REPUBLIC ACT No.

1405
AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO, DEPOSITS WITH ANY BANKING
INSTITUTION AND PROVIDING PENALTY THEREFOR.
Section 1. It is hereby declared to be the policy of the Government to give encouragement to the people to
deposit their money in banking institutions and to discourage private hoarding so that the same may be properly
utilized by banks in authorized loans to assist in the economic development of the country.
Section 2. 1 All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined,
inquired or looked into by any person, government official, bureau or office, except upon written permission of
the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction
of duty of public officials, or in cases where the money deposited or invested is the subject matter of the
litigation.
Section 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person
other than those mentioned in Section two hereof any information concerning said deposits.
Section 4. All Acts or parts of Acts, Special Charters, Executive Orders, Rules and Regulations which are
inconsistent with the provisions of this Act are hereby repealed.
Section 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more than
five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court.
Section 6. This Act shall take effect upon its approval.
Approved: September 9, 1955

Footnote
1

This Section and Section 3 were both amended by PD No. 1792 issued January 16, 1981, PD 1792 was
expressly repealed by Sec 135 of R.A. No. 7653, approved June 14, 1993. The original sections 2 and 3
of R.A. No.1405 are hereby reproduced for reference, as follows; "Sec 2 All deposits of whatever nature
with banks or banking institutions in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered
as of an absolutely confidential nature and may not be examined, inquired or looked into by any person,
government official, bureau or office, except upon written per-mission of the depositor, or in cases of
impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public
officials. or in cases where the money deposited or invested is the subject matter of the litigation," "Sec.
3. It shall be unlawful for any official or employee of a banking institution to disclose to any person
other than those mentioned in Section two hereof any information concerning said deposits."

1

PRESIDENTIAL DECREE No. 1792
AMENDING REPUBLIC ACT NO. 1405
WHEREAS, under existing legal framework, the Central Bank has the authority to examine all records of banks
in the discharge of its responsibilities under the Central Bank Charter;
WHEREAS, the prohibition against inquiry into bank deposits adversely delimits the examining authority of the
Central Bank.
WHEREAS, limited examination powers operate against effective supervision of banks and endangers the
safety of deposits which may affect the public's faith in the banking system.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in
me vested by the Constitution, do hereby decree and make the following part of the law of the land;
Section 1. Section 2 of Republic Act No. 1405 is hereby amended to read as follows:
Section 2. All deposits of whatever nature with banks or banking institutions in the Philippines including
investments in bonds issued by the Government of the Philippines, its political subdivisions and its
instrumentalities, are hereby considered as of an absolutely confidential nature and may not be examined,
inquired or looked into by any person, government official, bureau or office, except when the examination is
made in the course of a special or general examination of a bank and 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,
or when the examination is 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, or upon written permission of the depositor, or in cases of impeachment, or upon order of a competent
court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or
invested is the subject matter of the litigation.
Section 2. Section 3 of the same Act is hereby amended to read as follows:
Section 3. It shall be unlawful for any official or employee of a bank to disclose to any person other than those
mentioned in Section Two hereof, or for an independent auditor hired by a bank to conduct its regular audit to
disclose to any person other than a bank director, official or employee authorized by the bank, any information
concerning said deposits.
Section 3. This Decree shall take effect immediately.
Done in the City of Manila, this 16th day of January, in the year of Our Lord, nineteen hundred and eighty-one

2

[G.R. No. 109563. July 9, 1996]
PHILIPPINE NATIONAL BANK, vs. COURT OF APPEALS, MARIA AMOR BASCOS and MARCIANO BASCOS.
This is a petition seeking review of the decision dated August 10, 1992, of the Eight Division of the Court of Appeals and
its resolution dated March 25, 1993, both rendered in CA-G.R. CV No. 27653, which affirmed the decision of the
Regional Trial Court (RTC) of San Jose City (Branch 38).
The facts are as follows:
On June 4, 1979, private respondent spouses Maria Amor and Marciano Bascos obtained a loan from the Philippine
National Bank in the amount of P15,000.00 evidenced by a promissory note and secured by a real estate mortgage.
The promissory note contained the following stipulation:
For value received, I/we, [private respondents] jointly and severally promise to pay to the ORDER of the PHILIPPINE
NATIONAL BANK, at its office in San Jose City, Philippines, the sum of FIFTEEN THOUSAND ONLY (P15,000.00),
Philippine Currency, together with interest thereon at the rate of 12 % per annum until paid, which interest rate the Bank
may at any time without notice, raise within the limits allowed by law, and I/we also agree to pay jointly and severally
____% per annum penalty charge, by way of liquidated damages should this note be unpaid or is not renewed on due
dated.
Payment of this note shall be as follows:
*THREE HUNDRED SIXTY FIVE DAYS* AFTER DATE
On the reverse side of the note the following condition was stamped:
All short-term loans to be granted starting January 1, 1978 shall be made subject to the condition that any and/or all
extensions hereof that will leave any portion of the amount still unpaid after 730 days shall automatically convert the
outstanding balance into a medium or long-term obligation as the case may be and give the Bank the right to charge the
interest rates prescribed under its policies from the date the account was originally granted.
To secure payment of the loan the parties executed a real estate mortgage contract which provided:
(k) INCREASE OF INTEREST RATE:
The rate of interest charged on the obligation secured by this mortgage as well as the interest on the amount which may
have been advanced by the MORTGAGEE, in accordance with the provision hereof, shall be subject during the life of this
contract to such an increase within the rate allowed by law, as the Board of Directors of the MORTGAGEE may prescribe
for its debtors.
On December 12, 1980, PNB extended the period of payment of the loan to June 5, 1981, thus converting the loan from a
short-term to a medium-term loan, i.e., a loan which matured over two to five years. PNB also increased the rate of
interest per annum, first to 14%, effective December 1, 1979; then to 22% effective February 21, 1983; to 22.5% effective
June 20, 1983; to 23% from November 2, 1983; to 25% effective March 2, 1984; and finally to 28% from April 10, 1984.
Because private respondents defaulted in paying their obligation, the Provincial Sheriff of Nueva Ecija scheduled the
extrajudicial foreclosure of the mortgage on June 15, 1984 to pay private respondents' indebtedness which, according to
PNB, had increased from P15,000.00 to P35,125.84, plus 28% annual interest.
Private respondents brought suit against PNB, its Branch Manager Jetro Godoy, and the Provincial Sheriff of Nueva Ecija
Numeriano Y. Galang (1) for a declaration of nullity of C.B. Monetary Board Resolution No. 2126 dated November 29,
1979 (embodied in C.B. Circular No. 705 dated December 1, 1979), which increased the ceiling on the interest rate of
secured and unsecured loans to 16% per annum and 14% per annum, respectively, on the ground that it was contrary to
the Usury Law, good morals, public policy, customs and traditions, social justice, due process and the equal protection
clause of the Constitution; and (2) for a declaration that the interest rate increases on their loan were contrary to Art. 1959
of the Civil Code which provides that interest due and unpaid shall not earn interest. Pending final determination of the
case, private respondents asked that the auction sale be enjoined.
PNB filed an answer with compulsory counterclaim. It alleged that private respondents had no cause of action because
§1-a of the Usury Law, as amended by P.D. No. 1684, did not limit the number of times the interest could be increased
and that private respondents were estopped from questioning the increases because they failed to object to the same. PNB
asked that the complaint be dismissed and that private respondents be ordered to pay P35,125.84, plus interest from April
10, 1984, until the obligation was fully paid, attorney's fees and moral damages in such amount as may be determined by
the court.
On June 13, 1984 private respondents deposited with the clerk of court P8,000.00 and on January 15, 1985 P2,000.00, in
partial payment of their loan.
3

advances made by the PNB for insurance premiums and penalties added.B. 4. 116. that henceforth. and that the promissory note and real estate mortgage were contracts of adhesion which should be interpreted in favor of private respondents. judgment is hereby rendered as follows: 1. the case against them is dismissed. and the 10. on the ground that there was no corresponding stipulation that the interest rate would be reduced in the event the law reduced the applicable maximum rate as provided under P. PNB successively increased the interest from 18% to 32%." The real estate mortgage likewise provided: The rate of interest charged on the obligation secured by this mortgage as well as the interest on the amount which may have been advanced by the MORTGAGEE. The RTC invalidated the stipulations in the promissory note and the real estate mortgage. 1684 is not to be retroactively applied to loans granted before its effectivity. 705. P. Plaintiffs' claim for damages is. which authorized PNB to increase the interest rate. and 6. Pursuant to these clauses. and the Provincial Sheriff of Nueva Ecija. used by PNB to increase the interest. but because the absence of such provision made the clause so one-sided as to make it unreasonable. To begin with. 116 are declared null and void. that P. 1979. on the basis of which PNB increased the interest.On June 15. 1684. Navarro that although P. Numeriano Galang. The Court of Appeals nullified the interest rate increases not because the promissory note did not comply with P. 3. This Court declared the increases unilaterally imposed by PNB to be in violation of the principle of mutuality as embodied in 4 . before the effectivity of P.00 paid to and defendant bank to be credited as payment by the plaintiffs. shall be subject during the life of this contract to such an increase within the rate allowed by law.D. par. is a "law. No.D. No. that the interest rate on this note shall be correspondingly decreased in the event that the applicable maximum interest rate is reduced by law or by the Monetary Board. The parties shall each bear out [sic] the expenses incurred by them. dismissed. On the other hand. SO ORDERED. No. PNB's argument is that the Court of Appeals erred in applying §2 of P. 1990. there must nevertheless be a deescalation clause to mitigate the one-sideness of the escalation clause. 1684 on March 17. That ruling is correct. being contrary to Sec." PNB moved for a reconsideration. likewise. 22 of the Civil Code. No. the defendant PNB is hereby directed to desist from enforcing the increased rate of interest more than TWELVE (12%) per cent on plaintiffs' loan. 5. 3. The increase in interest rates based on the escalation clauses in the Promissory Note and the Real Estate Mortgage. the RTC rendered a decision. K. The appellate court held that the escalation clause in the promissory note could not be given effect because of the absence of a provision for a de-escalation in the event a reduction of interest was ordered by law. could not be considered "laws. to the promissory note and the real estate mortgage in this case.D.000. that collection of the increased interest sanctions unjust enrichment contrary to Art." which should prevail over Circular No. in accordance with the provisions hereof.D. There having [sic] no evidence against the defendants Jetro Godoy.D. PNB's argument rests on a misapprehension of the import of the appellate court's ruling. the dispositive portion of which reads: WHEREFORE. 2. PNB appealed. the plaintiffs can settle their unpaid obligation with the defendant PNB at the interest rate of TWELVE (12%) per cent per annum computed from the inception of the loan until the same is fully paid. our cases after Banco Filipino have fashioned the rule that any increase in the rate of interest made pursuant to an escalation clause must be the result of agreement between the parties. However. Thus in Philippine national Bank v. two promissory notes authorized PNB to increase the stipulated interest per annum ―within the limits allowed by law at any time depending on whatever policy [PNB] may adopt in the future. as the Board of Directors of the MORTGAGEE may prescribe for its debtors. the Court of Appeals affirmed the trial court's decision.D. Court of Appeals. It is in line with our decision in Banco Filipino Savings & Mortgage Bank v. 1684. it filed this petition. then to 41% and then to 48%. circulars. PNB contends that the two had been executed on June 4. Indeed because of concern for the unequal status of borrowers vis-a-vis the banks. 1980. As its motion was denied. Provided. No. which makes the validity of an escalation clause turn on the presence of a de-escalation clause. The compulsory counterclaim of the defendants is also dismissed. which sets a ceiling of 12% interest on secured loans. In addition it held that pursuant to the escalation clause any increase in interest must be within "the limits allowed by law" but C.D. 1684 by providing for a de-escalation. No.

That would completely take away from private respondents the right to assent to an important modification in their agreement. Rita Legarda. where the parties do not bargain on equal footing.. Hence. even assuming that the P1. As in the first case. ROMUALDEZ. Gancayco and Florentino Flor.: The principal question presented in this case is whether a bank can be compelled to disclose the records of accounts of a depositor who is under investigation for unexplained wealth. the weaker party's (the debtor) participation being reduced to the alternative "to take it or leave it" (Qua vs. that license would have been null and void for being violative of the principle of mutuality essential in contracts. For as stated in one case.. former administrator of the Agricultural Credit and Cooperative 5 . Perlas for plaintiffs-appellants.m. 85). WHEREFORE. It would have invested the loan agreement with the character of a contract of adhesion. L-18343 September 30. there must be mutuality between the parties based on their essential equality. of Justice.8 million loan agreement between the PNB and the private respondent gave the PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan. G. 42%. 21 SCRA 555). informing them of the increases. No. SO ORDERED. the decision of the Court of Appeals is AFFIRMED.Art. after only two years. as special prosecutors of the Department of Justice. J. 95 Phil. Only recently we invalidated another round of interest increases decreed by PNB pursuant to a similar agreement it had with other borrowers: [W]hile the Usury Law ceiling on interest rates was lifted by C. on February 20. Villamor & Gancayco for defendants-appellees. required the plaintiff Philippine National Bank to produce at a hearing to be held at 10 a.. that the interest rate on this accommodation shall be correspondingly decreased in the event that the applicable maximum interest is reduced by law or by the Monetary Board . A similar ruling was made in Philippine National Bank v. Circular 905. Law Union & Rock Insurance Co. REGALA.B. Jimenez." As the Court explained: In order that obligations arising from contracts may have the force of law between the parties. is void (Garcia vs. Court of Appeals. Private respondents' assent to the increases can not be implied from their lack of response to the letters sent by PNB. which provides that "[t]he contract must bind both contracting parties. Special Prosecutors of the Dept. we held: We cannot countenance petitioner bank's posturing that the escalation clause at bench gives it unbridled right to unilaterally upwardly adjust the interest on private respondents' loan. vs.. Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition. 1965 PHILIPPINE NATIONAL BANK and EDUARDO Z. PNB successively increased the stipulated interest so that what was originally 12% per annum became. de los Reyes and Zoilo P. defendantsappellees. nothing in the said circular could possibly be read as granting respondent bank carte blanche authority to raise interest rates to levels which would either enslave its borrowers or lead to a hemorrhaging of their assets. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties. EMILIO A. This question arose when defendants Emilio A. its validity or compliance cannot be left to the will of one of them. in his capacity as President of the Philippine National Bank. plaintiffs-appellants. Inc. In declaring the increases invalid.R. Ramon B. GANCAYCO and FLORENTINO FLOR. In this case no attempt was made by PNB to secure the conformity of private respondents to the successive increases in the interest rate.. 1308 of the Civil Code. 1961 the records of the bank deposits of Ernesto T. no one receiving a proposal to change a contract is obliged to answer the proposal. The credit agreement in that case provided: The BANK reserves the right to increase the interest rate within the limits allowed by law at any time depending on whatever policy it may adopt in the future: Provided. and would negate the element of mutuality in contracts.

that the Anti-Graft Law (which took effect on August 17. On the other hand. to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both. Without such provision.. Because of the threat of prosecution. notwithstanding any provision of law to the contrary. except upon written permission of the depositor. notwithstanding any provision of law to the contrary. and (4) In cases where the money deposited or invested is the subject matter of the litigation. a public official has been found to have acquired during his incumbency. are hereby considered as of an absolutely confidential nature and may not be examined." In support of their position. first. 1405 provides that bank deposits are "absolutely confidential . plaintiffs appealed to this Court. that fact shall be a ground for dismissal or removal. The law invoked by the defendant states: SEC. or upon order of a competent court in cases of bribery or dereliction of duty of public officials. After trial. 1960) is a general law which cannot be deemed to have impliedly repealed section 2 of Republic Act No. — If in accordance with the provisions of Republic Act Numbered One thousand three hundred seventy-nine.. the defendants cited the Anti-Graft and Corrupt Practices Act (Republic Act No. 9. the Anti-Graft and Corrupt Practices Act. Properties in the name of the spouse and unmarried children of such public official may be taken into consideration. inquired or looked into by any person." except in those cases enumerated therein. In declining to reveal its records. who was then under investigation for unexplained wealth. the court rendered judgment. 1405 which is "to give encouragement to the people to deposit their money in banking institutions and to discourage private hoarding so that the same may be utilized by banks in authorized loans to assist in the economic development of the country. plaintiffs filed an action for declaratory judgment in the Manila Court of First Instance.1awphîl. when their acquisition through legitimate means cannot be satisfactorily shown. because even without the latter law the balance standing to the depositor's credit can be considered provided its disclosure is made in any of the cases provided in Republic Act No. 1405. author of the Anti-Graft and Corrupt Practices Act testified. plaintiffs' position is that section 8 of the Anti-Graft Law "simply means that such bank deposits may be included or added to the assets of the Government official or employee for the purpose of computing his unexplained wealth if and when the same are discovered or revealed in the manner authorized by Section 2 of Republic Act 1405. whether in his name or in the name of other persons. Congress clearly intended to provide an additional ground for the examination of bank deposits. Thus. plaintiffs are actually making the provisions of Republic Act No. they argue that to construe section 8 of the Anti-Graft Law as allowing inquiry into bank deposits would be to negate the policy expressed in section 1 of Republic Act No. while Republic Act No. Romualdez. 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. Tolentino. The court said that. and [therefore] may not be examined. the plaintiff bank invoked Republic Act No. in the discretion of the court. because of the rule that repeals by implication are not favored. Dismissal due to unexplained wealth." Contrary to their claim that their position effects a reconciliation of the provisions of the two laws. 8. 5. In brief. Bank deposits shall be taken into consideration in the enforcement of this section. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines. 1405 prevail over those of the Anti-Graft Law. (3) Upon order of a competent court in cases of bribery or dereliction of duty of public officials. 1405 (which took effect on Sept. The truth is that these laws are so repugnant to each other than no reconciliation is possible. inquired or looked into. 1955). Second. its political subdivisions and its instrumentalities. which are (1) Upon written permission of the depositor. sustaining the power of the defendants to compel the disclosure of bank accounts of ACCFA Administrator Jimenez.nèt From that judgment. (2) In cases of impeachment. or in cases where the money deposited or invested is the subject matter of the litigation. plaintiffs contend.Administration. as bank president. during which Senator Arturo M. 1405 which provides: SEC. bureau or office. by enacting section 8 of. produce the records or he would be prosecuted for contempt. 3019) in support of their claim of authority and demanded anew that plaintiff Eduardo Z." The 6 . The plaintiff bank also called attention to the penal provision of the law which reads: SEC. 2. the Anti-Graft Law directs in mandatory terms that bank deposits "shall be taken into consideration in the enforcement of this section. government official. Any violation of this law will subject the offender upon conviction. an amount of property and/or money manifestly out of proportion to his salary and to his other lawful income. or in cases of impeachment.

March 3. respondents-appellees. 1405 which. or to mention the name of his candidate for public office. either in its entirety or in part. the plaintiff sought the garnishment of the bank deposit of the defendant B & B Forest Development Corporation with the China Banking Corporation. Indeed. Sy Santos. Feliciano. MAKALINTAL. L-34964 January 31. L-20808. And whether a statute. WENCESLAO ORTEGA. 29 [Civil Service Act of 1959] allows such classified employee to express his views on current political problems or issues. Upon motion of the plaintiff the trial court declared the defendants in default for failure to answer within the reglementary period. 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. 1965). and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. L-24022. without pronouncement as to costs.R. Inc. by invoking the provisions of Republic Act No. Election Code] prohibits a classified civil service employee from aiding any candidate.R." it nevertheless allows such disclosure in the following instances: (1) Upon written permission of the depositor. 1405. (2) In cases of impeachment. No. De Venecia. Del Rosario and Associates for petitioners-appellants. a notice of garnishment was issued by the Deputy Sheriff of the trial court and served on said bank through its cashier. The Construction of Statutes. an amendment to sec. Tagalo. it is enough to point out that while section 2 of Republic Act 1405 declares bank deposits to be "absolutely confidential. No. 54. * On December 17. G. 1970 judgment by default was rendered against the defendants. Cf. HON. G. 1973 CHINA BANKING CORPORATION and TAN KIM LIONG. (Crawford. is whether or not a banking institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor. (4) In cases where the money deposited is the subject matter of the litigation. 1968 Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co. 1965 invites comparison with this case. 29 is an exception to sec. In reply. 75138. vs. even if such expression of views or mention of names may result in aiding one particular candidate. sec. Secs. 1405 by providing additional exception to the rule against the disclosure of bank deposits. of the Court of First Instance of Manila in its Civil Case No. Tan Kim Liong. (3) Upon order of a competent court in cases of bribery or dereliction of duty of public officials. the presumption against the intent to repeal by implication is overthrown because the inconsistency or repugnancy reveals an intent to repeal the existing law. 54 [Rev. Accordingly. B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. prohibit the disclosure of any information relative to bank deposits. In other words. J.only conclusion possible is that section 8 of the Anti-Graft Law is intended to amend section 2 of Republic Act No. July 31. as Presiding Judge of the Court of First Instance of Manila. the bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act No. the decision appealed from is affirmed. G. To satisfy the judgment. 309-310. the last paragraph of sec. at most. and VICENTE G. Gozar and Associates for respondents-appellees. 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.: The only issue in this petition for certiorari to review the orders dated March 4. 1972. Branch VIII. Tan Kim Liong was ordered "to inform the Court within five days from receipt of this order whether or not there is a deposit in the China Banking 7 .. it is said that if the new law is inconsistent with or repugnant to the old law. so far as relevant to his duty. There it was held: The result is that although sec.. it was alleged. 54. is open to public scrutiny. However. has been repealed by implication is ultimately a matter of legislative intent. No. petitioners-appellants. WHEREFORE. ACABAN. On January 20. Iloilo Palay and Corn Planters Ass'n v. In an order dated March 4. 1972 the trial court denied the plaintiff's motion. 1972 and March 27. The policy as to one cannot be different from the policy as to the other. respectively. With regard to the claim that disclosure would be contrary to the policy making bank deposits confidential.R. The recent case of People v. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of court.

its political subdivisions and its instrumentalities. Mr. Mr. The petitioners argue that the disclosure of the information required by the court does not fall within any of the four (4) exceptions enumerated in Section 2." Resisting the two orders. Mr. it protects the depositor. MARCOS. I should like the Chairman of the Committee on Ways and Means to clarify this further. 351 and House Bill No. say. does it not? Mr. in the discretion of the court. that there is a preliminary attachment which is for garnishment or for holding liable all moneys deposited belonging to a certain individual. so that the bank would hold the same intact and not allow any withdrawal until further order. the position of the petitioners is that the bank deposit of judgment debtor B & B Forest Development Corporation cannot be subject to garnishment to satisfy a final judgment against it in view of the aforequoted provisions of law. the attachment or garnishment of money deposited is allowed. Any violation of this law will subject offender upon conviction." Tan Kim Liong moved to reconsider but was turned down by order of March 27. Into the very nature of such deposit. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two hereof any information concerning said deposits. as contemplated in the law. are hereby considered as of absolutely confidential nature and may not be examined. RAMOS. but such attachment or garnishment will bring out into the open the value of such deposit. But where the primary aim is to determine whether he has a bank deposit in order to bring about a proper assessment by the Bureau of Internal Revenue.00 worth of tax liability. MARCOS. MARCOS. 2. to hold the same intact and not allow any withdrawal until further order from this Court. Specifically referring to this case. then this is fully covered by the law. 8 . to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both. otherwise his arrest and confinement will be ordered by the Court. but when the object is merely to inquire whether he has a deposit or not for purposes of taxation. But under our rules of procedure and under the Civil Code. which later became Republic Act 1405. The pertinent provisions of Republic Act No. Now. 3977. And it protects the depositor. for instance. inquired or looked into by any person. that it was not the intention of the lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. The lower court did not order an examination of or inquiry into the deposit of B & B Forest Development Corporation. the inquiry is made only for the purpose of satisfying a tax liability already declared for the protection of the right in favor of the government. The law prohibits a mere investigation into the existence and the amount of the deposit. bureau or office. MARCOS. and if there is any deposit. such inquiry is not authorized by this proposed law. Is that prohibited by this amendment or by this law? Mr. Suppose an individual has a tax case. He is being held liable by the Bureau of Internal Revenue for. except upon written permission of the depositor. for purposes of the record. All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines. and because of this the deposit of this individual is attached by the Bureau of Internal Revenue. RAMOS. Let us assume. RAMOS. Mr. 5. 1972 within ten (10) days from the receipt of copy of this order. 1972. Sec. Mr. The attachment will only apply after the court has pronounced sentence declaring the liability of such person.000.Corporation of defendant B & B Forest Development Corporation. or upon order of a competent court in cases of bribery or dereliction of duty of public officials. It will be noted from the discussion of the conference committee report on Senate Bill No. the China Banking Corporation and Tan Kim Liong instituted the instant petition. RAMOS. 1405 relied upon by the petitioners reads: Sec. In the same order he was directed "to comply with the order of this Court dated March 4. It merely required Tan Kim Liong to inform the court whether or not the defendant B & B Forest Development Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment issued by it. It is only prohibited to the extent that the inquiry is limited. Sec 3. We do not view the situation in that light. government official. Thus: Mr. or in cases where the money deposited or invested is the subject matter of the litigation. or in cases of impeachment. or rather. and that if the questioned orders are complied with Tan Kim Liong may be criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest Development Corporation. P1. Yes.

No. both of which assail several orders issued by respondent Judge Zues C. No. and if the existence of the deposit is disclosed the disclosure is purely incidental to the execution process. ZUES C. Congressional Record. xxx xxx xxx Mr. without judicial authorization. RAMOS. RAMOS. 91-3506 and raffled to Branch 150 of the RTC Makati. 3839-3840. G.Mr. That is so. respondent Judge issued an order granting the issuance of a writ of attachment. with costs against the petitioners-appellants. MACAPAGAL. Mr. WHEREFORE. 1994 EMMANUEL C. respondents. MACAPAGAL. 9 . July 27. To satisfy a judgment which has become executory. ZUES C. December 24. I am glad that is clarified. does the gentleman mean that the plaintiff cannot attach the bank deposit of the defendant? Mr. even if ordered by the Court. are hereby affirmed. MARCOS. through the expedient of converting their assets into cash and depositing the same in a bank. MARCOS. No.R. But let us suppose that in an ordinary civil action for the recovery of a sum of money the plaintiff wishes to attach the properties of the defendant to insure the satisfaction of the judgment. Merely to determine the amount of such money to satisfy that obligation to the Government. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts. but not to determine whether a deposit has been made in evasion of taxes. Mr. does this bill. So I come to my original question. respectively. but. the orders of the lower court dated March 4 and 27. 1955). which was docketed as Civil Case No. 1972.000 and the deposit is half a million. allow the investigation or scrutiny of the bank deposit in order to execute the judgment? Mr. Diño. and SUN LIFE ASSURANCE COMPANY OF CANADA.000. Yes. suppose the tax liability is P1. RAMOS. in such ordinary civil cases it can be attached? Mr. Oñate and Econ Holdings Corporation (in G. No. OÑATE and ECON HOLDINGS CORPORATION vs. Once the judgment is rendered. Abrogar in Civil Case No. I see. or this proposed law. Yes.. respondent Sun Life Assurance Company of Canada (Sun Life.. as Presiding Judge of Branch 150 of the Regional Trial Court of Makati. preliminary garnishment or attachment of the deposit is not allowed? Mr. 1991. HON. No.R. 1991. These are separate petitions for certiorari with a prayer for temporary restraining order filed by Emmanuel C. 12. The pertinent facts are as follows: On December 23. Mr. MARCOS.R. (Vol. No. HON. and Noel L. That was the question raised by the gentleman from Pangasinan to which I replied that outside the very purpose of this law it could be reached by attachment. It is sufficiently clear from the foregoing discussion of the conference committee report of the two houses of Congress that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment.R. presided over by respondent Judge. So that the established rule of procedure as well as the substantive law on the matter is amended? Mr. will this bill allow scrutiny into the deposit in order that the judgment may be executed? Mr. 107303 February 21. Therefore. 107491 February 21. 1991. The following day. Indeed there is no real inquiry in such a case. for brevity) filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners. 107491). definitely establishing the liability of an individual for taxation purposes and this judgment is sought to be executed . if approved. Therefore. That is the effect. ABROGAR. in the execution of that judgment. RAMOS. Suppose there has been a decision. Mr. RAMOS. vs. pp. 1994 BRUNNER DEVELOPMENT CORPORATION. RAMOS. ABROGAR. 107303). and SUN LIFE ASSURANCE COMPANY OF CANADA. House of Representatives. 91-3506. and the writ was actually issued on December 27. and Brunner Development Corporation (in G. II. MARCOS. G. as I said before. as Presiding Judge of Branch 150 of the Regional Trial Court of Makati.

petitioners filed a motion for reconsideration of the February 6. either before or after service of summons on the defendant. It is a remedy which is purely statutory in respect of which the law requires a strict construction of the provisions granting it. has been the immemorial practice sanctioned by the courts: for the plaintiff or other proper party to incorporate the application for attachment in the complaint or other appropriate pleading (counterclaim. and (2) allowing the examination of the bank records though no notice was given to them. which motion was granted by respondent Judge. Makati but was not able to do so since there was no responsible officer to receive the same. and to obtain copies thereof. 1992. Summons was eventually served upon petitioners on January 9. petitioners claim not to be owned by them — and the records of Philippine National Bank (PNB) with regard to checks payable to Brunner. 1992. 1 Nonetheless. prohibits its issuance by any court before acquisition of jurisdiction over the person of the defendant. and that he may do so at any time. attempted to serve summons and a copy of the amended writ of attachment upon petitioners at their known office address at 108 Aguirre St. and (4) denying petitioners' motion to nullify the proceedings of January 23. as the provisional remedy in virtue of which a plaintiff or other proper party may. 1992. the trial court amended the writ of attachment to reflect the alleged amount of the indebtedness. Petitioners filed a motion to nullify the proceedings taken thereat since they were not present. Rule 57 in fact speaks of the grant of the remedy "at the commencement of the action or at any time thereafter. Sun Life asked the court to order both banks to comply with the notice of garnishment. upon Sun Life's ex-parte motion. incidentally. 1992. statutory or jurisprudential. 1992. Also on that same day. third-party claim) and for the Trial Court to issue the 10 .On January 3. On February 6. and levied on attachment a condominium unit and a real property belonging to petitioner Oñate. And this indeed. 0041-0277-03 with the Bank of Philippine Islands (BPI) — which. On March 12. while defendant Diño was served with summons on January 16. Petitioners' basic argument is that respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in (1) issuing ex parte the original and amended writs of preliminary attachment and the corresponding notices of garnishment and levy on attachment since the trial court had not yet acquired jurisdiction over them. Petitioners initially argue that respondent Judge erred in granting Sun Life's prayer for a writ of preliminary attachment on the ground that the trial court had not acquired jurisdiction over them. at the commencement of the action or any time thereafter. 1992. Sun Life filed another motion for examination of bank accounts. The examination of said account took place on January 23. 1992. its the date that marks "the commencement of the action. have the property of the adverse party taken into the custody of the court as security for the satisfaction of any judgment that may be recovered. accompanied by a representative of Sun Life. cross-claim.. petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment. On January 30. On September 6. We find both petitions unmeritorious. 1992 order. (2) approving Sun Life's additional attachment. Hence. (3) granting Sun Life's motion to examine the BPI account. 2 The rationale behind this rule was stated by the Court in this wise: A preliminary attachment may be defined. the instant petitions." That same day." and the reference plainly is to a time before summons is served on the defendant or even before summons issues. Legaspi Village Branch. Sheriff Flores proceeded. 1992. for brevity) at the Urban Bank. On January 21. to serve notices of garnishment upon several commercial banks and financial institutions. as abovepointed out. petitioners and their co-defendants filed a memorandum in support of the motion to discharge attachment. over a period of several days. Deputy Sheriff Arturo C. paraphrasing the Rules of Court." obviously refers to the date of the filing of the complaint — which. this time seeking the examination of Account No. 1992. Sun Life filed an ex-parte motion to examine the books of accounts and ledgers of petitioner Brunner Development Corporation (Brunner. That same day. Flores. This argument is clearly unavailing since it is wellsettled that a writ of preliminary attachment may be validly applied for and granted even before the defendant is summoned or is heard from. 1992. What the rule is saying quite clearly is that after an action is properly commenced — by the filing of the complaint and the payment of all requisite docket and other fees — the plaintiff may apply for and obtain a writ of preliminary attachment upon fulfillment of the pertinent requisites laid down by law. respondent Judge denied the motion for reconsideration. Withal no principle. respondent Judge issued an order (1) denying petitioners' and the co-defendants' motion to discharge the amended writ of attachment." The phrase "at the commencement of the action.

