G.R. No.

128996 February 15, 2002

CARMEN LL. INTENGAN, ROSARIO LL. NERI, and RITA P. BRAWNER, petitioners,
vs.
COURT OF APPEALS, DEPARTMENT OF JUSTICE, AZIZ RAJKOTWALA, WILLIAM FERGUSON, JOVEN
REYES, and VIC LIM, respondents.

DECISION

DE LEON, JR., J.:

Before us is a petition for review on certiorari, seeking the reversal of the Decision1 dated July 8, 1996 of
the former Fifteenth Division2 of the Court of Appeals in CA-G.R. SP No. 37577 as well as its
Resolution3 dated April 16, 1997 denying petitioners’ motion for reconsideration. The appellate court, in
its Decision, sustained a resolution of the Department of Justice ordering the withdrawal of informations
for violation of Republic Act No. 1405 against private respondents.

The facts are:

On September 21, 1993, Citibank filed a complaint for violation of section 31,4 in relation to section
1445 of the Corporation Code against two (2) of its officers, Dante L. Santos and Marilou Genuino.
Attached to the complaint was an affidavit6 executed by private respondent Vic Lim, a vice-president of
Citibank. Pertinent portions of his affidavit are quoted hereunder:

2.1 Sometime this year, the higher management of Citibank, N.A. assigned me to assist in the
investigation of certain anomalous/highly irregular activities of the Treasurer of the Global Consumer
Group of the bank, namely, Dante L. Santos and the Asst. Vice President in the office of Mr. Dante L.
Santos, namely Ms. Marilou (also called Malou) Genuino. Ms. Marilou Genuino apart from being an
Assistant Vice President in the office of Mr. Dante L. Santos also performed the duties of an Account
Officer. An Account Officer in the office of Mr. Dante L. 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, NA., such as
peso and dollar deposits, mortgage backed securities and money placements, among others.

xxx xxx xxx

4.1 The investigation in which I was asked to participate was undertaken because the bank had found
records/evidence showing that Mr. Dante L. Santos and Ms. Malou Genuino, contrary to their
disclosures and the aforementioned bank policy, appeared to have been actively engaged in business
endeavors that were in conflict with the business of the bank. It was found that with the use of two (2)
companies in which they have personal financial interest, namely Torrance Development Corporation
and Global Pacific Corporation, they managed or caused existing bank clients/depositors to divert their
money from Citibank, N.A., such as those placed in peso and dollar deposits and money placements, to
products offered by other companies that were commanding higher rate of yields. 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, shares of stock and other certificates of third parties. It also appeared that out of
these transactions, Mr. Dante L. Santos and Ms. Marilou Genuino derived substantial financial gains.
5.1 In the course of the investigation, I was able to determine that the bank clients which Mr. Santos and
Ms. Genuino helped/caused to divert their deposits/money placements with Citibank, NA. to Torrance
and Global (their family corporations) for subsequent investment in securities, shares of stocks and debt
papers in other companies were as follows:

xxx

b) Carmen Intengan

xxx

d) Rosario Neri

xxx

i) Rita Brawner

All the above persons/parties have long standing accounts with Citibank, N.A. in savings/dollar deposits
and/or in trust accounts and/or money placements.

As evidence, Lim annexed bank records purporting to establish the deception practiced by Santos and
Genuino. Some of the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan,
Rosario Ll. Neri, and Rita P. Brawner, as follows:

a) Annex "A-6"7 - an "Application for Money Transfer" in the amount of US $140,000.00,

executed by Intengan in favor of Citibank $ S/A No. 24367796, to be debited from her Account
No. 22543341;

b) Annex "A-7"8 - a "Money Transfer Slip" in the amount of US $45,996.30, executed by Brawner
in favor of Citibank $ S/A No. 24367796, to be debited from her Account No. 22543236; and

c) Annex "A-9"9 - an "Application for Money Transfer" in the amount of US $100,000.00,

executed by Neri in favor of Citibank $ S/A No. 24367796, to be debited from her Account No.
24501018.

In turn, private respondent Joven Reyes, vice-president/business manager of the Global Consumer
Banking Group of Citibank, admits to having authorized Lim to state the names of the clients involved
and to attach the pertinent bank records, including those of petitioners’.10 He states that private
respondents Aziz Rajkotwala and William Ferguson, Citibank, N.A. Global Consumer Banking Country
Business Manager and Country Corporate Officer, respectively, had no hand in the disclosure, and that
he did so upon the advice of counsel.

In his memorandum, 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. Acting on this information, the bank client would then authorize the transfer of his funds from
his Citibank account to the Citibank account of either Torrance or Global.

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.

Upon approval of the Application for Manager’s Checks or Term Investment Application, the funds of
the bank client covered thereof were then deposited in the Citibank accounts of Torrance and/or Global.

Second step: Once the said fund transfers had been effected, 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, such as securities, shares of stocks and other certificates, were offering higher yields.

Third step: On maturity date(s) of the placements made by Torrance and/or Global in the other
companies, using the monies of the Citibank client, the other companies would then. return the
placements to Global and/or Torrance with the corresponding interests earned.

Fourth step: Upon receipt by Global and/or Torrance of the remittances from the other companies,
Global and/or Torrance would then issue its/their own checks drawn against their Citibank accounts in
favor of Santos and Genuino.

