1

 
EN BANC
 
JOSEPH VICTOR G. EJERCITO, G.R. Nos. 157294-95
Petitioner, Present:
   
  PANGANIBAN, C.J.,
  PUNO,
  QUISUMBING,
- versus - YNARES-SANTIAGO,
  SANDOVAL-GUTIERREZ,
  CARPIO,
  AUSTRIA-MARTINEZ,
  CORONA,
SANDIGANBAYAN (SPECIAL CARPIO MORALES,
DIVISION) AND PEOPLE OF CALLEJO, SR.,
THE PHILIPPINES,
AZCUNA,
Respondents.
TINGA,
 
CHICO-NAZARIO,
GARCIA, and
VELASCO, JR., JJ.
Promulgated:
 
November 30, 2006
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
 
DECISION
 
CARPIO MORALES, J.:
 
The present petition for certiorari under Rule 65 assails the Sandiganbayan
Resolutions dated February 7 and 12, 2003 denying petitioner Joseph Victor G.
Ejercitos Motions to Quash Subpoenas Duces Tecum/Ad Testificandum, and
Resolution dated March 11, 2003 denying his Motion for Reconsideration of the
first two resolutions.
 
The three resolutions were issued in Criminal Case No. 26558, People of
the Philippines v. Joseph Ejercito Estrada, et al., for plunder, defined and
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penalized in R.A. 7080, AN ACT DEFINING AND PENALIZING THE CRIME

OF PLUNDER.
 
In above-stated case of People v. Estrada, et al., the Special Prosecution
[1]
Panel  filed on January 20, 2003 before the Sandiganbayan a Request for Issuance
of Subpoena Duces Tecum for the issuance of a subpoena directing the President
of Export and Industry Bank (EIB, formerly Urban Bank) or his/her authorized
representative to produce the following documents during the hearings scheduled
on January 22 and 27, 2003:
 
I.        For Trust Account No. 858;
1.      Account Opening Documents;
2.      Trading Order No. 020385 dated January 29, 1999;
3.      Confirmation Advice TA 858;
4.      Original/Microfilm copies, including the dorsal side, of the
following:
 
a.       Bank of Commerce MC # 0256254 in the amount
of P2,000,000.00;
b.      Urban bank Corp. MC # 34181 dated November 8, 1999 in
the amount of P10,875,749.43;
c.       Urban Bank MC # 34182 dated November 8, 1999 in the
amount of P42,716,554.22;
d.      Urban Bank Corp. MC # 37661 dated November 23,
1999 in the amount of P54,161,496.52;
 
5.      Trust Agreement dated January 1999:
Trustee: Joseph Victor C. Ejercito
Nominee: URBAN BANK-TRUST DEPARTMENT
Special Private Account No. (SPAN) 858; and
6.      Ledger of the SPAN # 858.
 
II. For Savings Account No. 0116-17345-9
SPAN No. 858
 
1.      Signature Cards; and
2.      Statement of Account/Ledger
 
III.   Urban Bank Managers Check and their corresponding Urban Bank
Managers Check Application Forms, as follows:
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1.      MC # 039975 dated January 18, 2000 in the amount
of P70,000,000.00;
2.      MC # 039976 dated January 18, 2000 in the amount
of P2,000,000.00;
3.      MC # 039977 dated January 18, 2000 in the amount
of P2,000,000.00;
4.      MC # 039978 dated January 18, 2000 in the amount
of P1,000,000.00;
 
The Special Prosecution Panel also filed on January 20, 2003, a Request for
Issuance of Subpoena Duces Tecum/Ad Testificandum directed to the authorized
representative of Equitable-PCI Bank to produce statements of account pertaining
to certain accounts in the name of Jose Velarde and to testify thereon.
 
The Sandiganbayan granted both requests by Resolution of January 21,
2003 and subpoenas were accordingly issued.
 
The Special Prosecution Panel filed still another Request for Issuance of
Subpoena Duces Tecum/Ad Testificandum dated January 23, 2003 for the
President of EIB or his/her authorized representative to produce the same
documents subject of the Subpoena Duces Tecum dated January 21, 2003 and to
testify thereon on the hearings scheduled on January 27 and 29, 2003 and
subsequent dates until completion of the testimony. The request was likewise
granted by the Sandiganbayan. A Subpoena Duces Tecum/Ad Testificandum was
accordingly issued on January 24, 2003.
 
Petitioner, claiming to have learned from the media that the Special
Prosecution Panel had requested for the issuance of subpoenas for the examination
of bank accounts belonging to him, attended the hearing of the case on January 27,
2003 and filed before the Sandiganbayan a letter of even date expressing his
concerns as follows, quoted verbatim:
 
Your Honors:
 
It is with much respect that I write this court relative to the concern of
subpoenaing the undersigneds bank account which I have learned
through the media.
 
I am sure the prosecution is aware of our banking secrecy laws
everyone supposed to observe. But, instead of prosecuting those who
may have breached such laws, it seems it is even going to use
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supposed evidence which I have reason to believe could only have

been illegally obtained.
 
The prosecution was not content with a general request. It even lists
and identifies specific documents meaning someone else in the bank
illegally released confidential information.
 
If this can be done to me, it can happen to anyone. Not that anything
can still shock our family. Nor that I have anything to hide. Your
Honors.
 
But, I am not a lawyer and need time to consult one on a situation that
affects every bank depositor in the country and should interest the
bank itself, the Bangko Sentral ng Pilipinas, and maybe the
Ombudsman himself, who may want to investigate, not exploit, the
serious breach that can only harm the economy, a consequence that
may have been overlooked. There appears to have been deplorable
connivance.
 
xxxx
 
I hope and pray, Your Honors, that I will be given time to retain the
services of a lawyer to help me protect my rights and those of every
banking depositor. But the one I have in mind is out of the country
right now.
 
May I, therefore, ask your Honors, that in the meantime, the issuance
of the subpoena be held in abeyance for at least ten (10) days to
enable me to take appropriate legal steps in connection with the
prosecutions request for the issuance of subpoena concerning my
accounts. (Emphasis supplied)
 
 
From the present petition, it is gathered that the accounts referred to by
petitioner in his above-quoted letter are Trust Account No. 858 and Savings
Account No. 0116-17345-9.[2]
 
In open court, the Special Division of the Sandiganbayan, through Associate
Justice Edilberto Sandoval, advised petitioner that his remedy was to file a motion
to quash, for which he was given up to 12:00 noon the following day, January 28,
2003.
 
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Petitioner, unassisted by counsel, thus filed on January 28, 2003 a Motion to

Quash Subpoena Duces Tecum/Ad Testificandum praying that the subpoenas
previously issued to the President of the EIB dated January 21 and January 24,
2003 be quashed.[3]
 
In his Motion to Quash, petitioner claimed that his bank accounts are
covered by R.A. No. 1405 (The Secrecy of Bank Deposits Law) and do not fall
under any of the exceptions stated therein.He further claimed that the specific
identification of documents in the questioned subpoenas, including details on dates
and amounts, could only have been made possible by an earlier illegal disclosure
thereof by the EIB and the Philippine Deposit Insurance Corporation (PDIC) in its
capacity as receiver of the then Urban Bank.
 
The disclosure being illegal, petitioner concluded, the prosecution in the
case may not be allowed to make use of the information.
 
Before the Motion to Quash was resolved by the Sandiganbayan, the
prosecution filed another Request for the Issuance of Subpoena Duces Tecum/Ad
Testificandum dated January 31, 2003, again to direct the President of the EIB to
produce, on the hearings scheduled on February 3 and 5, 2003, the same
documents subject of the January 21 and 24, 2003 subpoenas with the exception of
the Bank of Commerce MC #0256254 in the amount of P2,000,000 as Bank of
Commerce MC #0256256 in the amount of P200,000,000 was instead
requested. Moreover, the request covered the following additional documents:
 
IV. For Savings Account No. 1701-00646-1:
1. Account Opening Forms;
2. Specimen Signature Card/s; and
3. Statements of Account.
 
 
The prosecution also filed a Request for the Issuance of Subpoena Duces
Tecum/Ad Testificandum bearing the same date, January 31, 2003, directed to
Aurora C. Baldoz, Vice President-CR-II of the PDIC for her to produce the
following documents on the scheduled hearings on February 3 and 5, 2003:
 
1. Letter of authority dated November 23, 1999 re: SPAN [Special
Private Account Number] 858;
 
2. Letter of authority dated January 29, 2000 re: SPAN 858;
 
3. Letter of authority dated April 24, 2000 re: SPAN 858;
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4. Urban Bank check no. 052092 dated April 24, 2000 for the amount
of P36, 572, 315.43;
 
5. Urban Bank check no. 052093 dated April 24, 2000 for the amount
of P107,191,780.85; and
 
6. Signature Card Savings Account No. 0116-17345-9. (Underscoring
supplied)
 
 
The subpoenas prayed for in both requests were issued by the
Sandiganbayan on January 31, 2003.
 
On February 7, 2003, petitioner, this time assisted by counsel, filed an
Urgent Motion to Quash Subpoenae Duces Tecum/Ad Testificandum praying that
the subpoena dated January 31, 2003directed to Aurora Baldoz be quashed for the
same reasons which he cited in the Motion to Quash[4] he had earlier filed.
 
On the same day, February 7, 2003, the Sandiganbayan issued a Resolution
denying petitioners Motion to Quash Subpoenae Duces Tecum/Ad Testificandum
dated January 28, 2003.
 
Subsequently or on February 12, 2003, the Sandiganbayan issued a
Resolution denying petitioners Urgent Motion to Quash Subpoena Duces
Tecum/Ad Testificandum dated February 7, 2003.
 
Petitioners Motion for Reconsideration dated February 24, 2003 seeking a
reconsideration of the Resolutions of February 7 and 12, 2003 having been denied
by Resolution of March 11, 2003, petitioner filed the present petition.
 
Raised as issues are:
 
1.           Whether petitioners Trust Account No. 858 is covered by the term
deposit as used in R.A. 1405;
 
2.           Whether petitioners Trust Account No. 858 and Savings Account
No. 0116-17345-9 are excepted from the protection of R.A. 1405; and
 
3.           Whether the extremely-detailed information contained in the
Special Prosecution Panels requests for subpoena was obtained through
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a prior illegal disclosure of petitioners bank accounts, in violation of the

fruit of the poisonous tree doctrine.
 
 
Respondent People posits that Trust Account No. 858[5] may be inquired
into, not merely because it falls under the exceptions to the coverage of R.A. 1405,
but because it is not even contemplated therein. For, to respondent People, the law
applies only to deposits which strictly means the money delivered to the bank by
which a creditor-debtor relationship is created between the depositor and the bank.
 
The contention that trust accounts are not covered by the term deposits, as
used in R.A. 1405, by the mere fact that they do not entail a creditor-debtor
relationship between the trustor and the bank, does not lie. An examination of the
law shows that the term deposits used therein is to be understood broadly and not
limited only to accounts which give rise to a creditor-debtor relationship between
the depositor and the bank.
 
The policy behind the law is laid down in Section 1:
 
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. (Underscoring supplied)
 
 
If the money deposited under an account may be used by banks for
authorized loans to third persons, then such account, regardless of whether it
creates a creditor-debtor relationship between the depositor and the bank, falls
under the category of accounts which the law precisely seeks to protect for the
purpose of boosting the economic development of the country.
 
Trust Account No. 858 is, without doubt, one such account. The Trust
Agreement between petitioner and Urban Bank provides that the trust account
covers deposit, placement or investment of funds by Urban Bank for and in behalf
of petitioner.[6] The money deposited under Trust Account No. 858, was, therefore,
intended not merely to remain with the bank but to be invested by it elsewhere. To
hold that this type of account is not protected by R.A. 1405 would encourage
private hoarding of funds that could otherwise be invested by banks in other
ventures, contrary to the policy behind the law.
 
Section 2 of the same law in fact even more clearly shows that the term
deposits was intended to be understood broadly:
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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 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. (Emphasis and
underscoring supplied)
 
 
The phrase of whatever nature proscribes any restrictive interpretation of
deposits. Moreover, it is clear from the immediately quoted provision that,
generally, the law applies not only to money which is deposited but also to those
which are invested. This further shows that the law was not intended to apply only
to deposits in the strict sense of the word. Otherwise, there would have been no
need to add the phrase or invested.
 
Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No.
858.
 
The protection afforded by the law is, however, not absolute, there being
recognized exceptions thereto, as above-quoted Section 2 provides. In the present
case, two exceptions apply, to wit: (1) the examination of bank accounts is upon
order of a competent court in cases of bribery or dereliction of duty of public
officials, and (2) the money deposited or invested is the subject matter of the
litigation.
 
Petitioner contends that since plunder is neither bribery nor dereliction of
duty, his accounts are not excepted from the protection of R.A. 1405. Philippine
National Bank v. Gancayco[7] holds otherwise:
 
Cases of unexplained wealth are similar to cases of bribery or
dereliction of duty and no reason is seen why these two classes of
cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy
as to the other. This policy expresses the notion that a public office
is a public trust and any person who enters upon its discharge does
so with the full knowledge that his life, so far as relevant to his duty,
is open to public scrutiny.
 
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Undoubtedly, cases for plunder involve unexplained wealth. Section 2 of
R.A. No. 7080 states so.
 