Several reasons can be given for the exception. 1992 is of no moment since the same can be indicative only of the absence of criminal liability. 5 The fact that a criminal complaint for estafa filed by Sun Life against the petitioners was dismissed by the Provincial Prosecutor of Rizal for Makati on April 21. True. an exception to the established rule on the enforcement of the writ of attachment can be made where a previous attempt to serve the summons and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server. petitioners argue that the enforcement of the writ was invalid since it undisputedly preceded the actual service of summons by six days at most. then. II. there is a possibility that a defendant. Thus. Third. but we stymied by the absence of a responsible officer in petitioners' offices. This cannot be considered a ground for lifting the writ since this delves into the very complaint of the Sun Life. et al. right up to the time the cases went up to this Court.. First. 10 The petitioners herein tried to have the writ of attachment discharged by posting a counter-bond. the ease by which a writ of attachment can be obtained is counter-balanced by the ease by which the same can be discharged: the defendant can either make a cash deposit or post a counter-bond equivalent to the value of the property attached. Petitioners cite the decisions in Sievert vs. 8 But we must distinguish the case at bar from the Sievert and BAC Manufacturing cases. 3 Petitioners then contended that the writ should have been discharged since the ground on which it was issued — fraud in contracting the obligation — was not present. Besides. 197 SCRA 663 [1991]). As this Court stated in Cuatro v. Court of Appeals. In those two cases. but not of civil liability. 11 . vs. Court of Appeals: 4 Moreover. The issue of fraud. Inc. Court of Appeals. 7 wherein this Court held that enforcement of the writ of attachment can not bind the defendant in view of the failure of the trial court to acquire jurisdiction over the defendant through either summons or his voluntary appearance. an attachment may not be dissolved by a showing of its irregular or improper issuance if it is upon a ground which is at the same time the applicant's cause of action in the main case since an anomalous situation would result if the issues of the main case would be ventilated and resolved in a mere hearing of the motion (Davao Light and Power Co. supra. et al. 6 and BAC Manufacturing and Sales Corp. The records reveal that Sheriff Flores and Sun Life did attempt a contemporaneous service of both summons and the writ of attachment on January 3. would put his properties beyond the reach of the plaintiff while the latter is trying to serve the summons and the writ anew. Court of Appeals. there might not be any property of the defendant left to attach. 1992. Sun Life had elevated the case for review to the Department of Justice. The plaintiffs therein did not even attempt to cause service of summons upon the defendants. the court eventually acquired jurisdiction over the petitioners six days later. (Solidbank) vs. This is not true in the case at bar. summons was never served upon the defendants. the same was denied by respondent Judge on the ground that the amount of the counter-bond was less than that of Sun Life's bond. one of the allegation in petitioner's complaint below is that the defendant spouses induced the plaintiff to grant the loan by issuing postdated checks to cover the installment payments and a separate set of postdated checks for payment of the stipulated interest (Annex "B"). this Court had held in a recent decision that the enforcement of writ of attachment may not validly be effected until and unless proceeded or contemporaneously accompanied by service of summons. vs. To nullify the notices of garnishment issued prior thereto would again open the possibility that petitioners would transfer the garnished monies while Sun Life applied for new notices of garnishment..writ ex-parte at the commencement of the action if it finds the application otherwise sufficient in form and substance. having been alerted of plaintiffs action by the attempted service of summons and the writ of attachment. We do not agree entirely with petitioners. is clearly within the competence of the lower court in the main action. Note is taken of the fact that petitioners Oñate and Econ Holdings admitted in their answer 9 that the offices of both Brunner Development Corporation and Econ Holdings were located at the same address and that petitioner Oñate is the President of Econ Holdings while petitioner Diño is the President of Brunner Development Corporation as well as a stockholder and director of Econ Holdings. 1992 and was upheld by the Provincial Prosecutor on July 13. Court of Appeals. The Consolidated Bank and Trust Corp. In the present case. Finally. By the time the plaintiff may have caused the service of summons and the writ. Second. provided that such service is effected within a reasonable period thereafter. where the case is presently pending.

Rule 57 of the Rules of Court. which provided. 2 of the Law on Secrecy of Bank Deposits.Petitioners' second ground assail the acts of respondent Judge in allowing the examination of Urban Banks' records and in ordering that the examination of the bank records of BPI and PNB as invalid since no notice of said examinations were ever given them. as amended. 1405. or before a commissioner appointed by the court and be examined on oath respecting the same.00) was erroneously "under-encoded" to One Thousand Pesos (P1. 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. a check (Check No. (3) Upon written permission of the depositor. WHEREFORE. delivery of property to officer.000." The examination of the bank records is not a fishing expedition. or (6) In cases where the money deposited or invested is the subject matter of the litigation.000.000. (5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials. (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. The facts are not disputed. G.00 to the account of Mr. No. Whether or not the case at bar falls under the last exception is the issue in the instant petition. 0111-01854-8 with private respondent Allied Bank payable to the order of one Jose Ch. 11669677) dated March 31. 1990. order personal property capable of manual delivery belonging to him. sheriff. 1 as amended.000. (4) In cases of impeachment. petitioner sent the check for clearing through the Philippine Clearing House Corporation (PCHC).00) for 12 . "An Act Prohibiting Disclosure or Inquiry Into. 10. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property. to await the judgment in the action. a clearing discrepancy was committed by Union Bank's clearing staff when the amount of One Million Pesos (P1. 134699 December 23. Furthermore. The court may.R. to be delivered to the clerk or court.000. except when there is a need to examine said defendant "for the purpose of giving information respecting his property. — Any 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 belonging to such party. Petitioner only discovered the under-encoding almost a year later. The payee deposited the check with petitioner Union Bank who credited the P1. 1990. or other proper officer on such terms as may be just. Thus. vs." for Section 2 therefore provides an exception "in cases where the money deposited or invested is the subject matter of the litigation. When the check was presented for payment. and may be examined on oath. 1990 in the amount of One Million Pesos (P1. On March 21. to wit: Sec.000. Examination of party whose property is attached and persons indebted to him or controlling his property. but rather a method by which Sun Life could trace the proceeds of the check it paid to petitioners. on May 7. Union Bank notified Allied Bank of the discrepancy by way of a charge slip for Nine Hundred Ninety-Nine Thousand Pesos (P999. may be required to attend before the court in which the action is pending.00) only.000. after such examination. COURT OF APPEALS and ALLIED BANK CORPORATION. having reference to any lien thereon or claim against the same. but the person who is holding property or credits belonging to the defendant. the instant petitions are hereby DISMISSED. It is clear from the foregoing provision that notice need only be given to the garnishee. 1993 is hereby lifted. 1999 UNION BANK OF THE PHILIPPINES. On May 21. Deposits With Any Banking Institution and Providing Penalty Therefore. Alvarez. The temporary restraining order issued on June 28. The provision does not require that notice be furnished the defendant himself. Alvarez. in the possession of the person so required to attend before the court. Sec.000. 1991. Sun Life grounded its requests for the examination of the bank accounts on Section 10. Section 10 Rule 57 is not incompatible with Republic Act No.00) was drawn against Account No.

3." Subsequently. Union Bank filed in the Regional Trial Court (RTC) of Makati a petition for the examination of Account No." Furthermore.480. specifically on Under-Encoding of check amounting to P1. clearly stated that its "cause of action against defendant arose from defendant's deliberate violation of the provisions of the PCHC Rule Book. 5. a reading of petitioner collecting bank's complaint in the Arbicom case shows that its thrust is directed against respondent drawee bank's alleged failure to inform the former of the under-encoding when Sec.000. . never called nor notified the plaintiff of the error committed thus causing actual losses to plaintiff in the principal amount of P999. that it is unlawful for any official or employee of a bank to disclose to any person any information concerning deposits. .00 which defendant as the receiving bank thereof. judgment be rendered in favor of plaintiff against defendant sentencing it to pay plaintiff: 1. Arbicom Case No. 1991 representing reimbursements for opportunity losses and interest at the rate of 24% per annum arising from actual losses sustained by plaintiff as of May 21. petition) is not one for bribery or dereliction of duty of public officials much less is there any showing that the subject matter thereof is the money deposited in the account in question.3 of the PCHC Rule Book is clear that it is receiving bank's (respondent drawee bank herein) duty and obligation to notify the erring bank (petitioner collecting bank herein) of any such underencoding of any check amount submitted for clearing within the member banks of the PCHC not later than 10:00 a.20 as of October 9. Sec. 91-068. The RTC held that: The case of the herein petitioner does not fall under any of the foregoing exceptions to warrant a disclosure of or inquiry into the ledgers/books of account of Allied Checking Account No.000. and as principal reliefs. 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.000.000. Judgment on the arbitration case was held in abeyance pending the resolution of said petition. 2. Prescinding from the above. 111-01854-8.]3.00 and damage[s] by way of loss of interest income.00 exclusive of opportunity losses and interest. 25[. Petitioner collecting bank itself in its complaint filed before the PCHC.000. however. it seeks for [sic] the recovery of amounts of money as a consequence of an alleged under-coding of check amount to P1. the RTC dismissed Union Bank's petition. 13 . 7. inquired or looked into by any person. . Sec. 111-01854-8. The sum of THREE HUNDRED SIXTY-ONE AND FOUR HUNDRED EIGHTY AND 20/XX P361. ruling that the case was not one where the money deposited is the subject matter of the litigation. 25. we see no cogent reason to depart from the time-honored general banking rule that all deposits of whatever nature with banks are considered of absolutely confidential nature and may not be examined. Such other damages that may be awarded by this Tribunal. bureau or office and corollarily. Union Bank filed a complaint against Allied Bank before the PCHC Arbitration Committee (Arbicom). The latter. 6. which was erroneously encoded at P1. Upon motion of private respondent.000. 1990 until payment thereof.00 drawn upon defendant's Tondo Branch which was deposited with plaintiff herein on May 20.000. Penalty Charges at the rate of 1/8 of 1% of P999. 91-068 (Annex "A". 1990. The amount for attorney's fees at the rate of 25% of any and all sums due. 2 Thereafter.00 from May 22. government official. 4. . The costs of suit which includes filing fee in addition to litigation expenses which shall be proven in the course of arbitration. of the following clearing day and prays that respondent drawee bank be held liable to petitioner collecting bank for penalties in view of the latter's violation of the notification requirement. Needless to say. Petitioner's complaint primarily hing[e]s on the alleged deliberate violation by Allied Bank Corporation of the provisions of the PCHC Rule Book.m. praying that: . Exemplary and punitive damages against the defendant in such amounts as may be awarded by this Tribunal in order to serve a lesson to all member-Banks under the PCHC umbrella to strictly comply with the provisions thereof. 3. The sum of NINE HUNDRED NINETY-NINE THOUSAND PESOS (P999. 3 The Court of Appeals affirmed the dismissal of the petition. 1990. .00). 25. the complaint filed by herein petitioner against Allied Banking Corporation before the Philippine Clearing House Corporation (PCHC) Arbitration Committee and docketed therein as Arb[i]com Case No.000.automatic debiting against of Allied Bank.

Inasmuch as Civil Case No. or the thing in dispute. . ERLINDA V." thus: . 2 of [Republic Act No. Ms. . . . 25. which states: 25. This much is evident in petitioner's complaint before the Arbicom. the Court sanctioned the examination of the bank accounts where part of the money was subsequently caused to be deposited: . plaintiff's cause of action against defendant arose from defendant's deliberate violation of the provisions of the PCHC Rule Book.000. Mellon Bank involved a case where the money deposited was the subject matter of the litigation since the money so deposited was the very thing in dispute. chattels.3.000. In Mellon Bank. Failing in that duty." We also find petitioner's definition of the phrase "subject matter of the action" is consistent with the term "subject matter of the litigation. the things real or personal. the subject of the action is the matter or thing with respect to which the controversy has arisen. The money deposited in Account No. . while the object of the action is to prevent or redress the wrong by obtaining some legal relief.00 which defendant as the receiving bank thereof. necessarily. This. 8 Petitioner even requested private respondent's Branch Manager for reimbursement from private respondent's account through the automatic debiting system. . Sec.000. 0111-018548 itself. vs. Sec. but the subject of the action is neither of these since it is not the wrong or the relief demanded. 7 where the petitioner bank inadvertently caused the transfer of the amount of US$1. the money.00. plaintiff's Senior Vice-President. The Receiving Bank should inform the erring Bank about the under-encoding of amount not later than 10:00 A.000. VALENTON wrote defendant's Tondo Branch Manager. .000.000.00.1. or the contract and its subject matter.Nowhere in petitioner collecting bank's complaint filed before the PCHC does it mention of the amount it seeks to recover from Account No. 6 petitioner points out. 1991.00 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. 2. . lands. .000. specifically on Under-Encoding of check amounting to P1. and this ordinarily is the property. . 26899 is aimed at recovering the amount converted by the Javiers for their own benefit.M. but speaks of P999.00 drawn upon defendant's Tondo Branch which was deposited with plaintiff herein sometime on May 20. By the phrase "subject matter of the action" is meant "the physical facts. it was instead erroneously encoded at P1.00 exclusive of opportunity losses and interest thereon whatsoever.00 and other damages. 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. From the check amount of P1. N." Petitioner contends that the Court of Appeals confuses the "cause of action" with the "subject of the action. Magsino." as the latter is used in the Bank Deposits Secrecy Act. of the following clearing day. It does not appear that petitioner is seeking reimbursement from the account of the drawer.000.3. 5 where we defined "subject matter of the action.00 instead of only US$1. 0111-01854-8 is the subject matter of the litigation Petitioner cites the case of Mathay vs." In Yusingco vs. never called nor notified the plaintiff of the error committed thus causing actual losses to plaintiff in the principal amount of P999. Consolidated Bank and Trust Company. The cause of action is the legal wrong threatened or committed.7. and the like. . however.000. concerning which the wrong has been done.3. RODOLFO JOSE on the incident and requested assistance in facilitating 14 . . Petitioner's theory is that private respondent Allied Bank should have informed petitioner of the under-encoding pursuant to the provisions of Section 25. 4 Union Bank is now before this Court insisting that the money deposited in Account No. 1405] allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation. is not the case here. this Court distinguished the two concepts. in relation to which the suit is prosecuted.000. Mr. it is the alleged violation by respondent of the rules and regulations of the PCHC. Ong Hing Lian. We note with approval the difference between the "subject of the action" from the "cause of action.1 of the PCHC Handbook. Clearly. The argument is well taken. 0111-018548 is not the subject matter of the litigation in the Arbicom case for as clearly stated by petitioner itself.A. 1990. .000. On May 6. and not the delict or wrong committed by the defendant. petitioner holds private respondent directly liable for the P999.

Since the provisions of the PCHC Rule Book has so imposed upon the defendant being the Receiving Bank of a discrepant check item to give that timely notification and defendant failing to comply with such requirement. however.9.00. according to the circumstances. 2. the petition before this Court reveals that the true purpose for the examination is to aid petitioner in proving the extent of Allied Bank's liability: Hence. . . 11 The following argument adduced by petitioner in the Arbicom case leaves no doubt that petitioner is holding private respondent itself liable for the discrepancy: Defendant by its acceptance thru the clearing exchange of the check deposit from its client cannot be said to be free from any liability for the unpaid portion of the check amount considering that defendant as the drawee bank. . On May 23. Upon a reading of the terms of the Quitclaim and Release being proposed by defendant. petitioner rejected private respondent's proposal that the drawer issue postdated checks in favor of petitioner since the identity and credit standing of the depositor were unknown to petitioner. 15 . rendering respondent Allied Bank liable to petitioner for the deficiency. the amount actually debited from the subject account becomes very material and germane to petitioner's claim for reimbursement as it is only upon examination of subject account can it be proved that indeed a discrepancy in the amount credited to petitioner was committed. Erlinda Valenton again insisting on the execution of the Quitclaim and Release in favor of defendant as the Branch has endeavored to negotiate with its client for the collection of such amount. 1172 of the Civil Code provides that: "Responsibility arising from negligence in the performance of every kind of obligation is also demandable. which has remained deposited in aforesaid account. . The sum of NINE HUNDRED NINETY-NINE THOUSAND PESOS (P999. He who is guilty of negligence in the performance of its [sic] duty is liable for damages. the proposal of defendant could not be acceptable for the reason that aside from the interest lost already for the use of its money by another party.000. The money deposited in aforesaid account is undeniably the subject matter of the litigation since the issue in the Arbicom case is whether respondent Bank should be held liable to petitioner for reimbursement of the amount of money constituting the difference between the amount of the check and the amount credited to petitioner. . . . . . 13 On the other hand. is remiss in its duty of verifying possible technicalities on the face of the check. bolsters petitioner's contention that the money in subject account is the very subject matter of the pending Arbicom case. the unmistakable fact lies that again defendant attempts for the second time to take advantage of plaintiffs plight by indicating that the terms of the payment of the principal amount of P999.correction of the erroneous coding with request for reimbursement thru the industry's automatic debiting of defendant's account. . does not specifically state that it was seeking recovery of the amount from the depositor's account. 1170.00 is by way of several personal postdated checks up to March 21. defendant's Branch Manager. no assurance is made as to the actual collection thereof from a party whose credit standing. then it can be said that defendant is guilty of negligence. 1992 from a person whose identify is not even disclosed to plaintiff. that is. but such liability may be regulated by the courts. . . Rodolfo Jose wrote plaintiff's Ms. the same Mr.) Art.12. if the defendant could tender the full payment of the amount of P999.00 in defendant's own Manager's check and that plaintiff is willing to forego its further claims for interest and losses for a period of 620 days. Plaintiff then replied to defendant's letter by requesting that in lieu of the post-dated checks from defendant's client with whom plaintiff has no privity whatsoever. (Art. . To an ordinary person aggrieved already by having been taken advantage of for 620 days more or less. New Civil Code. more or less. thereby. Petitioner merely asked that "judgment be rendered in favor of plaintiff against defendant sentencing it to pay plaintiff: 1.000. the defense of respondent Allied Bank that the reimbursement cannot be made since client's account is not sufficiently funded at the time petitioner sent its Charge Slip.["] 12 Petitioner points to its prayer in its complaint to show that it sought reimbursement from the drawer's account. the recipient is not at all aware of. The prayer. which can be verified only by examining the subject bank account. 9 Further. .000.00).000. . P999. 1991. On top of the allegations in the Complaint. 10 Petitioner also believed that it had no privity with the depositor: 2.

DESIERTO. ANGEL C. In Re: Motion to Cite Lourdes T. respectively. The subject matter of the dispute may be the amount of P999.Indeed. In other words. 240-020718.00 deposited in the drawer's account. 2001] LOURDES T. 1405. DE JESUS. Office of the Ombudsman. . The necessity of the inquiry. 1998 in OMB-0-97-0411. petitioners. Fact-Finding and Intelligence Bureau (FFIB) v. petitioner Marquez received an Order from the Ombudsman Aniano A. ANIANO A.R. et. denying Marquez‘s motion for reconsideration dated September 10. is immaterial since the case does not come under any of the exceptions allowed by the Bank Deposits Secrecy Act. petitioner needs to determine: 1. b. June 27. functions and duties of the Ombudsman. It does not seek recovery of the very money contained in the deposit. how long respondent Allied Bank had wilfully or negligently allowed the difference of P999. By the terms of R. in her capacity as Branch Manager. to prove the allegations in its Complaint before the PCHC Arbitration Committee.000. whether indeed the subject account was no longer sufficiently funded when petitioner sent its charge slip for reimbursement to respondent bank on May 7. Desierto dated April 29. 011-37270. 1998. issue subpoena and subpoena duces tecum and take testimony in any investigation or inquiry. and their order dated October 14. and to rebut private respondent's defense on the matter. 16 . 1998. 14 In short. (9) Punish for contempt in accordance with the Rules of Court and under the same procedure and with the same penalties provided therein. 245-30317-3 and 245-30318-1. 2.00 to be maintained in the subject account without remitting the same to petitioner. only a disclosure of the pertinent details and information relating to the transactions involving subject account will enable petitioner to prove its allegations in the pending Arbicom case. otherwise known as the Ombudsman Act of 1989 and under existing jurisprudence on the matter. received by counsel of September 9. . MARQUEZ. [G. al. JR. petitioner seeks to-a. MAYOR-ALGO. The order further states: ―It is worth mentioning that the power of the Ombudsman to investigate and to require the production and inspection of records and documents is sanctioned by the 1987 Philippine Constitution. and 3. HON.000. No. Prohibit respondents from implementing their order dated October 14. The accounts to be inspected are Account Nos. the "money deposited" itself should be the subject matter of the litigation. the petition is DENIED. 135882.. The antecedent facts are as follows: Sometime in May 1998. 6770 especially Section 15 thereof provides. respondents. Republic Act No. respondents‘ order dated September 7. in proceeding with the hearing of the motion to cite Marquez for indirect contempt. 1998.. the following powers. A. It must be noted that R. 6770. 1998. . in their capacities as Chairman and Members of the Panel. No. vs. 1998. Amado Lagdameo. Marquez for indirect contempt.A.00 that petitioner seeks from private respondent as a result of the latter's alleged failure to inform the former of the discrepancy. MARY ANN CORPUZ-MANALAC and JOSE T. 1991. or the lack thereof. among others. through the issuance by this Court of a temporary restraining order and/or preliminary injunction. That petitioner feels a need for such information in order to establish its case against private respondent does not. including the power to examine and have access to bank accounts and records. by itself. Union Bank of the Philippines. JR. Julia Vargas Branch. 1998. received by counsel on October 20. for having been issued without or in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction. WHEREFORE. involved in a case pending with the Ombudsman entitled. Annul and set aside. warrant the examination of the bank deposits.000. where petitioner is the branch manager. to wit: x x x (8) Administer oaths. petitioner is fishing for information so it can determine the culpability of private respondent and the amount of damages it can recover from the latter. . to produce several bank documents for purposes of inspection in camera relative to various accounts maintained at Union Bank of the Philippines. Evaluation and Preliminary Investigation Bureau. whether or not respondent Allied Bank's actuations in refusing to immediately reimburse the discrepancy was attended by good or bad faith. but it is not the P999. In the petition at bar. (in his capacity as OMBUDSMAN.

against the Ombudsman. 1998. Julia Vargas Branch was the depositary bank of the subject Traders Royal Bank Manager‘s Checks (MCs). Your act constitutes disobedience of or resistance to a lawful order issued by this office and is punishable as Indirect Contempt under Section 3(b) of R. pending with the office of the Ombudsman. on May 2 and 3. We surmised that these accounts have long been dormant. Marquez and Atty. On July 10. were deposited and credited to an account maintained at the Union Bank.A.Clearly.6 million. In the meantime. the Ombudsman issued an order directing petitioner to produce the bank documents relative to the accounts in issue. George Trivinio. After convincing themselves of the veracity of the checks. hence are not covered by the new account number generated by the Union Bank system. a respondent in OMB-0-97-0411. A.A. it must be emphasized that Union Bank. A. the specific provision of R. the lower court denied petitioner‘s prayer for a temporary restraining order and stated thus: ―After hearing the arguments of the parties. United Nations Avenue branch. Marquez to comply with the order of the Ombudsman. on July 14.A. 6770. on June 4. Makati City. thereby giving the bank enough time within which to sufficiently comply with the order. eleven (11) MCs in the amount of P70. Section 15 and R.1 Million at Traders Royal Bank.A. on June 16. known as ―The Ombudsman Act of 1989‖. However. Macalino at the bank‘s main office. the name of the depositor(s) could easily be identified since the account numbers x x x where said checks were deposited are identified in the order. your persistent refusal to comply with Ombudsman‘s order is unjustified. The petition was intended to clear the rights and duties of petitioner.‖ the bank is still required to preserve the records pertaining to the accounts within a certain period of time as required by existing banking rules and regulations. the court finds the application for a Temporary Restraining Order to be without merit. on June 16. Respondent should he decide to exercise his 17 . filed a petition for declaratory relief. The reason forwarded by petitioner was that ―despite diligent efforts and from the account numbers presented. Macalino advised Ms. The meeting was for the purpose of allowing petitioner and Atty. ―Since the application prays for the restraint of the respondent. Petitioner agreed to an in camera inspection set on June 3. 6770. there is no great or irreparable injury from which petitioners may suffer. petitioner sought a declaration of her rights from the court due to the clear conflict between R. Fe B. No. petitioner manager would be charged with indirect contempt and obstruction of justice. purchased fifty one (51) Managers Checks (MCs) for a total amount of P272. And finally. and is merely intended to delay the investigation of the case. Julia Vargas Branch. 6770. prohibition and injunction with the Regional Trial Court. not the International Corporate Bank. Notwithstanding the fact that the checks were payable to cash or bearer. the Ombudsman issued another order stating that unless petitioner appeared before the FFIB with the documents requested. The order states: Viewed from the foregoing.‖ Thus. petitioner wrote the Ombudsman explaining to him that the accounts in question cannot readily be identified and asked for time to respond to the order. 1405) and places the office of the Ombudsman in the same footing as the courts of law in this regard. 1998. the in camera inspection was already extended twice from May 13. 1998. Makati City. petitioner together with Union Bank of the Philippines. Moreover. stated: ―firstly. The same may also constitute obstruction in the lawful exercise of the functions of the Ombudsman which is punishable under Section 36 of R. if respondent is not so restrained. modifies the law on the Secrecy of Bank Deposits (R. responding to the request of the petitioner for time to comply with the order. 6770. as shown at its dorsal portion and as cleared by the Philippine Clearing House. It would appear that Mr. Out of the 51 MCs. No. We therefore have to verify from the Interbank records archives for the whereabouts of these accounts. Ayala Avenue. 1998. the FFIB panel met in conference with petitioner Lourdes T. Even assuming that the accounts xxx were already classified as ―dormant accounts. Atty. a later legislation. 1998. On May 26.‖ The basis of the Ombudsman in ordering an in camera inspection of the accounts is a trail of managers checks purchased by one George Trivinio. 1998 to June 3. 1405. 6770. 1998.‖ The Ombudsman. Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman and other persons acting under his authority were continuously harassing her to produce the bank documents relative to the accounts in question. 1995. Macalino to view the checks furnished by Traders Royal Bank. in the exercise of his contempt powers under Section 15 (9) in relation to paragraph (8) of R. Thus. nonetheless. 1998.A. 1998. we can not identify these accounts since the checks are issued in cash or bearer. Sections 2 and 3.

Rosales. Since petitioner failed to show prima facie evidence that the subject matter of the investigation is outside the jurisdiction of the Office of the Ombudsman. petitioner filed with the Ombudsman a motion for reconsideration of the above order. and b. 3. 1405). Deposit is subject of litigation. Makati City. ―The questioned orders were issued with the investigation of the case of Fact-Finding and Intelligence Bureau vs. Her motion was premised on the fact that there was a pending case with the Regional Trial Court. she wanted to be clarified as to how she would comply with the orders without her breaking any law. 1998. Fact Finding and Intelligence Bureau (FFIB). Petitioners‘ application for Temporary Restraining Order is not only to restrain the Ombudsman from exercising his contempt powers. 6770. petitioner filed a motion for reconsideration based on the following grounds: a. 1998. the present petition. It is in these proceedings where petitioners may question the propriety of respondent‘s exercise of his contempt powers.m.. Director. By court order in bribery or dereliction of duty cases against public officials. A. x x x Anyone who. On August 31. the Ombudsman filed a motion to dismiss the petition for declaratory relief on the ground that the Regional Trial Court has no jurisdiction to hear a petition for relief from the findings and orders of the Ombudsman.1998 and June 16. A.1998. Under the present Constitution only judges may issue warrants. the Ombudsman filed an opposition to petitioner‘s motion for reconsideration dated July 20. The subject matter of the investigation being conducted by the Ombudsman at petitioners‘ premises is outside his jurisdiction. Gancayco 18 . at which date and time she should appear personally to submit her additional evidence. for violation of R. No. and on October 14. ordering petitioner and counsel to appear for a continuation of the hearing of the contempt charges against her. particularly R.‖ Hence. The FFIB opposed the motion. After hearing. An examination of the secrecy of bank deposits law (R. Impeachment case. hence. No. 1405) would reveal the following exceptions: 1. 1405. petitioner received a copy of the motion to cite her for contempt. Sections 14 and 27. 5. in cases of unexplained wealth as held in the case of PNB vs. No. However. On August 7. 1998. Failure to do so shall be deemed a waiver thereof. Petitioner likewise reiterated that she had no intention to disobey the orders of the Ombudsman. for lack of merit. the panel issued an order dated September 7. filed with the Office of the Ombudsman by Agapito B. the Ombudsman denied the motion by order the dispositive portion of which reads: ―Wherefore. A.A. Let the hearing of the motion of the Fact Finding Intelligence Bureau (FFIB) to cite her for indirect contempt be intransferrably set to 29 October 1998 at 2:00 o‘clock p. The issue is whether petitioner may be cited for indirect contempt for her failure to produce the documents requested by the Ombudsman. 1998. and also the Ombudsman‘s motion to dismiss. R.‖ On July 20. 3019. 4. 1998. el. Sec. no writ of injunction may be issued by this Court to delay this investigation pursuant to Section 14 of the Ombudsman Act of 1989. Petitioners are not therefore left without any adequate remedy. 1998. On September 10. citing R. respondent Lourdes T. without lawful excuse x x x refuses to produce documents for inspection. 1998. the lower court denied petitioner‘s motion for reconsideration. A. No. petitioner filed with the Ombudsman an opposition to the motion to cite her in contempt on the ground that the filing thereof was premature due to the petition pending in the lower court. but to stop him from implementing his Orders dated April 29.contempt powers would still have to apply with the court. which would determine whether obeying the orders of the Ombudsman to produce bank documents would not violate any law. Where the depositor consents in writing. Respondent Ombudsman panel set the incident for hearing on September 7. OMB-0-97-0411. On August 19. 3019. 8. 1998. On July 23. et. A. respondent should apply with the Court for the issuance of the warrant needed for the enforcement of his contempt orders. Marquez‘s motion for reconsideration is hereby DENIED. On August 21. 1998. 1998. 2. No. Amado Lagdameo. 1998. when thereunto lawfully required shall be subject to discipline as in case of contempt of Court and upon application of the individual or body exercising the power in question shall be dealt with by the Judge of the First Instance (now RTC) having jurisdiction of the case in a manner provided by law (section 580 of the Revised Administrative Code). And whether the order of the Ombudsman to have an in camera inspection of the questioned account is allowed as an exception to the law on secrecy of bank deposits (R.

personality. Secrecy of foreign currency deposits. 1246. That said foreign currency deposits shall be exempt from attachment. al.) 19 . are hereby declared as and considered of an absolutely confidential nature and. or anyone in her place to comply with the order dated October 14. garnishment. the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. however. except upon the written permission of the depositor. 3019. inquired or looked into by any person. 21. In Union Bank of the Philippines v. et. A. there is yet no pending litigation before any court of competent authority. the account must be clearly identified. there was no pending case in court which would warrant the opening of the bank account for inspection. AND FOR OTHER PURPOSES. and trespass to dwelling. the Secrecy of Bank Deposits Act. the revelation of trade and industrial secrets. The Revised Penal Code makes a crime of the violation of secrets by an officer. What is existing is an investigation by the office of the Ombudsman. what the Office of the Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo. The Civil Code provides that "[e]very person shall respect the dignity. In short. No costs. (5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials. privacy and peace of mind of his neighbors and other persons" and punishes as actionable torts several acts for meddling and prying into the privacy of another. Court of Appeals. and further amended by PD No. prom. et. Provided. No. 1035. It also holds a public officer or employee or any private individual liable for damages for any violation of the rights and liberties of another person. or (6) In cases where the money deposited or invested is the subject matter of the litigation‖ In the case at bar. We order the Ombudsman to cease and desist from requiring Union Bank Manager Lourdes T. with the Sandiganbayan. Nov.The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the Philippines. is based on a pending investigation at the Office of the Ombudsman against Amado Lagdameo. – All foreign currency deposits authorized under this Act. (As amended by PD No.. IN VIEW WHEREOF. government agency or any administrative body whatsoever. Zones of privacy are recognized and protected in our laws. and similar orders. Julia Vargas Branch. We rule that before an in camera inspection may be allowed. REPUBLIC ACT No. 1035. Sec. The bank personnel and the account holder must be notified to be present during the inspection. (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. and the Intellectual Property Code. in no instance shall foreign currency deposits be examined. government official. for violation of R. (3) Upon written permission of the depositor. we held that ―Section 2 of the Law on Secrecy of Bank Deposits. 1998. or any other order or process of any court. legislative body. (4) In cases of impeachment. bureau or office whether judicial or administrative or legislative. al. Invasion of privacy is an offense in special laws like the Anti-Wiretapping Law. or any other entity whether public or private. 1977. as amended by PD No. we GRANT the petition. Section 8. and such inspection may cover only the account identified in the pending case. and recognizes the privacy of letters and other private communications. Marquez. Clearly. 6426 AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES. Further. 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. as well as foreign currency deposits authorized under PD No. 1034. there must be a pending case before a court of competent jurisdiction. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates Authority and AMARI.