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.

Fifth step: At the same time, Global and/or Torrance would also issue its/their check(s) drawn against
its/their Citibank accounts in favor of the bank client.

The check(s) cover the principal amount (or parts thereof) which the Citibank client had previously
transferred, with the help of Santos and/or Genuino, from his Citibank account to the Citibank
account(s) of Global and/or Torrance for placement in the other companies, plus the interests or
earnings his placements in other companies had made less the spreads made by Global, Torrance,
Santos and Genuino.

The complaints which were docketed as I.S. Nos. 93-9969, 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.

As an incident to the foregoing, petitioners filed respective motions for the exclusion and physical
withdrawal of their bank records that were attached to Lim’s affidavit.

In due time, Lim and Reyes filed their respective counter-affidavits.12 In separate Memoranda dated
March 8, 1994 and March 15, 1994 2nd Assistant Provincial Prosecutor Hermino T. Ubana, Sr.
recommended the dismissal of petitioners’ complaints. The recommendation was overruled by
Provincial Prosecutor Mauro M. Castro who, in a Resolution dated August 18, 1994,13 directed the filing
of informations against private respondents for alleged violation of Republic Act No. 1405, otherwise
known as the Bank Secrecy Law.
Private respondents’ counsel then filed an appeal before the Department of Justice (DOJ). On November
17, 1994, then DOJ Secretary Franklin M. Drilon issued a Resolution14 ordering, inter alia, the withdrawal
of the aforesaid informations against private respondents. Petitioners’ motion for reconsideration15 was
denied by DOJ Acting Secretary Demetrio G. Demetria in a Resolution dated March 6, 1995.16

Initially, petitioners sought the reversal of the DOJ resolutions via a petition
for certiorari and mandamus filed with this Court, docketed as G.R. No. 119999-120001. However, the
former First Division of this Court, in a Resolution dated June 5, 1995,17 referred the matter to the Court
of the Appeals, on the basis of the latter tribunal’s concurrent jurisdiction to issue the extraordinary
writs therein prayed for. The petition was docketed as CA-G.R. SP No. 37577 in the Court of Appeals.

On July 8, 1996, the Court of Appeals rendered judgment dismissing the petition in CA-G.R. SP No. 37577
and declared therein, as follows:

Clearly, 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." To substantiate the
alleged scheme of Santos and Genuino, 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.

Although petitioners were not the parties involved in IS. No. 93-8469, 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.A. No. 1405. That ruling is
consistent with the principle laid down in the case of Mellon Bank, N.A. vs. 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.
Significantly, therefore, as long as the bank deposits are material to the case, although not necessarily
the direct subject matter thereof, a disclosure of the same is proper and falls within the scope of the
exceptions provided for by R.A. No. 1405.

xxx xxx xxx

Moreover, the language of the law itself is clear and cannot be subject to different interpretations. 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.

Petitioners’ motion for reconsideration was similarly denied in a Resolution dated April 16, 1997. Appeal
was made in due time to this Court.

The instant petition was actually denied by the former Third Division of this Court in a Resolution18 dated
July 16, 1997, on the ground that petitioners had failed to show that a reversible error had been
committed. On motion, however, the petition was reinstated19 and eventually given due course.20

In assailing the appellate court’s findings, petitioners assert that the disclosure of their bank records was
unwarranted and illegal for the following reasons:
 I.

IN BLATANT VIOLATION OF R.A. NO. 1405, PRIVATE RESPONDENTS ILLEGALLY MADE DISCLOSURES OF
PETITIONERS’ CONFIDENTIAL BANK DEPOSITS FOR THEIR SELFISH ENDS IN PROSECUTING THEIR
COMPLAINT IN IS. NO. 93-8469 THAT DID NOT INVOLVE PETITIONERS.

II.

PRIVATE RESPONDENTS’ DISCLOSURES DO NOT FALL UNDER THE FOURTH EXCEPTION OF R.A. NO. 1405
(i.e., "in cases where the money deposited or invested is the subject matter of the litigation"), NOR
UNDER ANY OTHER EXCEPTION:

(1)

PETITIONERS’ DEPOSITS ARE NOT INVOLVED IN ANY LITIGATION BETWEEN PETITIONERS AND
RESPONDENTS. THERE IS NO LITIGATION BETWEEN THE PARTIES, MUCH LESS ONE INVOLVING
PETITIONERS’ DEPOSITS AS THE SUBJECT MATTER THEREOF.

(2)

EVEN ASSUMING ARGUENDO THAT THERE IS A LITIGATION INVOLVING PETITIONERS’ DEPOSITS

AS THE SUBJECT MATTER THEREOF, PRIVATE RESPONDENTS’ DISCLOSURES OF PETITIONERS’
DEPOSITS ARE NEVERTHELESS ILLEGAL FOR WANT OF THE REQUISITE COURT ORDER, IN
VIOLATION OF R.A. NO. 1405.

III.

THEREFORE, PETITIONERS ARE ENTITLED TO PROSECUTE PRIVATE RESPONDENTS FOR VIOLATIONS OF

R.A. NO. 1405 FOR HAVING ILLEGALLY DISCLOSED PETITIONERS’ CONFIDENTIAL BANK DEPOSITS AND
RECORDS IN IS. NO. 93-8469.

