persons, then such account, regardless of whether it creates a creditor-debtor relationship between the depositor and the bank falls under the category of accounts which the law precisely seeks to protect. The phrase “of whatever nature” proscribes any restrictive interpretation of deposits. RA 1405 applies not only to money which are invested, such as those placed in a trust account. -These accounts are no longer protected by the Secrecy of Bank Deposits Law, there being two exceptions applicable in this case namely: (1) the examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials, and (2) the money deposited or invested is the subject matter of the litigation. Exception 1 applies since the plunder case pending against former President Estrada is analogous to bribery or dereliction of duty, while exception 2 applies because the money deposited in Estrada’s bank accounts is said to form part of the subject matter of the same plunder case.

14. China Bank Corporation v. Court of Appeals, 511 SCRA 110 (2006)

Page 18 of 21

Law on Secrecy of Bank Deposits (RA 1405) FACTS:

Comia, A.T

- Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar deposits with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00. Mary Margaret Dee received these amounts from Citibank N.A. through checks which she allegedly deposited at China Banking Corporation (China Bank). He likewise accused his son-in-law, George Dee, husband of his daughter, Mary Margaret, of transferring his real properties and shares of stock in George Dee’s name without any consideration. Jose Gotianuy, died during the pendency of the case before the trial court. He was substituted by his daughter, Elizabeth Gotianuy Lo. The latter presented the US Dollar checks withdrawn by Mary Margaret Dee from his US dollar placement with Citibank. -Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to Cristota Labios and Isabel Yap, employees of China Bank, to testify on the case. -China Bank opposed. TC: -The disclosure is only as to the name or whose name the said fund is deposited is not violative of the law CA: -Affirmed TC. The law protects only the deposit itself but not the name of depositor. CB’s Contention: -Jose Gotianuy is not the owner of the questioned foreign currency deposit, thus, he cannot invoke the aid of the court in compelling the disclosure of someone else’s foreign currency deposit. ISSUE: -Whether or not Jose Gotianuy as co –payee of a foreign currency depositor in checks deposited in the account of Mary Margaret Dee is a depositor. HELD: -The law provides that all foreign currency deposits authorized under Republic Act No. 6426, as amended by Sec. 8, Presidential Decree No. 1246, Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034 are considered absolutely confidential in nature and may not be inquired into. There
Page 19 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

is only one exception to the secrecy of foreign currency deposits, that is, disclosure is allowed upon the written permission of the depositor. -As the owner of the funds unlawfully taken and which are undisputably now deposited with China Bank, Jose Gotianuy has the right to inquire into the said deposits. -A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course of business, to be placed to his credit and subject to his check or the beneficiary of the funds held by the bank as trustee. -As CA ruled: Furthermore, it is indubitable that the Citibank checks were drawn against the foreign currency account with Citibank, NA. The monies subject of said checks originally came from the late Jose Gotianuy, the owner of the account. Thus, he also has legal rights and interests in the CBC account where said monies were deposited. More importantly, the Citibank checks readily demonstrate that the late Jose Gotianuy is one of the payees of said checks. Being a co-payee thereof, then he or his estate can be considered as a co-depositor of said checks. Ergo, since the late Jose Gotianuy is a co-depositor of the CBC account, then his request for the assailed subpoena is tantamount to an express permission of a depositor for the disclosure of the name of the account holder.

15. Republic v. Eugenio, 545 SCRA 384 (2008) FACTS: -A series of investigation concerning the award of the NAIA 3 contracts to PIATCO were undertaken by the Ombudsman and the compliance and Investigation Staff (CIS) of Anti-Money Laundering Council. -The OSG wrote AMLC requesting the latter’s assistance “in obtaining more evidence to completely reveal the financial trail of corruption surrounding the NAIA 3 Project. -The CIS conducted an intelligence database search on the financial transactions of certain individuals involved in the award, including Pontaleon Alvarez who had been the chairman of the PBAC Technical committee, NAIA 3 Project. -The search revealed that Alvarez maintained 8 bank accounts with 6 different banks.

Page 20 of 21

Law on Secrecy of Bank Deposits (RA 1405)

Comia, A.T

-AMLC issued resolution whereby the council resolved to authorize the executive director of the AMLC “to sign and verify an application to inquire into and/or examine the deposits or investments of Pantaleon Alvarez et al., and their related web of accounts wherever theses may be found and to authorize the AMLC Secretariat “to conduct an inquiry into the subject accounts once the RTC-Makati grants the application to inquire into and/or examine bank accounts of those persons. RTC grants the application. -Pursuant to the order, CIS proceeded to inquire and examine the deposits, investments and related web accounts. -Special Prosecutor of the Ombudsman wrote a letter requesting AMLC to investigate the accounts of Alvarez et al, which AMLC likewise heeded. -Again, AMLC filed an application, this time with RTC Manila, to inquire into and/or examine 13 accounts and 2 related web of accounts allegedly having been used to facilitate corruption in NAIA 3 Project. -Manila RTC issued an order granting Ex-parte the application. -Alvarez filed an Urgent Motion to stay enforcement of the order. -RTC stayed the order but soon after, reinstated the same. HELD: -There is no need for a pre existing or pending case in court for violation of the Anti- Money Laundering Law before a bank inquiry order may be issued by the court. However it does not follow that such order may be availed of exparte. A bank inquiry order, unlike a freeze order can not be issued unless notice is given to the owners of the account, allowing them the opportunity to contest the issuance of such order.

Page 21 of 21

Sign up to vote on this title
UsefulNot useful