Philippines. This bond shall remain valid and effective until the loan including interest has been fully paid and liquidated. Makati City. LAND BANK OF THE PHILIPPINES. represented by its President as PRINCIPAL.000. the above bounden PRINCIPAL. Philippines as SURETY.000. 50. 2Ka. SILVERIO President AMALIO A. a copy of which contract/agreement is hereto attached and made part hereof. and Westmont Bank (now United Overseas Bank). it shall remain in full force and effect. Euliji-ro. Korea. MALLARI Senior Vice-President General Insurance Group 20 .S. then this obligation shall be null and void. Ulchi-ro. and the GOVERNMENT SERVICE INSURANCE SYSTEM. Puyat Avenue. Seoul. if the PRINCIPAL shall well and truly perform and fulfill all the undertakings. 99-1853. we bind ourselves. 82647 allowing the quashal by the Regional Trial Court (RTC) of Makati of a subpoena for the production of bank ledger. Financial Center Roxas Boulevard. THE HONORABLE 15th DIVISION OF THE COURT OF APPEALS and INDUSTRIAL BANK OF KOREA. on the 12th day of December. 313 Sen. Korea.R. WHEREAS. with principal office in the City of Pasay. Korea. covenants. Tong Yang Merchant Bank. Chungk-ku. Manila: TONG YANG MERCHANT BANK. collectively known as "the Banks" against Domsat Holdings. terms. RODRIGO A. Seoul.4 Republic of the Philippines GOVERNMENT SERVICE INSURANCE SYSTEM GENERAL INSURANCE FUND GSIS Headquarters. Jung-gu. 411 Quintin Paredes St. Metro Manila. THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS: WHEREAS.G. WESTMONT BANK. otherwise. successors and assigns. 2-Ga. Seoul. INC. conditions.R. Inc. TONG YANG MERCHANT BANK. administrators. Principal GOVERNMENT SERVICE INSURANCE SYSTEM General Insurance Fund By: By: CAPT.. 199-40. as Administrator of the GENERAL INSURANCE FUND. of US $ ELEVEN MILLION DOLLARS ($11. WESTMONT BANK and DOMSAT HOLDINGS. in the sum. SP No. a corporation duly organized and existing under and by virtue of the laws of the Philippines. 2011 GOVERNMENT SERVICE INSURANCE SYSTEM. 1996 entered into a contract agreement with the aforementioned OBLIGEES to fully and faithfully Guarantee the repayment of the principal and interest on the loan granted the PRINCIPAL to be used for the financing of the two (2) year lease of a Russian Satellite from INTERSPUTNIK. Ulchi-ro. DOMSAT HOLDINGS. in accordance with the terms and conditions of the credit package entered into by the parties. Land Bank Bldg. Chung-gu. HANAREUM BANKING CORP. Land Bank of the Philippines.2 whereby the Banks agreed to lend United States (U. This case is incident to Civil Case No. WITNESS OUR HANDS AND SEALS this 13th day of December 1996 at Pasay City.) $11 Million to Domsat for the purpose of financing the lease and/or purchase of a Gorizon Satellite from the International Organization of Space Communications (Intersputnik).00) for the payment of which sum. NOW. THEREFORE.3 The controversy originated from a surety agreement by which Domsat obtained a surety bond from GSIS to secure the payment of the loan from the Banks.. are held and firmly bound unto the OBLIGEES: LAND BANK OF THE PHILIPPINES. which is the main case for collection of sum of money with damages filed by Industrial Bank of Korea. INDUSTRIAL BANK OF KOREA. Pasay City G(16) GIF Bond 027461 SURETYBOND KNOW ALL MEN BY THESE PRESENTS: That we. Gil J. INC. First Merchant Banking Corporation. vs. and agreements stipulated in said contract/agreements. No. DOMSAT HOLDINGS.. 2-Ga. well and truly to be made. and FIRST MERCHANT BANKING CORPORATION. executors. INC. We quote the terms of the Surety Bond in its entirety. the aforementioned OBLIGEES require said PRINCIPAL to give a good and sufficient bond in the above stated sum to secure the full and faithful performance on his part of said contract/agreement. The subject of this petition for certiorari is the Decision1 of the Court of Appeals in CA-G. IV. 189206 June 8. firmly by these presents. Binondo. 185. our heirs. 7th Floor. Said case stemmed from a Loan Agreement. (Domsat) and the Government Service Insurance System (GSIS). jointly and severally.

thus: After a careful consideration of the arguments of the parties. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002. papers. with Westmont Bank (now United Overseas Bank). in his/her direct or indirect possession. Inc. in his/her direct or indirect possession. whether in his/her capacity as Custodian of Records or otherwise. Inc. The loan was secured by defendant GSIS which was the surety. with Westmont Bank (now United Overseas Bank). custody or control (whether actual or constructive). these assailed orders are the subject of the petition for certiorari before the Court of Appeals. in his/her direct or indirect possession. Ledger covering the account of DOMSAT Holdings. as amended. with Westmont Bank as the conduit. Inc. any and all documents. files. transferred the U. 2) request for the documents will violate the Law on Secrecy of Bank Deposits. and 3) GSIS failed to advance the reasonable cost of production of the documents. Court of Appeals.10 On 26 June 2003.S.12 The trial court invoked the ruling in Intengan v.13 where it was ruled that foreign currency deposits are absolutely confidential and may be examined only when there is a written permission from the depositor. whether in his/her capacity as Custodian of Records or otherwise. All applications for cashier‘s/ manager‘s checks and bank transfers funded by the account of DOMSAT Holdings. custody or control (whether actual or constructive). GSIS raised the following arguments in support of its petition: I. GSIS requested for the issuance of a subpoena duces tecum to the custodian of records of Westmont Bank to produce the following documents: 1. and all other data and materials covering said applications. and all other data and materials covering said applications. The motion for reconsideration filed by GSIS was denied on 30 December 2003. The case at bench is for the collection of a sum of money from defendants that obtained a loan from the plaintiff. Inc. $11 Million loan proceeds from the Industrial Bank of Korea to Citibank New York account of Westmont Bank and from there to the Binondo Branch of Westmont Bank. the trial court granted the second motion for reconsideration filed by the banks. books. notes and other data and materials relating to the account or transactions of DOMSAT Holdings.5 The Banks filed a complaint before the RTC of Makati against Domsat and GSIS. in his/her direct or indirect possession.When Domsat failed to pay the loan. 4. The previous subpoenas issued were consequently quashed. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002. GSIS alleged that Domsat. any and all documents. with or through the Westmont bank (now United Overseas Bank) for the period January 1997 to December 2002. whether in his/her capacity as Custodian of Records or otherwise. 6 The RTC issued a subpoena decus tecum on 21 November 2002. the RTC issued an Order denying the motion to quash for lack of merit. Hence. 3. All applications for cashier‘s/manager‘s checks funded by the account of Philippine Agila Satellite.11 On 1 September 2003 however. 21 .7 A motion to quash was filed by the banks on three grounds: 1) the subpoena is unreasonable. WHEREFORE. deeds. records. whether in his/her capacity as Custodian of Records or otherwise. for lack of merit the motion is DENIED. files. deeds. GSIS refused to comply with its obligation reasoning that Domsat did not use the loan proceeds for the payment of rental for the satellite. 2. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002. Inc.9 On 9 April 2003. papers. another Order was issued by the RTC denying the motion for reconsideration filed by the banks. custody or control (whether actual or constructive). Ledger covering the account of Philippine Agila Satellite. notes and other data and materials relating to the account or transactions of Philippine Agila Satellite. custody or control (whether actual or constructive). the Court did not find merit in the motion.8 Domsat also joined the banks‘ motion to quash through its Manifestation/Comment. records. The quashal of the subpoena would deny defendant GSIS its right to prove its defenses. oppressive and does not establish the relevance of the documents sought. In the course of the hearing. We quote the pertinent portion of the Order. Inc. The serious objection appears to be that the subpoena is violative of the Law on Secrecy of Bank Deposit. books. It is the contention of defendant GSIS that the proceeds of the loan was deviated to purposes other than to what the loan was extended. The law declares bank deposits to be "absolutely confidential" except: x x x (6) In cases where the money deposited or invested is the subject matter of the litigation.

the decretal portion of which reads: 22 . However. III. are not eligible for deposit under the System. had inappropriately invoked the provisions of Central Bank (CB) Circular Nos. CB Circular 343 requires the surrender to the banking system of foreign exchange.A. Court of Appeals where the Supreme Court has ruled that the under R. as well as a copy of an Agreement and/or Contract and/or Memorandum between Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon Satellite. inquired or looked into without the written consent of its owner. the Court of Appeals ruled that the testimony of the incumbent president of Westmont Bank is not the written consent contemplated by Republic Act No.14 The Court of Appeals addressed these issues in seriatim. under CB 1389. 6426. The fact that it was deposited to the local bank Westmont Bank. 6426 there is only a single exception to the secrecy of foreign currency deposits. whether for payment of legitimate obligation or otherwise. The Court of Appeals however upheld the issuance of subpoena praying for the production of applications for cashier‘s or manager‘s checks by Domsat through Westmont Bank. The appellate court also underscored the fact that GSIS did not raise the defect of lack of notice in its opposition to the second motion for reconsideration.00 deposit in the account of respondent Domsat in Westmont Bank is covered by the secrecy of bank deposit. On 29 February 2008. it is no longer secret and confidential.A. and petitioner GSIS‘ right to inquire into what happened to such deposit can not be suppressed.000. 6426 or the Bank Secrecy Law. Series of 1983. The abovesaid provision relied upon by the petitioner does not in any manner prescribe the conditions before any foreign currency deposit can be entitled to the confidentiality provisions of R. In its Reply to respondent banks‘ comment. The Court of Appeals declared that Domsat‘s deposit in Westmont Bank is covered by Republic Act No. Respondent judge capriciously and arbitrarily ignored Section 2 of the Foreign Currency Deposit Act (RA 6426) in ruling in his Orders dated September 1 and December 30.000.A.000. What is applicable now is the decision in Intengan vs. the Court of Appeals rendered the assailed Decision. The ruling in Van Twest vs.000. Obviously. therefore. This requirement. II. The appellate court believed that the production of these documents does not involve the examination of Domsat‘s account since it will never be known how much money was deposited into it or withdrawn therefrom and how much remains therein.00 in Westmont Bank is covered by the Bank Secrecy Law. under Sec. including proceeds of foreign borrowings. proceeds of foreign borrowings are no longer required to be surrendered to the banking system. can no longer be found in later circulars. 102 thereof.000. petitioner now argues that paragraph 2.00 deposit. Petitioner. 2003 despite the fact that it did not contain a notice of hearing and was therefore a mere scrap of paper. petitioner claims violates the circular and makes the deposit lose its confidentiality status under R.000. We quote the pertinent portion of the Decision: It is our considered opinion that Domsat‘s deposit of $11. 6426. 343 which has already been superseded by more recently issued CB Circulars. as such it cannot be examined. transfer to foreign currency deposit account or receipt from another foreign currency deposit account.Respondent Judge acted with grave abuse of discretion when it favorably considered respondent banks‘ (second) Motion for Reconsideration dated July 9. Section 27 of CB Circular 1389 is applicable because Domsat‘s $11. CB Circular No. 6426. Since both respondent banks and respondent Domsat have disclosed during the trial the US$11. should have been paid directly to Intersputnik and not deposited into Westmont Bank. Court of Appeals was rendered during the effectivity of CB Circular No. Section 102 of Circular 960 has not been re-enacted in the later Circulars. disclosure is allowed only upon the written permission of the depositor.00 loan from respondent banks was intended to be paid to a foreign supplier Intersputnik and. therefore.000. The appellate court held that failure to timely object to the admission of a defective motion is considered a waiver of its right to do so. Undaunted.15 Anent the third issue. The Court of Appeals resorted to a liberal interpretation of the rules to avoid miscarriage of justice when it allowed the filing and acceptance of the second motion for reconsideration. 960. however.000. 2003 that the US$11. a reading of the entire Section 27 of CB Circular 1389 reveals that the portion quoted by the petitioner refers only to the procedure/conditions of drawdown for service of debts using foreign exchange. that is. 960 has since been superseded by CB Circular 1318 and later by CB Circular 1389. petitioner appears to have conceded that what is applicable in this case is CB Circular 1389.

it is not allowed when a party to a case fails to appeal a judgment to the proper forum. when a party adopts an improper remedy.S. the latter became final and executory. 2003 is hereby modified in that the quashal of the subpoena for the production of Domsat‘s bank ledger in Westmont Bank is upheld while respondent court is hereby ordered to issue subpoena duces tecum ad testificandum directing the records custodian of Westmont Bank to bring to court the following documents: a) applications for cashier‘s or manager‘s checks by respondent Domsat through Westmont Bank from January 1997 to December 2002. the petition is partially GRANTED. 99-1853 is procedurally acceptable. Thus. GSIS asserts that the subject matter of the litigation is the U.18 Certiorari under Rule 65 lies only when there is no appeal. They justify the issuance of the subpoena as an interlocutory matter which may be reconsidered anytime and that the pro forma rule has no application to interlocutory orders. Hence. and c) copy of an agreement and/or contract and/or memorandum between respondent Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon satellite. No pronouncement as to costs. $11 Million. speedy and adequate remedy in the ordinary course of law. That action is not a substitute for a lost appeal in general. only the consent of the depositor shall serve as the exception for the disclosure of his/her deposit.19 Where an appeal is available. nor plain. particularly for the production of applications for cashier‘s or manager‘s checks by Domsat through Westmont Bank. $11 Million is the subject matter of the case and the disclosure of bank deposits relating to the U. $11 Million should be allowed. b) bank transfers by respondent Domsat through Westmont Bank from January 1997 to December 2002.S. $11 Million obtained by Domsat from the Banks to supposedly finance the lease of a Russian satellite from Intersputnik. his petition may be dismissed outright. Petitioner availed of the improper remedy as the appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a special civil action under Rule 65.20lauuphil Yet.S. It appears that only GSIS appealed the ruling of the Court of Appeals pertaining to the quashal of the subpoena for the production of Domsat‘s bank ledger with Westmont Bank.21 Domsat denies the allegations of GSIS and reiterates that it did not give a categorical or affirmative written consent or permission to GSIS to examine its bank statements with Westmont Bank. $11 Million will greatly prejudice and burden the GSIS pension fund considering that a substantial portion of this fund is earmarked every year to cover the surety bond issued.16 GSIS filed a motion for reconsideration which the Court of Appeals denied on 19 June 2009. 6426. Accordingly. The Banks maintain that Republic Act No. is contingent upon whether Domsat indeed utilized the amount to lease a Russian satellite as agreed in the Surety Bond Agreement. Under said law. as well as a copy of an agreement and/or contract and/or memorandum between Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon satellite. Rule 15 of the Rules of Civil Procedure.S. Since neither Domsat nor the Banks interposed an appeal from the other portions of the decision. GSIS argues that the whereabouts of the U. Whether or not it should be held liable as a surety for the principal amount of U. GSIS insists that Domsat‘s deposit with Westmont Bank can be examined and inquired into. thus covered by Republic Act No. Accordingly. GSIS contends. the instant petition ascribing grave abuse of discretion on the part of the Court of Appeals in ruling that Domsat‘s deposit with Westmont Bank cannot be examined and in finding that the banks‘ second motion for reconsideration in Civil Case No. The Banks counter the arguments of GSIS as a mere rehash of its previous arguments before the Court of Appeals. even if this procedural infirmity is discarded for the broader interest of justice. certiorari will not prosper even if the ground therefor is grave abuse of discretion. the assailed Order dated December 30. GSIS defends the acceptance by the trial court of the second motion for reconsideration filed by the banks on the grounds that it is pro forma and did not conform to the notice requirements of Section 4. 1405 is not the applicable law in the instant case because the Domsat deposit is a foreign currency deposit. It anchored its argument on Republic Act No.WHEREFORE. GSIS also contends that the concerted refusal of Domsat and the banks to divulge the whereabouts of the U. Lastly. the petition sorely lacks merit. 1405 or the "Law on Secrecy of Bank Deposits.17 This Court notes that GSIS filed a petition for certiorari under Rule 65 of the Rules of Court to assail the Decision and Resolution of the Court of Appeals." which allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation.S. 23 .

All deposits of whatever nature with banks or banking institutions in the Philippines including investments in bonds issued by the Government of the Philippines. 1405 is considered a law of general application. provides: Section 8. 6426 applies in this case. Thus. 1246. That said foreign currency deposits shall be exempt from attachment. 24 . A general law does not nullify a specific or special law. (As amended by PD No. Republic Act No. government official. The core issue is which of the two laws should apply in the instant case. government official. including dollar deposits of petitioners. Section 2 thereof was first amended by Presidential Decree No. or upon order of a competent court in cases of bribery or dereliction of duty of public officials. Nov. 21. This Court highlighted the exception to the non-disclosure of foreign currency deposits. are hereby declared as and considered of an absolutely confidential nature and. 6426. Citibank filed an action against its officers for persuading their clients to transfer their dollar deposits to competitor banks.. were annexed to the complaint. except upon written permission of the depositor.GSIS invokes Republic Act No. 1405 provides for four (4) exceptions when records of deposits may be disclosed. 6426. government agency or any administrative body whatsoever. garnishment. inquired or looked into by any person. 1405 but Republic Act No. 7653 in 1993. In said case. Provided. 6426 to oppose it. he has the right to inquire into the said deposits.22 On the other hand.S. 1405. There is no conflict between them. This Court ruled that since the accounts in question are U. The latter allegedly received the checks from Citibank and deposited them to her account in China Bank. China Bank argued that the Citibank dollar checks with both respondent and/or her daughter as payees. 1246. the lone exception to the non-disclosure of foreign currency deposits.S.) On the one hand. are hereby considered as of an absolutely confidential nature and may not be examined. in the case of a written permission of the depositor. except upon the written permission of the depositor. 1405 was enacted for the purpose of giving encouragement to the people to deposit their money in banking institutions and to discourage private hoarding so that the same may be properly utilized by banks in authorized loans to assist in the economic development of the country. 1034. Republic Act No. Court of Appeals affirmed the above-cited principle and categorically declared that for foreign currency deposits. 1792 in 1981 and further amended by Republic Act No. The subject checks were presented in evidence. which was enacted in 1974. as well as foreign currency deposits authorized under Presidential Decree No. The above pronouncement was reiterated in China Banking Corporation v. is disclosure upon the written permission of the depositor. the applicable law therefore is not Republic Act No. the Anti-Money Laundering Council (AMLC) may inquire into a bank account upon order of any competent court. Court of Appeals. 1035 and later by Presidential Decree No. prom.23 It covers all bank deposits in the Philippines and no distinction was made between domestic and foreign deposits. It now reads: Section 2. 1035. Section 8 of Republic Act No. Republic Act No. and amended by Presidential Decree No. and further amended by PD No. dollar deposits. as amended by Presidential Decree No. its political subdivisions and its instrumentalities. These two laws both support the confidentiality of bank deposits. and e) in cases of violation of the Anti-Money Laundering Act (AMLA). or any other order or process of any court. 1977. (c) upon order of a competent court in the case of bribery or dereliction of duty of public officials or. Intengan v. (d) when the money deposited or invested is the subject matter of the litigation. Republic Act No. i. as owner of the funds unlawfully taken and which are undisputably now deposited with China Bank. and ruled that respondent. Secrecy of Foreign Currency Deposits. dollar deposits. 6426. Generalia specialibus non derogant. (b) in cases of impeachment. On the other hand. purporting to establish the deception practiced by the officers. deposited with China Bank. inquired or looked into by any person. bureau or office. These are under any of the following instances: a) upon written permission of the depositor. the applicable law is Republic Act No. Bank records. it is beyond cavil that Republic Act No.25 Therefore. 1405 to justify the issuance of the subpoena while the banks cite Republic Act No.e. such as U. however. Petitioners now complained that Citibank violated Republic Act No.26 where respondent accused his daughter of stealing his dollar deposits with Citibank. may not be looked into under the law on secrecy of foreign currency deposits. bureau or office whether judicial or administrative or legislative or any other entity whether public or private. 1035. 6426. under Republic Act No. or in cases where the money deposited or invested is the subject matter of the litigation. legislative body. A subpoena was issued to employees of China Bank to testify on these checks.24 It is a special law designed especially for foreign currency deposits in the Philippines. Republic Act No. in no instance shall foreign currency deposits be examined. 6426 was intended to encourage deposits from foreign lenders and investors. 1405 was enacted in 1955. or in cases of impeachment. – All foreign currency deposits authorized under this Act.

Santos personally attends to clients of the bank in the effort to persuade clients to place and keep their monies in the products of Citibank. among others.R. to products offered by other companies that were commanding higher rate of yields. vs. in the exercise of his sound discretion. N.R. shares of stocks and debt papers in other companies were as follows: 25 . DEPARTMENT OF JUSTICE. assigned me to assist in the investigation of certain anomalous/highly irregular activities of the Treasurer of the Global Consumer Group of the bank. otherwise. such as those placed in peso and dollar deposits and money placements. appeared to have been actively engaged in business endeavors that were in conflict with the business of the bank. WHEREFORE. Furthermore. Attached to the complaint was an affidavit6 executed by private respondent Vic Lim. a vice-president of Citibank. AZIZ RAJKOTWALA. JOVEN REYES. Mr. 2002 CARMEN LL. 37577 as well as its Resolution3 dated April 16. An Account Officer in the office of Mr. namely Ms. Santos and Ms. Ms. Westmont Bank cannot be legally compelled to disclose the bank deposits of Domsat. Dante L. This was done by first transferring bank clients‘ monies to Torrance and Global which in turn placed the monies of the bank clients in securities.A. the petition for certiorari is DISMISSED. 6426. Citibank filed a complaint for violation of section 31. xxx xxx xxx 4. 5. The third issue raised by GSIS was properly addressed by the appellate court. The appellate court. however. No. Dante L. sustained a resolution of the Department of Justice ordering the withdrawal of informations for violation of Republic Act No.1 Sometime this year.1 The investigation in which I was asked to participate was undertaken because the bank had found records/evidence showing that Mr. and RITA P. and VIC LIM. Dante L.. SP No. to Torrance and Global (their family corporations) for subsequent investment in securities. Santos. NERI. argue that GSIS is in fact liable to them for the proper applications of the loan proceeds and not vice-versa. Santos and Marilou Genuino. was diverted to a purpose other than that stated in the surety bond. The Decision dated 29 February 2008 and 19 June 2009 Resolution of the Court of Appeals are hereby AFFIRMED. NA. Vice President in the office of Mr. such as peso and dollar deposits.1 In the course of the investigation. The facts are: On September 21. Santos and the Asst.. 1993.4 in relation to section 1445 of the Corporation Code against two (2) of its officers. mortgage backed securities and money placements. N. Dante L. absent the written permission from Domsat. namely. Malou Genuino. COURT OF APPEALS. Genuino helped/caused to divert their deposits/money placements with Citibank.A.27 The basis for the application of subpoena is to prove that the loan intended for Domsat by the Banks and guaranteed by GSIS.Applying Section 8 of Republic Act No. Santos and Ms. G. The appellate court correctly relied on precedents where this Court set aside technicality in favor of substantive justice. Dante L. Santos and Ms. contrary to their disclosures and the aforementioned bank policy. 1996 of the former Fifteenth Division2 of the Court of Appeals in CA-G. in its Decision. Marilou (also called Malou) Genuino. thus it can be considered a waiver of the defect. the higher management of Citibank. namely Torrance Development Corporation and Global Pacific Corporation. Marilou Genuino derived substantial financial gains. WILLIAM FERGUSON. it might expose itself to criminal liability under the same act. Dante L. they managed or caused existing bank clients/depositors to divert their money from Citibank. We are however not prepared to rule on the merits of this case lest we pre-empt the findings of the lower courts on the matter. seeking the reversal of the Decision1 dated July 8. Santos also performed the duties of an Account Officer. NA. Marilou Genuino apart from being an Assistant Vice President in the office of Mr. grant the second motion for reconsideration despite its being pro forma. The Banks. I was able to determine that the bank clients which Mr. shares of stock and other certificates of third parties. the appellate court accurately pointed out that petitioner did not assail the defect of lack of notice in its opposition to the second motion of reconsideration. 128996 February 15. It was found that with the use of two (2) companies in which they have personal financial interest. Before us is a petition for review on certiorari. 1405 against private respondents. BRAWNER. Pertinent portions of his affidavit are quoted hereunder: 2. The appellate court maintained that the judge may. 1997 denying petitioners‘ motion for reconsideration. ROSARIO LL. Dante L. INTENGAN. It also appeared that out of these transactions.

to be debited from her Account No. The amounts covered by the checks represent the shares of Santos and Genuino in the margins Global and/or Torrance had realized out of the placements [using the diverted monies of the Citibank clients] made with the other companies. including those of petitioners‘. Third step: On maturity date(s) of the placements made by Torrance and/or Global in the other companies. such as securities. The transfer of the Citibank client‘s deposits was done through the accomplishment of either an Application For Manager‘s Checks or a Term Investment Application in favor of Global or Torrance that was prepared/filed by Genuino herself. admits to having authorized Lim to state the names of the clients involved and to attach the pertinent bank records. Citibank. Global and/or Torrance would then issue its/their own checks drawn against their Citibank accounts in favor of Santos and Genuino. Fifth step: At the same time. private respondent Joven Reyes.an "Application for Money Transfer" in the amount of US $100. Acting on this information.00.000. from his Citibank account to the Citibank account(s) of Global and/or Torrance for placement in the other companies. the Solicitor General described the scheme as having been conducted in this manner: First step: Santos and/or Genuino would tell the bank client that they knew of financial products of other companies that were yielding higher rates of interests in which the bank client can place his money. 24501018.10 He states that private respondents Aziz Rajkotwala and William Ferguson. Some of the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan. Santos and Genuino.000. to be debited from her Account No. and Rita P. N. in savings/dollar deposits and/or in trust accounts and/or money placements.A. executed by Intengan in favor of Citibank $ S/A No. Torrance. 24367796.30. As evidence. return the placements to Global and/or Torrance with the corresponding interests earned. using the monies of the Citibank client. Neri. N. Upon approval of the Application for Manager‘s Checks or Term Investment Application. Global and/or Torrance would also issue its/their check(s) drawn against its/their Citibank accounts in favor of the bank client.A. b) Annex "A-7"8 . 24367796.a "Money Transfer Slip" in the amount of US $45. Rosario Ll. vice-president/business manager of the Global Consumer Banking Group of Citibank. Global and/or Torrance would then issue its/ their checks drawn against its/their Citibank accounts in favor of the other companies whose financial products. 22543341. the funds of the bank client covered thereof were then deposited in the Citibank accounts of Torrance and/or Global. executed by Neri in favor of Citibank $ S/A No. shares of stocks and other certificates. respectively. were offering higher yields.an "Application for Money Transfer" in the amount of US $140. 26 . The check(s) cover the principal amount (or parts thereof) which the Citibank client had previously transferred. 93-10058 and 94-1215 were subsequently amended to include a charge of estafa under Article 315. paragraph 1(b)11 of the Revised Penal Code. and that he did so upon the advice of counsel. executed by Brawner in favor of Citibank $ S/A No. had no hand in the disclosure.996. 24367796. 93-9969. In turn. Brawner. to be debited from her Account No. Second step: Once the said fund transfers had been effected. Fourth step: Upon receipt by Global and/or Torrance of the remittances from the other companies. as follows: a) Annex "A-6"7 . with the help of Santos and/or Genuino.xxx b) Carmen Intengan xxx d) Rosario Neri xxx i) Rita Brawner All the above persons/parties have long standing accounts with Citibank. the bank client would then authorize the transfer of his funds from his Citibank account to the Citibank account of either Torrance or Global.S. Nos. The complaints which were docketed as I. Lim annexed bank records purporting to establish the deception practiced by Santos and Genuino. 22543236. the other companies would then. In his memorandum. and c) Annex "A-9"9 .00. Global Consumer Banking Country Business Manager and Country Corporate Officer. plus the interests or earnings his placements in other companies had made less the spreads made by Global.

. 1994. otherwise known as the Bank Secrecy Law. 37577 in the Court of Appeals. Petitioners‘ motion for reconsideration15 was denied by DOJ Acting Secretary Demetrio G.A. Although petitioners were not the parties involved in IS. Magsino (190 SCRA 633) where the Supreme Court allowed the testimonies on the bank deposits of someone not a party to the case as it found that said bank deposits were material or relevant to the allegations in the complaint. NOR UNDER ANY OTHER EXCEPTION: 27 .A. then DOJ Secretary Franklin M.13 directed the filing of informations against private respondents for alleged violation of Republic Act No. No. 1995. a disclosure of the same is proper and falls within the scope of the exceptions provided for by R. their accounts were relevant to the complete prosecution of the case against Santos and Genuino and the respondent DOJ properly ruled that the disclosure of the same falls under the last exception of R. therefore. inter alia. although not necessarily the direct subject matter thereof. II. Private respondents‘ counsel then filed an appeal before the Department of Justice (DOJ). 93-8469. the petition was reinstated19 and eventually given due course. on the basis of the latter tribunal‘s concurrent jurisdiction to issue the extraordinary writs therein prayed for. 1996.A. The petition was docketed as CA-G. in a Resolution dated August 18. 1997. No. Drilon issued a Resolution14 ordering. That ruling is consistent with the principle laid down in the case of Mellon Bank. Appeal was made in due time to this Court. private respondents had to present the records of the monies which were manipulated by the two officers which included the bank records of herein petitioners. 1405 (i. On motion. "in cases where the money deposited or invested is the subject matter of the litigation"). Demetria in a Resolution dated March 6.As an incident to the foregoing.16 Initially. NO. In due time. However. recommended the dismissal of petitioners‘ complaints.R. The instant petition was actually denied by the former Third Division of this Court in a Resolution18 dated July 16.e. 1994 and March 15. docketed as G. 37577 and declared therein. xxx xxx xxx Moreover.17 referred the matter to the Court of the Appeals. NO. Castro who. the former First Division of this Court. 93-8469 THAT DID NOT INVOLVE PETITIONERS. the language of the law itself is clear and cannot be subject to different interpretations. N. No. petitioners assert that the disclosure of their bank records was unwarranted and illegal for the following reasons: I. 1994. the disclosure of petitioners‘ deposits was necessary to establish the allegation that Santos and Genuino had violated Section 31 of the Corporation Code in acquiring "any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence. 1405. 1405." To substantiate the alleged scheme of Santos and Genuino. PRIVATE RESPONDENTS ILLEGALLY MADE DISCLOSURES OF PETITIONERS‘ CONFIDENTIAL BANK DEPOSITS FOR THEIR SELFISH ENDS IN PROSECUTING THEIR COMPLAINT IN IS. On November 17.R. IN BLATANT VIOLATION OF R. petitioners filed respective motions for the exclusion and physical withdrawal of their bank records that were attached to Lim‘s affidavit. On July 8. vs. 119999-120001. Ubana. petitioners sought the reversal of the DOJ resolutions via a petition for certiorari and mandamus filed with this Court.A. 1405. as follows: Clearly.A. Petitioners‘ motion for reconsideration was similarly denied in a Resolution dated April 16. 1405. Significantly.20 In assailing the appellate court‘s findings. as long as the bank deposits are material to the case. NO. 1997. The recommendation was overruled by Provincial Prosecutor Mauro M. PRIVATE RESPONDENTS‘ DISCLOSURES DO NOT FALL UNDER THE FOURTH EXCEPTION OF R. the withdrawal of the aforesaid informations against private respondents. SP No. SP No. the Court of Appeals rendered judgment dismissing the petition in CA-G. Lim and Reyes filed their respective counter-affidavits.12 In separate Memoranda dated March 8. No. in a Resolution dated June 5. however.R. Sr. A reading of the provision itself would readily reveal that the exception "or in cases where the money deposited or invested is the subject matter of the litigation" is not qualified by the phrase "upon order of competent Court" which refers only to cases of bribery or dereliction of duty of public officials. 1995. on the ground that petitioners had failed to show that a reversible error had been committed. 1994 2nd Assistant Provincial Prosecutor Hermino T.