Apart from the reversal of the decision and resolution of the appellate court as well as the resolutions of
the Department of Justice, 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. 1405 against private respondents.

The petition is not meritorious.

Actually, this case should have been studied more carefully by all concerned. The finest legal minds in
the country - from the parties’ respective counsel, the Provincial Prosecutor, the Department of Justice,
the Solicitor General, and the Court of Appeals - all appear to have overlooked a single fact which
dictates the outcome of the entire controversy. A circumspect review of the record shows us the reason.
The accounts in question are U.S. dollar deposits; consequently, the applicable law is not Republic Act
No. 1405 but Republic Act (RA) No. 6426, known as the "Foreign Currency Deposit Act of the
Philippines," section 8 of which provides:
Sec. 8. Secrecy of Foreign Currency Deposits.- All foreign currency deposits authorized under this Act, as
amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under
Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential
nature and, except upon the written permission of the depositor, in no instance shall such foreign
currency deposits be examined, inquired or looked into by any person, government official bureau or
office whether judicial or administrative or legislative or any other entity whether public or
private: Provided, however, that said foreign currency deposits shall be exempt from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or any
administrative body whatsoever.21 (italics supplied)

Thus, under R.A. No. 6426 there is only a single exception to the secrecy of foreign currency deposits,
that is, disclosure is allowed only upon the written permission of the depositor. Incidentally, the acts of
private respondents complained of happened before the enactment on September 29, 2001 of R.A. No.
9160 otherwise known as the Anti-Money Laundering Act of 2001.

A case for violation of Republic Act No. 6426 should have been the proper case brought against private
respondents. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners’
dollar deposits without the latter’s written permission. It does not matter if that such disclosure was
necessary to establish Citibank’s case against Dante L. Santos and Marilou Genuino. Lim’s act of
disclosing details of petitioners’ bank records regarding their foreign currency deposits, with the
authority of Reyes, would appear to belong to that species of criminal acts punishable by special laws,
called malum prohibitum. In this regard, it has been held that:

While it is true that, as a rule and on principles of abstract justice, 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, the courts have always recognized the power of the legislature, on grounds of public policy
and compelled by necessity, "the great master of things," to forbid in a limited class of cases the doing
of certain acts, and to make their commission criminal without regard to the intent of the doer. xxx In
such cases no judicial authority has the power to require, in the enforcement of the law, such
knowledge or motive to be shown. As was said in the case of State vs. McBrayer xxx:

‘It is a mistaken notion that positive, willful intent, as distinguished from a mere intent, to violate the
criminal law, is an essential ingredient in every criminal offense, and that where there is the absence of
such intent there is no offense; this is especially so as to statutory offenses. When the statute plainly
forbids an act to be done, and it is done by some person, the law implies conclusively the guilty intent,
although the offender was honestly mistaken as to the meaning of the law he violates. When the
language is plain and positive, and the offense is not made to depend upon the positive, willful intent
and purpose, nothing is left to interpretation.’22

Ordinarily, the dismissal of the instant petition would have been without prejudice to the filing of the
proper charges against private respondents. The matter would have ended here were it not for the
intervention of time, specifically the lapse thereof. So as not to unduly prolong the settlement of the
case, we are constrained to rule on a material issue even though it was not raised by the parties. We
refer to the issue of prescription.

Republic Act No. 6426 being a special law, the provisions of Act No. 3326,23 as amended by Act No. 3763,
are applicable:
SECTION 1. Violations penalized by special acts shall, unless otherwise provided in such acts, 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, or both: (b) after four years for those punished by
imprisonment for more than one month, but less than two years; (c) after eight years for those punished
by imprisonment for two years or more, but less than six years; and (d) after twelve years for any other
offence punished by imprisonment for six years or more, except the crime of treason, which shall
prescribe after twenty years: Provided, however, That all offences against any law or part of law
administered by the Bureau of Internal Revenue shall prescribe after five years. Violations penalized by
municipal ordinances shall prescribe after two months.

Violations of the regulations or conditions of certificates of public convenience issued by the Public
Service Commission shall prescribe after two months.

SEC. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if
the same be not known at the time, from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.

The prescription shall be interrupted when proceedings are instituted against the guilty person, and
shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy.1âwphi1

A violation of Republic Act No. 6426 shall subject the offender to imprisonment of not less than one year
nor more than five years, or by a fine of not less than five thousand pesos nor more than twenty-five
thousand pesos, or both.24 Applying Act No. 3326, the offense prescribes in eight years.25 Per available
records, private respondents may no longer be haled before the courts for violation of Republic Act No.
6426. Private respondent Vic Lim made the disclosure in September of 1993 in his affidavit submitted
before the Provincial Fiscal.26 In her complaint-affidavit,27 Intengan stated that she learned of the
revelation of the details of her foreign currency bank account on October 14, 1993. On the other hand,
Neri asserts that she discovered the disclosure on October 24, 1993.28 As to Brawner, the material date
is January 5, 1994.29 Based on any of these dates, prescription has set in.30

The filing of the complaint or information in the case at bar for alleged violation of Republic Act No.
1405 did not have the effect of tolling the prescriptive period. For it is the filing of the complaint or
information corresponding to the correct offense which produces that effect.31