SECTION 2. Definition of the Crime of Plunder;
Penalties. Any public officer who, by himself or in connivance with
members of his family, relatives by affinity or consanguinity, business
associates, subordinates or other persons, amasses, accumulates or
acquires ill-gotten wealth through a combination or series of overt or
criminal acts as described in Section 1(d) hereof, in the aggregate
amount or total value of at least Seventy-five million pesos
(P75,000,000.00), shall be guilty of the crime of plunder and shall be
punished by life imprisonment with perpetual absolute
disqualification from holding any public office. Any person who
participated with said public officer in the commission of plunder
shall likewise be punished. In the imposition of penalties, the degree
of participation and the attendance of mitigating and extenuating
circumstances shall be considered by the court. The court shall declare
any and all ill-gotten wealth and their interests and other incomes and
assets including the properties and shares of stock derived from the
deposit or investment thereof forfeited in favor of the
State. (Emphasis and underscoring supplied)
 
 
An examination of the overt or criminal acts as described in Section 1(d) of
R.A. No. 7080 would make the similarity between plunder and bribery even more
pronounced since bribery is essentially included among these criminal acts. Thus
Section 1(d) states:
 
d) Ill-gotten wealth means any asset, property, business
enterprise or material possession of any person within the purview of
Section Two (2) hereof, acquired by him directly or indirectly through
dummies, nominees, agents, subordinates and or business associates
by any combination or series of the following means or similar
schemes.
 
1) Through misappropriation, conversion, misuse, or malversation of
public funds or raids on the public treasury;
 
2) By receiving, directly or indirectly, any commission, gift, share,
percentage, kickbacks or any other form of pecuniary benefit
from any person and/or entity in connection with any
government contract or project or by reason of the office or
position of the public officer concerned;
 
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3) By the illegal or fraudulent conveyance or disposition of assets

belonging to the National Government or any of its subdivisions,
agencies or instrumentalities or government-owned or -controlled
corporations and their subsidiaries;
 
4) By obtaining, receiving or accepting directly or indirectly any
shares of stock, equity or any other form of interest or
participation including promise of future employment in any
business enterprise or undertaking;
 
5) By establishing agricultural, industrial or commercial monopolies
or other combinations and/or implementation of decrees and
orders intended to benefit particular persons or special interests;
or
 
6) By taking undue advantage of official position, authority,
relationship, connection or influence to unjustly enrich himself or
themselves at the expense and to the damage and prejudice of the
Filipino people and the Republic of the Philippines. (Emphasis
supplied)
 
 
Indeed, all the above-enumerated overt acts are similar to bribery such that,
in each case, it may be said that no reason is seen why these two classes of cases
cannot be excepted from the rule making bank deposits confidential.[8]
 
The crime of bribery and the overt acts constitutive of plunder are crimes
committed by public officers, and in either case the noble idea that a public office
is a public trust and any person who enters upon its discharge does so with the full
knowledge that his life, so far as relevant to his duty, is open to public scrutiny
applies with equal force.
 
Plunder being thus analogous to bribery, the exception to R.A. 1405
applicable in cases of bribery must also apply to cases of plunder.
 
Respecting petitioners claim that the money in his bank accounts is not the
subject matter of the litigation, the meaning of the phrase subject matter of the
litigation as used in R.A. 1405 is explained in Union Bank of the Philippines v.
Court of Appeals,[9] thus:
 
Petitioner contends that the Court of Appeals confuses the
cause of action with the subject of the action. In Yusingco v. Ong
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Hing Lian, petitioner points out, this Court distinguished the two
concepts.
 
x x x The cause of action is the legal wrong
threatened or committed, while the object of the action is
to prevent or redress the wrong by obtaining some legal
relief; but the subject of the action is neither of these
since it is not the wrong or the relief demanded, the
subject of the action is the matter or thing with respect to
which the controversy has arisen, concerning which the
wrong has been done, and this ordinarily is the property
or the contract and its subject matter, or the thing in
dispute.
 
The argument is well-taken. We note with approval the
difference between the subject of the action from the cause of
action. We also find petitioners definition of the phrase subject matter
of the action is consistent with the term subject matter of the
litigation, as the latter is used in the Bank Deposits Secrecy Act.
 
In Mellon Bank, N.A. v. Magsino, where the petitioner bank
inadvertently caused the transfer of the amount of US$1,000,000.00
instead of only US$1,000.00, the Court sanctioned the examination
of the bank accounts where part of the money was subsequently
caused to be deposited:
 
x x x Section 2 of [Republic Act No. 1405] allows
the disclosure of bank deposits in cases where the money
deposited is the subject matter of the
litigation. Inasmuch as Civil Case No. 26899 is aimed
at recovering the amount converted by the Javiers for
their own benefit, necessarily, an inquiry into the
whereabouts of the illegally acquired amount extends
to whatever is concealed by being held or recorded in
the name of persons other than the one responsible
for the illegal acquisition.
 
Clearly, Mellon Bank involved a case where the money
deposited was the subject matter of the litigation since the money
deposited was the very thing in dispute. x x x (Emphasis and
underscoring supplied)
 
The plunder case now pending with the Sandiganbayan necessarily involves
an inquiry into the whereabouts of the amount purportedly acquired illegally by
former President Joseph Estrada.
 12

 
In light then of this Courts pronouncement in Union Bank, the subject matter
of the litigation cannot be limited to bank accounts under the name of President
Estrada alone, but must include those accounts to which the money purportedly
acquired illegally or a portion thereof was alleged to have been transferred. Trust
Account No. 858 and Savings Account No. 0116-17345-9 in the name of petitioner
fall under this description and must thus be part of the subject matter of the
litigation.
 
In a further attempt to show that the subpoenas issued by the Sandiganbayan
are invalid and may not be enforced, petitioner contends, as earlier stated, that the
information found therein, given their extremely detailed character, could only
have been obtained by the Special Prosecution Panel through an illegal disclosure
by the bank officials concerned. Petitioner thus claims that, following the fruit of
the poisonous tree doctrine, the subpoenas must be quashed.
 
Petitioner further contends that even if, as claimed by respondent People, the
extremely-detailed information was obtained by the Ombudsman from the bank
officials concerned during a previous investigation of the charges against President
Estrada, such inquiry into his bank accounts would itself be illegal.
 
Petitioner relies on Marquez v. Desierto[10] where the Court held:
 
We rule that before an in camera inspection may be allowed there
must be a pending case before a court of competent
jurisdiction. Further, the account must be clearly identified, the
inspection limited to the subject matter of the pending case before the
court of competent jurisdiction. The bank personnel and the account
holder must be notified to be present during the inspection, and such
inspection may cover only the account identified in the pending case.
(Underscoring supplied)
 
 
As no plunder case against then President Estrada had yet been filed before a
court of competent jurisdiction at the time the Ombudsman conducted an
investigation, petitioner concludes that the information about his bank accounts
were acquired illegally, hence, it may not be lawfully used to facilitate a
subsequent inquiry into the same bank accounts.
 
Petitioners attempt to make the exclusionary rule applicable to the instant
case fails. R.A. 1405, it bears noting, nowhere provides that an unlawful
examination of bank accounts shall render the evidence obtained therefrom
inadmissible in evidence. Section 5 of R.A. 1405 only states that [a]ny violation of
this law will subject the offender upon conviction, to an imprisonment of not more
 13

than five years or a fine of not more than twenty thousand pesos or both, in the
discretion of the court.
 
The case of U.S. v. Frazin,[11] involving the Right to Financial Privacy Act of
1978 (RFPA) of the United States, is instructive.
Because the statute, when properly construed, excludes a
suppression remedy, it would not be appropriate for us to provide one
in the exercise of our supervisory powers over the administration of
justice. Where Congress has both established a right and provided
exclusive remedies for its violation, we would encroach upon the
prerogatives of Congress were we to authorize a remedy not provided
for by statute. United States v. Chanen, 549 F.2d 1306, 1313 (9th
Cir.), cert. denied, 434 U.S. 825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977).
 
 
The same principle was reiterated in U.S. v. Thompson:[12]
 
x x x When Congress specifically designates a remedy for one
of its acts, courts generally presume that it engaged in the necessary
balancing of interests in determining what the appropriate penalty
should be. SeeMichaelian, 803 F.2d at 1049 (citing
cases); Frazin, 780 F.2d at 1466. Absent a specific reference to an
exclusionary rule, it is not appropriate for the courts to read such a
provision into the act.
 
 
Even assuming arguendo, however, that the exclusionary rule applies in
principle to cases involving R.A. 1405, the Court finds no reason to apply the
same in this particular case.
 
Clearly, the fruit of the poisonous tree doctrine [13] presupposes a violation of
law. If there was no violation of R.A. 1405 in the instant case, then there would be
no poisonous tree to begin with, and, thus, no reason to apply the doctrine.
 
How the Ombudsman conducted his inquiry into the bank accounts of
petitioner is recounted by respondent People of the Philippines, viz:
 
x x x [A]s early as February 8, 2001, long before the issuance of
the Marquez ruling, the Office of the Ombudsman, acting under the
powers granted to it by the Constitution and R.A. No. 6770, and
acting on information obtained from various sources, including
impeachment (of then Pres. Joseph Estrada) related reports, articles
and investigative journals, issued a Subpoena Duces Tecum addressed
 14

to Urban Bank. (Attachment 1-b) It should be noted that the

description of the documents sought to be produced at that time
included that of numbered accounts 727, 737, 747, 757, 777 and 858
and included such names as Jose Velarde, Joseph E. Estrada, Laarni
Enriquez, Guia Gomez, Joy Melendrez, Peachy Osorio, Rowena
Lopez, Kevin or Kelvin Garcia. The subpoena did not single out
account 858.
 
xxxx
 
Thus, on February 13, 2001, PDIC, as receiver of Urban Bank, issued a
certification as to the availability of bank documents relating to A/C
858 and T/A 858 and the non-availability of bank records as to the
other accounts named in the subpoena. (Attachments 2, 2-1 and 2-b)
 
Based on the certification issued by PDIC, the Office of the Ombudsman
on February 16, 2001 again issued a Subpoena Duces
Tecum directed to Ms. Corazon dela Paz, as Interim Receiver,
directing the production of documents pertinent to account A/C 858
and T/C 858. (Attachment 3)
 
In compliance with the said subpoena dated February 16, 2001, Ms. Dela
Paz, as interim receiver, furnished the Office of the Ombudsman
certified copies of documents under cover latter dated February 21,
2001:
 
1.      Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-
18-99, 11-22-99, 1-07-00, 04-03-00 and 04-24-00;
2.      Report of Unregularized TAFs & TDs for UR COIN A &
B Placements of Various Branches as of February 29, 2000
and as of December 16, 1999; and
3.      Trading Orders Nos. A No. 78102 and A No. 078125.
 
Trading Order A No. 07125 is filed in two copies a white copy
which showed set up information; and a yellow copy which
showed reversal information. Both copies have been
reproduced and are enclosed with this letter.
 
We are continuing our search for other records and documents
pertinent to your request and we will forward to you on Friday,
23 February 2001, such additional records and documents as we
might find until then. (Attachment 4)
 
 15

The Office of the Ombudsman then requested for the mangers checks,
detailed in the Subpoena Duces Tecum dated March 7,
2001. (Attachment 5)
 
PDIC again complied with the said Subpoena Duces
Tecum dated March 7, 2001 and provided copies of the managers
checks thus requested under cover letter dated March 16,
2001. (Attachment 6)[14] (Emphasis in the original)
 
 
The Sandiganbayan credited the foregoing account of respondent People.
[15]
 The Court finds no reason to disturb this finding of fact by the Sandiganbayan.
 
The Marquez ruling notwithstanding, the above-described examination by the
Ombudsman of petitioners bank accounts, conducted before a case was filed with a
court of competent jurisdiction, was lawful.
 
For the Ombudsman issued the subpoenas bearing on the bank accounts of
petitioner about four months before Marquez was promulgated on June 27, 2001.
 
While judicial interpretations of statutes, such as that made in Marquez with
respect to R.A. No. 6770 or the Ombudsman Act of 1989, are deemed part of the
statute as of the date it was originally passed, the rule is not absolute.
 
Columbia Pictures, Inc. v. Court of Appeals[16] teaches:
 
It is consequently clear that a judicial interpretation becomes a part of
the law as of the date that law was originally passed, subject only to
the qualification that when a doctrine of this Court is overruled
and a different view is adopted, and more so when there is
a reversal thereof, the new doctrine should be
applied prospectively and should not apply to parties who relied on
the old doctrine and acted in good faith. (Emphasis and underscoring
supplied)
 
 
When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of
Bank Deposits Law in Marquez, that before an in camera inspection may be
allowed there must be a pending case before a court of competent jurisdiction, it
was, in fact, reversing an earlier doctrine found in Banco Filipino Savings and
Mortgage Bank v. Purisima[17].
 
 16

Banco Filipino involved subpoenas duces tecum issued by the Office of the

Ombudsman, then known as the Tanodbayan,[18] in the course of its preliminary
investigation of a charge of violation of the Anti-Graft and Corrupt Practices Act.
 
While the main issue in Banco Filipino was whether R.A. 1405 precluded
the Tanodbayans issuance of subpoena duces tecum of bank records in the name of
persons other than the one who was charged, this Court, citing P.D. 1630,
[19]
 Section 10, the relevant part of which states:
 
(d) He may issue a subpoena to compel any person to appear,
give sworn testimony, or produce documentary or other evidence the
Tanodbayan deems relevant to a matter under his inquiry,
 
 
 
held that The power of the Tanodbayan to issue subpoenae ad testificandum
and subpoenae duces tecum at the time in question is not disputed, and at any
rate does not admit of doubt.[20]
 
As the subpoenas subject of Banco Filipino were issued during a
preliminary investigation, in effect this Court upheld the power of the Tandobayan
under P.D. 1630 to issue subpoenas duces tecum for bank documents prior to the
filing of a case before a court of competent jurisdiction.
 