A. 1405. 1405 FOR HAVING ILLEGALLY DISCLOSED PETITIONERS‘ CONFIDENTIAL BANK DEPOSITS AND RECORDS IN IS.S. The accounts in question are U. and the Court of Appeals . IN VIOLATION OF R. would appear to belong to that species of criminal acts punishable by special laws. 6426 there is only a single exception to the secrecy of foreign currency deposits. and it is done by some person. government official bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided. McBrayer xxx: ‗It is a mistaken notion that positive. as well as foreign currency deposits authorized under Presidential Decree No. are hereby declared as and considered of an absolutely confidential nature and. government agency or any administrative body whatsoever. 2001 of R. such knowledge or motive to be shown. 1405 against private respondents. legislative body. however. A case for violation of Republic Act No. 1035. known as the "Foreign Currency Deposit Act of the Philippines. Lim‘s act of disclosing details of petitioners‘ bank records regarding their foreign currency deposits.(1) PETITIONERS‘ DEPOSITS ARE NOT INVOLVED IN ANY LITIGATION BETWEEN PETITIONERS AND RESPONDENTS.from the parties‘ respective counsel. except upon the written permission of the depositor. 93-8469.. A circumspect review of the record shows us the reason. that said foreign currency deposits shall be exempt from attachment. called malum prohibitum. to violate the criminal law. the Provincial Prosecutor. men are not and should not be held criminally responsible for acts committed by them without guilty knowledge and criminal or at least evil intent xxx. NO. as amended by Presidential Decree No.all appear to have overlooked a single fact which dictates the outcome of the entire controversy. willful intent. as a rule and on principles of abstract justice. It does not matter if that such disclosure was necessary to establish Citibank‘s case against Dante L. and to make their commission criminal without regard to the intent of the doer. as distinguished from a mere intent. the Solicitor General. the applicable law is not Republic Act No. inquired or looked into by any person. MUCH LESS ONE INVOLVING PETITIONERS‘ DEPOSITS AS THE SUBJECT MATTER THEREOF. THERE IS NO LITIGATION BETWEEN THE PARTIES. 1034. THEREFORE. Incidentally. the acts of private respondents complained of happened before the enactment on September 29. The finest legal minds in the country . it has been held that: While it is true that. disclosure is allowed only upon the written permission of the depositor. 9160 otherwise known as the Anti-Money Laundering Act of 2001. As was said in the case of State vs. garnishment. PETITIONERS ARE ENTITLED TO PROSECUTE PRIVATE RESPONDENTS FOR VIOLATIONS OF R. is an essential ingredient in every criminal offense. dollar deposits.A. consequently. The petition is not meritorious. although the offender was honestly mistaken as to the meaning of the law he 28 . the law implies conclusively the guilty intent. In this regard. 6426 should have been the proper case brought against private respondents. this is especially so as to statutory offenses. 1405 but Republic Act (RA) No. or any other order or process of any court. in no instance shall such foreign currency deposits be examined." to forbid in a limited class of cases the doing of certain acts. in the enforcement of the law. When the statute plainly forbids an act to be done. No. "the great master of things." section 8 of which provides: Sec. No. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners‘ dollar deposits without the latter’s written permission. III.A. 8. 6426. the Department of Justice. NO. (2) EVEN ASSUMING ARGUENDO THAT THERE IS A LITIGATION INVOLVING PETITIONERS‘ DEPOSITS AS THE SUBJECT MATTER THEREOF. the courts have always recognized the power of the legislature. with the authority of Reyes. Santos and Marilou Genuino. this case should have been studied more carefully by all concerned.All foreign currency deposits authorized under this Act.A. that is. Apart from the reversal of the decision and resolution of the appellate court as well as the resolutions of the Department of Justice. Secrecy of Foreign Currency Deposits. NO. on grounds of public policy and compelled by necessity. PRIVATE RESPONDENTS‘ DISCLOSURES OF PETITIONERS‘ DEPOSITS ARE NEVERTHELESS ILLEGAL FOR WANT OF THE REQUISITE COURT ORDER. under R. and that where there is the absence of such intent there is no offense. petitioners pray that the latter agency be directed to issue a resolution ordering the Provincial Prosecutor of Rizal to file the corresponding informations for violation of Republic Act No. xxx In such cases no judicial authority has the power to require. Actually.21 (italics supplied) Thus.

26 In her complaint-affidavit. Prescription shall begin to run from the day of the commission of the violation of the law. 6426 being a special law. On one hand. 2. prescribe in accordance with the following rules: (a) after a year for offences punished only by a fine or by imprisonment for not more than one month. 1993. and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.25 Per available records. we are constrained to rule on a material issue even though it was not raised by the parties. Neri asserts that she discovered the disclosure on October 24.violates. 6426.30 The filing of the complaint or information in the case at bar for alleged violation of Republic Act No. as amended by Presidential Decree No. 1994.24 Applying Act No. So as not to unduly prolong the settlement of the case. On the other hand. When the language is plain and positive.32 on the other. (c) after eight years for those punished by imprisonment for two years or more. incorrectly invoked. For it is the filing of the complaint or information corresponding to the correct offense which produces that effect. Violations of the regulations or conditions of certificates of public convenience issued by the Public Service Commission shall prescribe after two months.23 as amended by Act No.A. Republic Act No. and if the same be not known at the time. the existence of laws is a matter of mandatory judicial notice.‘22 Ordinarily.A. and the offense is not made to depend upon the positive. We point out. private respondents may no longer be haled before the courts for violation of Republic Act No. 9160: ―The Anti-Money Laundering Act of 2001‖ was promulgated primarily to allow the examination of bank accounts suspected to be sourced from illegal activities but which otherwise are protected from examination or freezing under existing laws on secrecy of bank deposits. No pronouncement as to costs D. This was not done. which shall prescribe after twenty years: Provided. nothing prevented the petitioners from filing a complaint charging the correct offense against private respondents. specifically the lapse thereof. the offense prescribes in eight years. came into effect as far back as 1977. SEC. however. however. Secrecy of Bank Deposits Under the Anti-Money Laundering Law (RA 9160) R.28 As to Brawner. 6426. but less than two years. as everyone involved was content to submit the case on the basis of an alleged violation of Republic Act No. That all offences against any law or part of law administered by the Bureau of Internal Revenue shall prescribe after five years.29 Based on any of these dates. but less than six years. nothing is left to interpretation. the dismissal of the instant petition would have been without prejudice to the filing of the proper charges against private respondents. are applicable: SECTION 1. or by a fine of not less than five thousand pesos nor more than twenty-five thousand pesos. except the crime of treason. 6426 shall subject the offender to imprisonment of not less than one year nor more than five years. prescription has set in. the provisions of Act No. willful intent and purpose. ignorance thereof cannot be pretended.1âwphi1 A violation of Republic Act No. Private respondent Vic Lim made the disclosure in September of 1993 in his affidavit submitted before the Provincial Fiscal. or both: (b) after four years for those punished by imprisonment for more than one month.33 Even during the pendency of this appeal. 1405 (―An Act Prohibiting Disclosure of or Inquiry into Deposits with any Banking Institution and Providing Penalty Therefor‖) was promulgated forty-six years ago to encourage people to deposit their money in banking institutions and to discourage private hoarding so that these private funds may be properly utilized to 29 . the petition is hereby DENIED. the material date is January 5. Violations penalized by special acts shall. or both. Hence. that the confidentiality of foreign currency deposits mandated by Republic Act No. The matter would have ended here were it not for the intervention of time. from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. and (d) after twelve years for any other offence punished by imprisonment for six years or more. unless otherwise provided in such acts. 1993. however. 3326. 1246. 1405 did not have the effect of tolling the prescriptive period. The prescription shall be interrupted when proceedings are instituted against the guilty person. ignorantia legis non excusat. We refer to the issue of prescription. R. 1405 (Bank Secrecy Law).31 It may well be argued that the foregoing disquisition would leave petitioners with no remedy in law. Violations penalized by municipal ordinances shall prescribe after two months. 3326.34 WHEREFORE. 3763.27 Intengan stated that she learned of the revelation of the details of her foreign currency bank account on October 14.

Hijacking and other violations under Republic Act No. particularly: a) ―Covered Institutions‖ b) Covered Transactions and c) Unlawful Activity. Similarly. commodities or financial derivatives supervised or regulated by the Securities & Exchange Commission. and for Other Purposes‖) promulgated on April 4. Specified provisions of the Anti-Graft and Corrupt Practices Act. 30 . Felonies or offenses of a similar nature that is punishable under the penal laws of other countries. The term ―covered institutions‖ embraces any institution supervised or regulated by either the Banko Sentral ng Pilipinas (BSP) or the Insurance Commission and any institution or entity dealing in currency. The key to a proper appreciation of the law is in its definition of terms. Swindling 10. R. Under said law. Specified provisions of the Dangerous Drugs Act of 1972. Smuggling. involves. Accordingly. Piracy on the high seas. b) in cases of impeachment. 6426 (―An Act Instituting Foreign Currency Deposit System in the Philippines. the crime of money laundering is defined as one whereby the proceeds of an unlawful activity are transacted and made to appear as having originated from a legitimate source. transacts or attempts to transact. said monetary instrument or property. c) upon order of a competent court in cases of bribery or dereliction of duty of public officials. or relates to the proceeds of any unlawful activity. 9. Any person knowing that any monetary instrument or property represented. 13. who at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client or those with an underlying legal or trade obligation. Fraudulent practices and other violations of Securities Regulation Code of 2000. 6235 destructive arson and murder. Specifically it is committed by: a. Violations of the Electronic Commerce Act of 2000 (R. Robbery and Extortion 6. 11. all deposits of whatever natures which are deposited with banks or banking institutions are considered as of an absolutely confidential nature. 8792). 3. Expressly excluded are transactions involving a person. or d) in cases where the money deposited is the subject matter of the litigation. 8. With the passage of time and the phenomenon referred to as ―globalization‖. Examination of the account is allowed only by way of exception in four (4) cases: a) upon written permission of the depositor. series or combination of transactions involving a total amount in excess of P4M or its equivalent in foreign currency. 12. Kidnapping for ransom. 2. 1972 extended the veil of absolute confidentiality and immunity from examination to foreign currency deposits with authorized Philippines banks and banking institutions. Qualified theft. Plunder 5.A. these laws originally promulgated with a noble purpose were taken advantage of to conceal illegal banking activities such that the Philippines was cited as among the money laundering centers of Asia. ―Unlawful Activity‖ refers to any act or omission involving the following crimes/offenses: 1. Jueteng and Masiao. 4.A. 7.assist in the economic development of the country. Hence international pressure was imposed to goad our government into passing an anti-money laundering law. and 14. acts perpetrated by terrorists. ―Covered Transaction‖ is a single.

9160 and the crime embraced with the definition of ―unlawful activity‖. Garnishment G. a vacancy in any of the enumerated offices or absence of any such member will render the AMLC ineffective. while the AMLC has powers to freeze a suspected account.000. e. But at least some procedure. vs. f. 1991 PHILIPPINE COMMERCIAL & INDUSTRIAL BANK and JOSE HENARES. has been put in place as will hopefully deter the use of Philippine banks (and other financial/insurance institutions) as laundry centers. To allay fears of the lawmakers themselves that the law may in the future be used against them (as in the case of the crime of plunder which ERAP is charged with). The AMLC is authorized to. the Commissioner of the Insurance Commission of the Chairman of the SEC. 9160 may be filed during an election period .000 for failure to disclose a money laundering activity. The penalty for the crime of transacting or attempting to transact a money laundering activity ranges from 7 to 14 years and a fine of not less that P3M but not more than double the value of the monetary instrument. 4 – 7 years imprisonment and a fine of at least P1. No. b. COURT OF APPEALS and MARINDUQUE MINING AND INDUSTRIAL CORPORATION This is a petition for review on certiorari which assails both the resolution 1 dated June 27. however crude. Hence.00 but not more than P500. The law has several defects but what do you expect when the passage of said law was fast-tracked (very like instant noodles) and extensive debates and deliberations on the bill discouraged and avoided just so both houses of congress are able to meet the deadline.A.R. Notably. E. upon determination of probable cause. perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. issue of a freeze order – which shall be effective for at least fifteen (15) days and except for the Court of Appeals and the Supreme Court no court shall issue a TRO or writ of injunction against a freeze order issued by the AMLC. Hence. it cannot examine same without aprior court order. 1988 which denied the petitioners' motion for reconsideration.A. 84526 January 28. The dispositive portion of the resolution in question dated June 27. c. 1988 of the Court of Appeals 2 which reconsidered and set aside its earlier decisions 3 dated February 26. c.b. THE HON. the law requires that the AMLC must act unanimously in the discharge of its functions. a safeguard provision was inserted.5M but to exceed P3M for facilitating the offense of money laundering. 6 months – 4 years ora fine of not less than P100. 9160) is a significant development.A. Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Monetary Laundering Council (AMLC). The AMLC is also authorized to inquire into or examine any particular deposit or investment with a covered institution but upon order of a competent court.A. 1988 reads as follows: 31 . By and large. 1988 reversing the decision 4 of the trial court and the subsequent resolution 5 dated August 3. Any person may be simultaneously charged with and convicted of both a violation of R. The formation of an Anti-Money Laundering Council composed of the Governor of the BSP. 9160 cannot be used for political persecution and no case for violation of R. d. Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity. R. fails to do so. Other significant provisions: a. the passage of the law (R.

the Deputy Provincial Sheriff of Negros Occidental. The third-party complaint of the petitioners against the forty-nine (49) laborers in the NLRC case was. 1976.00 against the private respondent.466. the house lawyer of the private respondent. garnished. the petitioner Jose Henares. against the petitioners and Damian Rojas. Branch 11. then plaintiff. in Civil Case No. demanded from the latter. the deputy sheriff presented the Notice of Garnishment and the Writ of Execution attached therewith to the petitioner Henares and later in the afternoon. verbally at first at around 2:00 o'clock in the afternoon of that day. the said Commission issued a writ of execution directing the Deputy Sheriff of Negros Occidental. Thereafter. the deputy sheriff returned to the bank in order to encash the check but before the actual encashment. after several postponements. the pre-trial was finally conducted and terminated with only the petitioners and the private respondent participating. G. Atty. Philippine Commercial and Industrial Bank. alleging that the former's current deposit with the petitioner bank was levied upon. Both the petitioners and the Deputy Sheriff filed their respective answers denying the material averments of the said complaint and alleged that their actuations were all in accordance with law and likewise filed counterclaims for damages. 1976 addressed to six (6) banks. In case you fail to collect said amount in cash. but nothing seemed to have happened thereat. The petitioner Henares. you are to cause the satisfaction of the same on the movable or immovable properties of the respondent not exempt from execution. the latter have failed and refused to restore the amount of P37. which was the exact balance of the private respondent's account as of that day. all located in Bacolod City. you are to collect from same respondent the total amount of P205. We are constrained to reconsider Our aforesaid decision and to set it aside and in lieu thereof hereby enter another decision AFFIRMING the decision dated January 15. Incidentally. 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. then defendants. the Sheriff prepared on his own a Notice of Garnishment dated April 29. On April 26. 1976. Thereafter.853. the private respondent. April 29. On July 6. the aforenamed deputy sheriff went to the mining site of the private respondent and served the writ of execution on the persons concerned. April 30. under pain of contempt. G-1 and G-3. dismissed for failure of the sheriff to serve summons upon the latter. 1976. 9 Accordingly. 1982. the release of the deposit of the private respondent. 1976. Alejano.xxx xxx xxx For the reasons above adduced. On the following day. he issued a manager's check in the name of the Deputy Provincial Sheriff of Negros Occidental for the amount of P37. et al. and notwithstanding the alleged unauthorized disclosure of the said current deposit and unlawful release thereof. and with undue haste unlawfully allowed to be withdrawn. issued a debit memo for the full balance of the private respondent's account with the petitioner bank. Rexes V. The pertinent portion of the said writ reads as follows: xxx xxx xxx Further. acting on a tip regarding the existence of the said notice of garnishment. through their respective counsel.466. to enforce the aforementioned judgment. (Exhs. On January 23. the latter allowed the said encashment. one of which being the petitioner herein. 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.18. filed a complaint before the Regional Trial Court of Manila. at about 9:30 in the morning of April 29." 6 The undisputed facts 7 as gathered from the findings of the trial court are as follows: The instant case originated from an action 8 filed with the National Labor Relations Commission (NLRC) by a group of laborers who obtained therefrom a favorable judgment for the payment of backwages amounting to P205. including a cross-claim of the former against the latter. communicated with the bank manager. at about 1:00 o'clock in the afternoon. Emphasis supplied). however. 32 . requesting the withholding of any release of the deposit of the private respondent with the petitioner bank. 103100 entitled "Marinduque Mining and Industrial Corporation (MMIC) vs. 1985 of the Regional Trial Court of Manila. and later confirmed in a formal letter received by the petitioner Henares at about 5:00 o'clock of that same day. the petitioner Henares once again inquired about any existing restraining order from the NLRC and upon being told that there was none. 1976. Meanwhile. also Exh. 1976.18 to the former's account despite repeated demands. one Damian Rojas.853. on April 28. Branch II. 3.00 as their backwage (sic) for twelve (12) months and then turn over said amount to this commission for further disposition.

1405. June 29. with interest thereon at the rate of 12% per annum from date of first demand on April 29. 418-419. or to a receiver or trustee appointed to receive them. 1988. In De la Rama. the mere garnishment of funds belonging to a 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. The garnishee. 1963. to the attaching officer. Emphasis supplied). thus: In the second place. the respondent court denied the petitioner's own motion for reconsideration. 14) The effect of the garnishment. to wit: (a) the sum of P37. and keep the same subject to the final orders of the Court. therefore. is universally regarded as charged with its legal custody pending outcome of the attachment or garnishment unless. Whether or not petitioners violated Republic Act No. when they allowed the sheriff to garnish the deposit of private respondent. 11 to wit: 1. (De la Rama vs. although the same could not be disposed of by the owner. Jur. remained all the time in the possession of the bank as part of the funds of the Luzon Surety Co. otherwise known as the Secrecy of Bank Deposits Act. On August 3. (5 Am. the respondent court in a decision dated February 26.On January 15. but however. 33 . et al. judgment is hereby rendered in favor of the plaintiff and against the three (3) defendants by ordering the latter to pay. Defendants are ordered to pay. 1988. 2. the trial court rendered its judgment in favor of the private respondent. with indecent haste disclosed and released the deposit of plaintiff-appellee on the strength of a mere notice of garnishment which the Honorable Supreme Court ruled upon is no authority for the release of the deposit.. held that the petitioners were liable. to set aside said amount from the funds of the Luzon Surety Co. because the judgment debtor was able to appeal to the Court of Appeals and obtain from the Court an injunction prohibiting execution of the judgment. first reversed the said judgment of the lower court. he is permitted to surrender or pay the garnished property or funds into court. The balance of the amount garnished. double costs. 10 xxx xxx xxx On appeal.000. defendant-appellant PCIB. 1976 until the amount shall have been fully and completely restored and paid. In the case at bar there was never an order to deliver the full amount garnished to the plaintiffappellee.. 12 The above-mentioned contention citing De la Rama is not exactly on all fours with the facts of the case at bar. 1988. even from the time of garnishment. Whether or not petitioners had legal basis in releasing the garnished deposit of private respondent to the sheriff. subsequently annulled and set aside its said decision in the resolution dated June 27. or one in whose hands property is attached or garnished. 1988. on the motion for reconsideration filed by the private respondent. in this wise: In the case at bar. therefore. the plaintiff the following amounts. L-17927.. 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. jointly and severally.466. (b) the sum of P10. despite vigorous objections from plaintiff-appellee. holder of the funds of the Luzon Surety Co. Villarosa. The petition is impressed with merit. was to require the Philippine Trust Company. The crux of the instant controversy boils down to the question of 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). The respondent court in its questioned resolution dated June 27. 1985. by local statute and practice. Hence. this petition. The petitioners raise two issues. the amount garnished was not actually taken possession of by the sheriff. jointly and severally. the dispositive portion of which reads: WHEREFORE.00 as attorney's fees.18. 8 SCRA 413.

enjoys the presumption of regularity. Under the above-cited rule. unless such property be delivered or transferred. as garnishee. absent any patent defect. from its obligations to NPC with respect to the payment to ECI of P1. sufficiently supported by Sec. or such debts be paid. v." 17 Rather. the uncontroverted statements in the deposition of the petitioner Henares that he had previously sought the advice of the bank's counsel and that he had checked twice with the Acting Provincial Sheriff who had informed him of the absence of any restraining order. Unless there are compelling reasons such as: a defect on the face of the writ or actual knowledge on the part of the garnishee of lack of entitlement on the part of the garnisher. to the proper officer issuing the writ and "the law exempts from liability the person having in his possession or under his control any credits or other personal property belonging to the defendant. . On the contrary. debts or other property.114. De Castro 14 where the Court absolved both garnishees. until the attachment be discharged. To expose garnishees to risks for obeying court orders and processes would only undermine the administration of justice. etc. it is not incumbent upon the garnishee to inquire or to judge for itself whether or not the order for the advance execution of a judgment is valid. thus in effect subjecting MERALCO to double liability. belie any allegation of undue and indecent haste in the release of the said deposit in question. from any liability for their prompt compliance in the release of garnished funds. respectively. . at the time of service upon them of a copy of the order of attachment and notice as provided in the last preceding section. The reason for the rule is self evident. MERALCO. and which was quoted in Rizal Commercial Banking Corporation is persuasive xxx xxx xxx But while partial restitution is warranted in favor of NPC. Garnishment is considered as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. Section 8. 16 We therefore see no application for Sec. sheriff or other proper officer of the court issuing the attachment. to the clerk. MERALCO and RCBC. Rule 57 of the Rules of Court provides: Effect of attachment of debts and credits. should be released from all responsibilities over such amount after delivery thereof to the sheriff. Inc. . the said deposit being considered a credit in favor of the depositor against the bank. Rule 39 of the Rules of Court invoked by the private respondent as to necessitate the "examination of the debtor of the judgment debtor. or any judgment recovered by him be satisfied. nowhere in the record of the present case is there any evidence of an appeal by the private respondent from the decision of the NLRC or the existence of any restraining order to prevent the release of the private respondent's deposit to the deputy sheriff at the time of the service of the notice of garnishment and writ of execution to the petitioners. . shall be liable to the applicant of the amount of such credits.) 15 xxx xxx xxx Moreover. 41. after having been judicially compelled to pay the amount of the judgment represented by funds in its possession belonging to the judgment debtor or NPC. we find the immediate release of the funds by the petitioners on the strength of the notice of garnishment and writ of execution. sheriff. Rule 39 of the Rules of Court which reads: xxx xxx xxx 34 . . — All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued.543. the garnishee. (Emphasis ours. National Power Corporation 13 and Rizal Commercial Banking Corporation (RCBC) vs." Applying the foregoing to the case at bar.23. or owing any debts to the same. 39. or other officer of the court in which the action is pending. The cases more in point to the present controversy are the recent decisions in Engineering Construction Inc. there is no issue concerning the indebtedness of the petitioner bank to the private respondent since the latter has never denied the existence of its deposit with the former. we find that the Appellate Court erred in not absolving MERALCO. whose issuance. . to the clerk. MERALCO should not have been faulted for its prompt obedience to a writ of garnishment.On the other hand. the garnishee [the third person] is obliged to deliver the credits. The rationale behind Engineering Construction. if such property be delivered or transferred.

a duly authorized officer of the court. We believe that the petitioners should rather be commended for having acted with urgent dispatch despite attempts by the private respondent. 960 as contrary to the provisions of the Constitution. The petition is for declaratory relief. laborers' backwages. drawn from the incorrect conclusions of fact established by evidence and otherwise at certain conclusions which are based on misapprehension of facts. may pay to the officer holding the execution the amount of his debt or so much thereof as may be necessary to satisfy the execution. SALVACION. Salvacion. vs. we likewise take cognizance of the subject of the judgment sought to be enforced in the writ of execution in question. or any other order or process of any court. minor.) Adjudging Section 113 of Central Bank Circular No. 1988 of the Court of Appeals are hereby ANNULLED and SET ASIDE and its Decision dated February 26. Ligle do we realize that statutes or even constitutions are bundles of compromises thrown our way by their framers. the statute may already be out of tune and irrelevant to our day. because its provision that "Foreign currency deposits shall be exempt from attachment. respondents. such as when the Court of Appeals clearly misconstrued and misapplied the law.R. Ortega 18 had the occasion to dispose of this issue when it stated.) Immediately upon the filing of this petition. SALVACION. CENTRAL BANK OF THE PHILIPPINES. we find no violation whatsoever by the petitioners of Republic Act No. the petition is GRANTED and the challenged Resolutions dated June 27. CHINA BANKING CORPORATION and GREG BARTELLI y NORTHCOTT. It prays for the following reliefs: a.) After hearing. and if existence of the deposit is disclosed the disclosure is purely incidental to the execution process.After an execution against property has issued.. With costs against the private respondent. Unless we exercise vigilance. SALVACION. xxx xxx xxx Finally. Jr. government agency or any administrative body whatsoever 35 . G. an Order be issued restraining the respondents from applying and enforcing Section 113 of Central Bank Circular No. In our predisposition to discover the "original intent" of a statute. garnishment. The Court in China Banking Corporation vs. namely. even if ordered by the Court. Since there is no evidence that the petitioners themselves divulged the information that the private respondent had an account with the petitioner bank and it is undisputed that the said account was properly the object of the notice of garnishment and writ of execution carried out by the deputy sheriff. 351 and House Bill No. 960.. 2.) Declaring the respective rights and duties of petitioners and respondents. which later became Republic Act 1405. father and Natural Guardian. to frustrate or unjustifiably delay the prompt satisfaction of final judgments which often result in undue prejudice to the legitimate claims of labor. 19 as in the case at bar. and the officer's receipt shall be a sufficient discharge for the amount so paid or directed to be credited by the judgment creditor on the execution. otherwise known as the Secrecy of Bank Deposits Act. hence void. judgment be rendered: 1. through the expedient of converting their assets into cash and depositing the same in a bank. as with so many scheming employers. 1988 and August 13. courts become the unfeeling pillars of the status quo. While the general rule is that the findings of fact of the appellate court are binding on this Court. we can not therefore hold the petitioners liable under R. 1988 dismissing the complaint is hereby REINSTATED. 1997 KAREN E. No. 94723 August 21. and Spouses FEDERICO N. thus: It is clear from the discussion of the conference committee report on Senate Bill No. and EVELINA E. The petitioners are therefore absolved from any liability for the disclosure and release of the private respondent's deposit to the custody of the deputy sheriff in satisfaction of the final judgment for the laborers' backwages. WHEREFORE. that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. a person indebted to the judgment debtor. b. 3977. the said rule however admits of exceptions. Indeed there is no real inquiry in such a case. thru Federico N. JR. 1405. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts. legislative body. 1405. With regard to the second issue.A.

In a letter dated March 13. rescued Karen. The antecedent facts: On February 4. 7.00) cash. 104-108758-8 (Peso Acct. In answer to this letter of the Deputy Sheriff of Makati. and three times each day on February 5. 1989. invoked Section 113 of Central Bank Circular No. legislative body. the criminal cases were archived in an Order dated February 28. 1989 and was able to rape the child once on February 4.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank. Erlinda S. 1989. 804. an American tourist. On February 16. 960 has any exception or whether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57 of the Revised Rules of Court. Control No. Criminal Case No. or any other order or process of any court.) COCOBANK Bank Book No. iii. 6. 1989. On February 24.) has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause of the Constitution. 1989 to the Deputy Sheriff of Makati.) Dollar Check No.) Dollar Account — China Banking Corp. The policemen recovered from Bartelli the following items: 1. China Banking Corporation.000. 368.i. after policemen and people living nearby. Carolino: 36 . JCL (4) 1981 by FGU Insurance Corporation in the amount of P100. On March 1. Greg Bartelli was arrested and detained at the Makati Municipal Jail. 1989. a Writ of Preliminary Attachment was issued by the trial court on February 28.20. for the issuance of the writ of preliminary attachment. On March 15. the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation. Pending the arrest of the accused Greg Bartelli y Northcott. 5.903.. US$/A#54105028-2. 1989 Ms. and 805 for four (4) counts of Rape. The Central Bank responded as follows: May 26. 021000678-1166111303. 1989. and 7. 89-3214. Carolino 12 Pres. petitioners filed with the Regional Trial Court of Makati Civil Case No.) Philippine Money (P234. then 12 years old to go with him to his apartment. Greg Bartelli y Northcott. 1989 on whether Section 113 of CB Circular No. 89-3214 for damages with preliminary attachment against Greg Bartelli. 1989. On February 28. the day there was a scheduled hearing for Bartelli's petition for bail the latter escaped from jail. Meanwhile. 802. US 3.00. 960 to the effect that the dollar deposits or defendant Greg Bartelli are exempt from attachment.) Door Keys 6 pieces. garnishment. coaxed and lured petitioner Karen Salvacion. 2. 1989. or up to February 7. in a letter dated March 20. Osmena Avenue South Admiral Village Paranaque. On February 7. 803.) Stuffed Doll (Teddy Bear) used in seducing the complainant. On the same day. After petitioners gave Bond No. China Banking Corporation invoked Republic Act No. 1989. Condaya filed against Greg Bartelli. Greg Bartelli detained Karen Salvacion for four days. whatsoever. the Judge issued an Order dated February 22. Makati Investigating Fiscal Edwin G. 1989. ii. 4. 6. Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order which has placed the subject deposits in custodia legis. 1989 granting the application of herein petitioners. Metro Manila Dear Ms. 1989.) has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution. the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest and Hold Departure Order. Therein. 3. in Civil Case No. This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25.) ID-122-30-8877. 1405 as its answer to the notice of garnishment served on it. government agency or any administrative body. 1989. 801 for Serious Illegal Detention and Criminal Cases Nos.).