It may well be argued that the foregoing disquisition would leave petitioners with no remedy in law. We
point out, however, that the confidentiality of foreign currency deposits mandated by Republic Act No.
6426, as amended by Presidential Decree No. 1246, came into effect as far back as 1977. Hence,
ignorance thereof cannot be pretended. On one hand, the existence of laws is a matter of mandatory
judicial notice;32 on the other, ignorantia legis non excusat.33 Even during the pendency of this appeal,
nothing prevented the petitioners from filing a complaint charging the correct offense against private
respondents. This was not done, as everyone involved was content to submit the case on the basis of an
alleged violation of Republic Act No. 1405 (Bank Secrecy Law), however, incorrectly invoked.34

WHEREFORE, the petition is hereby DENIED. No pronouncement as to costs.

SO ORDERED.
G.R. No. 94723 August 21, 1997

KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural Guardian, and
Spouses FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners,
vs.
CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y
NORTHCOTT, respondents.

TORRES, JR., J.:

In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of
the status quo. Ligle do we realize that statutes or even constitutions are bundles of compromises
thrown our way by their framers. Unless we exercise vigilance, the statute may already be out of tune
and irrelevant to our day.

The petition is for declaratory relief. It prays for the following reliefs:

a.) Immediately upon the filing of this petition, an Order be issued restraining the
respondents from applying and enforcing Section 113 of Central Bank Circular No. 960;

b.) After hearing, judgment be rendered:

1.) Declaring the respective rights and duties of petitioners and respondents;

2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions
of the Constitution, hence void; because its provision that "Foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body whatsoever

i.) 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;

ii.) has given foreign currency depositors an undue favor or a class

privilege in violation of the equal protection clause of the Constitution;

iii.) 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 antecedent facts:

On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen
Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen
Salvacion for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and
three times each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people
living nearby, rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The
policemen recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control No. 021000678-
1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account
— China Banking Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.)
Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.

On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli, Criminal
Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for four (4)
counts of Rape. On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case No.
89-3214 for damages with preliminary attachment against Greg Bartelli. On February 24, 1989, the day
there was a scheduled hearing for Bartelli's petition for bail the latter escaped from jail.

On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of Warrant
of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the
criminal cases were archived in an Order dated February 28, 1989.

Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the
application of herein petitioners, for the issuance of the writ of preliminary attachment. After
petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amount of P100,000.00, a
Writ of Preliminary Attachment was issued by the trial court on February 28, 1989.

On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking
Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking
Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On
March 15, 1989, 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. In answer to this letter of the Deputy Sheriff of
Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central
Bank Circular No. 960 to the effect that the dollar deposits or defendant Greg Bartelli are exempt from
attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body, whatsoever.

This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated
April 25, 1989 on whether Section 113 of CB Circular No. 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. The
Central Bank responded as follows:

May 26, 1989

 Ms. Erlinda S. Carolino
12 Pres. Osmena Avenue
South Admiral Village
Paranaque, Metro Manila

Dear Ms. Carolino:

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

Director1

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)

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. 12-14)
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 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 recall until she reaches old
age, and he is not sure if she could ever recover from this experience. (TSN, Sept. 24,
1989, pp. 10-11)

Pursuant to an Order granting leave to publish notice of decision, said notice was published in the
Manila Bulletin once a week for three consecutive weeks. 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, petitioners tried to execute on Bartelli's dollar deposit with China Banking Corporation. Likewise,
the bank invoked Section 113 of Central Bank Circular No. 960.

Thus, petitioners decided to seek relief from this Court.

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. 960 and
Section 8 of R.A. 6426, as amended by P.D. 1246, 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. 960 providing that
"Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body whatsoever."
should be adjudged as unconstitutional on the grounds that: 1.) 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; 2.) it has given foreign currency depositors an undue favor or a class privilege in violation
of the equal protection clause of the Constitution; 3.) 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; and 4.) The Monetary Board, in issuing Section 113 of Central
Bank Circular No. 960 has exceeded its delegated quasi-legislative power when it took away: a.) 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; b.) 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, which is beyond its power to do so.

On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing
Section 113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is
copied verbatim from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the
Monetary Board that grants exemption from attachment or garnishment to foreign currency deposits,
but the law (R.A. 6426 as amended) itself; that it does not violate the substantive due process
guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to be reasonable;
c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class.

Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from
attachment, garnishment or any other order or process of any court, is to assure the development and
speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the
Philippines; 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, thus directly contributing to the economic development of the
country; that the subject section is being enforced according to the regular methods of procedure; 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.

Respondent Central Bank further avers that the questioned provision is needed to promote the public
interest and the general welfare; that the State cannot just stand idly by while a considerable segment
of the society suffers from economic distress; that the State had to take some measures to encourage
economic development; 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. 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.A. No. 6426 as amended is such
a law, in that it specifically provides, among others, that foreign currency deposits shall be exempted
from attachment, garnishment, or any other order or process of any court, legislative body, government
agency or any administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons similar to that of
respondent Central Bank, also stated that respondent China Bank is not unmindful of the inhuman
sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is
only too willing to release the dollar deposit of Bartelli which may perhaps partly mitigate the sufferings
petitioner has undergone; but it is restrained from doing so in view of R.A. No. 6426 and Section 113 of
Central Bank Circular No. 960; and that despite the harsh effect of these laws on petitioners, CBC has no
other alternative but to follow the same.