Marquez, on the other hand, practically reversed this ruling in Banco
Filipino despite the fact that the subpoena power of the Ombudsman under R.A.
6770 was essentially the same as that under P.D. 1630. Thus Section 15 of R.A.
6770 empowers the Office of the Ombudsman to
 
(8) Administer oaths, issue subpoena and subpoena duces tecum, and
take testimony in any investigation or inquiry, including the power to
examine and have access to bank accounts and records;
 
A comparison of this provision with its counterpart in Sec. 10(d) of P.D. 1630
clearly shows that it is only more explicit in stating that the power of the
Ombudsman includes the power to examine and have access to bank accounts and
records which power was recognized with respect to the Tanodbayan
through Banco Filipino.
 
The Marquez ruling that there must be a pending case in order for the Ombudsman
to validly inspect bank records in camera thus reversed a prevailing doctrine.
[21]
 Hence, it may not be retroactively applied.
 
 17

The Ombudsmans inquiry into the subject bank accounts prior to the filing of any
case before a court of competent jurisdiction was therefore valid at the time it was
conducted.
 
Likewise, the Marquez ruling that the account holder must be notified to be present
during the inspection may not be applied retroactively to the inquiry of the
Ombudsman subject of this case. This ruling is not a judicial interpretation either
of R.A. 6770 or R.A. 1405, but a judge-made law which, as People v.
Luvendino[22] instructs, can only be given prospective application:
 
x x x The doctrine that an uncounselled waiver of the right to
counsel is not to be given legal effect was initially a judge-
made one and was first announced on 26 April 1983 in Morales v.
Enrile and reiterated on 20 March 1985 in People v. Galit. x x x
 
While the Morales-Galit doctrine eventually became part of Section
12(1) of the 1987 Constitution, that doctrine affords no comfort to
appellant Luvendino for the requirements and restrictions outlined
in Moralesand Galit have no retroactive effect and do not reach
waivers made prior to 26 April 1983 the date of promulgation
of Morales. (Emphasis supplied)
 
 
In fine, the subpoenas issued by the Ombudsman in this case were legal,
hence, invocation of the fruit of the poisonous tree doctrine is misplaced.
 
AT ALL EVENTS, even if the challenged subpoenas are quashed, the
Ombudsman is not barred from requiring the production of the same documents
based solely on information obtained by it from sources independent of its
previous inquiry.
 
In particular, the Ombudsman, even before its inquiry, had already possessed
information giving him grounds to believe that (1) there are bank accounts bearing
the number 858, (2) that such accounts are in the custody of Urban Bank, and (3)
that the same are linked with the bank accounts of former President Joseph Estrada
who was then under investigation for plunder.
Only with such prior independent information could it have been possible for the
Ombudsman to issue the February 8, 2001 subpoena duces tecum addressed to the
President and/or Chief Executive Officer of Urban Bank, which described the
documents subject thereof as follows:
 
(a) bank records and all documents relative thereto pertaining to all
bank accounts (Savings, Current, Time Deposit, Trust, Foreign
Currency Deposits, etc) under the account names of Jose Velarde,
 18

Joseph E. Estrada, Laarni Enriquez, Guia Gomez, Joy Melendrez,

Peach Osorio, Rowena Lopez, Kevin or Kelvin Garcia, 727, 737, 747,
757, 777 and 858. (Emphasis and underscoring supplied)
 
 
The information on the existence of Bank Accounts bearing number 858 was,
according to respondent People of the Philippines, obtained from various sources
including the proceedings during the impeachment of President Estrada, related
reports, articles and investigative journals.[23] In the absence of proof to the
contrary, this explanation proffered by respondent must be upheld. To presume that
the information was obtained in violation of R.A. 1405 would infringe the
presumption of regularity in the performance of official functions.
 
Thus, with the filing of the plunder case against former President Estrada before
the Sandiganbayan, the Ombudsman, using the above independent information,
may now proceed to conduct the same investigation it earlier conducted, through
which it can eventually obtain the same information previously disclosed to it by
the PDIC, for it is an inescapable fact that the bank records of petitioner are no
longer protected by R.A. 1405 for the reasons already explained above.
 
Since conducting such an inquiry would, however, only result in the
disclosure of the same documents to the Ombudsman, this Court, in avoidance of
what would be a time-wasteful and circuitous way of administering justice,
[24]
 upholds the challenged subpoenas.
 
Respecting petitioners claim that the Sandiganbayan violated his right to due
process as he was neither notified of the requests for the issuance of the subpoenas
nor of the grant thereof, suffice it to state that the defects were cured when
petitioner ventilated his arguments against the issuance thereof through his earlier
quoted letter addressed to the Sandiganbayan and when he filed his motions to
quash before the Sandiganbayan.
 
IN SUM, the Court finds that the Sandiganbayan did not commit grave abuse of
discretion in issuing the challenged subpoenas for documents pertaining to
petitioners Trust Account No. 858 and Savings Account No. 0116-17345-9 for the
following reasons:
 
1. These accounts are no longer protected by the Secrecy of Bank Deposits
Law, there being two exceptions to the said law applicable in this case, namely: (1)
the examination of bank accounts is upon order of a competent court in cases of
bribery or dereliction of duty of public officials, and (2) the money deposited or
invested is the subject matter of the litigation. Exception (1) applies since the
plunder case pending against former President Estrada is analogous to bribery or
dereliction of duty, while exception (2) applies because the money deposited in
 19

petitioners bank accounts is said to form part of the subject matter of the same
plunder case.
 
2. The fruit of the poisonous tree principle, which states that once the
primary source (the tree) is shown to have been unlawfully obtained, any
secondary or derivative evidence (the fruit) derived from it is also inadmissible,
does not apply in this case. In the first place, R.A. 1405 does not provide for the
application of this rule. Moreover, there is no basis for applying the same in this
case since the primary source for the detailed information regarding petitioners
bank accounts the investigation previously conducted by the Ombudsman was
lawful.
 
3. At all events, even if the subpoenas issued by the Sandiganbayan were
quashed, the Ombudsman may conduct on its own the same inquiry into the
subject bank accounts that it earlier conducted last February-March 2001, there
being a plunder case already pending against former President Estrada. To quash
the challenged subpoenas would, therefore, be pointless since the Ombudsman
may obtain the same documents by another route. Upholding the subpoenas avoids
an unnecessary delay in the administration of justice.
 
WHEREFORE, the petition is DISMISSED. The Sandiganbayan
Resolutions dated February 7 and 12, 2003 and March 11, 2003 are upheld.
 
The Sandiganbayan is hereby directed, consistent with this Courts ruling
in Marquez v. Desierto, to notify petitioner as to the date the subject bank
documents shall be presented in court by the persons subpoenaed.
 
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
 
G.R. No. 107303 February 21, 1994
EMMANUEL C. OÑATE and ECON HOLDINGS
CORPORATION, petitioners, 
vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional
Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.
G.R. No. 107491 February 21, 1994
 20

BRUNNER DEVELOPMENT CORPORATION, petitioner, 

vs.
HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional
Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF
CANADA, respondents.
Florante A. Bautista for petitioner in G.R. No. 107303.
Andin & Andin Law Offices for Brunner Development Corporation.
Quasha, Asperilla, Ancheta, Pena & Nolasco for Sun Life Assurance Company of
Canada.

NOCON, J.:
These are separate petitions for certiorari with a prayer for temporary restraining
order filed by Emmanuel C. Oñate and Econ Holdings Corporation (in G.R. No.
107303), and Brunner Development Corporation (in G.R. No. 107491), both of
which assail several orders issued by respondent Judge Zues C. Abrogar in Civil
Case No. 91-3506.
The pertinent facts are as follows: On December 23, 1991, respondent Sun Life
Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a sum
of money with a prayer for the immediate issuance of a writ of attachment against
petitioners, and Noel L. Diño, which was docketed as Civil Case No. 91-3506 and
raffled to Branch 150 of the RTC Makati, presided over by respondent Judge. The
following day, December 24, 1991, respondent Judge issued an order granting the
issuance of a writ of attachment, and the writ was actually issued on December 27,
1991.
On January 3, 1992, upon Sun Life's ex-parte motion, the trial court amended the
writ of attachment to reflect the alleged amount of the indebtedness. That same
day, Deputy Sheriff Arturo C. Flores, accompanied by a representative of Sun Life,
attempted to serve summons and a copy of the amended writ of attachment upon
petitioners at their known office address at 108 Aguirre St., Makati but was not
able to do so since there was no responsible officer to receive the
same.1 Nonetheless, Sheriff Flores proceeded, over a period of several days, to
serve notices of garnishment upon several commercial banks and financial
institutions, and levied on attachment a condominium unit and a real property
belonging to petitioner Oñate.
Summons was eventually served upon petitioners on January 9, 1992, while
defendant Diño was served with summons on January 16, 1992.
On January 21, 1992, petitioners filed an "Urgent Motion to Discharge/Dissolve
Writ of Attachment." That same day, Sun Life filed an ex-parte motion to examine
the books of accounts and ledgers of petitioner Brunner Development Corporation
(Brunner, for brevity) at the Urban Bank, Legaspi Village Branch, and to obtain
copies thereof, which motion was granted by respondent Judge. The examination
of said account took place on January 23, 1992. Petitioners filed a motion to nullify
the proceedings taken thereat since they were not present.
On January 30, 1992, petitioners and their co-defendants filed a memorandum in
support of the motion to discharge attachment. Also on that same day, Sun Life
 21

filed another motion for examination of bank accounts, this time seeking the
examination of Account No. 0041-0277-03 with the Bank of Philippine Islands
(BPI) — which, incidentally, petitioners claim not to be owned by them — and the
records of Philippine National Bank (PNB) with regard to checks payable to
Brunner. Sun Life asked the court to order both banks to comply with the notice of
garnishment.
On February 6, 1992, respondent Judge issued an order (1) denying petitioners' and
the co-defendants' motion to discharge the amended writ of attachment, (2)
approving Sun Life's additional attachment, (3) granting Sun Life's motion to
examine the BPI account, and (4) denying petitioners' motion to nullify the
proceedings of January 23, 1992.
On March 12, 1992, petitioners filed a motion for reconsideration of the February
6, 1992 order. On September 6, 1992, respondent Judge denied the motion for
reconsideration.
Hence, the instant petitions. 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; and (2) allowing
the examination of the bank records though no notice was given to them.
We find both petitions unmeritorious.
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. This argument is clearly unavailing since it is
well-settled that a writ of preliminary attachment may be validly applied for and
granted even before the defendant is summoned or is heard from.2 The rationale
behind this rule was stated by the Court in this wise:
A preliminary attachment may be defined, paraphrasing the Rules of
Court, as the provisional remedy in virtue of which a plaintiff or other
proper party may, at the commencement of the action or any time
thereafter, 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. It is a remedy which is purely statutory in
respect of which the law requires a strict construction of the
provisions granting it. Withal no principle, statutory or jurisprudential,
prohibits its issuance by any court before acquisition of jurisdiction
over the person of the defendant.
Rule 57 in fact speaks of the grant of the remedy "at the
commencement of the action or at any time thereafter." The phrase "at
the commencement of the action," obviously refers to the date of the
filing of the complaint — which, as abovepointed out, its the date that
marks "the commencement of the action;" and the reference plainly is
to a time before summons is served on the defendant or even before
summons issues. 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
 22

obtain a writ of preliminary attachment upon fulfillment of the

pertinent requisites laid down by law, and that he may do so at any
time, either before or after service of summons on the defendant. And
this indeed, 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, cross-claim, third-party claim) and for the
Trial Court to issue the writ ex-parte at the commencement of the
action if it finds the application otherwise sufficient in form and
substance.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. This cannot be considered a ground for lifting the writ since this delves
into the very complaint of the Sun Life. As this Court stated in Cuatro v. Court of
Appeals:4
Moreover, 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., Inc. vs. Court of Appeals, supra, The
Consolidated Bank and Trust Corp. (Solidbank) vs. Court of Appeals,
197 SCRA 663 [1991]).
In the present case, 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"). The issue of fraud, then, is clearly within the
competence of the lower court in the main action.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, 1992 and was upheld by the Provincial Prosecutor on July 13, 1992 is of no
moment since the same can be indicative only of the absence of criminal liability,
but not of civil liability. Besides, Sun Life had elevated the case for review to the
Department of Justice, where the case is presently pending.
Finally, petitioners argue that the enforcement of the writ was invalid since it
undisputedly preceded the actual service of summons by six days at most.
Petitioners cite the decisions in Sievert vs. Court of Appeals, et al.6 and BAC
Manufacturing and Sales Corp. vs. Court of Appeals, et al.,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.
We do not agree entirely with petitioners. True, 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.8
 23

But we must distinguish the case at bar from the Sievert and BAC

Manufacturing cases. In those two cases, summons was never served upon the
defendants. The plaintiffs therein did not even attempt to cause service of
summons upon the defendants, right up to the time the cases went up to this Court.
This is not true in the case at bar. 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, 1992, but we stymied by the absence of a responsible
officer in petitioners' offices. Note is taken of the fact that petitioners Oñate and
Econ Holdings admitted in their answer9 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.
Thus, 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, provided that such service is effected within a reasonable period
thereafter.
Several reasons can be given for the exception. First, there is a possibility that a
defendant, having been alerted of plaintiffs action by the attempted service of
summons and the writ of attachment, would put his properties beyond the reach of
the plaintiff while the latter is trying to serve the summons and the writ anew. By
the time the plaintiff may have caused the service of summons and the writ, there
might not be any property of the defendant left to attach.
Second, the court eventually acquired jurisdiction over the petitioners six days
later. 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.
Third, 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. 10 The petitioners herein tried to have the writ of attachment discharged
by posting a counter-bond, 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.
II.
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. Sun Life grounded its requests for the examination of the bank
accounts on Section 10, Rule 57 of the Rules of Court, which provided, to wit:
Sec. 10. Examination of party whose property is attached and persons
indebted to him or controlling his property; delivery of property to
officer. — 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, may be required to
attend before the court in which the action is pending, or before a
commissioner appointed by the court and be examined on oath
 24

respecting the same. The party whose property is attached may also be
required to attend for the purpose of giving information respecting his
property, and may be examined on oath. The court may, after such
examination, order personal property capable of manual delivery
belonging to him, in the possession of the person so required to attend
before the court, to be delivered to the clerk or court, sheriff, or other
proper officer on such terms as may be just, having reference to any
lien thereon or claim against the same, to await the judgment in the
action.
It is clear from the foregoing provision that notice need only be given to the
garnishee, but the person who is holding property or credits belonging to the
defendant. The provision does not require that notice be furnished the defendant
himself, except when there is a need to examine said defendant "for the purpose of
giving information respecting his property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405,
as amended, "An Act Prohibiting Disclosure or Inquiry Into, Deposits With Any
Banking Institution and Providing Penalty Therefore," for Section 2 therefore
provides an exception "in cases where the money deposited or invested is the
subject matter of the litigation."
The examination of the bank records is not a fishing expedition, but rather a
method by which Sun Life could trace the proceeds of the check it paid to
petitioners.
WHEREFORE, the instant petitions are hereby DISMISSED. The temporary
restraining order issued on June 28, 1993 is hereby lifted.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18343             September 30, 1965
PHILIPPINE NATIONAL BANK and EDUARDO Z. ROMUALDEZ, in his
capacity as President of the Philippine National Bank, plaintiffs-appellants, 
vs.
EMILIO A. GANCAYCO and FLORENTINO FLOR, Special Prosecutors of
the Dept. of Justice, defendants-appellees.
Ramon B. de los Reyes and Zoilo P. Perlas for plaintiffs-appellants.
Villamor & Gancayco for defendants-appellees.