This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular
No. 960 (1983).
The cited provision is absolute in application. It does not admit of any exception, nor has the same been
repealed nor amended.
The purpose of the law is to encourage dollar accounts within the country's banking system which would
help in the development of the economy. There is no intention to render futile the basic rights of a person
as was suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law.
Compliance is, therefore, enjoined.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director 1
Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve summons by publication in the
Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg Bartelli y Northcott." Summons with the complaint was
a published in the Manila Times once a week for three consecutive weeks. Greg Bartelli failed to file his answer to the
complaint and was declared in default on August 7, 1989. After hearing the case ex-parte, the court rendered judgment in
favor of petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the
latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the amount
of P150,000.00 each or a total of P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondent Greg Bartelli which gave rise to the award were related in graphic detail by the trial court
in its decision as follows:
The defendant in this case was originally detained in the municipal jail of Makati but was able to escape
therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the Presiding Judge,
Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch 136, where he was charged
with four counts of Rape and Serious Illegal Detention (Crim. Cases Nos. 802 to 805). Accordingly, upon
motion of plaintiffs, through counsel, summons was served upon defendant by publication in the Manila
Times, a newspaper of general circulation as attested by the Advertising Manager of the Metro Media
Times, Inc., the publisher of the said newspaper. Defendant, however, failed to file his answer to the
complaint despite the lapse of the period of sixty (60) days from the last publication; hence, upon motion
of the plaintiffs, through counsel, defendant was declared in default and plaintiffs were authorized to
present their evidence ex parte.
In support of the complaint, plaintiffs presented as witnesses the minor Karen E. Salvacion, her father,
Federico N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who gave the
following testimony:
Karen took her first year high school in St. Mary's Academy in Pasay City but has recently transferred to
Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend
Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a
concrete bench in front of Plaza Fair, an American approached her. She was then alone because Edna
Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he talked
to her. He said he was a Math teacher and told her that he has a sister who is a nurse in New York. His
sister allegedly has a daughter who is about Karen's age and who was with him in his house along
Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
37

The American asked Karen what was her favorite subject and she told him it's Pilipino. He then invited
her to go with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed toy
to persuade her to teach his niece. (Id., pp. 5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendant's house along
Kalayaan Avenue. (Id., p. 6)
When they reached the apartment house, Karen noticed that defendant's alleged niece was not outside the
house but defendant told her maybe his niece was inside. When Karen did not see the alleged niece inside
the house, defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his niece
was not there. Defendant got a piece of cotton cord and tied Karen's hands with it, and then he undressed
her. Karen cried for help but defendant strangled her. He took a packing tape and he covered her mouth
with it and he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet
and hands spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex organ.
She felt severe pain. She tried to shout but no sound could come out because there were tapes on her
mouth. When defendant withdrew his finger it was full of blood and Karen felt more pain after the
withdrawal of the finger. (Id., p. 8)
He then got a Johnson's Baby Oil and he applied it to his sex organ as well as to her sex organ. After that
he forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it
difficult to breathe and she perspired a lot while feeling severe pain. She merely presumed that he was
able to insert his sex organ a little, because she could not see. Karen could not recall how long the
defendant was in that position. (Id. pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he
untied her hands. Karen could only hear the sound of the water while the defendant, she presumed, was in
the bathroom washing his sex organ. When she took a shower more blood came out from her. In the
meantime, defendant changed the mattress because it was full of blood. After the shower, Karen was
allowed by defendant to sleep. She fell asleep because she got tired crying. The incident happened at
about 4:00 p.m. Karen had no way of determining the exact time because defendant removed her watch.
Defendant did not care to give her food before she went to sleep. Karen woke up at about 8:00 o'clock the
following morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and coke at about 8:30 to 9:00
a.m. defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She
was raped for the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which
defendant had stored downstairs; it was he who cooked the rice that is why it looks like "lugaw". For the
third time, Karen was raped again during the night. During those three times defendant succeeded in
inserting his sex organ but she could not say whether the organ was inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor put
a tape on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all the
windows and doors were closed. And even if she shouted for help, nobody would hear her. She was so
afraid that if somebody would hear her and would be able to call the police, it was still possible that as she
was still inside the house, defendant might kill her. Besides, the defendant did not leave that Sunday,
ruling out her chance to call for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 1214)
On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after
a breakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that
there was a window because everything was covered by a carpet, until defendant opened the window for
around fifteen minutes or less to let some air in, and she found that the window was covered by styrofoam
and plywood. After that, he again closed the window with a hammer and he put the styrofoam, plywood,
and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although defendant left but kept the door
closed. She went to the bathroom and saw a small window covered by styrofoam and she also spotted a
38

small hole. She stepped on the bowl and she cried for help through the hole. She cried: "Maawa no po
kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap ako!" Somebody heard her. It was a
woman, probably a neighbor, but she got angry and said she was "istorbo". Karen pleaded for help and
the woman told her to sleep and she will call the police. She finally fell asleep but no policeman came.
(TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 o'clock the following morning, and she saw defendant in bed, this time sleeping. She
waited for him to wake up. When he woke up, he again got some food but he always kept the door locked.
As usual, she was merely fed with biscuit and coke. On that day, February 7, 1989, she was again raped
three times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 — 9:00, and the third was after
lunch at 12:00 noon. After he had raped her for the second time he left but only for a short while. Upon
his return, he caught her shouting for help but he did not understand what she was shouting about. After
she was raped the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the
bathroom and shouted for help. After shouting for about five minutes, she heard many voices. The voices
were asking for her name and she gave her name as Karen Salvacion. After a while, she heard a voice of a
woman saying they will just call the police. They were also telling her to change her clothes. She went
from the bathroom to the room but she did not change her clothes being afraid that should the neighbors
call for the police and the defendant see her in different clothes, he might kill her. At that time she was
wearing a T-shirt of the American because the latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and he opened the door. He asked her if she had asked for help because
there were many policemen outside and she denied it. He told her to change her clothes, and she did
change to the one she was wearing on Saturday. He instructed her to tell the police that she left home and
willingly; then he went downstairs but he locked the door. She could hear people conversing but she
could not understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at
the door as hard as she could. She heard somebody going upstairs and when the door was opened, she saw
a policeman. The policeman asked her name and the reason why she was there. She told him she was
kidnapped. Downstairs, he saw about five policemen in uniform and the defendant was talking to them.
"Nakikipag-areglo po sa mga pulis," Karen added. "The policeman told him to just explain at the
precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of the house. They rode the car of
a certain person she called Kuya Boy together with defendant, the policeman, and two of her neighbors
whom she called Kuya Bong Lacson and one Ate Nita. They were brought to Sub-Station I and there she
was investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her mother together
with some of their neighbors. Then they were brought to the second floor of the police headquarters. (Id.,
p. 21)
At the headquarters, she was asked several questions by the investigator. The written statement she gave
to the police was marked as Exhibit A. Then they proceeded to the National Bureau of Investigation
together with the investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her
private parts. It was already 3:00 in the early morning of the following day when they reached the NBI.
(TSN, Aug. 15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit B.
She was studying at the St. Mary's Academy in Pasay City at the time of the incident but she subsequently
transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because she was
ashamed to be the subject of conversation in the school. She first applied for transfer to Jose Abad Santos,
Arellano University along Taft Avenue near the Light Rail Transit Station but she was denied admission
after she told the school the true reason for her transfer. The reason for their denial was that they might be
implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and
she is always in a state of shock; she has been absent-minded and is ashamed even to go out of the house.
(TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p. 11) The father prays for
P500,000.00 moral damages for Karen for this shocking experience which probably, she would always
39

3. (TSN. garnishment. 960 did not exceed its power or authority because the subject Section is copied verbatim from a portion of R. Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and the general welfare. that it is only too willing to release the dollar deposit of Bartelli which 40 .D.) it has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners' favor in violation of substantive due process guaranteed by the Constitution. is to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines. that the State had to take some measures to encourage economic development.) it has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause of the Constitution. 10-11) Pursuant to an Order granting leave to publish notice of decision. in that it specifically provides. said notice was published in the Manila Bulletin once a week for three consecutive weeks. c. legislative body. petitioners tried to execute on Bartelli's dollar deposit with China Banking Corporation.) the law seems to be reasonable.recall until she reaches old age. For its part.) the plaintiffs substantive right to have the judgment credit satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of Court. in its Comment alleges that the Monetary Board in issuing Section 113 of CB Circular No. 2. which is beyond its power to do so. thus directly contributing to the economic development of the country.) it has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank. the bank invoked Section 113 of Central Bank Circular No. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some properties are exempted from execution/attachment especially provided by law and R. respondent Central Bank. and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or public interest. as amended by P.A. that the State cannot just stand idly by while a considerable segment of the society suffers from economic distress. that it does not violate the substantive due process guaranteed by the Constitution because a. that foreign currency deposits shall be exempted from attachment." should be adjudged as unconstitutional on the grounds that: 1. Expanding. that the subject section is being enforced according to the regular methods of procedure. 6426 as amended by P. b.) it was based on a law. that one reason for exempting the foreign currency deposits from attachment. 1246. and he is not sure if she could ever recover from this experience. The issues raised and the arguments articulated by the parties boil down to two: May this Court entertain the instant petition despite the fact that original jurisdiction in petitions for declaratory relief rests with the lower court? Should Section 113 of Central Bank Circular No. but the law (R. No. No. also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor Karen E. 960 has exceeded its delegated quasi-legislative power when it took away: a. or any other order or process of any court. Sept. Salvacion from the beastly hands of Greg Bartelli. pp. After the lapse of fifteen (15) days from the date of the last publication of the notice of judgment and the decision of the trial court had become final. b. among others. the Central Bank said.) The Monetary Board. 6426 as amended) itself.D. 960. petitioners decided to seek relief from this Court.) it is enforced according to regular methods of procedure.) it applies to all members of a class. Hence. it was not the Monetary Board that grants exemption from attachment or garnishment to foreign currency deposits. aside from giving reasons similar to that of respondent Central Bank. 24. and d. On the other hand.) the plaintiffs substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court. government agency or any administrative body whatsoever. 1989. legislative body.A. 1246. Likewise. 960 and Section 8 of R. respondent China Banking Corporation. government agency or any administrative body whatsoever.A. and 4. 6426 as amended is such a law. otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient? Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. or any other order or process of any court. 960 providing that "Foreign currency deposits shall be exempt from attachment. 6426. in issuing Section 113 of Central Bank Circular No. that another reason is to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines. and that it applies to all foreign currency deposits made by any person and therefore does not violate the equal protection clause of the Constitution. garnishment or any other order or process of any court.A. Thus. garnishment.

trustingly went with said stranger to his apartment.000. and even if not. 3 Here is a child. but ten times. No. could not. anxiety.may perhaps partly mitigate the sufferings petitioner has undergone. This questioned law. more enlightened. The intention of the questioned law may be good when enacted. could not have such a bestial desire on her nor capable of committing such a heinous crime. in this case. it would be difficult for him to fathom how the incentive for foreign currency deposit could be more important than his child's rights to said award of damages. when foreign investments were minimal and presumably. long time. this was the reason why said statute was enacted. This further illustrates the flaw in the questioned provisions. . therefore makes futile the favorable judgment and award of damages that she and her parents fully deserve. CBC has no other alternative but to follow the same. simply because the school authorities of the said High School learned about what happened to her and allegedly feared that they might be implicated in the case. after hearing the testimony of Karen. which amount could alleviate the humiliation. Not once. Petitioner deserves to receive the damages awarded to her by the court. Indeed. and keep pace with the times. But this petition for declaratory relief can only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the writ of execution in Civil Case No. where the petition has far-reaching implications and raises questions that should be resolved. and there she was raped by said American tourist Greg Bartelli. On the other hand. 2 However. In his Comment. 4 If Karen's sad fate had happened to anybody's own kin. however get the award of damages because of this unreasonable law. thus: 41 . 6426 and Section 113 of Central Bank Circular No.A. as in fact she had been actually humiliated once when she was refused admission at the Abad Santos High School. 960. as civilized society to remain ever under the regimen of their barbarous ancestors.00. . the Solicitor General correctly opined. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us. But the realities of the present times show that the country has recovered economically. the mere recall of which could make her feel so humiliated. . a 12-year old girl.000. . As that becomes more developed.A. No. Thus. 6426 was enacted in 1983 or at a time when the country's economy was in a shambles. and besmirched reputation she had suffered and may continue to suffer for a long. who in her belief that all Americans are good and in her gesture of kindness by teaching his alleged niece the Filipino language as requested by the American. 89-3214. It has thus been said that — But I also know. it may be treated as one for mandamus. but it is restrained from doing so in view of R. where she sought to transfer from another school. new truths are disclosed and manners and opinions change with the change of circumstances. she has never heard of an old Filipino adage that in every forest there is a snake. Being only 12 years old when that unfortunate incident happened. an American national. This Court has no original and exclusive jurisdiction over a petition for declaratory relief. exceptions to this rule have been recognized. It is worth mentioning that R. As stated by the trial court in its decision. as new discoveries are made. the minor Karen Salvacion whose only fault was in her being so naive and credulous to believe easily that defendant. the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. Arellano University. This Court finds the petition to be partly meritorious. 5 that laws and institutions must go hand in hand with the progress of the human mind. . and knowing that this person who had wronged her has the money. and that despite the harsh effect of these laws on petitioners. the victim's claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is a mere visitor. She was detained therein for four (4) days. xxx xxx xxx The reason for imposing exemplary or corrective damages is due to the wanton and bestial manner defendant had committed the acts of rape during a period of serious illegal detention of his hapless victim. long time. institutions must advance also. This American tourist was able to escape from the jail and avoid punishment. We might as well require a man to wear still the coat which fitted him when a boy. the Court believes that it was undoubtedly a shocking and traumatic experience she had undergone which could haunt her mind for a long. . the child. having received a favorable judgment in the Civil Case for damages in the amount of more than P1.

bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided. 1034 authorizing the establishment of an offshore banking system in the Philippines. 960 applies when the deposit does not come from a lender or investor but from a mere transient or tourist who is not expected to maintain the deposit in the bank for long. WHEREAS. except upon the written permission of the depositor. 960 was issued pursuant to Section 7 of Republic Act No. as amended by Presidential Decree No. More specifically. under the provisions of Presidential Decree No. legislative body. The Monetary Board of the Central Bank shall promulgate such rules and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the publication of such rules and regulations in the Official Gazette and in a newspaper of national circulation for at least once a week for three consecutive weeks. exempting such deposits from tax. WHEREAS. thus: Sec. 1246. in no instance shall such foreign currency deposits be examined. 6426: Sec. 7. 6426. — Foreign currency deposits shall be exempt from attachment. 89-3214 on the strength of the following provision of Central Bank Circular No. as well as foreign currency deposits authorized under Presidential Decree No. certain Philippine banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency. that said foreign currency deposits shall be exempt from attachment. 1034. in order to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines. are hereby declared as and considered of an absolutely confidential nature and. offshore banking units are also authorized to receive foreign currency deposits in certain cases. The resolution of this question is important for the protection of nationals who are victimized in the forum by foreigners who are merely passing through.: WHEREAS. 1246 and CB Circular No. viz. the petition raises the question whether the protection against attachment. 960: Sec.D. 1035. Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of execution issued in Civil Case No.The present petition has far-reaching implications on the right of a national to obtain redress for a wrong committed by an alien who takes refuge under a law and regulation promulgated for a purpose which does not contemplate the application thereof envisaged by the alien. and guaranteeing the vested rights 42 . Central Bank Circular No. garnishment or other court process accorded to foreign currency deposits by PD No. 113. garnishment. making absolute the protective cloak of confidentiality over such foreign currency deposits. — All foreign currency deposits authorized under this Act. the rules and regulations at the time the deposit was made shall govern. . government agency or any administrative body whatsoever. as amended by P. inquired or looked into by any person. Exemption from attachment. Rules and Regulations. 1035. 8. or any other order or process of any court. garnishment and other court process to foreign currency deposits is stated in its whereases. as amended by Presidential Decree No. or any other order or process of any court. legislative body. government agency or any administrative body whatsoever. In case the Central Bank promulgates new rules and regulations decreasing the rights of depositors. garnishment. WHEREAS. The aforecited Section 113 was copied from Section 8 of Republic Act NO. however. xxx xxx xxx . certain incentives were provided for under the two Systems such as confidentiality of deposits subject to certain exceptions and tax exemptions on the interest income of depositors who are nonresidents and are not engaged in trade or business in the Philippines. 6426. under Republic Act No. . The purpose of PD 1246 in according protection against attachment. government official. Secrecy of Foreign Currency Deposits.

The Offshore Banking System was established by PD No. Respondent Greg Bartelli. WHEREAS. 6 In fine. conditions conducive to the establishment of an offshore banking system. is applicable to a foreign transient. will maintain his deposit in the bank only for a short time. It is these deposits that are induced by the two laws and given protection and incentives by them. it is timely to expand the foreign currency lending authority of the said depository banks under RA 6426 and apply to their transactions the same taxes as would be applicable to transaction of the proposed offshore banking units. It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD No. 1035. 1246 against attachment. WHEREAS. On the other hand. injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. thus directly contributing to the economic development of the country. exist in the Philippines. third Whereas of PD No. it is presumed that the lawmaking body intended right and justice to prevail. it is in the interest of developing countries to have as wide access as possible to the sources of capital funds for economic development. the Foreign Currency Deposit system was created by PD. Its purposes are as follows: WHEREAS. 960 which exempts from attachment. In turn. and other positive factors provide the Philippines with the clear potential to develop as another financial center in Asia. or any other order or process of any court. such as political stability. and contributing to the national development effort. a growing economy and adequate communication facilities. the establishment of an offshore banking system in the Philippines has been authorized under a separate decree. creating employment opportunities and expertise in international finance. have the resources and managerial competence to more actively engage in foreign exchange transactions and participate in the grant of foreign currency loans to resident corporations and firms. WHEREAS. 1035). as stated. physical and human resources. 1034. an offshore banking system based in the Philippines will be advantageous and beneficial to the country by increasing our links with foreign lenders. among others. He deposited his dollars with respondent China Banking Corporation only for safekeeping during his temporary stay in the Philippines. 960 and PD No. as depository bank under the Foreign Currency Deposit Act (RA No. 1034. Eventually. is just a tourist or a transient. the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No.of depositors would better encourage the inflow of foreign currency deposits into the banking institutions authorized to accept such deposits in the Philippines thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines. if we rule that the questioned Section 113 of Central Bank Circular No. one of the principal purposes of the protection accorded to foreign currency deposits is "to assure the development and speedy growth of the Foreign Currency Deposit system and the Offshore Banking in the Philippines" (3rd Whereas). WHEREAS. legislative body. 6426). garnishment. Obviously. the purposes of PD No. 1034 are as follows: WHEREAS. garnishment or other court processes. Thus. WHEREAS. the geographical location. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in the country and. "Ninguno non deue enriquecerse tortizeramente 43 . facilitating the flow of desired investments into the Philippines. government agency or any administrative body whatsoever. No. a number of local commercial banks. therefore. the foreign currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD Nos. For the reasons stated above. the application of the law depends on the extent of its justice. This would negate Article 10 of the New Civil Code which provides that "in case of doubt in the interpretation or application of laws.

7400. development banks. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances. that the questioned Section 113 of Central Bank No. 12 August 2004) a. this is one of those fundamental solutions that would respond to the vehement urge of conscience. 13 April 1992) d. savings. Deposit Insurance (RA 3591 as amended) SECTION 4. That. by Branch CXLIV. checking. person or other agency charged by law with the duty to take charge of the assets and liabilities of a bank which has been forbidden from doing business in the Philippines. IN VIEW WHEREOF.(Renumbered from Sec. et al. together with such other obligations of a bank. It would be unthinkable. the provisions of Section 113 of CB Circular No. Padilla. when the statute is silent or ambiguous. As used in this Act . 89-3214. (As amended by R. 960 would be used as a device by accused Greg Bartelli for wrongdoing. The term ―deposit‖ means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or is obliged to give credit to a commercial. acquitting the guilty at the expense of the innocent. which. or issued in accordance with Bangko Sentral rules and regulations and other applicable laws. The term ―Bank‖ and ―Banking Institution‖ shall be synonymous and interchangeable and shall include banks. savings bank. The term ―insured bank‖ means any bank the deposits of which are insured in accordance with the provisions of this Act. cooperative banks. e. "Karen Salvacion. any insured bank which is incorporated under the laws of the Philippines which maintains a branch outside the Philippines may elect to include for insurance its deposit obligations payable only at such branch. subject to the approval of the Board of Directors. and to dispose of the assets and to wind up the affairs of such bank. the Board of Directors shall determine and prescribe by regulations to be deposit liabilities of the bank: Provided. 13 April 1992) c.con dano de otro. 74 Phil. (Padilla vs. time or thrift account. 3 by R. RTC Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment. consistent with banking usage and practices. and to continue into liquidation whenever authorized under this Act or other laws. 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. and in so doing. stock savings and loan associations and branches and agencies in the Philippines of foreign banks and all other corporations authorized to perform banking functions in the Philippines. The term ―non-insured bank‖ means any bank the deposits of which are not insured. b. as well as the duty to gather.A. mortgage banks. 377). commercial banks. f. commission.A. Greg Bartelli y Northcott. further. 9302. That any obligation of a bank which is payable at the office of the bank located outside of the Philippines shall not be a deposit for any of the purposes of this Act or included as part of the total deposits or of insured deposit: Provided. preserve and administer such assets and liabilities for the benefit of the depositors and creditors of said bank. IV. 7400.A. 44 . 960 and PD No." Simply stated. rural banks. vs. (As amended by R.A. The term ―receiver‖ includes a receiver. We definitely cannot have both ways and rest in the belief that we have served the ends of justice. insofar as it amends Section 8 of R. The term ―Board of Directors‖ means the Board of Directors of the Corporation. 1246.

subject to the approval of the President of the Philippines. That. and 4. but not to exceed Five Hundred Thousand Pesos (P500. trust accounts. shall be insured separately from any individuallyowned deposit account: Provided." "and/or" is used. 27 June 1984. R. The term ―insured deposit‖ means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of the date of closure. 9302. the maximum insured deposit shall be presumed to belong entirely to such juridical person or entity: Provided. That (1) If the account is held jointly by two or more natural persons.A. the maximum deposit insurance cover may be adjusted in such amount.A. there shall be added together all deposits in the bank maintained in the same right and capacity for his benefit either in his own name or in the name of others. 7400. in consultation with the BSP. Deposit accounts or transactions constituting. and (2) if the account is held by a juridical person or entity jointly with one or more natural persons. The petition for certiorari may only be filed within thirty (30) days from notice of denial of claim for deposit insurance. (As amended by P. 29 April 2009) g.The Corporation shall not pay deposit insurance for the following accounts or transactions. That the aggregate of the interest of each co-owner over several joint accounts. recorded or booked as deposit by the bank: 1. The actions of the Corporation taken under this section shall be final and executory. and publication of a cease and desist order issued by the Corporation against such deposit accounts or transactions." "or. 9576. (As amended by R. R. as amended.A. and/or for such deposit products. Deposits that are determined to be the proceeds of an unlawful activity as defined under Republic Act 9160. after due notice and hearing. 2009) 45 . 9302. finally. R. whether denominated.A. or that are fictitious or fraudulent. further.D. for such a period. juridical persons or entities. except on appropriate petition for certiorari on the ground that the action was taken in excess of jurisdiction or with such grave abuse of discretion as to amount to a lack or excess of jurisdiction. in case of a condition that threatens the monetary and financial stability of the banking system that may have systemic consequences. as defined in section 17 hereof. 3. no owner/holder of any negotiable certificate of deposit shall be recognized as a depositor entitled to the rights provided in this Act unless his name is registered as owner/holder thereof in the books of the issuing bank: Provided. documented. juridical persons or entities.000. unsafe and unsound banking practice/s. as may be determined by a unanimous vote of the Board of Directors in a meeting called for the purpose and chaired by the Secretary of Finance. unless a different sharing is stipulated in the document of deposit.00). 1940.2 Such net amount shall be determined according to such regulations as the Board of Directors may prescribe. and/or emanating from. That the provisions of any law to the contrary notwithstanding. shall likewise be subject to the maximum insured deposit of Five Hundred Thousand Pesos (P500. 12 August 2004. R.A. and may not be restrained or set aside by the court.000. as determined by the Corporation. furthermore. and other similar instruments. In determining such amount due to any depositor. 13 April 1992. the maximum insured deposit shall be divided into as many equal shares as there are individuals. 2. A joint account regardless of whether the conjunction "and. 9576. Deposit accounts or transactions which are unfunded. 12 August 2004. or by two or more juridical persons or entities. as determined by the Monetary Board.00): Provided. Investment products such as bonds and securities. whether owned by the same or different combinations of individuals.

00 with the PDIC. 1983.A. COURT OF APPEALS. guardian or agent.00. Eventually. FELY RUMBANA. ―B‖) issued by PFC for the aforementioned certificates was returned by the drawee bank for having been drawn against insufficient funds. GERARD YU. To their dismay. On September 14. Cotaoco went to the RSB to encash the said certificates. and said check was not replaced by the PFC. On May 29. the certificates of time deposit of plaintiffs-appellees were not included in the list on the ground that the certificates were not funded by the PFC or duly recorded as liabilities of RSB. to ―C-12‖). ELIZABETH NGKAION. December 22. ―C‖. among others. No. The deposit liabilities of any bank or banking institution. The term ―trust funds‖ means funds held by an insured bank in a fiduciary capacity and includes without being limited to. inclusive. plaintiffs-appellees filed with the PDIC their respective claims for the amount of the certificates (Exhs. as found by the Court of Appeals. On the same date (September 22. 1983 (Exhs. 118917. 09648 to 09660. Records. MINA YU. 04 August 1969. a masterlist or inventory of the RSB assets and liabilities was prepared. on March 31. Petitioner Philippine Deposit Insurance Corporation (PDIC) seeks the reversal of the decision of the Court of Appeals affirming with modification the decision of the Regional Trial Court holding petitioner liable for the value of thirteen (13) certificates of time deposit (CTDs) in the possession of private respondents. plaintiffs-appellees invested in money market placements with the Premiere Financing Corporation (PFC) in the sum of P10. resulting in the cancellation of the certificates as indebtedness or liabilities of RSB. went to the PFC to encash the promissory notes and checks. upon agreement of Cotaoco. ―D‖). 299255 dated September 22. On September 4. on June 15. the Monetary Board of the Central Bank issued Resolution No. 1983). 1983 for the amount of P125. executor. RSB advised Cotaoco to file a claim with the PDIC. Consequently. 1984. that the certificate shall bear 14% interest per annum. renumbered from Sec.R. Instead of paying the promissory notes and checks. i. each stating. the Monetary Board issued Resolution No. the trial court. 1989. administrator.h. or which thereafter may engage in the business of receiving deposits. 1496 (Exh. jointly and severally. 1984. 1997] PHILIPPINE DEPOSIT INSURANCE CORPORATION.000. the RSB still failed to pay the value of the certificates. 1987. ERIC YU. PDIC refused the aforesaid claims on the ground that the Traders Royal Bank Check No. LETICIA TAN. The term ―transfer deposit‖ means a deposit in an insured bank made available to a depositor by the Corporation as payment of insured deposit of such depositor in a closed bank and assumed by another insured bank. LORNA ACUB. 1984. Meanwhile. shall be insured with the Corporation.07 (Exh. 788 (Exh. 46 . 9302. ―B-1‖ to ―B-12‖). the records of RSB were secured and its deposit liabilities were eventually determined.A. Instead. Despite said extension. the trial court rendered its decision ordering the defendants therein to pay plaintiffs. The facts. Sabina Yu. the amount corresponding to the latter‘s certificates of time deposit. James Ngkaion. who have similar claims on their certificates of time deposit with the RSB. 6037. private respondents filed an action for collection against PDIC. represented by their Attorney-in-Fact. declared the Central Bank in default for failing to file an answer.000. JOHN FRANCIS COTAACO. which is engaged in the business of receiving deposits as herein defined on the effective date of this Act. 159) suspending the operations of the RSB. 1983). However. 4 by R. ‗1‘) liquidating the RSB. (As amended by R. John Francis Cotaoco. Damian requested Cotaoco for a deferment or an extension of a few days to enable the RSB to raise the amount to pay for the same (Exh. Cotaoco agreed. Elaine Ngkaion and Jeffrey Ngkaion. MERLY CUESCANO. that the same certifies that the bearer thereof has deposited with the RSB the sum of P10. 12 August 2004) [G. ROSA AQUERO. On December 7. vs. but the PFC referred him to the Regent Saving Bank (RSB). SECTION 5. RSB Executive Vice President Jose M.846. On the aforesaid maturity dated (November 3.000. likewise filed their claims with the PDIC. that the certificate is insured up to P15.00 each for which they were issued by the PFC corresponding promissory notes and checks. RSB and the Central Bank. ―B‖. for and in behalf of plaintiffs-appellees. the RSB. are as follows: On September 22. p. Subsequently. Thereat. and that the maturity date thereof is on November 3. ―C-1‖. 1987. ‗2‘. issued the subject 13 certificates of time deposit with Nos. funds held as trustee.

which arose from the same facts as the Fourth National Bank case. is governed primarily by the provisions of the special law creating it. x x x Whatever the status of the plaintiffs may be as holders in due course under the Negotiable Instruments Law. In like fashion did the Supreme Court of Nebraska brush aside a similar contention in State v. We deal jointly with petitioner‘s first and third assigned errors. the plaintiffs in these cases argued that the negotiability of the certificates of deposits in their possession entitled them to be paid out of the bank guaranty fund. Whether the CTDs in question are negotiable or not is. contends that the CTDs are non-negotiable since they do not contain an unconditional promise or order to pay a sum in money are they made payable to order or bearer. The Central Bank. under Republic Act No. as such. on the other hand. Relying on this Court‘s ruling in Caltex (Philippines). A holder of a certificate of deposit in a bank who seeks to hold the guaranty fund liable for its payment must show 47 . they cannot be assignees of a deposit which was not made. There. Hence. Petitioner. its situation would be in no wise bettered so far as relate to a claim against the guaranty fund. therefore to deprive them of the benefit of the guaranty fund would be a calamity. The Philippine Deposit Insurance Corporation was created by law and. Thus. The fund protects deposits only. xxx where a certificate of deposit is given under such circumstances that it is not protected by the guaranty fund. Inc. which is purely statutory. which rests upon the law pertaining to negotiable paper. immaterial in the present case. as required by Section 1 of the Negotiable Instruments Law. a contention that the courts uniformly rejected. 3591. prohibition and mandamus before the Court of Appeals praying that the writ of execution issued by the trial court against it be set aside. Farmers’ State Bank: In this contention we think the appellants fail to distinguish between the liability of the maker of a negotiable instrument. although that fact is not indicated by anything on its face. however. its indorsement to an innocent holder cannot confer that qualify upon it. x x x The Supreme Court of Kansas. And if no deposit is made. this petition by PDIC assigning the following errors: I THE CA ERRED IN HOLDING THAT THE SUBJECT CTDS ARE NEGOTIABLE INSTRUMENTS II THE CA ERRED INHOLDING THAT THE CTDS WERE ACQUIRED FOR VALUE AND CONSIDERATION III THE CA ERRED WHEN IT HELD THAT BECAUSE THE CTDS STATE THAT THESE WERE INSURED. such liability rests upon the existence of deposits with the insured bank. the Kansas Supreme Court relied on its earlier ruling in American State Bank v. and the liability of the guaranty fund. 1995. on the other hand. On February 8. Bank of Wichita v. They are of wide currency in the banking and business worlds. and may be readily cashed. and cannot be entitled to the benefit of a guaranty which did not come into existence. the transfer of a certificate cannot impose a liability on the fund. Certificates of deposit have been regarded as the highest form of collateral. filed a petition for certiorari. The guaranty is something extrinsic to all forms of evidence of bank obligation. because they bear interest. and were acquired by the present holders in due course. x x x In arriving at the above decision. ruling thus: x x x The argument confuses negotiability of commercial paper with statutory guaranty of deposits. Wilson argued that: x x x the court should hold the certificates to be guaranteed because they are negotiable instruments. Foster. the Court of Appeals rendered its decision granting the Central Bank‘s petition but dismissing the appeals of PDIC and RSB. not on the negotiability or non-negotiability of the certificates evidencing these deposits. v. as amended. The authority for this conclusion finds support in decisions by American state courts applying their respective bank guaranty laws. found the plaintiffs‘ contention to be without merit. and are particularly useful to persons of small means. the Court held: x x x Even if the plaintiff were to be regarded as an innocent purchaser of the certificates as negotiable instruments.Both PDIC and RSB appealed. The liability of the PDIC for insured deposits therefore is statutory and. Invariably. and negotiability of instruments has no dependence on existence or nonexistence of the guaranty. The circumstances under which the guaranty fund may be liable are entirely apart from the law pertaining to negotiable paper. otherwise it is said certificates of deposit will be deprived of the quality of commercial paper. or no deposit within the protection of the guaranty law. the plaintiffs in Fourth Nat. PETITIONER SHOULD BE HELD LIABLE FOR THE SAME. the Court of Appeals concluded that the subject CTDs are negotiable. Court of Appeals and Security Bank and Trust Company. however.

check and/or certificate of deposit printed or issued in accordance with Central Bank rules and regulations and other applicable laws.) A deposit as defined in Section 3(f) of R. and statements in the certificates that the same are insured by PDIC are not binding upon the latter. the deposits of all banks which are entitled to the benefits of insurance under this Act xxx. granting arguendo that the certificates were originally issued in favor of PFC. It is a fund raised by assessments against all state banks. 3519: SECTION 1. savings. however. answered this question in the negative. The same ruling was adopted by the Supreme Court of South Dakota in Mildenstein v. administered by officers of the state to protect deposits in banks. however. No. then RSB would have surely refused to issue the certificates certifying to such fact. 3. together with such other obligations of a bank which.A. x x x The Farmers’ State Bank ruling was reiterated by the Nebraska Supreme Court in State v. and that the certificates are insured by PDIC. the law requires that a corresponding deposit be placed in the insured bank. cannot bind this Court: Equally unimpressive is the contention of PDIC and RSB that the certificates were issued to PFC which did not acquire the same for value because the check issued by the latter for the certificates bounced for insufficiency of funds. if it is true at the time RSB issued the certificates to PFC. time or thrift account or which is evidence by passbook. that the same will mature on November 3.A. payment of the insured deposits in such bank shall be made by the Corporation as soon as possible xxx. A perusal of the impugned decision. whether the certificates are negotiable or not is of no moment. Had not PFC deposited the amount stated therein. and thus. xxx SEC. Home State Bank of Dunning and in State v. such issuance could only give rise to the presumption that the amount stated in the certificates have been deposited to RSB. if in fact a deposit has not been made xxx. In order that a claim for deposit insurance with the PDIC may prosper. the deposit liability of PDIC is determined by the provisions of R. (Italics supplied. (Italics supplied). The fact remains that the certificates categorically state that their bearer [sic] have a deposit in the RSB. This is implicit from a reading of the following provisions of R. In the case at bar. the Court of Appeals initially found the subject CTDs to be negotiable. respondent court deemed the issue immaterial. Second. why did not RSB demand that PFC pay the certificates or file a claim against PFC on the ground that the latter failed to pay for the value of the certificates? It could very well be that the reason why RSB did not run after PFC for payment of the value of the certificates was because the instruments were issued to the latter by RSB for value or were already paid to RSB by plaintiffs-appellees. or that officers of the bank may have stated that the deposit is protected by the guaranty law.A. Subsequently. Third. 3591. No. There is hereby created a Philippine Deposit Insurance Corporation. consistent with banking usage and practices. the instruments were paid for with checks still to be encashed. 1993. The fact that the certificates state that the certificates are insured by PDIC does not ipso facto make the latter liable for the same should the contingency insured against arise. x x x We come now to petitioner‘s second assigned error. as provided.) Did RSB receive money or its equivalent when it issued the certificates of time deposit? The Court of Appeals. x x x Besides. reveals that such finding is grounded entirely on speculation. 3519. x x x The mere fact that a certificate recites on its face that a certain sum has been deposited. checking. 10 (a) xxx xxx ( c) Whenever an insured bank shall have been closed on account of insolvency. First. then why did not RSB specifically state in the certificates that the validity thereof hinges on 48 . albeit for entirely different reasons. does not make the guaranty fund liable for payment. (Italics ours. xxx which shall insure. in resolving who between RSB and PFC issued the certificates to private respondents. Kilgore State Bank. the Board of Directors shall determine and prescribe by regulations to be deposit liabilities of the Bank xxx. Hirning. We disagree with respondent court‘s rationale.that the transaction leading up to the issuance of the certificate was such that the law holds the guaranty fund liable for its payment. The banks have nothing to do with the guaranty fund as such. As used in this Act(f) The term ―deposit‖ means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or is obliged to give credit to a commercial. As stated earlier. may be constituted only if money or the equivalent of money is received by a bank: SEC.