This Court finds the petition to be partly meritorious.

Petitioner deserves to receive the damages awarded to her by the court. 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. 89-3214.

This Court has no original and exclusive jurisdiction over a petition for declaratory relief.2 However,
exceptions to this rule have been recognized. Thus, where the petition has far-reaching implications and
raises questions that should be resolved, it may be treated as one for mandamus.3

Here is a child, a 12-year old girl, 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, trustingly
went with said stranger to his apartment, and there she was raped by said American tourist Greg Bartelli.
Not once, but ten times. She was detained therein for four (4) days. This American tourist was able to
escape from the jail and avoid punishment. On the other hand, the child, having received a favorable
judgment in the Civil Case for damages in the amount of more than P1,000,000.00, which amount could
alleviate the humiliation, anxiety, and besmirched reputation she had suffered and may continue to
suffer for a long, long time; and knowing that this person who had wronged her has the money, could
not, however get the award of damages because of this unreasonable law. This questioned law,
therefore makes futile the favorable judgment and award of damages that she and her parents fully
deserve. As stated by the trial court in its decision,

Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly
a shocking and traumatic experience she had undergone which could haunt her mind for
a long, long time, the mere recall of which could make her feel so humiliated, as in fact
she had been actually humiliated once when she was refused admission at the Abad
Santos High School, Arellano University, where she sought to transfer from another
school, 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.

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, the minor Karen Salvacion whose only fault was in
her being so naive and credulous to believe easily that defendant, an American national,
could not have such a bestial desire on her nor capable of committing such a heinous
crime. Being only 12 years old when that unfortunate incident happened, she has never
 heard of an old Filipino adage that in every forest there is a
snake, . . . .4

If Karen's sad fate had happened to anybody's own kin, 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; in this case, 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. This further illustrates the flaw in the questioned
provisions.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy
was in a shambles; when foreign investments were minimal and presumably, this was the reason why
said statute was enacted. But the realities of the present times show that the country has recovered
economically; and even if not, the questioned law still denies those entitled to due process of law for
being unreasonable and oppressive. The intention of the questioned law may be good when enacted.
The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the
case before us.

It has thus been said that —

But I also know,5 that laws and institutions must go hand in hand with the progress of
the human mind. As that becomes more developed, more enlightened, as new
discoveries are made, new truths are disclosed and manners and opinions change with
the change of circumstances, institutions must advance also, and keep pace with the
times. . . We might as well require a man to wear still the coat which fitted him when a
boy, as civilized society to remain ever under the regimen of their barbarous ancestors.

In his Comment, the Solicitor General correctly opined, thus:

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. More specifically, the petition raises the question whether the
protection against attachment, garnishment or other court process accorded to foreign
currency deposits by PD No. 1246 and CB Circular No. 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.

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.

xxx xxx xxx

. . . Respondents China Banking Corporation and Central Bank of the Philippines refused
to honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the
following provision of Central Bank Circular No. 960:
 Sec. 113. Exemption from attachment. — Foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body whatsoever.

Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:

Sec. 7. Rules and Regulations. 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. In case the Central Bank promulgates new rules and
regulations decreasing the rights of depositors, the rules and
regulations at the time the deposit was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as
amended by P.D. 1246, thus:

Sec. 8. Secrecy of Foreign Currency Deposits. — All foreign currency

deposits authorized under this Act, as amended by Presidential Decree
No. 1035, as well as foreign currency deposits authorized under
Presidential Decree No. 1034, are hereby declared as and considered of
an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall such foreign currency
deposits be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or administrative
or legislative or any other entity whether public or private: Provided,
however, that said foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body
whatsoever.

The purpose of PD 1246 in according protection against attachment, garnishment and

other court process to foreign currency deposits is stated in its whereases, viz.:

WHEREAS, under Republic Act No. 6426, as amended by Presidential

Decree No. 1035, certain Philippine banking institutions and branches of
foreign banks are authorized to accept deposits in foreign currency;

WHEREAS, under the provisions of Presidential Decree No. 1034

authorizing the establishment of an offshore banking system in the
Philippines, offshore banking units are also authorized to receive foreign
currency deposits in certain cases;

WHEREAS, in order to assure the development and speedy growth of

the Foreign Currency Deposit System and the Offshore Banking System
 in the Philippines, 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;

WHEREAS, making absolute the protective cloak of confidentiality over

such foreign currency deposits, exempting such deposits from tax, and
guaranteeing the vested rights 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, thus directly contributing to
the economic development of the country;

Thus, 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).

The Offshore Banking System was established by PD No. 1034. In turn, the purposes of
PD No. 1034 are as follows:

WHEREAS, conditions conducive to the establishment of an offshore

banking system, such as political stability, a growing economy and
adequate communication facilities, among others, exist in the
Philippines;

WHEREAS, it is in the interest of developing countries to have as wide

access as possible to the sources of capital funds for economic
development;

WHEREAS, an offshore banking system based in the Philippines will be

advantageous and beneficial to the country by increasing our links with
foreign lenders, facilitating the flow of desired investments into the
Philippines, creating employment opportunities and expertise in
international finance, and contributing to the national development
effort.