REGALA, J.:
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.
 25

This question arose when defendants Emilio A. Gancayco and Florentino Flor, as
special prosecutors of the Department of Justice, required the plaintiff Philippine
National Bank to produce at a hearing to be held at 10 a.m. on February 20, 1961
the records of the bank deposits of Ernesto T. Jimenez, former administrator of the
Agricultural Credit and Cooperative Administration, who was then under
investigation for unexplained wealth. In declining to reveal its records, the plaintiff
bank invoked Republic Act No. 1405 which provides:
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 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.
The plaintiff bank also called attention to the penal provision of the law which
reads:
SEC. 5. Any violation of this law will subject the 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.
On the other hand, the defendants cited the Anti-Graft and Corrupt Practices Act
(Republic Act No. 3019) in support of their claim of authority and demanded anew
that plaintiff Eduardo Z. Romualdez, as bank president, produce the records or he
would be prosecuted for contempt. The law invoked by the defendant states:
SEC. 8. Dismissal due to unexplained wealth. — If in accordance with the
provisions of Republic Act Numbered One thousand three hundred seventy-
nine, a public official has been found to have acquired during his
incumbency, whether in his name or in the name of other persons, an amount
of property and/or money manifestly out of proportion to his salary and to
his other lawful income, that fact shall be a ground for dismissal or removal.
Properties in the name of the spouse and unmarried children of such public
official may be taken into consideration, when their acquisition through
legitimate means cannot be satisfactorily shown. Bank deposits shall be
taken into consideration in the enforcement of this section, notwithstanding
any provision of law to the contrary.
Because of the threat of prosecution, plaintiffs filed an action for declaratory
judgment in the Manila Court of First Instance. After trial, during which Senator
Arturo M. Tolentino, author of the Anti-Graft and Corrupt Practices Act testified,
the court rendered judgment, sustaining the power of the defendants to compel the
disclosure of bank accounts of ACCFA Administrator Jimenez. The court said that,
by enacting section 8 of, the Anti-Graft and Corrupt Practices Act, Congress
clearly intended to provide an additional ground for the examination of bank
deposits. Without such provision, the court added prosecutors would be hampered
if not altogether frustrated in the prosecution of those charged with having
acquired unexplained wealth while in public office.1awphîl.nèt
 26

From that judgment, plaintiffs appealed to this Court. In brief, 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, which are
(1) Upon written permission of the depositor; (2) In cases of impeachment; (3)
Upon order of a competent court in cases of bribery or dereliction of duty of public
officials; and (4) In cases where the money deposited or invested is the subject
matter of the litigation."
In support of their position, plaintiffs contend, first, that the Anti-Graft Law (which
took effect on August 17, 1960) is a general law which cannot be deemed to have
impliedly repealed section 2 of Republic Act No. 1405 (which took effect on Sept.
9, 1955), because of the rule that repeals by implication are not favored. Second,
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. 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."
Contrary to their claim that their position effects a reconciliation of the provisions
of the two laws, plaintiffs are actually making the provisions of Republic Act No.
1405 prevail over those of the Anti-Graft Law, 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.
The truth is that these laws are so repugnant to each other than no reconciliation is
possible. Thus, while Republic Act No. 1405 provides that bank deposits are
"absolutely confidential ... and [therefore] may not be examined, inquired or
looked into," except in those cases enumerated therein, the Anti-Graft Law directs
in mandatory terms that bank deposits "shall be taken into consideration in the
enforcement of this section, notwithstanding any provision of law to the contrary."
The only conclusion possible is that section 8 of the Anti-Graft Law is intended to
amend section 2 of Republic Act No. 1405 by providing additional exception to the
rule against the disclosure of bank deposits.
Indeed, it is said that if the new law is inconsistent with or repugnant to the old
law, the presumption against the intent to repeal by implication is overthrown
because the inconsistency or repugnancy reveals an intent to repeal the existing
law. And whether a statute, either in its entirety or in part, has been repealed by
implication is ultimately a matter of legislative intent. (Crawford, The Construction
of Statutes, Secs. 309-310. Cf. Iloilo Palay and Corn Planters Ass'n v. Feliciano,
G.R. No. L-24022, March 3, 1965).
The recent case of People v. De Venecia, G.R. No. L-20808, July 31, 1965 invites
comparison with this case. There it was held:
The result is that although sec. 54 [Rev. Election Code] prohibits a classified
civil service employee from aiding any candidate, sec. 29 [Civil Service Act
of 1959] allows such classified employee to express his views on current
political problems or issues, or to mention the name of his candidate for
public office, even if such expression of views or mention of names may
 27

result in aiding one particular candidate. In other words, the last paragraph
of sec. 29 is an exception to sec. 54; at most, an amendment to sec. 54.
With regard to the claim that disclosure would be contrary to the policy making
bank deposits confidential, it is enough to point out that while section 2 of
Republic Act 1405 declares bank deposits to be "absolutely confidential," it
nevertheless allows such disclosure in the following instances: (1) Upon written
permission of the depositor; (2) In cases of impeachment; (3) Upon order of a
competent court in cases of bribery or dereliction of duty of public officials; (4) In
cases where the money deposited is the subject matter of the litigation. Cases of
unexplained wealth are similar to cases of bribery or dereliction of duty and no
reason is seen why these two classes of cases cannot be excepted from the rule
making bank deposits confidential. The policy as to one cannot be different from
the policy as to the other. This policy express the motion that a public office is a
public trust and any person who enters upon its discharge does so with the full
knowledge that his life, so far as relevant to his duty, is open to public scrutiny.
WHEREFORE, the decision appealed from is affirmed, without pronouncement as
to costs.
EN BANC
[G.R. No. 135882. June 27, 2001]
LOURDES T. MARQUEZ, in her capacity as Branch Manager, Union Bank
of the Philippines, petitioners, vs. HON. ANIANO A. DESIERTO, (in his
capacity as OMBUDSMAN, Evaluation and Preliminary Investigation
Bureau, Office of the Ombudsman, ANGEL C. MAYOR-ALGO, JR.,
MARY ANN CORPUZ-MANALAC and JOSE T. DE JESUS, JR., in
their capacities as Chairman and Members of the Panel,
respectively, respondents.
DECISION
PARDO, J.:
In the petition at bar, petitioner seeks to--
a. Annul and set aside, for having been issued without or in excess of
jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction,
respondents order dated September 7, 1998 in OMB-0-97-0411, In Re: Motion
to Cite Lourdes T. Marquez for indirect contempt, received by counsel of
September 9, 1998, and their order dated October 14, 1998, denying Marquezs
motion for reconsideration dated September 10, 1998, received by counsel on
October 20, 1998.
b. Prohibit respondents from implementing their order dated October 14, 1998,
in proceeding with the hearing of the motion to cite Marquez for indirect
contempt, through the issuance by this Court of a temporary restraining order
and/or preliminary injunction.[1]
The antecedent facts are as follows:
Sometime in May 1998, petitioner Marquez received an Order from the
Ombudsman Aniano A. Desierto dated April 29, 1998, to produce several bank
documents for purposes of inspection in camera relative to various accounts
maintained at Union Bank of the Philippines, Julia Vargas Branch, where
 28

petitioner is the branch manager. The accounts to be inspected are Account Nos.

011-37270, 240-020718, 245-30317-3 and 245-30318-1, involved in a case
pending with the Ombudsman entitled, Fact-Finding and Intelligence Bureau
(FFIB) v. Amado Lagdameo, et. al. 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, Republic Act No. 6770, otherwise known as the
Ombudsman Act of 1989 and under existing jurisprudence on the matter. It must
be noted that R. A. 6770 especially Section 15 thereof provides, among others, the
following powers, functions and duties of the Ombudsman, to wit:
x x x
(8) Administer oaths, issue subpoena and subpoena duces tecum and take
testimony in any investigation or inquiry, including the power to examine and have
access to bank accounts and records;
(9) Punish for contempt in accordance with the Rules of Court and under the same
procedure and with the same penalties provided therein.
Clearly, the specific provision of R.A. 6770, a later legislation, modifies the law on
the Secrecy of Bank Deposits (R.A. 1405) and places the office of the Ombudsman
in the same footing as the courts of law in this regard.[2]
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, a
respondent in OMB-0-97-0411, pending with the office of the Ombudsman.
It would appear that Mr. George Trivinio, purchased fifty one (51) Managers
Checks (MCs) for a total amount of P272.1 Million at Traders Royal Bank, United
Nations Avenue branch, on May 2 and 3, 1995. Out of the 51 MCs, eleven (11)
MCs
in the amount of P70.6 million, were deposited and credited to an account
maintained at the Union Bank, Julia Vargas Branch.[3]
On May 26, 1998, the FFIB panel met in conference with petitioner Lourdes T.
Marquez and Atty. Fe B. Macalino at the banks main office, Ayala Avenue, Makati
City. The meeting was for the purpose of allowing petitioner and Atty. Macalino to
view the checks furnished by Traders Royal Bank. After convincing themselves of
the veracity of the checks, Atty. Macalino advised Ms. Marquez to comply with
the order of the Ombudsman. Petitioner agreed to an in camera inspection set on
June 3, 1998.[4]
However, on June 4, 1998, 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. The reason forwarded by petitioner was that despite diligent
efforts and from the account numbers presented, we can not identify these accounts
since the checks are issued in cash or bearer. We surmised that these accounts have
long been dormant, hence are not covered by the new account number generated
by the Union Bank system. We therefore have to verify from the Interbank records
archives for the whereabouts of these accounts.[5]
The Ombudsman, responding to the request of the petitioner for time to comply
with the order, stated: firstly, it must be emphasized that Union Bank, Julia Vargas
 29

Branch was the depositary bank of the subject Traders Royal Bank Managers
Checks (MCs), as shown at its dorsal portion and as cleared by the Philippine
Clearing House, not the International Corporate Bank.
Notwithstanding the fact that the checks were payable to cash or bearer,
nonetheless, 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.
Even assuming that the accounts xxx were already classified as dormant
accounts, 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.
And finally, the in camera inspection was already extended twice
from May 13, 1998 to June 3, 1998, thereby giving the bank enough time within
which to sufficiently comply with the order.[6]
Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner to
produce the bank documents relative to the accounts in issue. The order states:
Viewed from the foregoing, your persistent refusal to comply with Ombudsmans
order is unjustified, and is merely intended to delay the investigation of the case.
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.A. 6770. The
same may also constitute obstruction in the lawful exercise of the functions of the
Ombudsman which is punishable under Section 36 of R.A. 6770.[7]
On July 10, 1998, petitioner together with Union Bank of the Philippines, filed
a petition for declaratory relief, prohibition and injunction [8] with the Regional
Trial Court, Makati City, against the Ombudsman.
The petition was intended to clear the rights and duties of petitioner. Thus,
petitioner sought a declaration of her rights from the court due to the clear conflict
between R. A. No. 6770, Section 15 and R. A. No. 1405, Sections 2 and 3.
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.
Moreover, on June 16, 1998, the Ombudsman issued another order stating that
unless petitioner appeared before the FFIB with the documents requested,
petitioner manager would be charged with indirect contempt and obstruction of
justice.
In the meantime,[9] on July 14, 1998, the lower court denied petitioners prayer
for a temporary restraining order and stated thus:
After hearing the arguments of the parties, the court finds the application for a
Temporary Restraining Order to be without merit.
Since the application prays for the restraint of the respondent, in the exercise of his
contempt powers under Section 15 (9) in relation to paragraph (8) of R.A. 6770,
known as The Ombudsman Act of 1989, there is no great or irreparable injury from
which petitioners may suffer, if respondent is not so restrained. Respondent should
he decide to exercise his contempt powers would still have to apply with the court.
x x x Anyone who, without lawful excuse x x x refuses to produce documents for
 30