1987.00) from the respondent PAIC Savings and Mortgage Bank and the Philippine American Investments Corporation (PAIC). On October 4. ACCORDINGLY.000.000. CTD No. Vargas executed in favor of the respondent and PAIC a Joint First Mortgage1 over two parcels of land registered under her name. RSB Deputy Liquidator. It appears that from the years 1986 to 1991.07 xxx issued by Premiere Financing Corporation. therefore came into existence. represented by its president. as cited in the Decision on p. RSB cancelled the corresponding as evidenced by an RSB ―ticket‖ dated November 4. is the subject of the present case. 6076. No. the Central Bank) for the repurchase of the foreclosed property. including the ones in dispute.A. G. 48-49. 09648 to 09660. obtained a loan of three million pesos (P3. inclusive. In consideration of the third check.R. pp. in Civil Case No.95. P125. Therese Villanueva Vargas. The petition was given due course in an Order 5 dated May 19. Despite repeated demands from the respondent.665. even if it is true that PFC did not deposit with or pay the RSB the amount stated in the certificates. MANALO. respondent instituted extrajudicial foreclosure proceedings over the mortgaged lots. the second. with a value of P10. however. Vargas 49 . such finding totally ignores the evidence presented by defendants. 141297 October 8. The negotiations. 09648 was ―chopped.000. Section 2 of the mortgage contract states that "the properties mortgaged therein shall include all buildings and improvements existing on the mortgaged property at the time of the execution of the mortgage contract and thereafter. 1984.000. 1983.) and covered by TCT No. Truly. To conform with the value of the third check. The respondent then caused the annotation of the corresponding Sheriff's Certificate of Sale 3 on the title of the land on December 4.A. No. it failed to settle its loan obligation. and the third. title was consolidated in respondent's name for failure of Vargas to redeem. 50341 promulgated December 23. Cardola de Jesus. and is described in RSB‘s offer of evidence as ―Traders Royal Bank Check No. For. by issuing the certificates. COURT OF APPEALS (Special Twelfth Division) and PAIC SAVINGS AND MORTGAGE BANK.93. the Central Bank of the Philippines filed a Petition4 for assistance in the liquidation of the respondent with the Regional Trial Court.the encashment of said check? Fourth. 1983. No deposit. the instant petition is hereby GRANTED and the decision of the Court of Appeals REVERSED. there is no reason to depart from the established principle that were a bank issues a certificate of deposit acknowledging a deposit made with a third person or an officer of the bank. P121. 3591.‖ At the back of said check are the words ―Refer to Drawer.153. This petition for certiorari seeks the review of the Decision of the Court of Appeals in C.846. RSB bound itself to pay the amount stated therein to whoever is the bearer upon its presentment for encashment.00 each or a total of P130.‖ The check in question appears on the records as Exhibit ―3‖ (for Regent). Moreover.00. or the statutory period extended by law to a mortgagor to exercise his/her right of redemption. 5A. One of the lots. 2001 DOMINGO R. S. Villanueva Enterprises defaulted in paying the amortizations due. upon which assurance the depositor accepts it. After the lapse of one year. Branch 112. By reason of the check‘s dishonor.-G. petitioner PDIC cannot be held liable for value of the certificates of time deposit held by private respondents. Vargas negotiated with the respondent (through its then liquidator.00) and one million pesos (P1. vs.‖ and only the sum of P5. Villanueva Enterprises. Petitioner is absolved from any liability to private respondents. respectively. On October 29. the Pasay City property was sold at a public auction to the respondent itself. 1991. The first two checks ―made good in the clearing‖ while the third was returned for being ―drawn‖ against insufficient funds.R. the bank is liable for the amount of the deposit (Michis. 1986.846.07 was credited in favor of private respondents. 1998. located in Pasay City with an area of nine hundred nineteen square meters (919 sq. No.000. the latter is not be such reason freed from civil liability to plaintiffs-appellees. fizzled out as Vargas cannot afford the repurchase price fixed by the respondent based on the appraised value of the land at that time. m.‖ indicating that the drawee bank (Traders Royal Bank) refused to pay the value represented by said check. 292555 dated September 22. which affirmed an Order issued by the Regional Trial Court. after tendering the highest bid. SP. The first check amounted to P159. 3 thereof). 9011 dated December 9. On July 19. or with another bank representing it to be the certificate of the bank.846. Vol. as defined in Section 3 (f) of R. private respondents received thirteen (13) certificates of deposit with Nos."2 S.000. On August 22. To secure payment of both debts. testified that RSB received three (3) checks in consideration for the issuance of several CTDs. 1984. Accordingly. 1983 covering the amount or P125. Pasay City. These pieces of evidence convincingly show that the subject CTDs were indeed issued without RSB receiving any money therefor. Accordingly. 1999. Banks and Banking.07.

portion of the lot. the court a quo denied the Motion to Quash and Motion to Intervene filed respectively by Vargas and petitioner. involving 450 square meters. on June 22. 1997. 98-0868 before another branch17 of the Pasay City RTC to compel PAIC Bank to allow him to repurchase the subject property. upon the termination of the lease contract. assigned his rights therein to petitioner. that before petitioner sought intervention in the present case. and any and all persons claiming rights or title under them. the court rendered a decision6 dismissing the complaint and upholding the validity of the mortgage and foreclosure sale. subject of the instant Petition for Certiorari and Prohibition.7 This decision of the Court of Appeals subsequently became final and executory when we summarily dismissed Vargas' Petition for Review on Certiorari for having been filed beyond the reglementary period. Vargas. were similarly denied on December 9. 9011 (for the issuance of a writ of possession). filing therein a Petition for Certiorari.13 The writ was subsequently issued on April 24. On December 23.18 A Motion for Reconsideration and a Supplemental Motion for Reconsideration were filed by the petitioner which. Vargas. however. SO ORDERED. as buyer of the property.16 It bears mentioning. Armando Angsico. 1998. 1998 Order is AFFIRMED in all respects. Vargas and S. VILLANUEVA ENTERPRISES. On July 22. Notwithstanding this sale. the pertinent portion of which reads:14 "NOW THEREFORE you are hereby commanded that you cause oppositors THERESE VILLANUEVA VARGAS and S. INC. represented by its liquidator. renewable for another month at the exclusive option of the lessor. leased the same to petitioner Domingo R. over the same 450 sq. On appeal. 6076 of the Registry of Deeds of Pasay City.8 In the meantime." Shortly. filed their opposition thereto. thus: "All told. transferring. in issuing its questioned Order. the court a quo granted the petition for the issuance of the Writ of Possession. During the pendency of Civil Case No. respondent petitioned the Regional Trial Court.filed a case for annulment of mortgage and extrajudicial foreclosure sale before Branch 116 of the Pasay City Regional Trial Court. on June 29. for the issuance of a writ of possession for the subject property in Civil Case No. petitioner. Manalo on August 25. While this was awaiting resolution. on the strength of the lease contract and Deed of Assignment made in his favor. committed no grave abuse of discretion amounting to lack of jurisdiction. of Pasay City. and conveying ownership of the disputed lot in favor of a certain Armando Angsico. 1999. After which. where petitioner raises and argues the following legal issues: 50 . to forthwith vacate and surrender the possession of subject premises in question known as that parcel of land and improvements covered by TCT No. 1994. on December 23. 1998. on May 8. Petitioner then sought relief with the Court of Appeals. executed a Deed of Absolute Sale9 selling. (a) The lease is for a period of ten year lease (sic). Branch 112. the appellate court upheld the assailed judgment and declared the said mortgage and foreclosure proceedings to be in accord with law. Pertinent provisions of the lease agreement10 state: "3.12 On April 21."20 Hence. herein court a quo. 1998. 1992.15 Thereafter on June 25. 1992. x x x (d) The LESSEE has to introduce into the said 450 square meter premises improvements thereon (sic) consisting of one story building to house a Karaoke Music Restaurant Business. S. this appeal. docketed as Civil Case No. submitted a Permission to File an Ex-parte Motion to Intervene. 1993. Villanueva Enterprises and Vargas moved for its quashal. he had separately instituted a Complaint for Mandamus. he entered into another lease agreement. the appellate court rendered the impugned Decision. the Petition for Certiorari and Prohibition is hereby DISMISSED and the assailed December 9. to be not without rational bases and we observe that the court a quo. The contract fixed a period of one month beginning January 28. by said LESSEE be surrendered in favor of the LESSOR (sic). a portion of the above 919 square meter property. 1998. still representing herself to be the lawful owner of the property. 1998. which improvements constructed thereof (sic). 9011. This is in view of the consolidation of its ownership over the same as mentioned earlier. 1999. 1998.19 this time with the respondent. On October 7. Villanueva Enterprises. WE find the Order. dismissing the petition. you are hereby further ordered to take possession and deliver to the petitioner PAIC SAVINGS AND MORTGAGE BANK the subject parcel of land and improvements. WHEREFORE. respondent PAIC Bank. Inc. m. however. trial ensued.''11 Later.

"I. In fine. On the contrary. should pass upon the claims against the insolvent bank and that the liquidation court should assist the Superintendents of Banks and regulate his operations. docketed as Spec. exclusively vests with the Liquidation Court pursuant to Section 29 of Republic Act No. Petitioner postulates that the lower court should have dismissed respondent's "Ex-Parte Petition for Issuance of Writ of Possession" in Civil Case No. Pro. To be sure.) Petitioner apparently failed to appreciate the correct meaning and import of the above-quoted law. Whether or not public respondent acted without or in excess of its jurisdiction and/or was patently in error when it affirmed the denial of petitioner's motion for intervention. This interpretation of Section 29 becomes more obvious in the light of its intent. file a petition in the Regional Trial Court reciting the proceedings which have been taken and praying the assistance of the court in the liquidation of such institution. as amended. city.25 The lawmaking body contemplated that for convenience. Whether or not the public respondent committed grave abuse of discretion when it held that what are required to be instituted before the liquidation court are those claims against the insolvent banks only considering that the private respondent bank is legally dead due to insolvency and considering further that there is already a liquidation court (Regional Trial Court of Makati. to obviate the proliferation of litigations and to avoid injustice and arbitrariness. Act 3135.26 It then ought to follow that petitioner's reliance on Section 29 and the Valenzuela case is misplaced. It was filed upon the instance of the respondent's liquidator in order to take possession of a tract of land over which it has ownership claims."21 We will first resolve the jurisdictional and procedural questions raised by the petitioner. These contentions can not pass judicial muster. 9011 is not in the nature of a disputed claim against the bank. otherwise known as The Central Bank Act. if possible. otherwise known as The Central Bank Act. The requirement that all claims against the bank be pursued in the liquidation proceedings filed by the Central Bank is intended to prevent multiplicity of actions against the insolvent bank and designed to establish due process and orderliness in the liquidation of the bank. it is an action instituted by the respondent bank itself for the preservation of its asset and protection of its property. No. Whether or not the petitioner is estopped from questioning private respondent's ownership when it entered into a contract of lease involving the property in question. he accuses. 265. by the Solicitor General. is guilty of forum shopping. 265. thus: 51 ." For going to another court. he insists. Court of Appeals. P-9011 for want of jurisdiction over the subject matter of the claim. This is sanctioned by Section 7 of the said Act. Pasay City. II. Republic Act No. The power to hear the same. The court shall have jurisdiction in the same proceedings to assist in the adjudication of disputed claims against the bank or non-bank financial intermediary performing quasi-banking functions and the enforcement of individual liabilities of the stockholders and do all that is necessary to preserve the assets of such institution and to implement the liquidation plan approved by the Monetary Board. I. the exclusive jurisdiction of the liquidation court pertains only to the adjudication of claims against the bank.23 where we held that "if there is a judicial liquidation of an insolvent bank. Branch 57. The pertinent portion of Section 29 states: "x x x The liquidator designated as hereunder provided shall. only one court. M-1280) which is exclusively vested with jurisdiction to hear all matters and incidents on liquidation pursuant to Section 29. the liquidator took the proper course of action when it applied for a writ in the Pasay City RTC. III. IV. Branch 231 ) which presents a prejudicial question to the case at bar. all claims against the bank should be filed in the liquidation proceeding. It does not cover the reverse situation where it is the bank which files a claim against another person or legal entity. x x x"24 (emphasis supplied.27 entitled An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed To Real Estate Mortgages. despite the fact that he has a legal interest. the respondent. Whether or not the public respondent committed grave abuse of discretion and/or was patently in error in affirming the ruling of the trial court. totally disregarding the arguments raised in petitioner's supplemental motion for reconsideration only through a minute order and without taking into consideration the fact that there is a pending action in another court (RTC. The Petition for the Issuance of a Writ of Possession in Civil Case No.22 He then cites our decision in Valenzuela v. mandates that jurisdiction over a Petition for Writ of Possession lies with the court of the province. or municipality where the property subject thereof is situated. being a lessee and an assignee of the property subject matter of this case. The legal provision only finds operation in cases where there are claims against an insolvent bank.

to the exclusion of other courts. 1998. it taxes our imagination why the questions raised in Case No. Hence. Petitioner likewise proffers one other procedural obstacle. we have laid down the yardstick to determine whether a party violated the rule against forum shopping as where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. A bank which had been ordered closed by the monetary board retains its juridical personality which can sue and be sued through its liquidator. to give him possession thereof during the redemption period. as the purchaser in the extrajudicial foreclosure 52 . the execution of a judgment adverse to his interests. The rationale behind the principle of prejudicial question is to avoid two conflicting decisions. thus: "x x x and he (liquidator) may in the name of the bank or non-bank financial intermediary performing quasi-banking functions and with the assistance of counsel as he may retain.34 It generally comes into play in a situation where a civil action and a criminal action are both pending and there exists in the former an issue which must be preemptively resolved before the criminal action may proceed. then this will necessarily negate the possessory writ issued by the court a quo."33 (emphasis supplied. furnishing bond in an amount equivalent to the use of the property for a period of twelve months. 98-0868 must be considered determinative of Case No. there is no occasion for the doctrine to apply. He asserts that. In any sale made under the provisions of this Act. we are not persuaded. if not prevent.32 That the law allows a bank under liquidation to participate in an action can be clearly inferred from the third paragraph of the same Section 29 of The Central Bank Act earlier quoted.35 Here. The said action is the complaint he filed against the respondent for the latter to receive and accept the redemption price of eighteen million pesos for the subject property."SECTION 7. banks in liquidation would lose what justly belongs to them through a mere technicality. which authorizes or empowers a liquidator to institute actions. The basic issue in the former is whether the respondent. sixteen days after the lower court granted respondent's petition and thirteen days after it issued the writ.36 it is apparent that the former action was instituted merely to frustrate the Court's ruling in the case at bar granting the respondent the right to possess the subject property. At any rate. institute such actions as may be necessary in the appropriate court to collect and recover accounts and assets of such institution or defend any action filed against the institution. It cannot then possibly prejudice a decided case. the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated. II.30 Inasmuch as the case at bar is the only one filed by the respondent for the issuance of a writ of possession over the subject property. then the city's RTC should rightly take cognizance of the case. suffice it to state here that the doctrine only ponders situations where two (or more) cases are pending before different tribunals. In such situation.) It is therefore beyond dispute that respondent was legally capacitated to petition the court a quo for the issuance of the writ. which is the pendency of Civil Case No. no suit for or against an insolvent entity would prosper. as the purchaser in the extra-judicial foreclosure proceedings. 98-0868 and the present one are both civil in nature and therefore no prejudicial question can arise from the existence of the two actions. no writ may be issued in its favor. because howsoever the issue raised in the civil action is resolved would be determinative juris et de jure of the guilt or innocence of the accused in the criminal case. 9011. and the cognizance of which pertains to another tribunal.31 Otherwise. respondent bank is already a "dead" corporation that cannot maintain the suit in the RTC. It is but a canny and preemptive maneuver on the part of the petitioner to delay. aside from the fact that Civil Case No. Anent petitioner's auxiliary contention that respondent should be held guilty of forum shopping for not filing the case in the liquidation court. Petitioner next casts doubt on the capacity of the respondent to continue litigating the petition for the issuance of the writ. He argues that the primary issue therein constitutes a prejudicial question in relation to the present case in that if the Court therein will grant petitioner's prayer.29 Well to point. Again. A prejudicial question is one which arises in a case the resolution of which is a logical antecedent of the issue involved therein. The argument is devoid of merit. It bears stressing that the complaint for mandamus was filed only on May 7. being under liquidation. to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act x x x"28 (emphasis supplied) Since the land subject of this controversy is located in Pasay City. 98-0868 in Branch 231 of Pasay City RTC. may be compelled to have the property repurchased or resold to a mortgagor's successor-in-interest (petitioner): while that in the latter is merely whether the respondent. The only limitation being that the prosecution or defense of the action must be done through the liquidator.

The two cases. Petitioner seeks intervention in this case by virtue of the lease agreement and the deed of assignment executed in his favor by the mortgagor (Vargas) and an alleged buyer (Angsico) of the land.43 Taking into account these fundamental precepts. intervention is not an independent action but is ancillary and supplemental to an existing litigation. thus: "SECTION 1. assuming both are pending. the court neither exercises its official discretion nor judgment. At that stage. — A person who has a legal interest in the matter in litigation."38 Intervention is not a matter of right but may be permitted by the courts only when the statutory conditions for the right to intervene is shown. can proceed separately and take their own direction independent of each other. the tribunal should not limit itself to inquiring whether "a person (1) has a legal interest in the matter in litigation. in previous cases. that did not in any way affect the nature of the RTC's Order as an adjudication on the merits. He posits that as a lessee and assignee in possession of the foreclosed real estate. basically. It had issued the Writ of Possession on April 24. In the first place. disallowed injunction to prohibit its issuance. Rule 19 of the 1997 Rules of Civil Procedure requires: "SECTION 2. and whether or not the intervenor's rights may be fully protected in a separate proceeding. Who may intervene.proceedings. and whether or not the intervenor's rights may be fully protected in a separate proceeding. it will not be warranted anymore. Villanueva Enterprises moved to quash the writ.45 As such. becomes a litigant therein to enable him to protect or preserve a right or interest which may be affected by such proceeding. not originally impleaded in the proceeding. he automatically acquires interest over the subject matter of the litigation. allegedly to the tune of fifteen million pesos (P15. be allowed to intervene in the action.37 The pertinent provision is stated in Section 1. we rule that the petitioner may not properly intervene in the case at bar. or an interest against both."41 Just as important. he adds.47 just as we have held that issuance of the same may not be stayed by a pending action for annulment of mortgage or the foreclosure itself. furthermore. 1998. having been filed only at the execution stage. This interest is coupled with the fact that he introduced improvements thereon. Allowing petitioner to intervene. consisting of a one-storey building which houses a karaoke-music restaurant. This cannot be countenanced considering that after the consolidation of title in the buyer's name. His insistence to participate in the proceeding is an unfortunate case of too little. The issuance of the Order is in essence a rendition of judgment within the purview of Section 2. Enforcing the writ. or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may. 1998. (4) or when is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof. the writ of possession becomes a matter of right. 1998. petitioner's Ex-parte Permission to File a Motion to Intervene was submitted to the RTC only on June 25. Section 2. 1998. Rule 19 of the 1997 Rules of Civil Procedure. for failure of the mortgagor to redeem. (3) or an interest against both. Vargas and S.39 Thus.000.40 In determining the propriety of letting a party intervene in a case. we now come to the merits of the case.00).46 If only to stress the writ's ministerial character. III.48 53 . will serve no other purpose but to unduly delay the execution of the writ. Intervention is a remedy by which a third party. with leave of court. For that reason alone.44 Its issuance to a purchaser in an extrajudicial foreclosure is merely a ministerial function. as we have stated in Big Country Ranch Corporation v. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. too late. respectively. While it is true that on May 8. This is because. Petitioner's motion then was clearly out of time. without hearing his side would be an injustice to him. the lower court had already granted respondent's petition for the writ in an Order dated April 21. the allowance or disallowance of a motion to intervene is addressed to the sound discretion of the court. Having disposed of the jurisdictional and procedural issues. is entitled to a writ of possession after the statutory period for redemption has expired. we have. Court of Appeals. to the prejudice of the respondent.000. x x x" After the lapse of this period. The period within which a person may intervene is also restricted. it must meet the consequence of denial. (2) or in the success of either of the parties. or in the success of either of the parties. Rule 19.42 is the function to consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. Time to intervene. — The motion to intervene may be filed at any time before the rendition of judgment by the trial court.

banking or credit institution.) Being herself bereft of valid title and rights. This brings us to petitioner's final point. failed to redeem it. The possible legal implication of the lease on the petitioner's act of trying to redeem the disputed lot is a question which. petitioner. to redeem the property by paying the amount fixed by the court in the order or execution x x x"51 (emphasis supplied. 3936 requires the publication of a sworn statement of unclaimed balances in banks once a week of three consecutive weeks in at least two newspapers of general circulation in the locality where the banks are situated. TRUST CORPORATIONS. within the purview of this Act shall have the right. TO TRANSFER UNCLAIMED BALANCES HELD BY THEM TO THE TREASURER OF THE PHILIPPINES AND FOR OTHER PURPOSES. Hence. A mortgagor has only one year within which to redeem her foreclosed real estate. He briefly asserts that his act of entering into a lease contract with the respondent should not affect his right to redeem the subject property.: "x x x In the event of foreclosure. as mortgagor. for the simple reason that as early as December 4. within one year after the sale of the real estate mortgage as a result of the foreclosure of the respective mortgage. He can still fully protect his rights in Civil Case No. IV. 1975 AMENDING ACT NUMBERED THIRTY NINE HUNDRED AND THIRTY SIX. WHEREAS.49 After that period. judicially or extrajudicially. can best be resolved in the mandamus complaint. he likewise perpetually barred himself from redeeming the same is a matter which can be addressed most aptly in that pending action. Petitioner cannot validly predicate his supposed interest over the property in litigation on that of Vargas. there is presently no need for us to squarely rule on this ultimate point. he can ventilate his side to a fuller extent as that would be the more appropriate venue for elucidating whatever legal basis he alleges in compelling the respondent to sell to him the currently disputed land. This is in consonance with Section 78 of the General Banking Act. Whether by acknowledging the legality of the respondent's claim and title over the land at the time of the execution of the contract. 1985. if there be any. of any mortgage on real estate which is security for any loan granted before the passage of this Act or the provisions of this Act. 679 April 2. Whatever possessory rights he holds only emanate from that of Vargas. Act No. and from whom his assignor/predecessorin-interest bought it. finding no cogent reason to disturb the assailed Decision. which shall be reimbursed out of the escheated funds. It is axiomatic that one can not transmit what one does not have. the latter has already been stripped of all her rights over the land when she. 50 viz. as amended) PRESIDENTIAL DECREE No. 3936. in our opinion. in the City of Manila. the instant petition is hereby DENIED. Whether the agreement must be construed as a waiver on his part of exercising his purported right of redemption is an issue best left for the court therein to decide. Unclaimed Balancs Law (Act No. 98-0868 or the complaint for mandamus he filed before Branch 231 of the Pasay City RTC. all is not lost for the petitioner. the mortgagor or debtor whose real property has been sold at public auction. Vargas can not legitimately convey any to some other person. She could not have lawfully sold the land to Angsico nor leased it to petitioner for her own account. the law also provides for the publication of summons and a notice upon the commencement of the prescribed judicial proceedings for the escheat of unclaimed balances.Even if he anchors his intervention on the purported interest he has over the land and the improvements thereon. Therein lies the precariousness of his title. AND BUILDING AND LOAN ASSOCIATIONS. IN VIEW WHEREOF. There. for the full or partial payment of an obligation to any bank. V. AN ACT REQUIRING BANKS. the cost of which shall be paid by the Bureau of Treasury. whether judicially or extrajudicially. and if there is none. 54 . she loses all her interests over it. WHEREAS. still.52 It ought to follow that petitioner could not have acquired any right or interest from Vargas. He admits that he is a mere lessee and assignee. should not be allowed to do so. from whom he leased the lot. one in English and one in Spanish. Withal.

and "(d) The interest due on such unclaimed balance. under oath. buildings and loan associations. THEREFORE. the average amount of which is small. FERDINAND E. "Banks". of their respective managing officers. the bank. 3936 are hereby amended to read as follows: "Sec. "(b) The amount and the date of the outstanding unclaimed balance and whether the same is in money or in security. and trust corporations. shall refer to institutions defined under Section two. or the date when he made his last deposit or withdrawal. and 5 of Act No. there is a felt need to simplify the procedure for the escheat of unclaimed balances for the purpose of reducing the expenses therefor.WHEREAS. in favor of any person known to be dead or who has not made further deposits or withdrawals during the preceding ten years or more. if any. otherwise known as the General Banking Act. or trust corporation concerned for at least sixty days from the date of filing thereof: Provided. and interest thereon with banks. within the meaning of this Act. MARCOS. 2. building and loan association. and showing: "(a) The names and last known place of residence or post office addresses of the persons in whose favor such unclaimed balances stand. as hereinafter defined. "It shall be the duty of the Treasurer of the Philippines to inform the Solicitor General from time to time the existence of unclaimed balances held by banks. "(c) The date when the person in whose favor the unclaimed balance stands died. Sections 1. and trust corporations shall forward to the Treasurer of the Philippines a statement. 55 . That immediately before filing the above sworn statement. "Unclaimed balances". President of the Philippines. "A copy of the above sworn statement shall be posted in a conspicuous place in the premises of the bank. or who have not made further deposits or withdrawals during the preceding ten years or more. building and loan associations. whether organized under special charters or not. by virtue of the powers in me vested by the Constitution. respectively. shall be deposited with the Treasurer of the Philippines to the credit of the Government of the Republic of the Philippines to be used as the National Assembly may direct. the increase of which has been substantial the past few years. together with the increase and proceeds thereof. the nature of the same. and trust corporations. I. thirty-nine and fifty-six. and the amount thereof. shall include credits or deposits of money. of Republic Act Numbered Three Hundred Thirty Seven. 4. past experience has shown that the cost of publication required by law. as amended. arranged in alphabetical order according to the names of creditors and depositors. of all credits and deposits held by them in favor of persons known to be dead. "building and loan associations" and "trust corporations". do hereby decree and order: Section 1. and if the latter. bullion. building and loan association. Immediately after the taking effect of this Act and within the month of January of every odd year. 3. and trust corporation shall communicate with the person in whose favor the unclaimed balance stands at his last known place of residence or post office address. within the meaning of this Act. "Sec. security or other evidence of indebtedness of any kind. 2. NOW. WHEREAS. 1. all banks. Such unclaimed balances. building and loan associations. is more than the aggregate amount of the unclaimed balances to be escheated. if known.

if there are several. building and loan association. Upon the trial. building and loan association or trust corporation. or managing officer of each defendant bank. at such time as the court may order." Section 2. Any person interested may appear in said action and become a party thereto. such bank. All or any of such creditors or depositors or banks. in which shall be joined as parties the bank. and shall have full and complete jurisdiction to hear and determine the issues herein. and directed to all persons. cashier or managing officer of the bank. of said summons and notice. of the summons and notice. why the unclaimed balances involved in said action should not be deposited with the Treasurer of the Philippines as in this Act provided and notifying them that if they do not appear and show cause. building and loan association or trust corporation is situated. "Sec. there shall be a statement of the date of publication. or trust corporation neglects or refuses to make and file the sworn statement required by this action. Service of process in such action or actions shall be made by delivery of a copy of the complaint and summons to the president. this 2nd day of April. or in a local dialect. the court must hear all parties who have appeared therein. and in case there is none. if there be any. said summons required to be published as above. and render the appropriate judgment thereon. and if it be determined that such unclaimed balances in any defendant bank. if there are several. then the court shall render judgment in favor of the Government of the Republic of the Philippines. nineteen hundred and seventy-five. in the year of Our Lord. Any bank. and referring to the complaint therein. and the service of the summons on the defendant banks. the clerk of court shall also issue a notice signed by him. "At the time of issuing summons in the action above provided for. or trust corporation for unclaimed balances so deposited with the Treasurer of the Philippines shall be defended by the Solicitor General without cost to such bank. "Sec. 5. in Filipino. or first publication. building and loan association or trust corporation is located. building and loan association or trust corporation and all such creditors or depositors. 3. 56 . of such summons. if they have any."Sec. either in English. and at the end of the copy of such notice so published. or trust corporation shall pay to the Government the sum of five hundred pesos a month for each month or fraction thereof during which such default shall continue. building and loan association. if there are several. building and loan association or trust corporation which shall make any deposit with the Treasurer of the Philippines in conformity with the provisions of this Act shall not thereafter be liable to any person for the same and any action which may be brought by any person against in any bank. A copy of said notice shall be attached to. building and loan associations or trust corporations. the Government of the Republic of the Philippines will apply to the court for the relief demanded in the complaint. 4. DONE in the City of Manila. other than those named as defendants therein. and requiring them to appear within sixty days after the publication or first publication. published in the locality where the bank. Whenever the Solicitor General shall be informed of such unclaimed balances. Upon the publication or the completion of the publication. declaring that said unclaimed balances have escheated to the Government of the Republic of the Philippines and commanding said bank. or any of them. he shall commence an action or actions in the name of the People of the Republic of the Philippines in the Court of First Instance of the province or city where the bank. claiming any interest in any unclaimed balance mentioned in said complaint. If the president. building and loan association or trust corporation to forthwith deposit the same with the Treasurer of the Philippines to credit of the Government of the Republic of the Philippines to be used as the National Assembly may direct. and show cause. and published with the copy of. building and loan association or trust corporation and by publication of a copy of such summons in a newspaper of general circulation. cashier. giving the title and number of said action. the court shall have full and complete jurisdiction in the Republic of the Philippines over the said unclaimed balances and over the persons having or claiming any interest in the said unclaimed balances. building and loan association. in the City of Manila. building and loan association or trust corporation are unclaimed as hereinbefore stated. building and loan association or trust corporations may be included in one action. This Decree shall take effect immediately.