WHEREAS, the geographical location, physical and human resources,

and other positive factors provide the Philippines with the clear
potential to develop as another financial center in Asia;

On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035.
Its purposes are as follows:

WHEREAS, the establishment of an offshore banking system in the

Philippines has been authorized under a separate decree;
 WHEREAS, a number of local commercial banks, as depository bank
under the Foreign Currency Deposit Act (RA No. 6426), 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, 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. 1034; third Whereas of
PD No. 1035). It is these deposits that are induced by the two laws and given protection
and incentives by them.

Obviously, the foreign currency deposit made by a transient or a tourist is not the kind
of deposit encouraged by PD Nos. 1034 and 1035 and given incentives and protection by
said laws because such depositor stays only for a few days in the country and, therefore,
will maintain his deposit in the bank only for a short time.

Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his

dollars with respondent China Banking Corporation only for safekeeping during his
temporary stay in the Philippines.

For the reasons stated above, 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. 960 and PD No. 1246 against attachment, garnishment or other court
processes.6

In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the
questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment,
or any other order or process of any court, legislative body, government agency or any administrative
body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen
aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil
Code which provides that "in case of doubt in the interpretation or application of laws, it is presumed
that the lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse
tortizeramente con dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of
those fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla,
74 Phil. 377).

It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a
device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of
the innocent.
Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding the
final and executory judgment of the lower court against the Central Bank Circular protecting the foreign
depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a
national and victim of a crime? This situation calls for fairness against legal tyranny.

We definitely cannot have both ways and rest in the belief that we have served the ends of justice.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its
peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued
in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC
Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such
amount as would satisfy the judgment.

SO ORDERED.

G.R. No. 140687 December 18, 2006

CHINA BANKING CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and JOSE "JOSEPH" GOTIANUY as substituted by ELIZABETH
GOTIANUY LO, respondents.

DECISION

CHICO-NAZARIO, J.:

A Complaint for recovery of sums of money and annulment of sales of real properties and shares of
stock docketed as CEB-21445 was filed by Jose "Joseph" Gotianuy against his son-in-law, George Dee,
and his daughter, Mary Margaret Dee, before the Regional Trial Court (RTC) of Cebu City, Branch 58.

Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US
dollar deposits with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00. Mary
Margaret Dee received these amounts from Citibank N.A. through checks which she allegedly deposited
at China Banking Corporation (China Bank). He likewise accused his son-in-law, George Dee, husband of
his daughter, Mary Margaret, of transferring his real properties and shares of stock in George Dee's
name without any consideration. Jose Gotianuy, died during the pendency of the case before the trial
court.1 He was substituted by his daughter, Elizabeth Gotianuy Lo. The latter presented the US Dollar
checks withdrawn by Mary Margaret Dee from his US dollar placement with Citibank. The details of the
said checks are:

1) CITIBANK CHECK NO. 69003194405412 dated September 29 1997 in the amount of

US$5,937.52 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

2) CITIBANK CHECK NO. 69003194405296 dated September 29 1997 in the amount of

US$7,197.59 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

3) CITIBANK CHECK NO. 69003194405414 dated September 29 1997 in the amount of

US$1,198.94 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

4) CITIBANK CHECK NO. 69003194405413 dated September 29 1997 in the amount of

US$989.04 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

5) CITIBANK CHECK NO. 69003194405297 dated October 01 1997 in the amount of

US$766,011.97 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET; and

6) CITIBANK CHECK NO. 69003194405339 dated October 09 1997 in the amount of

US$83,053.10 payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET.2

Upon motion of Elizabeth Gotianuy Lo, the trial court3 issued a subpoena to Cristota Labios and Isabel
Yap, employees of China Bank, to testify on the case. The Order of the trial court dated 23 February
1999, states:

Issue a subpoena ad testificandum requiring MS. ISABEL YAP and CRISTOTA LABIOS of China
Banking Corporation, Cebu Main Branch, corner Magallanes and D. Jakosalem Sts., Cebu City, to
appear in person and to testify in the hearing of the above entitled case on March 1, 1999 at
8:30 in the morning, with regards to Citibank Checks (Exhs. "AAA" to "AAA-5") and other matters
material and relevant to the issues of this case.4

China Bank moved for a reconsideration. Resolving the motion, the trial court issued an Order dated 16
April 1999 and held:

The Court is of the view that as the foreign currency fund (Exhs. "AAA" to "AAA-5") is deposited
with the movant China Banking Corporation, Cebu Main Branch, Cebu City, the disclosure only
as to the name or in whose name the said fund is deposited is not violative of the law. Justice
will be better served if the name or names of the depositor of said fund shall be disclosed
because such a disclosure is material and important to the issues between the parties in the
case at bar.

Premises considered, the motion for reconsideration is denied partly and granted partly, in the
sense that Isabel Yap and/or Cristuta Labios are directed to appear before this Court and to
testify at the trial of this case on April 20, 1999, May 6 & 7, 1999 at 10:00 o'clock in the morning
and only for the purpose of disclosing in whose name or names is the foreign currency fund
(Exhs. "AAA" to "AAA-5") deposited with the movant Bank and not to other matters material
and relevant to the issues in the case at bar.5
From this Order, China Bank filed a Petition for Certiorari6 with the Court of Appeals. In a
Decision7 dated 29 October 1999, the Court of Appeals denied the petition of China Bank and affirmed
the Order of the RTC.