inspection, 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). Under the present Constitution
only judges may issue warrants, hence, respondent should apply with the Court for
the issuance of the warrant needed for the enforcement of his contempt orders. It is
in these proceedings where petitioners may question the propriety of respondents
exercise of his contempt powers. Petitioners are not therefore left without any
adequate remedy.
The questioned orders were issued with the investigation of the case of Fact-
Finding and Intelligence Bureau vs. Amado Lagdameo, et. el., OMB-0-97-0411,
for violation of R.A. 3019. 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, no writ of injunction may be issued by this Court to delay this
investigation pursuant to Section 14 of the Ombudsman Act of 1989.[10]
On July 20, 1998, petitioner filed a motion for reconsideration based on the
following grounds:
a. Petitioners application for Temporary Restraining Order is not only to
restrain the Ombudsman from exercising his contempt powers, but to
stop him from implementing his Orders dated April 29,1998 and June
16,1998; and
b. The subject matter of the investigation being conducted by the
Ombudsman at petitioners premises is outside his jurisdiction.[11]
On July 23, 1998, the Ombudsman filed a motion to dismiss the petition for
declaratory relief[12] 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, citing
R. A. No. 6770, Sections 14 and 27. On August 7, 1998, the Ombudsman filed an
opposition to petitioners motion for reconsideration dated July 20, 1998.[13]
On August 19, 1998, the lower court denied petitioners motion for
reconsideration,[14] and also the Ombudsmans motion to dismiss.[15]
On August 21, 1998, petitioner received a copy of the motion to cite her for
contempt, filed with the Office of the Ombudsman by Agapito B. Rosales,
Director, Fact Finding and Intelligence Bureau (FFIB).[16]
On August 31, 1998, 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.[17] Petitioner likewise reiterated that
she had no intention to disobey the orders of the Ombudsman. However, she
wanted to be clarified as to how she would comply with the orders without her
breaking any law, particularly R. A. No. 1405.[18]
Respondent Ombudsman panel set the incident for hearing on September 7,
1998.[19] After hearing, the panel issued an order dated September 7, 1998, ordering
petitioner and counsel to appear for a continuation of the hearing of the contempt
charges against her.[20]
On September 10, 1998, petitioner filed with the Ombudsman a motion for
reconsideration of the above order.[21] Her motion was premised on the fact that
 31

there was a pending case with the Regional Trial Court, Makati City, [22]which
would determine whether obeying the orders of the Ombudsman to produce bank
documents would not violate any law.
The FFIB opposed the motion,[23] and on October 14, 1998, the Ombudsman
denied the motion by order the dispositive portion of which reads:
Wherefore, respondent Lourdes T. Marquezs motion for reconsideration is hereby
DENIED, for lack of merit. 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 oclock p.m. at which date and time she should appear
personally to submit her additional evidence. Failure to do so shall be deemed a
waiver thereof.[24]
Hence, the present petition.[25]
The issue is whether petitioner may be cited for indirect contempt for her
failure to produce the documents requested by the Ombudsman. 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. A.
No. 1405).
An examination of the secrecy of bank deposits law (R. A. No. 1405) would
reveal the following exceptions:
1. Where the depositor consents in writing;
2. Impeachment case;
3. By court order in bribery or dereliction of duty cases against public
officials;
4. Deposit is subject of litigation;
5. Sec. 8, R. A. No. 3019, in cases of unexplained wealth as held in the
case of PNB vs. Gancayco[26]
The order of the Ombudsman to produce for in camera inspection the subject
accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on
a pending investigation at the Office of the Ombudsman against Amado
Lagdameo, et. al. for violation of R. A. No. 3019, Sec. 3 (e) and (g) relative to the
Joint Venture Agreement between the Public Estates Authority and AMARI.
We rule that before an in camera inspection may be allowed, there must be a
pending case before a court of competent jurisdiction. Further, the account must be
clearly identified, the inspection limited to the subject matter of the pending case
before the court of competent jurisdiction. The bank personnel and the account
holder must be notified to be present during the inspection, and such inspection
may cover only the account identified in the pending case.
In Union Bank of the Philippines v. Court of Appeals, we held that
Section 2 of the Law on Secrecy of Bank Deposits, as amended,
declares bank deposits to be absolutely confidential except:
(1) In an examination made in the course of a special or general
examination of a bank that is specifically authorized by the Monetary
Board after being satisfied that there is reasonable ground to believe that
a bank fraud or serious irregularity has been or is being committed and
 32

that it is necessary to look into the deposit to establish such fraud or

irregularity,
(2) In an examination made by an independent auditor hired by the bank to
conduct its regular audit provided that the examination is for audit
purposes only and the results thereof shall be for the exclusive use of the
bank,
(3) Upon written permission of the depositor,
(4) In cases of impeachment,
(5) Upon order of a competent court in cases of bribery or dereliction of
duty of public officials, or
(6) In cases where the money deposited or invested is the subject matter of
the litigation[27]
In the case at bar, there is yet no pending litigation before any court of
competent authority. What is existing is an investigation by the office of the
Ombudsman. In short, what the Office of the Ombudsman would wish to do is to
fish for additional evidence to formally charge Amado Lagdameo, et. al., with the
Sandiganbayan. Clearly, there was no pending case in court which would warrant
the opening of the bank account for inspection.
Zones of privacy are recognized and protected in our laws. The Civil Code
provides that "[e]very person shall respect the dignity, personality, 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. 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, and recognizes the privacy of
letters and other private communications. The Revised Penal Code makes a crime
of the violation of secrets by an officer, the revelation of trade and industrial
secrets, and trespass to dwelling. Invasion of privacy is an offense in special laws
like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the
Intellectual Property Code.[28]
IN VIEW WHEREOF, we GRANT the petition. We order the Ombudsman to
cease and desist from requiring Union Bank Manager Lourdes T. Marquez, or
anyone in her place to comply with the order dated October 14, 1998, and similar
orders. No costs.
SO ORDERED.
 
FIRST DIVISION
 
GOVERNMENT SERVICE G.R. No. 189206
INSURANCE SYSTEM,  
Petitioner,  
   
  Present:
   
 33

  CORONA, C.J.,
-versus- Chairperson
  VELASCO, JR.,
  LEONARDO-DE CASTRO,
  DEL CASTILLO, and
  PEREZ, JJ.
THE HONORABLE  
TH
15  DIVISION OF THE COURT  
OF APPEALS and INDUSTRIAL
BANK OF KOREA, TONG YANG  
MERCHANT BANK, HANAREUM  
BANKING CORP., LAND BANK  
OF THE PHILIPPINES,
 
WESTMONT BANK and DOMSAT
HOLDINGS, INC.,  
Respondents. Promulgated:
 
June 8, 2011
x ----------------------------------------------------------------------------------------x
DECISION
 
PEREZ, J.:
 
The subject of this petition for certiorari is the Decision[1] of the Court of
Appeals in CA-G.R. SP No. 82647 allowing the quashal by the Regional Trial
Court (RTC) of Makati of a subpoena for the production of bank ledger. This case
is incident to Civil Case No. 99-1853, which is the main case for collection of sum
of money with damages filed by Industrial Bank of Korea, Tong Yang Merchant
Bank, First Merchant Banking Corporation, Land Bank of the Philippines, and
Westmont Bank (now United Overseas Bank), collectively known as the Banks
against Domsat Holdings, Inc. (Domsat) and the Government Service Insurance
System (GSIS). Said case stemmed from a Loan Agreement,[2] whereby the Banks
agreed to lend United States (U.S.) $11 Million to Domsat for the purpose of
financing the lease and/or purchase of a Gorizon Satellite from the International
Organization of Space Communications (Intersputnik).[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. We quote the terms of the Surety Bond in its entirety.[4]
 
Republic of the Philippines
GOVERNMENT SERVICE INSURANCE SYSTEM
 34

GENERAL INSURANCE FUND

GSIS Headquarters, Financial Center
Roxas Boulevard, Pasay City
 
G(16) GIF Bond 027461
 
S U R E T Y B O N D
 
KNOW ALL MEN BY THESE PRESENTS:
 
That we, DOMSAT HOLDINGS, INC., represented by its
President as PRINCIPAL, and the GOVERNMENT SERVICE
INSURANCE SYSTEM, as Administrator of the GENERAL
INSURANCE FUND, a corporation duly organized and existing
under and by virtue of the laws of the Philippines, with principal
office in the City of Pasay, Metro Manila, Philippines as SURETY,
are held and firmly bound unto the OBLIGEES: LAND BANK OF
THE PHILIPPINES, 7th Floor, Land Bank Bldg. IV. 313 Sen. Gil J.
Puyat Avenue, Makati City; WESTMONT BANK, 411 Quintin
Paredes St., Binondo, Manila: TONG YANG MERCHANT BANK,
185, 2-Ka, Ulchi-ro, Chungk-ku, Seoul, Korea; INDUSTRIAL BANK
OF KOREA, 50, 2-Ga, Ulchi-ro, Chung-gu, Seoul, Korea; and FIRST
MERCHANT BANKING CORPORATION, 199-40, 2-Ga, Euliji-ro,
Jung-gu, Seoul, Korea, in the sum, of US $ ELEVEN MILLION
DOLLARS ($11,000,000.00) for the payment of which sum, well and
truly to be made, we bind ourselves, our heirs, executors,
administrators, successors and assigns, jointly and severally, firmly by
these presents.
 
THE CONDITIONS OF THE OBLIGATION ARE AS
FOLLOWS:
 
WHEREAS, the above bounden PRINCIPAL, on the 12th day
of December, 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, in accordance with the terms and
conditions of the credit package entered into by the
parties.
 
 35

This bond shall remain valid and effective until the loan
including interest has been fully paid and liquidated,
 
a copy of which contract/agreement is hereto attached and made part
hereof;
 
WHEREAS, 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.
NOW, THEREFORE, if the PRINCIPAL shall well and truly perform
and fulfill all the undertakings, covenants, terms, conditions, and
agreements stipulated in said contract/agreements, then this obligation
shall be null and void; otherwise, it shall remain in full force and
effect.
 
WITNESS OUR HANDS AND SEALS this 13 th day of December
1996 at Pasay City, Philippines.
 
 
DOMSAT HOLDINGS, INC GOVERNMENT SERVICE
INSURANCE
Principal SYSTEM
General Insurance Fund
By: By:
CAPT. RODRIGO A. SILVERIO AMALIO A. MALLARI
President Senior Vice-President
General Insurance Group
 
 
When Domsat failed to pay the loan, GSIS refused to comply with its
obligation reasoning that Domsat did not use the loan proceeds for the payment of
rental for the satellite. GSIS alleged that Domsat, with Westmont Bank as the
conduit, transferred the U.S. $11 Million loan proceeds from the Industrial Bank of
Korea to Citibank New York account of Westmont Bank and from there to the
Binondo Branch of Westmont Bank.[5] The Banks filed a complaint before the RTC
of Makati against Domsat and GSIS.
 
In the course of the hearing, GSIS requested for the issuance of a subpoena
duces tecum to the custodian of records of Westmont Bank to produce the
following documents:
 
 36

1.                  Ledger covering the account of DOMSAT Holdings, Inc.

with Westmont Bank (now United Overseas Bank), any and all
documents, records, files, books, deeds, papers, notes and other data
and materials relating to the account or transactions of DOMSAT
Holdings, Inc. with or through the Westmont Bank (now United
Overseas Bank) for the period January 1997 to December 2002, in
his/her direct or indirect possession, custody or control (whether
actual or constructive), whether in his/her capacity as Custodian of
Records or otherwise;

2.                  All applications for cashiers/ managers checks and bank

transfers funded by the account of DOMSAT Holdings, Inc. with or
through the Westmont Bank (now United Overseas Bank) for the
period January 1997 to December 2002, and all other data and
materials covering said applications, in his/her direct or indirect
possession, custody or control (whether actual or constructive),
whether in his/her capacity as Custodian of Records or otherwise;

3.                  Ledger covering the account of Philippine Agila

Satellite, Inc. with Westmont Bank (now United Overseas Bank), any
and all documents, records, files, books, deeds, papers, notes and
other data and materials relating to the account or transactions of
Philippine Agila Satellite, Inc. with or through the Westmont bank
(now United Overseas Bank) for the period January 1997 to
December 2002, in his/her direct or indirect possession, custody or
control (whether actual or constructive), whether in his/her capacity as
Custodian of Records or otherwise;

4.                  All applications for cashiers/managers checks funded by

the account of Philippine Agila Satellite, Inc. with or through the
Westmont Bank (now United Overseas Bank) for the period January
1997 to December 2002, and all other data and materials covering said
applications, in his/her direct or indirect possession, custody or
control (whether actual or constructive), whether in his/her capacity as
Custodian of Records or otherwise.[6]

 
The RTC issued a subpoena decus tecum on 21 November 2002.[7] A motion
to quash was filed by the banks on three grounds: 1) the subpoena is unreasonable,
oppressive and does not establish the relevance of the documents sought; 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.
[8]
 Domsat also joined the banks motion to quash through its
 37

Manifestation/Comment.[9] On 9 April 2003, the RTC issued an Order denying the

motion to quash for lack of merit. We quote the pertinent portion of the Order,
thus:
 
After a careful consideration of the arguments of the parties, the
Court did not find merit in the motion.
 
The serious objection appears to be that the subpoena is
violative of the Law on Secrecy of Bank Deposit, as amended. 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 case at bench is for the collection of a sum of money from
defendants that obtained a loan from the plaintiff. The loan was
secured by defendant GSIS which was the surety. 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 quashal of the
subpoena would deny defendant GSIS its right to prove its defenses.
 
WHEREFORE, for lack of merit the motion is DENIED.[10]
 
On 26 June 2003, another Order was issued by the RTC denying the motion for
reconsideration filed by the banks.[11] On 1 September 2003 however, the trial
court granted the second motion for reconsideration filed by the banks. The
previous subpoenas issued were consequently quashed.[12] The trial court invoked
the ruling in Intengan v. Court of Appeals,[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. The motion for reconsideration
filed by GSIS was denied on 30 December 2003.
 