(3) securities or negotiable instruments. bonds. brokers." SEC. and (4) other similar instruments where title thereto passes to another by endorsement. (f) "Proceeds" refers to an amount derived or realized from an unlawful activity. (4) Plunder under Republic Act No. and (iv) other entities administering or otherwise dealing in currency. (3) Section 3 paragraphs B. advisor. as amended. quasi-banks. (iii) foreign exchange corporations. (g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency. 3019. non-banks. salesmen. money changers. common trust funds. 3815. or consultant. 57 . at the time of the transaction was a properly identified client and the amount is commensurate with the business or financial capacity of the client. cash substitutes and other similar monetary instruments or property supervised or regulated by Securities and Exchange Commission and Exchange Commission (b) "Covered transaction" is a single. E. underlying trade obligation or contract. (i) "Unlawful activity" refers to any act or omission or series or combination thereof involving or having relation to the following: (1) Kidnapping for ransom under Article 267 of Act No. (2) insurance companies and all other institutions supervised or regulated by the Insurance Commission. (h) "Transaction" refers to any act establishing any right or obligation or giving rise to any contractual or legal relationship between the parties thereto. (c) "Monetary instrument" refers to: (1) coins or currency of legal tender of the Philippines.00) especially cash deposits and investments having no credible purpose or origin. Anti-Money Laundering Act (RA 9160) AN ACT DEFINING THE CRIME OF MONEY LAUNDERING. trust entities. (2) Sections 3. Short Title. department or office supervising or regulating the covered institutions enumerated in Section 3(a). as amended. origin or economic justification. It likewise refers to a single. valuable objects.VI. otherwise known as the Dangerous Drugs Act of 1972. – This Act shall be known as the "Anti-Money Laundering Act of 2001. commodities or financial derivatives based thereon. 8 and 9 of Article Two of Republic Act No. custodial receipts or deposit substitute instruments.000. checks and notes. investment houses and other similar entities managing securities or rendering services as investment agent.000. or those with an underlying legal or trade obligation. assignment or delivery. purpose. money payment. or combination of transactions involving a total amount in excess of Four million Philippine pesos (Php4. 2. 7080. SEC. Consistent with its foreign policy. 6425. – For purposes of this Act. pre-need companies and other similar entities. 5. 4. and all other institutions and their subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP). otherwise known as the Anti-Graft and Corrupt Practices Act. and (3) (i) securities dealers. PROVIDING PENALTIES THEREFOR AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: SECTION 1. deposit certificates. otherwise known as the Revised Penal Code. Declaration of Policy.00) or an equivalent amount in foreign currency based on the prevailing exchange rate within five (5) consecutive banking days except those between a covered institution and a person who. series. C. the following terms are hereby defined as follows: (a) "Covered institution" refers to: (1) banks. Definitions. transaction tickets and confirmations of sale or investments and money market instruments. the State shall extend cooperation in transnational investigations and prosecutions of persons involved in money laundering activities wherever committed. – It is hereby declared the policy of the State to protect and preserve the integrity and confidentiality of bank accounts and to ensure that the Philippines shall not be used as a money laundering site for the proceeds of any unlawful activity. or of any other country. 3.000. H and I of Republic Act No. as amended. (e) "Person" refers to any natural or juridical person. trading orders.000. as amended. (d) "Offender" refers to any person who commits a money laundering offense. G. close-end investment companies. It also includes any movement of funds by any means with a covered institution. 7. series or combination or pattern of unusually large and complex transactions in excess of Four million Philippine pesos (Php4. commercial papers. and transfer companies and other similar entities. trust certificates. (ii) mutual funds. (2) drafts. remittance.

(7) Piracy on the high seas under the Revised Penal Code. as amended. as amended and Presidential Decree No. to be. the methods and techniques used in money laundering. (9) Swindling under Article 315 of the Revised Penal Code. 301 and 302 of the Revised Penal Code. representing. Jurisdiction of Money Laundering Cases. (5) to initiate investigations of covered transactions. (c) Any person knowing that any monetary instrument or property is required under this Act to be disclosed and filed with the Anti-Money Laundering Council (AMLC). 295. (b) Any proceeding relating to the unlawful activity shall be given precedence over the prosecution of any offense or violation under this Act without prejudice to the freezing and other remedies provided. – (a) Any person may be charged with and convicted of both the offense of money laundering and the unlawful activity as herein defined. (6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. SEC. directly or indirectly. destructive arson and murder. including those perpetrated by terrorists against non-combatant persons and similar targets. (9) to develop educational programs on the pernicious effects of money laundering. Prosecution of Money Laundering. Creation of Anti-Money Laundering Council (AMLC). (8) Qualified theft under Article 310 of the Revised Penal Code. 296. the proceeds of any unlawful activity. as defined under the Revised Penal Code. (7) to implement such measures as may be necessary and justified under this Act to counteract money laundering. involving. (8) to receive and take action in respect of. as amended. (3) to institute civil forfeiture proceedings and all other remedial proceedings through the Office of the Solicitor General. the Commissioner of the Insurance Commission and the Chairman of the Securities and Exchange Commission as members. SEC. or believed by the Council. 455 and 1937. The AMLC shall act unanimously in the discharge of its functions as defined hereunder: (1) to require and receive covered transaction reports from covered institutions. – The regional trial courts shall have jurisdiction to try all cases on money laundering. or relates to. and 58 . or related to. thereby making them appear to have originated from legitimate sources. wherever located. the proceeds of an unlawful activity. 300. It is committed by the following: (a) Any person knowing that any monetary instrument or property represents. (10) Smuggling under Republic Act Nos. – Money laundering is a crime whereby the proceeds of an unlawful activity are transacted. as amended. (4) to cause the filing of complaints with the Department of Justice or the Ombudsman for the prosecution of money laundering offenses. involves. (6) to freeze any monetary instrument or property alleged to be proceeds of any unlawful activity. performs or fails to perform any act as a result of which he facilitates the offense of money laundering referred to in paragraph (a) above. 299. 8792. (12) Hijacking and other violations under Republic Act No. otherwise known as the Securities Regulation Code of 2000. Those committed by public officers and private persons who are in conspiracy with such public officers shall be under the jurisdiction of the Sandiganbayan. 5. in any manner or by any means. transacts or attempts to transact said monetary instrument or property. money laundering activities and other violations of this Act. as amended. – The Anti-Money Laundering Council is hereby created and shall be composed of the Governor of the Bangko Sentral ng Pilipinas as chairman. 8799. SEC. 7. 1602. (2) to issue orders addressed to the appropriate Supervising Authority or the covered institution to determine the true identity of the owner of any monetary instrument or property subject of a covered transaction report or request for assistance from a foreign State.(5) Robbery and extortion under Articles 294. (b) Any person knowing that any monetary instrument or property involves the proceeds of any unlawful activity. in whole or in part. 6. 4. 6235. (11) Violations under Republic Act No. 532. on the basis of substantial evidence. (13) Fraudulent practices and other violations under Republic Act No. Money Laundering Offense. any request from foreign states for assistance in their own anti-money laundering operations provided in this Act. SEC. otherwise known as the Electronic Commerce Act of 2000. the viable means of preventing money laundering and the effective ways of prosecuting and punishing offenders. fails to do so. (14) Felonies or offenses of a similar nature that are punishable under the penal laws of other countries.

or other similar devices. no administrative. criminal or civil proceedings. on the account for a period not exceeding fifteen (15) days. the records on customer identification. The AMLC has seventy-two (72) hours to dispose of the depositor‘s explanation. the freeze order shall automatically be dissolved. consultants or associates shall not be deemed to have violated Republic Act No. Prevention of Money Laundering. unquestionable integrity and known probity. agent. in case of corporate clients. When reporting covered transactions to the AMLC. facilities and resources for the more resolute prevention. and all other similar accounts shall be absolutely prohibited. the Securities and Exchange Commission or the Bangko Sentral ng Pilipinas (BSP) and shall hold full-time permanent positions within the BSP. in any manner or by any means. (c) Reporting of Covered Transactions. advisors. Authority to Freeze. detection and investigation of money laundering offenses and prosecution of offenders. employee. SEC. directly or indirectly. Notice to the depositor that his account has been frozen shall be issued simultaneously with the issuance of the freeze order. covered institutions and their officers. Creation of a Secretariat. as well as the authority and identification of all persons purporting to act on their behalf. whether or not such reporting results in any criminal prosecution under this Act or any other Philippine law. Customer Identification Requirements and Record Keeping. agent. employee. the fact that a covered transaction report was made. electronic mail. SEC. However. advisor.Covered institutions shall report to the AMLC all covered transactions within five (5) working days from occurrence thereof. . . to any person the fact that a covered transaction report was made. agents. The fifteen (15)-day freeze order of the AMLC may be extended upon order of the court. the contents thereof. anonymous accounts. He must be a member of the Philippine Bar. consultant or associate of the covered institution. – The AMLC is hereby authorized to establish a secretariat to be headed by an Executive Director who shall be appointed by the Council for a term of five (5) years. in undertaking any and all anti-money laundering operations. 9. directly or indirectly. shall be preserved and safely stored for at least five (5) years from the dates when they were closed. entity. SEC. agents. unless the Supervising Authority concerned prescribes a longer period not exceeding ten (10) working days. representative. representatives. the media. or media shall be held criminally liable. the concerned officer.All records of all transactions of covered institutions shall be maintained and safely stored for five (5) years from the dates of transactions. including government-owned and -controlled corporations. shall be criminally liable. 8791 and other similar laws. (a) Customer Identification. 10. the concerned officer. 1405. employees. If it fails to act within seventy-two (72) hours from receipt of the depositor‘s explanation. (b) Record Keeping. which shall be effective immediately. accounts under fictitious names. When reporting covered transactions to the AMLC. as amended. 6426. consultants or associates are prohibited from communicating. at least thirty-five (35) years of age and of good moral character. consultant or associate of the covered institution. account files and business correspondence. . Peso and foreign currency non-checking numbered accounts shall be allowed. No court shall issue a temporary restraining order or writ of injunction against any freeze order issued by the AMLC except the Court of Appeals or the Supreme Court. the AMLC may issue a freeze order. With respect to closed accounts. as amended. 8.(10) to enlist the assistance of any branch. provided that the fifteen (15)-day period shall be tolled pending the court‘s decision to extend the period. In case of violation thereof. the contents thereof. or any other information in relation thereto. department.The provisions of existing laws to the contrary notwithstanding. agency or instrumentality of the government. The depositor shall have seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be lifted. require a system of verifying their legal existence and organizational structure. which may include the use of its personnel. office. representatives. – Upon determination that probable cause exists that any deposit or similar account is in any way related to an unlawful activity. All members of the Secretariat must have served for at least five (5) years either in the Insurance Commission. bureau. Republic Act No. representative. The BSP may conduct annual testing solely limited to the determination of the existence and true identity of the owners of such accounts. advisor.Covered institutions shall establish and record the true identity of its clients based on official documents. but are prohibited from communicating. advisors. or any other information in relation thereto. 59 . Neither may such reporting be published or aired in any manner or form by the mass media. covered institutions and their officers. They shall maintain a system of verifying the true identity of their clients and. shall lie against any person for having made a covered transaction report in the regular performance of his duties and in good faith. In case of violation thereof. employees. in any manner or by any means. Republic Act No. to any person.

The principles of mutuality and reciprocity shall. That this provision shall not apply to deposits and investments made prior to the effectivity of this Act. . related to said report. the offender or any other person claiming an interest therein may apply. applying with the proper court therein for an order to enter any premises belonging to or in the possession or control of. or it is located outside the Philippines or has been placed or brought outside the jurisdiction of the court. the AMLC may execute the request or refuse to execute the same and inform the foreign State of any valid reason for not executing the request or for delaying the execution thereof. and a certification or an affidavit of a competent officer of the requesting State stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either. – (a) Request for Assistance from a Foreign State.Where the court has issued an order of forfeiture of the monetary instrument or property in a criminal prosecution for any money laundering offense defined under Section 4 of this Act. any or all of the persons named in said request. thereby rendering the same difficult to identify or be segregated for purposes of forfeiture. in default of which the said order shall become final and executory. for this purpose. and (4) applying for an order of forfeiture of any monetary instrument or property in the proper court in the foreign State: Provided. attributable to the offender. freezing. within fifteen (15) days from the date of the order of forfeiture. by verified petition. That the request is 60 . or it has been commingled with other monetary instruments or property belonging to either the offender himself or a third person or entity. Mutual Assistance among States. .Where a foreign State makes a request for assistance in the investigation or prosecution of a money laundering offense. That the court shall not issue such an order unless the application is accompanied by an authenticated copy of the order of a court in the requesting State ordering the forfeiture of said monetary instrument or property of a person who has been convicted of a money laundering offense in the requesting State. in whole or in part. 1405. restraining and seizing assets alleged to be proceeds of any unlawful activity. – (a) Civil Forfeiture. (2) obtaining information that it needs relating to any covered transaction. Republic Act No. and the court has. restraining and seizing assets alleged to be proceeds of any unlawful activity under the procedures laid down in this Act. material or object named in said request: Provided.Where the court has issued an order of forfeiture of the monetary instrument or property subject of a money laundering offense defined under Section 4. . in a petition filed for the purpose ordered seizure of any monetary instrument or property.The AMLC may execute a request for assistance from a foreign State by: (1) tracking down. the court may. – Notwithstanding the provisions of Republic Act No. Forfeiture Provisions. 13. . This provision shall apply in both civil and criminal forfeiture. removed. SEC. . and said order cannot be enforced because any particular monetary instrument or property cannot. and/or search any or all such persons named therein and/or remove any document. Authority to Inquire into Bank Deposits. as amended. and other laws. be at all times recognized. the Revised Rules of Court on civil forfeiture shall apply. This provision shall apply in both civil and criminal forfeiture. or it has been concealed. (b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State.SEC. for a declaration that the same legitimately belongs to him and for segregation or exclusion of the monetary instrument or property corresponding thereto. (c) Obtaining Assistance from Foreign States. (3) to the extent allowed by the law of the foreign State. and (3) applying for an order of forfeiture of any monetary instrument or property in the court: Provided. (c) Payment in Lieu of Forfeiture. be located. as amended. accordingly order the convicted offender to pay an amount equal to the value of said monetary instrument or property. the AMLC may inquire into or examine any particular deposit or investment with any banking institution or non-bank financial institution upon order of any competent court in cases of violation of this Act when it has been established that there is probable cause that the deposits or investments involved are in any way related to a money laundering offense: Provided. destroyed. (b) Claim on Forfeited Assets. 8791. The verified petition shall be filed with the court which rendered the judgment of conviction and order of forfeiture. directly or indirectly. 12. (2) giving information needed by the foreign State within the procedures laid down in this Act. money laundering offense or any other matter directly or indirectly related thereto. converted or otherwise transferred to prevent the same from being found or to avoid forfeiture thereof. That the documents accompanying the request in support of the application have been duly authenticated in accordance with the applicable law or regulation of the foreign State. instead of enforcing the order of forfeiture of the monetary instrument or property or part thereof or interest therein.When there is a covered transaction report made. . directly or indirectly. 11. diminished in value or otherwise rendered worthless by any act or omission.The AMLC may make a request to any foreign State for assistance in (1) tracking down. with due diligence. freezing. 6426. or it has been substantially altered. SEC. Republic Act No.

00) but not more than Five hundred thousand Philippine pesos (Php500. he shall. (g) Extradition. orders or processes needed by the requesting State. in addition to the penalties herein prescribed. the requesting State. with malice.000. consul general. or in bad faith. consular agent or any officer in the foreign service of the Philippines stationed in the foreign State in which the record is kept.00). (d) Limitations on Requests for Mutual Assistance.The Philippines shall negotiate for the inclusion of money laundering offenses as herein defined among extraditable offenses in all future treaties. 000. 000. shall be imposed on a person convicted under Section 9(b) of this Act.000.accompanied by an authenticated copy of the order of the regional trial court ordering the forfeiture of said monetary instrument or property of a convicted offender and an affidavit of the clerk of court stating that the conviction and the order of forfeiture are final and that no further appeal lies in respect of either. who participated in the commission of the crime or who shall have knowingly permitted or failed to prevent its commission. or both. secretary of State. (2) state the grounds on which any person is being investigated or prosecuted for money laundering or the details of his conviction.00) but not more than Five hundred thousand Philippine pesos (Php500. and authenticated by the seal of his office. the penalty shall be imposed upon the responsible officers. the court may suspend or revoke its license. shall be imposed on a person convicted under Section 4(c) of this Act. The penalty of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php 3.00) but not more than Five hundred thousand Philippine pesos (Php500. If the offender is a juridical person. material or object which may be of assistance to the investigation or prosecution. document. SEC.00).000. . partnership or any juridical person. document. vice consul. consul. The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than One hundred thousand Philippine pesos (Php100. as the case may be. (7) give all the particulars necessary for the issuance by the court in the requested State of the writs. or officer in or of. association. material or object which may be of assistance to the investigation or prosecution. or of the person administering the government or a department of the requesting territory. (6) specify the manner in which and to whom said information.000. Penal Provisions. be deported without further proceedings after serving the penalties herein prescribed. at the discretion of the court: Provided. and (8) contain such other information as may assist in the execution of the request. a document is authenticated if the same is signed or certified by a judge. or both. That the offender is not entitled to avail the benefits of the Probation Law. protectorate or colony.A request for mutual assistance from a foreign State must (1) confirm that an investigation or prosecution is being conducted in respect of a money launderer named therein or that he has been convicted of any money laundering offense.00). 14. material or object obtained pursuant to said request. (e) Requirements for Requests for Mutual Assistance from Foreign States.00). (3) give sufficient particulars as to the identity of said person. in 61 .00) but not more than Three million Philippine pesos (Php3.500.00) but not more than twice the value of the monetary instrument or property involved in the offense. – (a) Penalties for the Crime of Money Laundering. The penalty of imprisonment from six (6) months to one (1) year or a fine of not less than One hundred thousand Philippine pesos (Php100. shall be imposed upon a person convicted under Section 4(a) of this Act.000. . The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One million five hundred thousand Philippine pesos (Php1. (4) give particulars sufficient to identify any covered institution believed to have any information. Any person who. . If the offender is a corporation. reports or files a completely unwarranted or false information relative to money laundering transaction against any person shall be subject to a penalty of six (6) months to four (4) years imprisonment and a fine of not less than One hundred thousand Philippine pesos (Php100. The certificate of authentication may also be made by a secretary of the embassy or legation. .The AMLC may refuse to comply with any request for assistance where the action sought by the request contravenes any provision of the Constitution or the execution of a request is likely to prejudice the national interest of the Philippines unless there is a treaty between the Philippines and the requesting State relating to the provision of assistance in relation to money laundering offenses. If the offender is a public official or employee. If the offender is an alien.For purposes of this Section. and authenticated by the oath or affirmation of a witness or sealed with an official or public seal of a minister. is to be produced. document. magistrate or equivalent officer in or of. (c) Malicious Reporting. he shall.000.000. (b) Penalties for Failure to Keep Records.000. (5) ask from the covered institution concerned any information. (f) Authentication of Documents. shall be imposed upon a person convicted under Section 4(b) of this Act. the government of the requesting State.000.

addition to the penalties prescribed herein. 18. information dissemination on money laundering activities and its prevention. Said rules and regulations shall be submitted to the Congressional Oversight Committee for approval. and the application of such provision or section to other persons or circumstances. – All laws. Republic Act No. – This Act shall take effect fifteen (15) days after its complete publication in the Official Gazette or in at least two (2) national newspapers of general circulation. 23. 6426. – There is hereby created a Congressional Oversight Committee composed of seven (7) members from the Senate and seven (7) members from the House of Representatives. 16. 8791. as are inconsistent with this Act. – A system of special incentives and rewards is hereby established to be given to the appropriate government agency and its personnel that led and initiated an investigation. The members from the House of Representatives shall be appointed by the Speaker also based on proportional representation of the parties or coalitions therein with at least two (2) members representing the minority. 22. amended or modified accordingly. as the case may be. No case for money laundering may be filed against and no assets shall be frozen. are hereby repealed. Repealing Clause. The Oversight Committee shall have the power to promulgate its own rules. Appropriations for the succeeding years shall be included in the General Appropriations Act. The provisions of this Act shall not apply to deposits and investments made prior to its effectivity.000. – Restitution for any aggrieved party shall be governed by the provisions of the New Civil Code. – The AMLC shall be provided with an initial appropriation of Twenty-five million Philippine pesos (Php25. the Insurance Commission and the Securities and Exchange Commission shall promulgate the rules and regulations to implement effectively the provisions of this Act. the other provisions or sections of this Act.000. prosecution and conviction of persons involved in the offense penalized in Section 4 of this Act. 1405. executive orders.000. SEC. 21.00) to be drawn from the national government. decrees. SEC. as amended. as amended and other similar laws. Appropriations Clause. and the training of responsible officers and personnel of covered institutions. Restitution.000. suffer perpetual or temporary absolute disqualification from office. SEC. – Within thirty (30) days from the effectivity of this Act. shall be imposed on a person convicted for a violation under Section 9(c).00) but not more than One million Philippine pesos (Php1. The members from the Senate shall be appointed by the Senate President based on the proportional representation of the parties or coalitions therein with at least two (2) Senators representing the minority. 20. the Bangko Sentral ng Pilipinas. Congressional Oversight Committee. Any public official or employee who is called upon to testify and refuses to do the same or purposely fails to testify shall suffer the same penalties prescribed herein. The punishment of imprisonment ranging from three (3) to eight (8) years and a fine of not less than Five hundred thousand Philippine pesos (Php500. Separability Clause. 15. System of Incentives and Rewards.00). as amended. 17. SEC. 62 . rules and regulations or parts thereof. but not limited to. SEC. Covered institutions shall formulate their respective money laundering prevention programs in accordance with this Act including. Implementing Rules and Regulations. 19. SEC. Prohibitions Against Political Harassment. attached or forfeited to the prejudice of a candidate for an electoral office during an election period. shall not be affected thereby. – If any provision or section of this Act or the application thereof to any person or circumstance is held to be invalid. including the relevant provisions of Republic Act No. SEC. – This Act shall not be used for political persecution or harassment or as an instrument to hamper competition in trade and commerce. (d) Breach of Confidentiality. Effectivity. and to review or revise the implementing rules issued by the Anti-Money Laundering Council within thirty (30) days from the promulgation of the said rules. to oversee the implementation of this Act. SEC. SEC. detection and reporting. Republic Act No.000.

B and C) covering loans in the corporate account of defendant George and George Trade Inc. the defendants further bound themselves to pay a penalty at the rate of 3% per annum on the amount due until fully paid. applied for. for which defendant George King Tim Pua executed a promissory note (Exhibit B) on behalf of defendant corporation.000. are as follows: On April 22.00. and was granted.00 from the plaintiff. through defendant George King Tim Pua. defendant George King Tim Pua. until fully paid. 1979.22 as of September 7. On February 21.VII. The personal account of defendant George King Tim Pua was fully satisfied through the remittances of the fire insurance proceeds (Rollo. 63 . for which he executed three separate promissory notes (Exhibits 1-C to 1-E). and was granted..485.R. On April 19. defendant George and George Trade Inc. P450. for which he executed a promissory note (Exhibit 1-A) for the same amount. vs. Truth Lending Act (RA 3765) A. 1977. obtained a loan of P300.000. GEORGE KING TIM PUA and PUA KE SENG. 1979.80 of the loans. 1977. It then proceeded to apply said amount to the unpaid loans of respondent George and George Trade. which amounted to P671.R. as well as an additional sum equivalent to 10% of the total amount due as and for attorney's fees in addition to expenses and costs of suit. 1977. payable on May 23.000. 1979. by the plaintiff bank three (3) separate loans in the amounts of P220.23% per annum and is payable on June 22. with defendants George King Tim Pua and Pua Ke Seng as co-makers. once more secured a loan for P150. 1995 THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK).000.00 and P65. in his personal capacity. the defendants agree to pay interest at an increased rate of 14% per annum on the amount due. through defendant George King Tim Pua. thus leaving a balance of P288. which loan bears an interest of 14% per annum and is payable on May 21.00. in his personal capacity applied for. defendant George and George Trade Inc.00 from the plaintiff bank. payable on September 5. 1977. in his personal capacity. after it had deducted from the insurance proceeds the entirety of respondent George King Tim Pua's personal account.00. 1979. On August 2. for which he executed a promissory note (Exhibit 1-B) for the same amount. I The factual antecedents.00. payable on August 29. applied for.469.908. defendant George King Tim Pua. such amount to bear interest at the rate of 1% per month until paid.000. 00922.772. provides (sic) also that in case of default of payment. which loan bears an interest of 14% per annum and is payable on September 17. applied for.. This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court of the Decision of the Court of Appeals in CA-G. 1977. in his personal capacity. gain secured a loan from the plaintiff for the sum of P400. On January 23. On April 29. 1979.00 for which he executed a promissory note (Exhibit 1) for the same amount. with defendants George King Tim Pua and Pua Ke Seng as comakers. On May 6. compounded monthly. INC.. THE HONORABLE COURT OF APPEALS. with defendants George King Tim Pua and Pua Ke Seng as co-makers. and was granted. defendant George King Tim Pua.000. 1977.42. GEORGE AND GEORGE TRADE. another loan of P200. 53-55). 1979. No. pp. 1979. In order to secure the payment of defendant George King Tim Pua's obligation with the plaintiff.302.000. for which defendant George King Tim Pua executed a promissory note (Exhibit C) on behalf of defendant corporation. by the plaintiff bank a loan for the sum of P400. According to petitioner bank. there remained of the insurance proceeds the amount of P383. by plaintiff bank a loan for the sum of P500. Purpose and Scheme of the Law G. which loan bears an interest of 13. 1979. through defendant George King Tim Pua. defendant George King Tim Pua.00 The proceeds of the insurance policy were subsequently paid to the plaintiff which applied the same to the personal account of defendant George King Tim Pua. and was granted. for which defendant George King Tim Pua executed a promissory note (Exhibit A) on behalf of defendant corporation. as found by the trial court and adopted by the Court of Appeals. 91494 July 14. Under the two promissory notes (Exhibits B and C). The three promissory notes (Exhibits A. 1977. payable on August 22. Inc. defendant George and George Trade Inc.000.000.00.. he assigned unto the latter the proceeds of a fire insurance policy issued by the Kerr Insurance Company in the amount of P2. CV No.

Intermediate Appellate Court.469. Failing to secure a reconsideration of said decision. On November 4.000. petitioner is now before the Court on a petition for review on certiorari. No amicable settlement having been reached between the parties.00 Payable August 29. 1977 — 735. and plaintiff-appellee Consolidated Bank and Trust Corporation (Solidbank) is instead ordered to pay appellant George King Tim Pua the amount of P466. For his personal account.00 TOTAL 2. The dispositive portion of the decision reads: PREMISES CONSIDERED.000.000.00 attorney's fees and the costs of this suit (Rollo. the Court of Appeals reversed the decision of the trial court. the counterclaim filed by the defendants is dismissed (Rollo. jointly and severally. until the same is fully paid. this Court may review the findings of fact of the Court of Appeals and may scrutinize the evidence on record. As a general rule. Under such circumstance.00 (c) — 65. 1977 Loan III — 5/6/77 — 400000.00 Payable August 22.035. decreeing as follows: WHEREFORE. Simply stated. There are. however. One of the exceptions is when the findings of fact of the Court of Appeals are contrary to those of the trial court (Massive Construction.39 as decreed by the Court of Appeals? The issues raised are factual.000. 174). plus P10. viz: Loan I — 22-Apr-77 — 500. The Consolidated Bank and Trust Corporation (Solidbank) the sum of P228.000.Petitioner instituted on April 7. the findings of the Court of Appeals upon factual questions are conclusive and ought not to be disturbed. 1977 Loan II — 29-Apr-77 — 400.000. The records show that respondent George King Tim Pua had two sets of accounts with petitioner bank: his personal account and his account for George and George Trade. 1980 an action (Civil Case No. 223 SCRA 1 [1993]). judgment is hereby rendered ordering defendants George and George Trade.182. p. v. Inc. 1980. On appeal by private respondents. 1979 until said amount is fully paid.00 Payable September 5. to pay plaintiff. 14).000. private respondents claimed that the loans had been extinguished by way of payment through the assignment by respondent George King Tim Pua of the fire insurance proceeds and that it was in fact petitioner which owed them by reason of its failure to return to the latter the balance of said insurance proceeds.00. 130915) against private respondents before the then Court of First Instance of Manila for the recovery of the unpaid balances on the three promissory notes.00 (b) — 450.00 ============ 64 . with legal interest thereon per annum from September 8. he obtained from petitioner on different dates six separate loans with different due dates.39. p.182. including attorney's fees equivalent to 10% of the amount recoverable. with costs of suit. trial ensued. with interest thereon at the legal rate from March 28. 1977 Loan IV — (a) 2/21/1977 — 220. the issue in this petition is whether private respondents are indebted to petitioners in the amount of P288. In their Answer with Special and Affirmative Defenses and Counterclaim. exceptions to the rule. In the instant case.. the decision appealed from herein is REVERSED. George King Tim Pua and Pua Ke Seng. the findings of fact of the Court of Appeals are contrary to the findings of the trial court. 1982. For lack of merit.000. Inc. Inc.000. finding for petitioner.469.80.80 as held by the then Court of First Instance of Manila or whether said private respondents are entitled to reimbursement from petitioner in the amount of P466. and attorney's fees in the sum of P25.00 — ————— Payable on May 3. the trial court rendered judgment.

12. 1978.000. the accounts of respondents George King Tim Pua and George and George Trade.00 September 6.00 June 8. 1978 P 230. compounded monthly.219.46 Less: Payment September 12.383.219.000.00.485. with petitioner Bank should stand as of September 6. 1978 37. compounded monthly Interest paid up to March 5.000. he further undertook to pay an additional sum equivalent to 10% of the total amount due but in no case less than P200. 1978 149. Under the account of George and George Trade. Inc.000.219. 1979 2.387.000.46 Add: 65 . 17.00 14% interest. The records further show that payments were made as follows: September 12.00 was to be imposed in case of failure to pay on due date as attorney's fees. in case of failure on the part of respondent George King Tim Pua to pay on maturity.23%.985. 1978 100. 1979 —————— TOTA P 650. The maturity dates of the loans were extended up to either December 1 or December 5. An additional sum equivalent to 10% of the total amount due. but not less than P200.000.. which was to be increased to 14% in case of failure to pay on due date. respondent George King Tim Pua.00 October 28. respondent Pua Ke Seng. was to be imposed as and for attorney's fees. which was to be compounded monthly. 1977 and all interests were paid up to March 5. together with his comaker.00 PAYMENTS =========== Based on the foregoing figures. Inc. September 12.00 —————— TOTAL P 3.00 Payable June 22.00 November 28.00 L ============ The first loan bore an annual interest of 13.00 —————— Balance.000.000. 55658) — P 500.000.00 as attorney's fees.000. 1979 525. until fully paid.All of these loans bore a 14% rate of interest. March 6 to Sept. Interest were paid on the loans up to their date of maturity. The second and third loans bore an interest rate of 14% per annum and carried a penalty of 3% per annum on the amount due in case of failure to pay on the date of maturity. 1978 Add: Interest. 1978 230.00 Payable Sept. In which case.00 Payable May 21. 1978 P 307. 1979 Loan B — 19-Apr-79 — 200. thus: GEORGE KING TIM PUA Loan I (Promissory Note No. 1979 Loan C — 8/2/79 — 150. 1979. obtained the following loans: Loan A — 23-Jan-79 — 300. An additional amount equivalent to 10% of the total amount but not less than P200.46 —————— Total P 537.

34 P 546.00 (Promissory Note No.000.34 —————— Total P 476.17 ——————— Total P 905.34 LOANS I and II.500. 1978 P 65.00 —————— Balance.962. June 8.000. November 28. 1978 14%. 28.46 Less: Payment. 1978 Add: Interest March 6.904.079. June 8. compounded monthly 5. 1978 P 163.12 Loan II 476. October 28.00 14% Interest.000. 1978 100.60 ——————— Total P 492.68 —————— Total P 165. 6. 1979.116.00 P 735.000.000. 1979 Loan I P 70. 1978 14%.00 14% Interest. October 28. 1979 170. 54221) — P 220. 55991) — P 400.12 Loan II (Promissory Note No. compounded monthly Interest paid up to March 7. 28.00 14% Interest. 1978 to Sept. compounded monthly Interest paid up to March 5.634. 54222) — 450.587.35 —————— Total P 70.09 Add: Interest October 29 to Nov.77 Less: Payment November 28.587. 54223) — 65. 1979 76. compounded monthly Interest paid up to March 7. 1978 149.00 ——————— Balance.00 (Promissory Note No.60 Loan IV (Promissory Note No. compounded monthly 4.634. 1979 92. 6.666.079.116.17 66 . 1978 to Sept.216. 55828) — P 400. 1978 to June 8.63 —————— Total P 312. 1979 525.712. compounded monthly 1. 1978 Add: Interest March 8.492.000. 1979 P 21.00 —————— Balance.77 Add: Interest November 29. 1978 to June 8.666.212. 1978 Add: Interest March 8.000. as of June 8. 14%.09 Less: Payment.216.46 Loan III (Promissory Note No.587.000.Interest September 13 to Oct.