In justifying its conclusion, the Court of Appeals ratiocinated:

From the foregoing, it is pristinely clear the law specifically encompasses only the money or
funds in foreign currency deposited in a bank. Thus, the coverage of the law extends only to the
foreign currency deposit in the CBC account where Mary Margaret Dee deposited the Citibank
checks in question and nothing more.

It has to be pointed out that the April 16, 1999 Order of the court of origin modified its previous
February 23, 1999 Order such that the CBC representatives are directed solely to divulge "in
whose name or names is the foreign currency fund (Exhs. "AAA" to "AAA-5") deposited with the
movant bank." It precluded inquiry on "other materials and relevant to the issues in the case at
bar." We find that the directive of the court below does not contravene the plain language of RA
6426 as amended by P.D. No. 1246.

The contention of petitioner that the [prescription] on absolute confidentiality under the law in
question covers even the name of the depositor and is beyond the compulsive process of the
courts is palpably untenable as the law protects only the deposits itself but not the name of the
depositor. To uphold the theory of petitioner CBC is reading into the statute "something that is
not within the manifest intention of the legislature as gathered from the statute itself, for to
depart from the meaning expressed by the words, is to alter the statute, to legislate and not to
interpret, and judicial legislation should be avoided. Maledicta expositio quae corrumpit
textum – It is a dangerous construction which is against the words. Expressing the same
principle is the maxim: Ubi lex non distinguit nec nos distinguere debemos, which simply means
that where the law does not distinguish, we should not make any distinction." (Gonzaga,
Statutes and their Construction, p. 75.)8

From the Decision of the Court of Appeals, China Bank elevated the case to this Court based on the
following issues:

THE HONORABLE COURT OF APPEALS HAS INTERPRETED THE PROVISION OF SECTION 8 OF R.A.
6426, AS AMENDED, OTHERWISE KNOWN AS THE FOREIGN CURRENCY DEPOSIT ACT, IN A
MANNER CONTRARY TO THE LEGISLATIVE PURPOSE, THAT IS, TO PROVIDE ABSOLUTE
CONFIDENTIALITY OF WHATEVER INFORMATION RELATIVE TO THE FOREIGN CURRENCY
DEPOSIT.

II

PRIVATE RESPONDENT IS NOT THE OWNER OF THE QUESTIONED FOREIGN CURRENCY DEPOSIT.
THUS, HE CANNOT INVOKE THE AID OF THE COURT IN COMPELLING THE DISCLOSURE OF
SOMEONE ELSE'S FOREIGN CURRENCY DEPOSIT ON THE FLIMSY PRETEXT THAT THE CHECKS (IN
FOREIGN CURRENCY) HE HAD ISSUED MAY HAVE ENDED UP THEREIN.
 III

PETITIONER CAN RIGHTLY INVOKE THE PROVISION OF SEC. 8, R.A. 6426, IN BEHALF OF THE
FOREIGN CURRENCY DEPOSITOR, OWING TO ITS SOLEMN OBLIGATION TO ITS CLIENT TO
EXERCISE EXTRAORDINARY DILIGENCE IN THE HANDLING OF THE ACCOUNT.9

As amended by Presidential Decree No. 1246, the law reads:

SEC. 8. Secrecy of Foreign Currency Deposits. – All foreign currency deposits authorized under
this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits
authorized under Presidential Decree No. 1034, are hereby declared as and considered of an
absolutely confidential nature and, except upon the written permission of the depositor, in no
instance shall such foreign currency deposits be examined, inquired or looked into by any
person, government official, bureau or office whether judicial or administrative or legislative or
any other entity whether public or private: Provided, however, that said foreign currency
deposits shall be exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body whatsoever. (As
amended by PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977) (Emphasis
supplied.)

Under the above provision, the law provides that all foreign currency deposits authorized under
Republic Act No. 6426, as amended by Sec. 8, Presidential Decree No. 1246, Presidential Decree No.
1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034 are considered
absolutely confidential in nature and may not be inquired into. There is only one exception to the
secrecy of foreign currency deposits, that is, disclosure is allowed upon the written permission of the
depositor.

This much was pronounced in the case of Intengan v. Court of Appeals,10 where it was held that the only
exception to the secrecy of foreign currency deposits is in the case of a written permission of the
depositor.

It must be remembered that under the whereas clause of Presidential Decree No. 1246 which amended
Sec. 8 of Republic Act No. 6426, the Foreign Currency Deposit System including the Offshore Banking
System under Presidential Decree 1034 were intended to draw deposits from foreign lenders and
investors, and we quote:

Whereas, in order to assure the development and speedy growth of the Foreign Currency
Deposit System and the Offshore Banking System in the Philippines, 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;

Whereas, making absolute the protective cloak of confidentiality over such foreign currency
deposits, exempting such deposits from tax, and guaranteeing the vested rights 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, thus directly
contributing to the economic development of the country.