Hence, these assailed orders are the subject of the petition for certiorari before the
Court of Appeals. GSIS raised the following arguments in support of its petition:
 
I.
Respondent Judge acted with grave abuse of discretion when it
favorably considered respondent banks (second) Motion for
Reconsideration dated July 9, 2003 despite the fact that it did not
contain a notice of hearing and was therefore a mere scrap of paper.
 
II.
Respondent judge capriciously and arbitrarily ignored Section 2 of the
Foreign Currency Deposit Act (RA 6426) in ruling in his Orders dated
 38

September 1 and December 30, 2003 that the US$11,000,000.00

deposit in the account of respondent Domsat in Westmont Bank is
covered by the secrecy of bank deposit.
 
 
III.
Since both respondent banks and respondent Domsat have disclosed
during the trial the US$11,000,000.00 deposit, it is no longer secret
and confidential, and petitioner GSIS right to inquire into what
happened to such deposit can not be suppressed.[14]
 
The Court of Appeals addressed these issues in seriatim.
 
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. 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. 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.
 
The Court of Appeals declared that Domsats deposit in Westmont Bank is covered
by Republic Act No. 6426 or the Bank Secrecy Law. We quote the pertinent
portion of the Decision:
 
It is our considered opinion that Domsats deposit of $11,000,000.00 in
Westmont Bank is covered by the Bank Secrecy Law, as such it
cannot be examined, inquired or looked into without the written
consent of its owner. The ruling in Van Twest vs. Court of
Appeals was rendered during the effectivity of CB Circular No. 960,
Series of 1983, under Sec. 102 thereof, transfer to foreign currency
deposit account or receipt from another foreign currency deposit
account, whether for payment of legitimate obligation or otherwise,
are not eligible for deposit under the System.
 
CB Circular No. 960 has since been superseded by CB Circular 1318
and later by CB Circular 1389. Section 102 of Circular 960 has not
been re-enacted in the later Circulars. What is applicable now is the
decision in Intengan vs. Court of Appeals where the Supreme Court
has ruled that the under R.A. 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. Petitioner,
therefore, had inappropriately invoked the provisions of Central Bank
(CB) Circular Nos. 343 which has already been superseded by more
recently issued CB Circulars. CB Circular 343 requires the surrender
 39

to the banking system of foreign exchange, including proceeds of

foreign borrowings. This requirement, however, can no longer be
found in later circulars.
 
In its Reply to respondent banks comment, petitioner appears to have
conceded that what is applicable in this case is CB Circular
1389. Obviously, under CB 1389, proceeds of foreign borrowings are
no longer required to be surrendered to the banking system.
Undaunted, petitioner now argues that paragraph 2, Section 27 of CB
Circular 1389 is applicable because Domsats $11,000,000.00 loan
from respondent banks was intended to be paid to a foreign supplier
Intersputnik and, therefore, should have been paid directly to
Intersputnik and not deposited into Westmont Bank. The fact that it
was deposited to the local bank Westmont Bank, petitioner claims
violates the circular and makes the deposit lose its confidentiality
status under R.A. 6426. However, 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. The above-said 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.A. 6426.[15]
Anent the third issue, 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. 6426.
 
The Court of Appeals however upheld the issuance of subpoena praying for the
production of applications for cashiers or managers checks by Domsat through
Westmont Bank, 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. The appellate court believed
that the production of these documents does not involve the examination of
Domsats account since it will never be known how much money was deposited
into it or withdrawn therefrom and how much remains therein.
 
On 29 February 2008, the Court of Appeals rendered the assailed Decision, the
decretal portion of which reads:
 
WHEREFORE, the petition is partially GRANTED. Accordingly, the
assailed Order dated December 30, 2003 is hereby modified in that the
quashal of the subpoena for the production of Domsats 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:
 40

 
a)      applications for cashiers or managers checks by respondent
Domsat through Westmont Bank from January 1997 to December
2002;

b)      bank transfers by respondent Domsat through Westmont Bank

from January 1997 to December 2002; 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.[16]
 
GSIS filed a motion for reconsideration which the Court of Appeals denied
on 19 June 2009. Thus, the instant petition ascribing grave abuse of discretion on
the part of the Court of Appeals in ruling that Domsats deposit with Westmont
Bank cannot be examined and in finding that the banks second motion for
reconsideration in Civil Case No. 99-1853 is procedurally acceptable.[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. 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.[18] Certiorari under Rule 65 lies only when there
is no appeal, nor plain, speedy and adequate remedy in the ordinary course of
law. That action is not a substitute for a lost appeal in general; it is not allowed
when a party to a case fails to appeal a judgment to the proper forum. [19] Where an
appeal is available, certiorari will not prosper even if the ground therefor is grave
abuse of discretion. Accordingly, when a party adopts an improper remedy, his
petition may be dismissed outright.[20]
 
Yet, even if this procedural infirmity is discarded for the broader interest of
justice, the petition sorely lacks merit.
 
GSIS insists that Domsats deposit with Westmont Bank can be examined
and inquired into. It anchored its argument on Republic Act No. 1405 or the Law
on Secrecy of Bank Deposits, which allows the disclosure of bank deposits in cases
where the money deposited is the subject matter of the litigation. GSIS asserts that
the subject matter of the litigation is the U.S. $11 Million obtained by Domsat
from the Banks to supposedly finance the lease of a Russian satellite from
 41

Intersputnik. Whether or not it should be held liable as a surety for the principal

amount of U.S. $11 Million, GSIS contends, is contingent upon whether Domsat
indeed utilized the amount to lease a Russian satellite as agreed in the Surety Bond
Agreement. Hence, GSIS argues that the whereabouts of the U.S. $11 Million is
the subject matter of the case and the disclosure of bank deposits relating to the
U.S. $11 Million should be allowed.
 
GSIS also contends that the concerted refusal of Domsat and the banks to
divulge the whereabouts of the U.S. $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.
 
Lastly, 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, Rule 15 of the Rules of Civil
Procedure.[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.
 
The Banks maintain that Republic Act No. 1405 is not the applicable law in
the instant case because the Domsat deposit is a foreign currency deposit, thus
covered by Republic Act No. 6426.Under said law, only the consent of the
depositor shall serve as the exception for the disclosure of his/her deposit.
 
The Banks counter the arguments of GSIS as a mere rehash of its previous
arguments before the Court of Appeals. 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.
 
It appears that only GSIS appealed the ruling of the Court of Appeals
pertaining to the quashal of the subpoena for the production of Domsats bank
ledger with Westmont Bank. Since neither Domsat nor the Banks interposed an
appeal from the other portions of the decision, particularly for the production of
applications for cashiers or managers checks by Domsat through Westmont Bank,
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, the latter became final and executory.
 
GSIS invokes Republic Act No. 1405 to justify the issuance of
the subpoena while the banks cite Republic Act No. 6426 to oppose it. The core
issue is which of the two laws should apply in the instant case.
 
 42

Republic Act No. 1405 was enacted in 1955. Section 2 thereof was first
amended by Presidential Decree No. 1792 in 1981 and further amended by
Republic Act No. 7653 in 1993. It now reads:
 
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 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 8 of Republic Act No. 6426, which was enacted in 1974, and
amended by Presidential Decree No. 1035 and later by Presidential Decree No.
1246, provides:
 
Section 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 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.)
 
 
On the one hand, Republic Act No. 1405 provides for four (4) exceptions
when records of deposits may be disclosed. These are under any of the following
instances: a) upon written permission of the depositor, (b) in cases of
impeachment, (c) upon order of a competent court in the case of bribery or
dereliction of duty of public officials or, (d) when the money deposited or invested
is the subject matter of the litigation, and e) in cases of violation of the Anti-
Money Laundering Act (AMLA), the Anti-Money Laundering Council (AMLC)
may inquire into a bank account upon order of any competent court. [22] On the
other hand, the lone exception to the non-disclosure of foreign currency deposits,
under Republic Act No. 6426, is disclosure upon the written permission of the
depositor.
 
 43

These two laws both support the confidentiality of bank deposits. There is
no conflict between them. Republic Act No. 1405 was enacted for the purpose of
giving encouragement to the people to deposit their money in banking institutions
and to discourage private hoarding so that the same may be properly utilized by
banks in authorized loans to assist in the economic development of the country.
[23]
 It covers all bank deposits in the Philippines and no distinction was made
between domestic and foreign deposits. Thus, Republic Act No. 1405 is considered
a law of general application.On the other hand, Republic Act No. 6426 was
intended to encourage deposits from foreign lenders and investors. [24] It is a special
law designed especially for foreign currency deposits in the Philippines. A general
law does not nullify a specific or special law. Generalia specialibus non derogant.
[25]
 Therefore, it is beyond cavil that Republic Act No. 6426 applies in this case.
 
Intengan v. Court of Appeals affirmed the above-cited principle and categorically
declared that for foreign currency deposits, such as U.S. dollar deposits, the
applicable law is Republic Act No. 6426.
 
In said case, Citibank filed an action against its officers for persuading their
clients to transfer their dollar deposits to competitor banks. Bank records, including
dollar deposits of petitioners, purporting to establish the deception practiced by the
officers, were annexed to the complaint. Petitioners now complained that Citibank
violated Republic Act No. 1405. This Court ruled that since the accounts in
question are U.S. dollar deposits, the applicable law therefore is not Republic Act
No. 1405 but Republic Act No. 6426.
 
The above pronouncement was reiterated in China Banking Corporation v.
Court of Appeals,[26] where respondent accused his daughter of stealing his dollar
deposits with Citibank. The latter allegedly received the checks from Citibank and
deposited them to her account in China Bank. The subject checks were presented
in evidence. A subpoena was issued to employees of China Bank to testify on these
checks. China Bank argued that the Citibank dollar checks with both respondent
and/or her daughter as payees, deposited with China Bank, may not be looked into
under the law on secrecy of foreign currency deposits. This Court highlighted the
exception to the non-disclosure of foreign currency deposits, i.e., in the case of a
written permission of the depositor, and ruled that respondent, as owner of the
funds unlawfully taken and which are undisputably now deposited with China
Bank, he has the right to inquire into the said deposits.
 
Applying Section 8 of Republic Act No. 6426, absent the written permission
from Domsat, Westmont Bank cannot be legally compelled to disclose the bank
deposits of Domsat, otherwise, it might expose itself to criminal liability under the
same act.[27]
 
The basis for the application of subpoena is to prove that the loan intended
for Domsat by the Banks and guaranteed by GSIS, was diverted to a purpose other
than that stated in the surety bond. The Banks, however, argue that GSIS is in fact
 44

liable to them for the proper applications of the loan proceeds and not vice-
versa. 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.
 
The third issue raised by GSIS was properly addressed by the appellate
court. The appellate court maintained that the judge may, in the exercise of his
sound discretion, grant the second motion for reconsideration despite its being pro
forma. The appellate court correctly relied on precedents where this Court set aside
technicality in favor of substantive justice. Furthermore, 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, thus it can be considered a
waiver of the defect.
 
WHEREFORE, the petition for certiorari is DISMISSED. The Decision
dated 29 February 2008 and 19 June 2009 Resolution of the Court of Appeals are
hereby AFFIRMED.
 
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
 
G.R. No. 106253 February 10, 1994
ALEXANDER VAN TWEST and THE HON. SALVADOR P. DE GUZMAN,
in his capacity as Presiding Judge of the Regional Trial Court of Makati,
Branch 142, petitioners, 
vs.
THE HON. COURT OF APPEALS and GLORIA ANACLETO, respondents.
Martinez and Perez Law Offices for petitioner Alexander Van Twest.
Salonga, Hernandez & Allado for private respondent.

FELICIANO, J.:
On March 1990, petitioner Alexander Van Twest filed a complaint against private
respondent Gloria Anacleto and International Corporate Bank ("Interbank") for
recovery of a sum of money with prayer for a writ of preliminary injunction, before
Branch 142 of the Regional Trial Court of Makati, where the action was docketed
as Civil Case No. 
90-659.1
Petitioner alleged in his complaint that in 1989, he and private respondent opened a
joint foreign currency savings account with Interbank to hold funds which
"belonged entirely and exclusively" to petitioner, to "facilitate the funding of
certain business undertakings" of both of them and which funds were to be
 45