22 Penalty of 3% per annum 1. private respondents agreed to the payment of 14% interest per annum.63 ——————— Total P 308.000.000. The charging of compounded interest has been held as proper as long as the payment thereof has been agreed upon by the parties. 1979 Add: Interest from May 22. 1979 8. by stipulation.000.620.00 ——————— Amount Refundable to Respondent George King Tim Pua P 3. as amended.236. 6. 1979 Balance of Insurance Proceeds after payment of all loans P 295. III and IV.00 14% Interest per annum Interest paid up to May 21.208.000.00.63 Balance of Insurance Proceeds after payment of Loan A P 655. 1979 to Sept.000.00. Philippine National Bank.000. 790591) — P 300. whichever is lower.14 Loan B (Promissory Note No. 6. 1979 Loan II P 21. 6.634.000. INC Loan A (Promissory Note No. 504 to collect such charges on loans over P500.000.60 Loan IV 905.276.85 ============ The 14% interest rate charged by petitioner was within the limits set by Section 3 of the Usury Law. In Mambulao Lumber Company v. 17. 1. September 6.000.50% on loans over P1.691.517.000.07 ——————— Total P 210. banks are authorized under Central Bank Circular No.666. provides that all banks and non-bank financial intermediaries authorized to engage in quasi-banking functions are required to strictly adhere to the provisions of Republic Act No.46 Loan III 492.00 14% Interest. compounded monthly Interest paid up to June 22. 1979 8.039. which as added principal shall earn new interest.967. however.419.00 with a maturity of 730 days or less at the rate of 2% per annum.236. In the instant case. should they fail to pay the principal loan on the date of maturity.485. As to handling charges.77 GEORGE AND GEORGE TRADE.216.616.383. 794730) — P 150. 3765 67 .29 Balance of Insurance Proceeds after payment of Loan B P 445. 1979 Add: Interest from June 23. on the principal or the outstanding balance thereof. we ruled that the parties may.691. 792805) — P 200. 1979 2. Section 7 of the same Circular.LOANS II.85 Loan C (Promissory Note No.831.00 but not over 2.00 14% Interest per annum Interest paid up to Sept.00 ——————— BALANCE OF INSURANCE PROCEEDS P 963.23 Less: Payment. etc. as of Sept. 1979 to Sept. compounded monthly.75% on loans over P500. 1. 22 SCRA 359 (1968).85 Less: Trust Receipts Obligations 291.00 but not over P1.000.17 P 1. capitalize the interest due and unpaid.

If it is stated only in the dispositive portion of the decision. charge private respondents such handling charges. public order or public policy (Social Security Commission v. Neither has it been shown by competent proof that petitioner had to engage the services of a lawyer or incur expenses in collecting the fire insurance proceeds from Kerr and Company. 68 . The award of P10. 169 SCRA 226 [1989]. 193 SCRA 531 [1991]). being only 3% per annum of the unpaid balance of the principal of said Loan B. The payment of penalty is sanctioned by law.00 as attorney's fees to private respondents was reasonable and justified as they were compelled to litigate and incur expenses to protect their interest. the Decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the amount which petitioner is ordered to reimburse respondent George King Tim Pua is reduced to THREE THOUSAND SIX HUNDRED SIXTEEN & 65/100 PESOS (P3. Visayan Packing Corporation. As stated in the promissory notes. without which the award is a conclusion without a premise and improperly left to speculation and conjecture. There was no need for petitioner to litigate to protect its interest inasmuch as private respondents had fully paid their obligations months before it filed the complaint for recovery of sum of money. These conditions are not obtaining in the case at bench. A stipulation regarding the payment of attorney's fees is neither illegal nor immoral and is enforceable as the law between the parties as long as such stipulation does not contravene law.000. Almeda. respondent George King Tim Pua agreed to pay attorney's fees only "in addition to expenses and costs of suit.65). It becomes a violation of the proscription against the imposition of a penalty on the right to litigate (Universal Shipping Lines." In other words. good customs. Reparations Commission v. As to the award of attorney's fees being an exception rather than the rule. The payment of penalty was provided for under the terms and conditions of the promissory notes for Loans B and C of George and George Trade. the discretion of the court to award attorney's fees under Article 2208 of the Civil Code of the Philippines demands factual. The penalty actually imposed. v. Petitioner bank cannot. it is necessary for the court to make findings of fact and law that would bring the case within the exception and justify the grant of the award (Refractories Corporation of the Philippines v. 188 SCRA 170 [1990]). Intermediate Appellate Court. The "Tentative Computation" to which respondent George King Tim Pua allegedly affixed his initials to the item "Attorney's Fees. the same shall be disallowed.otherwise known as the "Truth in Lending Act" and shall make the true and effective cost of borrowing an integral part of every loan contract. with legal interest thereon from September 8. The failure of said Tentative Computation to express the true intent and agreement of the parties thereto was put in issue in the Amended Answer with Special and Affirmative Defenses and Counterclaim filed by private respondents before the trial court. WHEREFORE. Intermediate Appellate Court. although the penalty may be reduced by the courts if it is iniquitous or unconscionable (Equitable Banking Corporation v. 32 SCRA 293 [1970]). Intermediate Appellate Court. legal and equitable justification.616. The same cannot. However. 191 SCRA 28 [1990]). 10%" cannot be taken as amending the stipulation contained in the promissory notes on the payment of attorney's fees. The promissory notes signed by private respondents do not contain any stipulation on the payment of handling charges. however. Intermediate Appellate Court. 168 SCRA 474 [1988]. 176 SCRA 539 [1989]). good morals. petitioner is entitled to collect from respondent George King Tim Pua the attorney's fees agreed upon only in case it was compelled to litigate with third persons or to incur expenses to protect its interest (China Airlines. In this case. 1979 until said amount is fully paid. Songcuan v. The corresponding testimony of respondent George King Tim Pua that he did not understand the import of this item in the Tentative Computation remains unrebutted. is considered reasonable and proper. Inc. v. The reason for the award must be stated in the text of the court's decision. consisting of 10% of the total amount due and payable. be said of the payment being insisted upon by petitioner of the attorney's fees stipulated in all the promissory notes. the Court of Appeals strictly followed the above-stated standard set by this Court. therefore. The award of attorney's fees lies within the discretion of the court and depends upon the circumstances of each case. Ltd. Inc. Liwanag. No pronouncement as to costs.

When and how should these information be furnished to the debtor or borrower? The information enumerated above must be disclosed to the debtor or borrower prior to the consummation of the transaction. In that definition. any option. credit. service charges. or other claim against. (2) the amounts. (4) the charges. property or money. to be credited as down payment and/or trade-in. which is defined as any person engaged in the business of extending credit (including any person who as a regular business practice make loans or sells or rents property or services on a time. pledge. What are the information required to be furnished to the debtor or borrower? (1) the cash price or delivered price of the property or service to be acquired. lien. (3) the difference between the amounts set forth under clauses (1) and (2). any obligation of claim arising out of any of the foregoing. or leasing of property.000 or imprisonment of not less than 6 months. What is the effect on the obligation in case of violations to the Truth in Lending Act? The contract or transaction remains valid or enforceable. any purchase. subject to the penalties discussed below. if any.00 or more than P5. Who are covered under the Truth in Lending Act? The law covers any creditor. what is meant by “credit”? It means any loan. no punishment or penalty under this law shall apply to the Philippine Government or any agency or any political subdivision thereof. The creditor is also liable for reasonable attorney‘s fees and court costs as determined by the court. any contract or arrangement for the hire. or discount. Any creditor who violates the law is liable in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction. either for present or future delivery. The action must be brought within one year from the date of the occurrence of the violation. 2. which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit. The information must be clearly stated in writing. any contract to sell. or sale or contract of sale of property or services. advance. What are the penalties in case of violation? 1. the payment of a finance charge. individually itemized. Any person who willfully violates any provision of this law or any regulation issued thereunder shall be fined by not less than P1. (5) the total amount to be financed. any conditional sales contract. except that such liability shall not exceed P2. However. or any credit upon the security of. under which part or all of the price is payable subsequent to the making of such sale or contract. 3. and any transaction or series of transactions having a similar purpose or effect. with a view of preventing the uninformed use of credit to the detriment of the national economy.What is the policy behind the Truth in Lending Act? The declared policy behind the law is to protect the people from lack of awareness of the true cost of credit by assuring full disclosure of such cost. discounts. mortgage. deed of trust. whichever is the greater. any rental-purchase contract. bailment. fees. either as principal or as agent) who requires as an incident to the extension of credit. or other acquisition of. REPUBLIC ACT No. or installment basis. nor more than one year or both. and such other charges incident to the extension of credit as may be prescribed by the Monetary Board of the Bangko Sentral ng Pilipinas through regulations. what is meant by a “finance charge”? A finance charge includes interest. demand. and (7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation. (6) the finance charge expressed in terms of pesos and centavos. or for the delivery of. 3765 69 .000 on any credit transaction. In the same definition.

Any creditor shall furnish to each person to whom credit is extended. mortgage. pledge. demand. under which part or all of the price is payable subsequent to the making of such sale or contract. Declaration of Policy. (4) "Creditor" means any person engaged in the business of extending credit (including any person who as a regular business practice make loans or sells or rents property or services on a time.AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT. to be credited as down payment and/or trade-in. (a) Any creditor who in connection with any credit transaction fails to disclose to any person any information in violation of this Act or any regulation issued thereunder shall be liable to such person in the amount of P100 or in an amount equal to twice the finance charged required by such creditor in connection with such transaction. nothing contained in this Act or any regulation contained in this Act or any regulation thereunder shall affect the validity or enforceability of any contract or transactions. any option. discounts. any obligation of claim arising out of any of the foregoing. prior to the consummation of the transaction. or sale or contract of sale of property or services.000 on any credit transaction. (6) the finance charge expressed in terms of pesos and centavos. except that such liability shall not exceed P2. the term (1) "Board" means the Monetary Board of the Central Bank of the Philippines. association. service charges. or other acquisition of. any purchase. deed of trust. individually itemized. 70 . either for present or future delivery. or any other government. Any rule or regulation prescribed hereunder may contain such classifications and differentiations as in the judgment of the Board are necessary or proper to effectuate the purposes of this Act or to prevent circumvention or evasion. or leasing of property. property or money. or of any of its political subdivisions. Section 3. whichever is the greater. fees. Action to recover such penalty may be brought by such person within one year from the date of the occurrence of the violation. any contract or arrangement for the hire. (b) Except as specified in subsection (a) of this section. or other claim against. any contract to sell. or other organized group of persons. the creditor shall be liable for reasonable attorney's fees and court costs as determined by the court. It is hereby declared to be the policy of the State to protect its citizens from a lack of awareness of the true cost of credit to the user by assuring a full disclosure of such cost with a view of preventing the uninformed use of credit to the detriment of the national economy. Section 6. either as principal or as agent) who requires as an incident to the extension of credit. any conditional sales contract. or for the delivery of. (3) "Finance charge" includes interest. In any action under this subsection in which any person is entitled to a recovery." Section 2. or installment basis. credit. As used in this Act. and includes the Philippine Government or any agency thereof. to the extent applicable and in accordance with rules and regulations prescribed by the Board. (2) "Credit" means any loan. Section 1. lien. This Act shall be known as the "Truth in Lending Act. or the legal successor or representative of the foregoing. (5) the total amount to be financed. or discount. which are paid or to be paid by such person in connection with the transaction but which are not incident to the extension of credit. or any agency of the foregoing. (3) the difference between the amounts set forth under clauses (1) and (2). and (7) the percentage that the finance bears to the total amount to be financed expressed as a simple annual rate on the outstanding unpaid balance of the obligation. a clear statement in writing setting forth. the payment of a finance charge. corporation. or any credit upon the security of. Section 4. (4) the charges. in any court of competent jurisdiction. and such other charges incident to the extension of credit as the Board may be regulation prescribe. and any transaction or series of transactions having a similar purpose or effect. partnership. the following information: (1) the cash price or delivered price of the property or service to be acquired. Section 5. any rental-purchase contract. if any. (5) "Person" means any individual. (2) the amounts. or any rule or regulation issued thereunder. The Board shall prescribe such rules and regulations as may be necessary or proper in carrying out the provisions of this Act. or to facilitate the enforcement of this Act. advance. bailment.

00 or more than P5. and Records. Declaration of Basic Policy. trust accounts. placements. or cause the examination of. sale of bonds or analogous transactions. the State shall implement measures to achieve the following objectives: a) protection against hazards to health and safety. assets. (e) A final judgment hereafter rendered in any criminal proceeding under this Act to the effect that a defendant has willfully violated this Act shall be prima facie evidence against such defendant in an action or proceeding brought by any other party against such defendant under this Act as to all matters respecting which said judgment would be an estoppel as between the parties thereto. the deposits. 1992 THE CONSUMER ACT OF THE PHILIPPINES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:: TITLE I." Article 2. Consumer Act (RA 7394) Republic Act No. and (b) gather or cause the gathering of any relevant information about such deposits. juridical entities or to organizations. association. (2) of a judicially declared and outlawed terrorist organization. RA 9372 “Anti-Terror Law” or “Anti-Terrorism Law“. 27. – The foregoing requirements on consumer credit transactions shall not apply to the following credit transactions: a) those involving extension of credits for business or commercial purposes. to the contrary notwithstanding.000 or imprisonment for not less than 6 months. or group of persons. – GENERAL PROVISIONS Article 1.‖ SEC. Article 145. assets and records in a bank or financial institution. b) those in which the debtor is the one specifying the definite set of credit terms such as bank deposits. insurance contracts. trust accounts. (d) No punishment or penalty provided by this Act shall apply to the Philippine Government or any agency or any political subdivision thereof. c) provision of information and education to facilitate sound choice and the proper exercise of rights by the consumer. association. or to the Government and governmental agencies and instrumentalities. and records from a bank or financial institution. the bank or financial institution concerned shall not 71 . Judicial Authorization Required to Examine Bank Deposits. d) provision of adequate rights and means of redress. promote his general welfare and to establish standards of conduct for business and industry. 7394 April 13. – This Act shall be known as the "Consumer Act of the Philippines.(c) Any person who willfully violates any provision of this Act or any regulation issued thereunder shall be fined by not less than P1. the justices of the Court of Appeals designated as a special court to handle anti-terrorism cases after satisfying themselves of the existence of probable cause in a hearing called for that purpose that (1) a person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism. â€― The provisions of Republic Act No. VIII. and (3) of a member of such judicially declared and outlawed organization. or group of persons. Accounts. Short Title. 1405 as amended. – It is the policy of the State to protect the interests of the consumer. placements. may authorize in writing any police or law enforcement officer and the members of his/her team duly authorized in writing by the anti-terrorism council to: (a) examine. and e) involvement of consumer representatives in the formulation of social and economic policies. b) protection against deceptive. nor more than one year or both. Section 7. unfair and unconscionable sales acts and practices. Towards this end. As properly known as the ―Human Security Act of 2007. This Act shall become effective upon approval. Exempted Transaction.

placements. Application to Examine Bank Deposits. the original ex parte application of the applicant. placements. association. assets. and (3) member of such judicially declared and outlawed organization. or to gather information about the same. frozen. placements. association. if any. or (3) of any member of such organization. (b) the identity of the bank or financial institution where such deposits. SEC. or group of persons in a bank or financial institution. and Records. without prejudice to the liability of the police or law enforcement personnel under Section 19 hereof.refuse to allow such examination or to provide the desired information. trust accounts. or group of persons. or group of persons. and the written authorizations of the Anti Terrorism Council. the applicant police or law enforcement official shall have thirty (30) days after the termination of the period granted by the Court of Appeals as provided in the preceding paragraphs within which to file the appropriate case before the Public Prosecutor’s Office for any violation of this Act. Accounts. 29. which shall not exceed thirty (30) days renewable to another thirty (30) days from the expiration of the original period. and. shall only be granted by the authorizing division of the Court of Appeals upon an ex parte application to that effect of a police or of a law enforcement official who has been duly authorized in writing to file such ex parte application by the Anti-Terrorism Council created in Section 53 of this Act to file such ex parte application. assets. assets. and Records. (2) of any judicially declared and outlawed terrorist organization. and the gathering of any relevant information about the same from said bank or financial institution. In case of death of the original applicant or in case he is physically disabled to file the application for extension or renewal. if any. or group of persons. and records have been examined. whose deposits. The written order of the authorizing division of the Court of Appeals designated to handle cases involving terrorism shall specify: (a) the identity of the said: (1) person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism. assets. and records are to be examined or the information to be gathered. â€― The authorization issued or granted by the authorizing division of the Court of Appeals to examine or cause the examination of and to freeze bank deposits. â€― The written order granted by the authorizing division of the Court of Appeals as well as its order. That the person whose bank deposits. shall be deemed and are hereby declared as classified information: Provided. placements. the applicant police or law enforcement official shall immediately notify in writing the person subject of the bank examination and freezing of bank deposits. including his ex parte application to extend or renew. and records are held and maintained. Effective Period of Court Authorization to Examine and Obtain Information on Bank Deposits. the one next in rank to the original applicant among the members of the team named in the original written order of the authorizing division of the Court of Appeals shall file the application for extension or renewal: Provided. trust accounts. That. or (3) of any member of such organization. (2) of a judicially declared and outlawed terrorist organization. or group of persons. â€― The written order of the Court of Appeals authorizing the examination of bank deposits. which must be filed by the original applicant. The penalty of ten (10) years and one day to twelve (12) years of imprisonment shall be imposed upon 72 . (2) judicially declared and outlawed terrorist organization. and Records. assets and records. trust accounts. If no case is filed within the thirty (30)-day period. assets. when so ordered by and served with the written order of the Court of Appeals. 28. placements. has been duly authorized in writing by the Anti-Terrorism Council. trust accounts. The authorizing division of the Court of Appeals may extend or renew the said authorization for another period. Accounts. provided that the authorizing division of the Court of Appeals is satisfied that such extension or renewal is in the public interest. SEC. association. placements. Classification and Contents of the Court Order Authorizing the Examination of Bank Deposits. 30. association. shall be effective for the length of time specified in the written order of the authorizing division of the Court of Appeals. to extend or renew the same. trust accounts. sequestered and seized by law enforcement authorities has the right to be informed of the acts done by the law enforcement authorities in the premises or to challenge. (d) the length of time the authorization shall be carried out. as the case may be. trust accounts. association or group of persons. trust accounts. SEC. if he or she intends to do so. placements. association. and records: (1) of a person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism. assets. and records. which shall not exceed a period of thirty (30) days from the date of receipt of the written order of the authorizing division of the Court of Appeals by the applicant police or law enforcement official. and upon examination under oath or affirmation of the applicant and the witnesses he may produce to establish the facts that will justify the need and urgency of examining and freezing the bank deposits. and provided further that the application for extension or renewal. and records: (1) of the person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism. the legality of the interference. Accounts. (c) the identity of the persons who will conduct the said examination and the gathering of the desired information.

law enforcement official or judicial authority who violates his duty to notify in writing as defined above shall suffer the penalty of six (6) years and one day to eight (8) years of imprisonment. Any person. to open the sealed envelope or sealed package shall clearly state the purpose and reason: (a) for opening the sealed envelope or sealed package. and records discovered. The joint affidavit shall also certify under oath that no duplicates or copies of the information. â€― The sealed envelope or sealed package and the contents thereof. 33. Any person who copies. SEC. and records examined. incinerate. expunges incinerates. trust accounts. to remove. assets and records of: (1) a person charged with or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism. (b) the identity and address of the bank or financial institution where such deposits. (2) a judicially declared and outlawed terrorist organization. notes. SEC. assets and records have been made. â€― The written application. memoranda. (c) the number of bank deposits. placements. as the case may be. or symbols of the deposits. association. police officer or custodian of the bank data and information obtained after examination of deposits. trust accounts. and the sealed envelope or sealed package shall not be opened and its contents shall not be divulged. notes. Any person. summaries. working sheets. that all such duplicates and copies are placed in the sealed envelope or sealed package deposited with the authorizing division of the Court of Appeals. trust accounts. data. Assets and Records. and other documents obtained from the examination of the bank deposits. association. expunge. placements. assets and records to copy. data. or group of persons shall. trust accounts. delete. SEC. numbers. 31. (f) the date of the original written authorization granted by the Anti-Terrorism Council to the applicant to file the ex parte application to conduct the examination of the said bank deposits. trust accounts. and shall be accompanied by a joint affidavit of the applicant police or law enforcement official and the persons who actually conducted the examination of said bank deposits. assets. (e) all information. removes. placements. or group of persons. to open. memoranda. records examined and placed in the sealed envelope or sealed package deposited with the authorizing division of the Court of Appeals. and. be deposited with the authorizing division of the Court of Appeals in a sealed envelope or sealed package.the applicant police or law enforcement official who fails to notify in writing the person subject of the bank examination and freezing of bank deposits. and documents as evidence. placements. divulge. working sheets. or used as evidence unless authorized in a written order of the authorizing division of the Court of Appeals. excerpts. which are deposited with the authorizing division of the Court of Appeals. placements. and documents acquired from the examination of the bank deposits. (d) the outstanding balances of each of such deposits. memoranda. working sheets. and records are held and maintained. or (3) a member of any such organization. trust accounts. memoranda. placements. excerpts. excerpts. deletes. with notice in writing to the party concerned not later than three (3) days before the scheduled opening. data. law enforcement official or judicial authority who violates his duty to notify in writing as defined above shall suffer the penalty of six (6) years and one day to eight (8) years of imprisonment. summaries. with notice in writing to the party concerned not later than three (3) days of the scheduled opening. assets. trust accounts. notes. reports. working sheets. data. Trust Accounts. placements. within forty-eight (48) hours after the expiration of the period fixed in the written order of the authorizing division of the Court of Appeals or within forty-eight (48) hours after the expiration of the extension or renewal granted by the authorizing division of the Court of Appeals. â€― All information. Application to Open Deposited Bank Materials. documents. assets and records. Contents of Joint Affidavit. assets and records. trust accounts. Custody of Bank Data and Information Obtained after Examination of Deposits. and use the contents of the sealed envelope or sealed package as evidence. trust accounts. placements. It shall be unlawful for any person. and (g) that the items enumerated were all that were found in the bank or financial institution examined at the time of the completion of the examination. assets. assets and records. notes. or. â€― The joint affidavit shall state: (a) the identifying marks. assets. summaries. (b) for revealing and disclosing its classified contents. SEC. summaries. excerpts. examined. shall be deemed and are hereby declared classified information. 73 . if made. which written order shall be granted only upon a written application of the Department of Justice filed before the authorizing division of the Court of Appeals and only upon a showing that the Department of Justice has been duly authorized in writing by the Anti-Terrorism Council to file the application. 32. placements. and frozen. as well as the date of any extension or renewal of the original written authorization granted by the authorizing division of the Court of Appeals. Disposition of Bank Materials. shred or destroy in any manner the items enumerated above in whole or in part under any pretext whatsoever. shreds or destroys the items enumerated above shall suffer a penalty of not less than six (6) years and one day to twelve (12) years of imprisonment. (c) for using the classified information. placements. revealed. read. reveal. Placements. trust accounts. reports. reports. 34. reports.

or records in a bank or financial institution of: (1) a person charged with or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism. association. official. inquiry. sequestered or frozen for 74 . or group of persons. association. (2) a judicially declared and outlawed terrorist organization. association. excerpts. the penalty of ten (10) years and one day to twelve (12) years of imprisonment shall be imposed upon any police or law enforcement personnel. transportation and communication equipment. supplies and other implements. and records in any bank or financial institution. Penalty for Unauthorized or Malicious Examination of a Bank or a Financial Institution. â€― The deposits and their outstanding balances. shall absolutely not be admissible and usable as evidence against anybody in any judicial. â€― Any false or untruthful statement or misrepresentation of material fact in the joint affidavits required respectively in Section 12 and Section 32 of this Act shall constitute a criminal offense and the affiants shall suffer individually the penalty of ten (10) years and one day to twelve (12) years of imprisonment. shall be guilty of an offense and shall suffer the penalty of ten (10) years and one day to twelve (12) years of imprisonment. association. shall be guilty of an offense and shall suffer the penalty of ten (10) years and one day to twelve (12) years of imprisonment. (2) a judicially declared and outlawed terrorist organization. quasi-judicial. 35. trust accounts. (2) to a judicially declared and outlawed organization. Penalty for False or Untruthful Statement or Misrepresentation of Material Fact in Joint Affidavits. That notwithstanding Section 33 of this Act. assets and records of: (1) a person charged or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism. Penalty of Bank Officials and Employees Defying a Court Authorization. or group of persons. SEC. who refuses to allow the examination of the deposits. who maliciously obtained an authority from the Court of Appeals to examine the deposits. â€― An employee. Any person who unjustifiably refuses to follow the order of the proper division of the Court of Appeals to allow the person accused of the crime of terrorism or of the crime of conspiracy to commit terrorism to withdraw such sums from sequestered or frozen deposits. data. â€― Any person. or (3) a member of such judicially declared and outlawed organization. Seizure and Sequestration. placements. 37. 38. or (3) a member of such organization. and records of: (1) a person charged with or suspected of the crime of terrorism or the crime of conspiracy to commit terrorism. without being authorized to do so by the Court of Appeals. or (3) a member of such organization. or (3) a member of such organization. association. work sheets. placements. â€― Any information. transfer. the party aggrieved by such authorization shall upon motion duly filed be allowed access to the sealed envelope or sealed package and the contents thereof as evidence for the prosecution of any police or law enforcement personnel who maliciously procured said authorization. or group of persons shall be seized. or group of persons. sequestered.SEC. placements. association. placements. SEC. or group of persons. (2) a judicially declared and outlawed terrorist organization. association. placements. legislative. trust accounts. proceeding. or group of persons. association. or records in a bank or financial institution of: (1) a person charged with or suspected of the crime of terrorism or conspiracy to commit terrorism. notes. Evidentiary Value of Deposited Bank Materials. summaries. and frozen in order to prevent their use. or documents acquired from the examination of the bank deposits. trust accounts. assets. or a member of the board of directors of a bank or financial institution. or conveyance for purposes that are inimical to the safety and security of the people or injurious to the interest of the State. assets. trust accounts. 39. or group of persons in said bank or financial institution. assets and records as may be necessary for the regular sustenance of his or her family or to use any of his or her property that has been seized. memoranda. or hearing. trust accounts. placements. association. police or law enforcement personnel who examines the deposits. assets. assets. or group of persons. In addition to the liability attaching to the offender for the commission of any other offense. moneys. He or she may also use any of his property that is under seizure or sequestration or frozen because of his or her indictment as a terrorist upon permission of the court for any legitimate reason. 36. or group of persons. and property of whatever kind and nature belonging: (1) to any person suspected of or charged before a competent Regional Trial Court for the crime of terrorism or the crime of conspiracy to commit terrorism. SEC. The accused or a person suspected of may withdraw such sums as may be reasonably needed by the monthly needs of his family including the services of his or her counsel and his or her family’s medical needs upon approval of the court. or (3) to a member of such organization. when duly served with the written order of the authorizing division of the Court of Appeals. reports. or group of persons: Provided. (2) a judicially declared and outlawed terrorist organization. trust accounts. SEC. businesses. which have been secured in violation of the provisions of this Act. association. or administrative investigation.

placements. Trust Accounts. or inexcusable negligence causes or allows the escape of such detained person shall be guilty of an offense and shall suffer the penalty of: (a) twelve (12) years and one day to twenty (20) years of imprisonment. placements. 75 . 40. Upon his or her acquittal or the dismissal of the charges against him or her. Penalty for Unauthorized Revelation of Classified Materials. Immunity and Protection of Government Witnesses. assets and records shall be deemed released from such seizure. Assets and Records. SEC. misuse. and (b) six (6) years and one day to twelve (12) years of imprisonment. Sequestered and Frozen Bank Deposits. trust accounts. assets and records shall forthwith be deemed lifted by the investigating body or by the competent court. or dissipation of the whole or any part of the seized. Trust Accounts. the seizure. Assets and Records.000.00) a day for the period in which his properties. 6981 (Witness Protection. Trust Accounts. â€― Any person who is responsible for the loss. assets and records shall be automatically forfeited in favor of the government. as the case may be. placements. if the detained person has already been convicted and sentenced in a final judgment of a competent court. Placements. police or law enforcement agent. 6981. misconduct. sequestration and freezing. diversion. SEC. SEC. â€― If the person suspected of or charged with the crime of terrorism or conspiracy to commit terrorism is found. â€― The provisions of Republic Act No. 46. Assets and Records. trust accounts. Sequestered and Frozen Bank Deposits. Diversion or Dissipation of Seized. placements. assets and records of a person suspected of or charged with the crime of terrorism or conspiracy to commit terrorism shall suffer the penalty of ten (10) years and one day to twelve (12) years of imprisonment. Nature of Seized. â€― The penalty of ten (10) years and one day to twelve (12) years of imprisonment shall be imposed upon any person. judicial officer or civil servant who. If the person charged with the crime of terrorism or conspiracy to commit terrorism is convicted by a final judgment of a competent trial court. That said witnesses shall be entitled to benefits granted to witnesses under said Republic Act No. assets and records of a person suspected of or charged with the crime of terrorism or conspiracy to commit terrorism after such suspected person has been found innocent by the investigating body or after the case against such charged person has been dismissed or after he is acquitted by a competent court shall suffer the penalty of ten (10) years and one day to twelve (12) years of imprisonment. or is acquitted.legitimate purposes while his or her case is pending shall suffer the penalty of ten (10) years and one day to twelve (12) years of imprisonment. â€― The seized. 41. Placements. trust accounts. 43. not being authorized by the Court of Appeals to do so. sequestered and frozen bank deposits. his seized. Placements. trust accounts. sequestered and frozen bank deposits. SEC. as the case may be and their use or disposition while the case is pending shall be subject to the approval of the court before which the case or cases are pending. Misuse. and shall be restored to him without any delay by the bank or financial institution concerned without any further action on his part. the amount of Five Hundred Thousand Pesos (P500. SEC. sequestration and freezing of his bank deposits. trust accounts. â€― Any person who unjustifiably refuses to restore or delays the restoration of seized. Infidelity in the Custody of Detained Persons. Penalty for Unjustified Refusal to Restore or Delay in Restoring Seized. placements. SEC. Penalty for the Loss. after his investigation. sequestered and frozen bank deposits. 42. sequestered and frozen bank deposits. Sequestered and Frozen Bank Deposits. however. 45. â€― Any public officer who has direct custody of a detained person under the provisions of this Act and who by his deliberate act. placements. if the detained person has not been convicted and sentenced in a final judgment of a competent court. assets and records belonging to a person suspected of or charged with the crime of terrorism or conspiracy to commit terrorism shall be deemed as property held in trust by the bank or financial institution for such person and the government during the pendency of the investigation of the person suspected of or during the pendency of the trial of the person charged with any of the said crimes. The amount shall be taken from the appropriations of the police or law enforcement agency that caused the filing of the enumerated charges against him or her. Security and Benefits Act) to the contrary notwithstanding. trust accounts. SEC. and his bank deposits. the immunity of government witnesses testifying under this Act shall be governed by Sections 17 and 18 of Rule 119 of the Rules of Court: Provided. Trust Accounts. Disposition of the Seized. sequestration and freezing. reveals in any manner or form any classified information under this Act. Placements. Assets and Record. Sequestered and Frozen Bank Deposits. to be innocent by the investigating body. 44. The filing of any appeal on motion for reconsideration shall not state the release of said funds from seizure. assets or funds were seized shall be paid to him on the concept of liquidated damages. after his arraignment or his case is dismissed before his arraignment by a competent court.

forged document or spurious evidence in any investigation or hearing under this Act. Penalty for Furnishing False Evidence. SEC. the acquittal of the accused or the dismissal of the case shall be a bar to another prosecution for any offense or felony which is necessarily included in the offense charged under this Act. SEC. the judge shall set the case for continuous trial on a daily basis from Monday to Friday or other short-term trial calendar so as to ensure speedy trial. 76 . Prosecution Under This Act Shall Be a Bar to Another Prosecution Under the Revised Penal Code or Any Special Penal Laws.SEC. 47. Continuous Trial. â€― The penalty of twelve (12) years and one day to twenty (20) years of imprisonment shall be imposed upon any person who knowingly furnishes false testimony. Forged Document. upon a valid complaint or information or other formal charge sufficient in form and substance to sustain a conviction and after the accused had pleaded to the charge. – In cases of terrorism or conspiracy to commit terrorism. or Spurious Evidence. 49. 48. – When a person has been prosecuted under a provision of this Act.