As to the deposit in foreign currencies entitled to be protected under the confidentiality rule,
Presidential Decree No. 1034,11 defines deposits to mean funds in foreign currencies which are accepted
and held by an offshore banking unit in the regular course of business, with the obligation to return an
equivalent amount to the owner thereof, with or without interest.12

It is in this light that the court in the case of Salvacion v. Central Bank of the Philippines,13 allowed the
inquiry of the foreign currency deposit in question mainly due to the peculiar circumstances of the case
such that a strict interpretation of the letter of the law would result to rank injustice. Therein, Greg
Bartelli y Northcott, an American tourist, was charged with criminal cases for serious illegal detention
and rape committed against then 12 year-old Karen Salvacion. A separate civil case for damages with
preliminary attachment was filed against Greg Bartelli. The trial court issued an Order granting the
Salvacions' application for the issuance of a writ of preliminary attachment. A notice of garnishment was
then served on China Bank where Bartelli held a dollar account. China Bank refused, invoking the
secrecy of bank deposits. The Supreme Court ruled: "In fine, the application of the law depends on the
extent of its justice x x x It would be unthinkable, that the questioned law exempting foreign currency
deposits from attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever would be used as a device by an accused x x
x for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.14

With the foregoing, we are now tasked to determine the single material issue of whether or not
petitioner China Bank is correct in its submission that the Citibank dollar checks with both Jose Gotianuy
and/or Mary Margaret Dee as payees, deposited with China Bank, may not be looked into under the law
on secrecy of foreign currency deposits. As a corollary issue, sought to be resolved is whether Jose
Gotianuy may be considered a depositor who is entitled to seek an inquiry over the said deposits.

The Court of Appeals, in allowing the inquiry, considered Jose Gotianuy, a co-depositor of Mary
Margaret Dee. It reasoned that since Jose Gotianuy is the named co-payee of the latter in the subject
checks, which checks were deposited in China Bank, then, Jose Gotianuy is likewise a depositor thereof.
On that basis, no written consent from Mary Margaret Dee is necessitated.

We agree in the conclusion arrived at by the Court of Appeals.

The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee are co-payees of various
Citibank checks;15 (2) Mary Margaret Dee withdrew these checks from Citibank;16 (3) Mary Margaret Dee
admitted in her Answer to the Request for Admissions by the Adverse Party sent to her by Jose
Gotianuy17 that she withdrew the funds from Citibank upon the instruction of her father Jose Gotianuy
and that the funds belonged exclusively to the latter; (4) these checks were endorsed by Mary Margaret
Dee at the dorsal portion; and (5) Jose Gotianuy discovered that these checks were deposited with China
Bank as shown by the stamp of China Bank at the dorsal side of the checks.

Thus, with this, there is no issue as to the source of the funds. Mary Margaret Dee declared the source
to be Jose Gotianuy. There is likewise no dispute that these funds in the form of Citibank US dollar
Checks are now deposited with China Bank.
As the owner of the funds unlawfully taken and which are undisputably now deposited with China Bank,
Jose Gotianuy has the right to inquire into the said deposits.

A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course of
business, to be placed to his credit and subject to his check or the beneficiary of the funds held by the
bank as trustee.18

On this score, the observations of the Court of Appeals are worth reiterating:

Furthermore, it is indubitable that the Citibank checks were drawn against the foreign currency
account with Citibank, NA. The monies subject of said checks originally came from the late Jose
Gotianuy, the owner of the account. Thus, he also has legal rights and interests in the CBC
account where said monies were deposited. More importantly, the Citibank checks (Exhibits
"AAA" to "AAA-5") readily demonstrate (sic) that the late Jose Gotianuy is one of the payees of
said checks. Being a co-payee thereof, then he or his estate can be considered as a co-depositor
of said checks. Ergo, since the late Jose Gotianuy is a co-depositor of the CBC account, then his
request for the assailed subpoena is tantamount to an express permission of a depositor for the
disclosure of the name of the account holder. The April 16, 1999 Order perforce must be
sustained.19(Emphasis supplied.)

One more point. It must be remembered that in the complaint of Jose Gotianuy, he alleged that his US
dollar deposits with Citibank were illegally taken from him. On the other hand, China Bank employee
Cristuta Labios testified that Mary Margaret Dee came to China Bank and deposited the money of Jose
Gotianuy in Citibank US dollar checks to the dollar account of her sister Adrienne Chu.20 This fortifies our
conclusion that an inquiry into the said deposit at China Bank is justified. At the very least, Jose Gotianuy
as the owner of these funds is entitled to a hearing on the whereabouts of these funds.

All things considered and in view of the distinctive circumstances attendant to the present case, we are
constrained to render a limited pro hac vice ruling.21 Clearly it was not the intent of the legislature when
it enacted the law on secrecy on foreign currency deposits to perpetuate injustice. This Court is of the
view that the allowance of the inquiry would be in accord with the rudiments of fair play,22 the
upholding of fairness in our judicial system and would be an avoidance of delay and time-wasteful and
circuitous way of administering justice.23

WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of Appeals dated
29 October 1999 affirming the Order of the RTC, Branch 58, Cebu City dated 16 April 1999
is AFFIRMED and this case is ordered REMANDED to the trial court for continuation of hearing with
utmost dispatch consistent with the above disquisition. No costs.

SO ORDERED.