"temporarily (held) in trust" by private respondent, who "shall turnover the same to
plaintiff upon demand." Petitioner further alleged that withdrawals from the
account were always made through their joint signatures; that when his business
relationship with private respondent turned sour, the latter unilaterally closed their
joint account, withdrew the remaining balance of Deutschmark (DM) 269,777.37
and placed the money in her own personal account with the same bank.2 Petitioner
thus sought an injunctive writ to prevent private respondent from withdrawing the
money at any time and thereby defeat petitioner's main and pending action in Civil
Case No. 90-659.3
After issuing a temporary restraining order upon the filing of the complaint, the
trial court conducted hearings on four (4) successive session dates on the
application for a writ of preliminary injunction, examining petitioner and his two
(2) witnesses, as well as private respondent. The hearings culminated in the
issuance of an order dated 28 March 1990, enjoining private respondent and
Interbank from effecting and allowing withdrawals from the foreign currency
deposit account until further orders from the trial court.4
The preliminary injunction order of the Regional Trial Court was, however,
annulled on petition for certiorari filed by private respondent before the Court of
Appeals in a Decision dated 19 July 1991.5
Petitioner's motion for reconsideration having been denied by the Court of
Appeals, he is now before this Court on Petition for Review, seeking reinstatement
of the writ of preliminary injunction issued by the trial court.6
In a Resolution dated 12 August 1992, the Court motu proprio issued an indefinite
temporary restraining order enjoining the Court of Appeals from enforcing its
questioned Decision and Resolution.7 The parties subsequently complied with the
requirement of the Court to submit responsive pleadings in amplification of their
respective positions regarding the soundness of the Court of Appeals' Decision
under review.8 The Court then resolved to give due course to the Petition and
required the parties to submit their memoranda. The parties did.9
Deliberating on the present Petition for Review, the Court considers that the Court
of Appeals was in reversible
Deliberating on the present Petition for Review, the Court considers that the Court
of Appeals was in reversible error in annulling the writ of preliminary injunction
issued in petitioner's favor by the Regional Trial Court.
In ruling that petitioner was not entitled to the provisional remedy of preliminary
injunction during the pendency of Civil Case No. 90-659, the Court of Appeals
said:
Upon the facts of the complaint filed, we ruled that the writ of
preliminary injunction issued by the lower court is improper and
without basis. It is clear from the complaint that the subject foreign
currency was deposited in a savings account under the name of private
respondent (herein petitioner) "and/or" herein petitioner (now private
respondent). By virtue of this "and/or" agreement, petitioner is
authorized to withdraw from the account on the strength of her
signature alone. The allegation of private respondent that the said
foreign currency solely belonged to him loses its meaning in the face
 46

of the fact that the amount was deposited in a joint fund and had
become, under the eyes of the law, property jointly owned by
petitioner and private respondent. Furthermore, by private
respondent's own admission, said foreign currency deposit was to be
used to fund the business venture of private respondent and petitioner.
The evidence on record shows that petitioner was going to withdraw
the subject foreign currency deposit so that it may be used as
collateral for peso loan, which, in turn, would be used to pay-off the
obligations incurred by both petitioner and private respondent in the
course of their business venture. In fact, an action to collect the
amount of P2,998,500.00 representing the unpaid obligation of private
respondent and petitioner to one of their creditors, had been filed in
the Regional Trial Court of Makati on 29 March 1990.
In short, private respondent had failed to show that he has a right to
stop petitioner from withdrawing the foreign currency deposit under
their joint "and/or" account. And it was error for respondent Judge to
have issued the Order dated 29 injunction.  10 (Emphasis supplied)
Petitioner's principal contention is that the public respondent misappreciated the
facts of the case; he did not seek injunction to restrain private respondent from
withdrawing the funds from their joint account, since private respondent indeed
enjoyed a semblance of right to do so and the withdrawal had already become
a fait accompli. Rather, petitioner seeks to restrain private respondent from
effecting withdrawals from her personal account, into which she had transferred
the foreign currency, in order not to defeat his main action seeking recovery of
said fund. 11
The Court must agree with petitioner. The Court of Appeals evidently
misapprehended the facts of this case, a relatively exceptional situation warranting
the Court to rule of factual issues in a petition for review, preparatory to the
resolution of the legal issues posed in this proceeding. 12
It would be untenable for petitioner to try and restrain private respondent from
withdrawing money from their joint account, an accomplished fact which can no
longer be enjoined. 13 Petitioner, and the trial court, correctly directed the writ
applied for against private respondent's personal savings account because the
object of the writ is to preserve the status quo, the last, actual, peaceable and
uncontested status that preceded the pending controversy. 14 An injunctive writ
would prevent private respondent from withdrawing from her personal account at
will, or at least without the prior knowledge and consent of the trial court and
petitioner, thereby approximating the situation obtaining when the money subject
of the main action was previously deposited in a joint savings account, as well as
ensuring that the continuation of petitioner's main suit for recovery of the sum of
money would be worthwhile.
There is also a more fundamental reason why issuance of an injunctive writ was
warranted in this case. The record of the preliminary hearings conducted by the
trial court on the application for a writ of injunction indicates that petitioner had
shown a clear legal right over the fund, notwithstanding the circumstance that the
foreign currency was initially placed in a joint savings account, such that
petitioner's right must be protected from the prospective acts of the private
 47

respondent, following the fund's transfer to her personal

account. 15
First, as found by the Court of Appeals, private respondent intended to use the
Deutschmark as collateral for a peso loan which she would use to
pay-off the debts incurred by her faltering joint venture with petitioner. It should
be noted that private respondent's declared object does not articulate a claim
of ownership over the foreign exchange funds.
Second, although private respondent specifically denied in her answer petitioner's
averment in his complaint that the money is owned by him, 16 she did make an
affirmative allegation in her answer that petitioner "agreed to finance the
project." 17 One cannot finance a project without owning the funds with which the
financing is to be undertaken. She also declared, in her testimony during the
preliminary hearings on petitioner's application for a writ of preliminary injunction,
that petitioner undertook to remit his cash investment in her name and that she was
the industrial partner in he joint venture:
xxx xxx xxx
(Atty. Racela; private respondent's counsel)
Q: How about your finances, the proposed investment
share of Mr. Alexander Van Twest?
A: We agreed that Alexander Van Twest would remit his
cash investment in my name and that he will open an
"and/or" savings account and placed (sic) there my name.
xxx xxx xxx
(Court:)
Q: Now, Madam witness, may we ask what was your
agreement insofar as this plan of yours with Mr.
Alexander Van Twest to undertake (a) leather industry
project?
A: As far as the professional services is concerned, I am
the industrial partner of Mr. Alexander Van Twest.
xxx xxx xxx 18
(Emphasis supplied)
Petitioner submitted, during the same hearings, documentary evidence indicating
he had directed the transfer to the Philippines of large amounts of Deutschmark,
enough to account for the funds subject of this controversy, from foreign banks to
Interbank between November 1989 and February 1990. 19
And third, private respondent's own counsel admitted that the money subject of the
inward remittances above-noted belonged to petitioner:
xxx xxx xxx
Atty. Racela:
A: Insofar as the holdings (sic) of the plaintiff, under the
custody of the NBI, your Honor, those are matters
extraneous to the proceedings. Now, insofar as the
 48

injunction is concerned, your Honor, the evidence

presented by the plaintiff clearly resolve only on the issue
of the savings account, your Honor, opened by the
plaintiff and the defendant, your Honor and there is no
need for him to prove the ownership of the account.
Insofar as we are concerned, whether or not defendant
can withdraw on the savings account which they opened
jointly, your Honor.
A: Will the defendant stipulate that all the inward
remittances from abroad and the money belong to the
plaintiff?
Atty. Racela:
A: We are willing to stipulate, your Honor.
Atty. Racela: (counsel of petitioner)
A: May we make of record that the defense counsel —
the all the money (which) came in the same savings
account, subject of the complaint came from the plaintiff.
Atty. Racela:
A: Inward remittances came from abroad in pursuit of
the joint agreement between [plaintiff and] defendant,
your Honor.
Atty. Racela:
A: He would also prove the agreement between the
plaintiff and the defendant with respect to the deposit and
withdrawal of the same account, your Honor.
Court:
A: Is there a written agreement?
Atty. Reyes:
A: There is none, your Honor. The agreement was based
on trust. We need to present the plaintiff himself to
testify on the trust agreement.
Atty. Racela:
A: We admit that the proceeds came from foreign
sources, from the plaintiff, your Honor, by way of
investment in pursuit of a joint venture agreement with
the defendant, your Honor.
xxx xxx xxx 20
(Emphasis supplied)
To the mind of the Court, the evidence of record sufficiently rebut the perception
of the Court of Appeals that the foreign funds previously deposited in the joint
savings account were in effect owned in common by the petitioner and private
respondent, such that petitioner could validly oppose private respondent's attempt
to dispose of such funds by obtaining a writ of preliminary injunction. It does not
 49

appear indubitable that private respondent was a co-owner of the funds who could
unilaterally control the application thereof in payment of partnership debts. Indeed,
petitioner has affirmatively shown that the Deutschmark originated from him alone
and that he alone was owner thereof. By depositing those funds in a joint 'and/or'
account, petitioner did not convey ownership thereof to private respondent and
private respondent could not convert those funds to her personal and exclusive
ownership and use.
We believe and so hold that the trial court did not act with grave abuse of
discretion in issuing the injunctive writ and that the Court of Appeals committed
reversible error in concluding otherwise; private respondent was heard and had
exhaustively presented all her arguments in opposition to the writ of preliminary
injunction. 21
In a bid to buttress the Decision of the Court of Appeals, private respondent
contends for the first time in this proceeding that the personal foreign currency
deposit account she is maintaining is exempt from processes issued by the courts,
pursuant to Section 8 of R.A. 6426 as amended by P. D. 1246, the statute in force
on 26 February 1990, the date she withdrew the foreign exchange fund from her
joint account with petitioner and transferred the same to her personal
account. 22 Private respondent adds that the Court has plenary authority to
disregard the procedural defect attending private respondent's new contention;
since this case cannot be resolved adequately without a ruling on the nature of the
exemption from court processes granted by the statute. 23
Private respondent's contentions do not persuade. Her belated invocation of the
provisions of R.A. No. 6426 as amended violates basic procedural due process by
interposing a new matter before this Court the consideration of which would
further delay a final disposition on the propriety of petitioner of petitioner's
application for an injunctive writ. 24
On a substantive, the Court holds that the privileges extended by the statute cited
by private respondent are actually enjoyed, and are invocable only, by the
petitioner, both because private respondent's transactions fall outside the ambit of
the statute, and because petitioner is the owner of the foreign exchange fund
subject of this case. This conclusion is anchored on the consistent and
contemporaneous administrative construction by the Central Bank of the basic
statute, as manifested in the relevant circulars issued by it in implementation of
that law, which are entitled to great respect by the courts. 25
Section 8 of R.A. No. 6426 (the Foreign Currency Deposit Act), as amended by
P.D. No. 1246, which is still in force, provides:
Sec. 8. Secretary 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 shall be
 50

exempt from attachment, garnishment, or any other order or process

of any court, legislative body, government agency or any
administrative body whatsoever.  26 (Emphasis supplied)
Section one hundred-two of Circular No. 960, Series of 1983, provides in relevant
part:
xxx xxx xxx
Sec. 102. Foreign currency funds ineligible for deposits.
a. Foreign exchange purchased from authorized agent
banks in accordance with existing regulations such as
excess travel funds; unspent financial assistance of
dependents abroad of Philippine residents; foreign
exchange acquired from any resident persons, firm,
association and corporation; and transfers to foreign
currency deposit account or receipt from another foreign
currency deposit account, whether for payment of
legitimate obligation or otherwise, are not eligible for
deposit under the System.
xxx xxx xxx 27
(Emphasis supplied)
This Circular was in force at the time private respondent undertook her questioned
transactions; thus, such local transfer from the original joint foreign currency
account to another (personal) foreign currency account, was not an eligible foreign
currency deposit within the coverage of R.A. No. 6426 and not entitled to the
benefit of the confidentiality provisions of R.A. No. 6426.
Circular No. 960 was superseded by Circular No. 1318, Series of 1992, which
did not reenact and continue the administrative provision above-mentioned
(Section 102). Nevertheless, Section seventy-four, Chapter seven of Circular No.
1318, which deals with the foreign currency deposit system, provides in relevant
part;
Section 74. Definition of Terms. As used in this Chapter, the
following terms shall have the meaning indicated unless the context
clearly indicates otherwise:
xxx xxx xxx
The definition of such other terms used in this Chapter shall be
consistent with the definition of terms used under the Chapter on
Offshore Banking System.  28 (Emphasis supplied)
Section forty-nine, Chapter five of the same Circular, dealing with the Offshore
Banking System, stated in part:
Section 49. Definition of Terms. . . .
xxx xxx xxx
d. "Deposit" shall refer to funds in foreign currencies which
are accepted and held by an OBU business,with the obligation to
return an equivalent amount to the owner thereof, with or without
interest;
 51

xxx xxx xxx 29

(Emphasis supplied)
In other words, although transfers from one foreign currency deposit account to
another foreign currency deposit account in the Philippines are now eligible
deposits under the Central Bank's Foreign Currency Deposit System, private
respondent is still not entitled to the confidentiality provisions of the relevant
circulars. For, as noted earlier, private respondent is not the owner of such foreign
currency funds and her personal deposit account is not, under Section 49 of
Circular No. 1318, protected by this Circular.
Circular No. 1318 was superseded for a brief period by Circular No. 1353, Series
of 1992, which in turn was superseded by Circular No. 1389, Series of 1993.
Circular No. 1389 is the current implementing issuance for R.A. No. 6426; the
relevant provisions (Sections 74 and 49) of Circular No. 1318 have been
incorporated en toto in the current Circular. 30
ACCORDINGLY, the Petition for Review is hereby GRANTED. The Decision
and Resolution of the Court of Appeals dated 19 July 1991 and 9 July 1992,
respectively, are hereby REVERSED and SET ASIDE. The temporary restraining
order issued by the Court dated 12 August 1992, enjoining the public respondent
from dissolving the writ of preliminary injunction issued by the Regional Trial
Court through its case is hereby REMANDED to the trial court for continuation of
the main proceeding in Civil Case No. 90-659. No pronouncement as to costs.
SO ORDERED.
 

FIRST DIVISION

CHINA BANKING   G.R. No. 140687

CORPORATION,
 
Petitioner,
   
 
Present:
 
 
- versus -
PANGANIBAN, C.J.*
 
  YNARES-SANTIAGO,
 
(Working Chairperson)
THE HONORABLE COURT OF
 52

APPEALS and JOSE JOSEPH AUSTRIA-MARTINEZ,

GOTIANUY as substituted by CALLEJO, SR., and
ELIZABETH GOTIANUY LO,
CHICO-NAZARIO, JJ.
Respondents.
 
Promulgated:
 
December 18, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
 
 
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 Dees 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;
 
 53

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 court[3] 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.
 
 54

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 oclock 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 Certiorari[6] with the Court of
Appeals. In a Decision[7] 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 textumIt 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
 55

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:
 
I
 
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 ELSES 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
 56

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
 57

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.
 58

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 Gotianuy[17] 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.)
 59

 
 
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.
 
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
 
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.:
 60

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.
 61

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).
 62

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
 63

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
 64

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
 65

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)
 66

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
 67

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
 68

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
 69

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
 70

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.
 71

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,
 72

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
 73

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.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 71479 October 18, 1990
MELLON BANK, N.A., petitioner, 
vs.
HON. CELSO L. MAGSINO, in his capacity as Presiding Judge of Branch
CLIX of the Regional Trial Court at Pasig; MELCHOR JAVIER, JR.,
VICTORIA JAVIER; HEIRS OF HONORIO POBLADOR, JR., namely:
Elsa Alunan Poblador, Honorio Poblador III, Rafael Poblador, Manuel
Poblador, Ma. Regina Poblador, Ma. Concepcion Poblador & Ma. Dolores
Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO JHOCSON, JR.;
JOSE MARQUEZ; ROBERTO GARINO; ELNOR INVESTMENT CO.,
INC.; PARAMOUNT FINANCE CORPORATION; RAFAEL
CABALLERO; and TRI-ARC INVESTMENT and MANAGEMENT CO.,
INC. respondents.
 74

FERNAN, C.J.:
The issue in the instant special civil action of certiorari is whether or not, by virtue
of the principle of election of remedies, an action filed in California, U.S.A., to
recover real property located therein and to constitute a constructive trust on said
property precludes the filing in our jurisdiction of an action to recover the purchase
price of said real property.
On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First
National Bank of Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila
through the Prudential Bank. Accordingly, the First National Bank requested the
petitioner, Mellon Bank, to effect the transfer. Unfortunately the wire sent by
Mellon Bank to Manufacturers Hanover Bank, a correspondent of Prudential Bank,
indicated the amount transferred as "US$1,000,000.00" instead of US$1,000.00.
Hence Manufacturers Hanover Bank transferred one million dollars less bank
charges of $6.30 to the Prudential Bank for the account of Victoria Javier.
On June 3, 1977, Javier opened a new dollar account (No. 343) in the Prudential
Bank and deposited $999,943.70. Immediately their, Victoria Javier and her
husband, Melchor Javier, Jr., made withdrawals from the account, deposited them
in several banks only to withdraw them later in an apparent plan to conceal,
"launder" and dissipate the erroneously sent amount.
On June 14, 1977, Javier withdrew $475,000 from account No. 343 and converted
it into eight cashier's checks made out to the following: (a) F.C. Hagedorn & Co.,
Inc., two cheeks for the total amount of P1,000,000; (b) Elnor Investment Co., Inc.,
two checks for P1,000,000; (c) Paramount Finance Corporation, two checks for
P1,000,000; and (d) M. Javier, Jr., two checks for P496,000. The first six checks
were delivered to Jose Marquez and Honorio Poblador, Jr.
It appears that Melchor Javier, Jr. had requested Jose Marquez, a realtor, to look
for properties for sale in the United States. Marquez offered a 160-acre lot in the
Mojave desert in California City which was owned by Honorio Poblador, Jr.
Javier, without having seen the property, agreed to buy it for P3,236,800
(US$437,405) although it was actually appraised at around $38,500. Consequently,
as Poblador's agent, Marquez executed in Makati a deed of absolute sale in favor of
the Javiers and had the document notarized in Manila before an associate of
Poblador. Marquez executed another deed of sale indicating receipt of the purchase
price and sent the deed to the Kern County Registrar in California for registration.
Inasmuch as Poblador had requested that the purchase price should not be paid
directly to him, the payment of P3,000,000 was coursed through Elnor Investment
Co., Inc., allegedly Poblador's personal holding company; Paramount Finance,
allegedly headed by Poblador's brother, and F.C. Hagedorn, allegedly a stock
brokerage with extensive dealings with Poblador. The payment was made through
the aforementioned six cashier's checks while the balance of P236,000 was paid in
cash by Javier who did not even ask for a receipt.
The two checks totalling P1,000,000 was delivered by Poblador to F.C. Hagedorn
with specific instructions to purchase Atlas, SMC and Philex shares. The four
checks for P2,000,000 with Elnor Investment and Paramount Finance as payees
were delivered to the latter to purchase "bearer" notes.
 75

Meanwhile, in July, 1977, Mellon Bank filed a complaint docketed as No. 148056
in the Superior Court of California, County of Kern, against Melchor Javier, Jane
Doe Javier, Honorio Poblador, Jrn, and Does I through V. In its first amended
complaint to impose constructive trust dated July 14, 1977, 1 Mellon Bank alleged
that it had mistakenly and inadvertently cause the transfer of the sum of
$999,000.00 to Jane Doe Javier; that it believes that the defendants had withdrawn
said funds; that "the defendants and each of them have used a portion of said funds
to purchase real property located in Kern County, California"; and that because of
defendants' knowledge of Mellon Bank's mistake and inadvertence and their use of
the funds to purchase the property, they and "each of them are involuntary or
constructive trustees of the real property and of any profits therefrom, with a duty
to convey the same to plaintiff forthwith." It prayed that the defendants and each of
them be declared as holders of the property in trust for the plaintiff; that defendants
be compelled to transfer legal title and possession of the property to the plaintiff;
that defendants be made to pay the costs of the suit, and that other reliefs be
granted them.
On July 29, 1977, Mellon Bank also filed in the Court of First Instance of Rizal,
Branch X, a complaint against the Javier spouses, Honorio Poblador, Jr., Domingo
L. Jhocson, Jr., Jose Marquez, Roberto Gariño, Elnor Investment Co., Inc., F.C.
Hagedorn & Co., Inc. and Paramount Finance Corporation. After its amendment,
Rafael Caballero and Tri-Arc Investment & Management Company, Inc. were also
named defendants. 2
The amended and supplemental complaint alleged the facts set forth above and
added that Roberto Gariño, chief accountant of Prudential Bank, and who was the
reference of Mrs. Ventosa's dollar remittances to Victoria Javier, immediately
informed the Javiers of the receipt of US$1,000,000.00; that knowing the financial
circumstances of Mrs. Ventosa and the fact that a mistake had been committed, the
Javiers, with undue haste, took unlawful advantage of the mistake, withdrew the
whole amount and transferred the same to a "343 dollar account"; that, aided and
abetted by Poblador and Domingo L. Jhocson, the Javiers "compounded and
completed the conversion" of the funds by withdrawing from the account dollars or
pesos equivalent to US $975,000; that by force of law, the Javiers had been
constituted trustees of an implied trust for the benefit of Mellon Bank with a clear
duty to return to said bank the moneys mistakenly paid to them; that, upon request
of Mellon Bank and Manufacturers Hanover Bank, Prudential Bank informed the
Javiers of the erroneous transmittal of one million dollars first orally and later by
letter-demand; that conferences between the representatives of the Javiers, led by
Jhocson and Poblador, in the latter's capacity as legal and financial counsel, and
representatives of Mellon Bank, proved futile as the Javiers claimed that most of
the moneys had been irretrievably spent; that the Javiers could only return the
amount if the Mellon Bank should agree to make an absolute quitclaim and waiver
of future rights against them, and that in a scheme to conceal and dissipate the
funds, through the active participation of Jose Marquez, the Javiers bought the
California property of Poblador.
It further alleged that trust fund moneys totalling P3,000,000.00 were made
payable to Hagedorn Paramount and Elnor; that Hagedorn on instructions of
Poblador, purchased shares of stock at a stock exchange for P1,000,000.00 but
later, it hastily sold said shares at a loss of approximately P150,000.00 to the
 76

prejudice of the plaintiff; that proceeds of the sale were deposited by Hagedorn in
the name of Poblador and/or the law office of Poblador, Nazareno, Azada,
Tomacruz and Paredes; that dividends declared on the shares were delivered by
Hagedorn to Caballero after the complaint had been filed and thereafter, Caballero
deposited the dividends in his personal account; that after receiving the
P1,000,000.00 trust money, Paramount issued promissory notes upon maturity of
which Paramount released the amount to unknown persons; that Elnor also
invested P1,000,000.00 in Paramount for which the latter also issued promissory
notes; that after the filing of the complaint, counsel for plaintiff requested
Paramount not to release the amount after maturity; that in evident bad faith, Elnor
transferred the non-negotiable Paramount promissory notes to Tri-Arc. that when
the notes matured, Paramount delivered the proceeds of P1,000,000.00 to Tri-Arc;
that Poblador knew or should have known that the attorney's fees he received from
the Javiers came from the trust funds; and that despite formal demands even after
the filing of the complaint, the defendants refused to return the trust funds which
they continued concealing and dissipating.
It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and Gariño be ordered to
account for and pay jointly and severally unto the plaintiff US$999,000.00 plus
increments, additions, fruits and interests earned by the funds from receipt thereof
until fully paid; (b) the other defendants be ordered to account for and pay unto the
plaintiff jointly and severally with the Javiers to the extent of the amounts which
each of them may have received directly or indirectly from the US$999,000.00
plus increments, additions, fruits and interests; (c) Marquez be held jointly and
severally liable with Poblador for the amount received by the latter for the sale of
the 160-acre lot in California City; and (d) defendants be likewise held liable
jointly and severally for attomey's fees and litigation expenses plus exemplary
damages.
In due course, the defendants filed their answers and hearing of the case ensued. In
his testimony, Jose Marquez stated that Prudential Bank and Trust Company
checks Nos. 2530 and 2531 in the respective amounts of P100,000 and P900,000
payable to F. C. Hagedorn were delivered to him by Melchor Javier, Jr. as partial
consideration for the sale of Poblador's property in California. After receiving the
checks, Hagedorn purchased shares of Atlas Mining, Philex, Marcopper and San
Miguel Corporation for Account No. 3000, which, according to Fred Hagedorn
belonged to the law office of Poblador. 3
F.C. Hagedorn & Co., Inc. then sold the shares for P874,490.75 as evidenced by
HSBC check No. 339736 for P400,000 and HSBC check No. 339737 for
P474,490.75 payable to "cash". Mellon Bank traced these checks to Account 2825-
1 of the Philippine Veterans Bank in the name of Cipriano Azada, Poblador's law
partner and counsel to the Javiers. 4
An employee of the Philippine Veterans Bank thereafter introduced the specimen
signature cards for Account No. 2825-1 thereby confirming Azada's ownership of
the account. Defendants objected to this testimony on the grounds of Azada's
absence, the confidentiality of the bank account, and the best evidence rule. The
court overruled the objection. Another employee of the Philippine Veterans Bank
then presented the ledger card for Account No. 2825-1, a check deposit slip and a
 77

daily report of returned items. The defendants objected but they were again
overruled by the court.
Mellon Bank then subpoenaed Erlinda Baylosis of the Philippine Veterans Bank to
show that Azada deposited HSBC checks No. 339736 and 339737 amounting to
P874,490.75 in his personal current account with said bank. It also subpoenaed
Pilologo Red, Jr. of Hongkong & Shanghai Banking Corporation to prove that said
amount was returned by Azada to Hagedorn.
The testimonies of these witnesses were objected to by the defense on the grounds
of res inter alios acta, immateriality, irrelevancy and confidentiality. To resolve
the matter, the court ordered the parties to submit memoranda. The defendants'
objections were also discussed at the hearing on July 13, 1982. For the first time,
Poblador's counsel raised the matter of "election of remedies." 5
At the July 20, 1982 hearing, the lower court, then presided by Judge Eficio
Acosta, conditionally allowed the testimonies of Baylosis and Red. Baylosis
afffirmed that Azada deposited checks Nos. 339736 and 339737 in the total
amount of P874,490.75 in his personal account with the Philippine Veterans Bank
but almost simultaneously, Azada issued his PVB check for the same amount in
favor of Hagedorn Consequently, Azada's check initially bounced. For his part,
Red testified that Azada's check for P874,490.75 was received by the Hongkong &
Shanghai Banking Corporation and credited to the account of Hagedorn .
The defendants then moved to strike off the testimonies of Baylosis and Red from
the record. Defendant Paramount Finance Corporation, which is not a party to the
California case, thereafter filed its memorandum raising the matter of "election of
remedies". It averred that inasmuch as the Mellon Bank had filed in California an
action to impose constructive trust on the California property and to recover the
same, Mellon Bank can no longer try to regain the purchase price of the same
property through Civil Case No. 26899. The other defendants adopted Paramount's
stand.
After Mellon Bank filed its reply to the memorandum of Paramount, on September
10, 1982, Judge Acosta issued a resolution ordering that the testimonies of
Baylosis and Red and the documents they testified on, which were conditionally
allowed, be stricken from the records. 6 Judge Acosta explained:
After a judicious evaluation of the arguments of the parties the Court
is of the view that in cases where money held in trust was diverted by
the trustee, under the "rule of trust pursuit" the beneficiary "may elect
whether to accept the trust estate in its new form or hold the trustee
responsible for it in its original condition" (Lathrop vs. Hampton, 31
Cal. 17; Zodos vs. Marefalos 48 Idaho 291; Bahle vs. Hasselbrach 64
NW Eq. 334, 51 Sections 508-76 Am Jur. 2d p. 475), and that "an
election to pursue one remedy waives and bars pursuit of any
inconsistent remedy"(76 Am Jur. 2d S253). The instant complaint
among others is for the recovery of the purchase price of the Kern
property as held in trust for the plaintiff while in the California case
the plaintiff maintains that the Kern property is held in trust for the
plaintiff, which positions are inconsistent with each other. Neither can
the plaintiff now abandon his complaint for the recovery of the Kern
property and pursue his complaint for the recovery of the purchase
 78

price of said property for "if he has first sought to follow the res, the
plaintiff cannot thereafter hold the trustee personally responsible" and
"when once there has been an election to do one of two things, you
cannot retract it and do the other thing. The election once made is
finally made." (Fowler vs. Bowvery Savings Bank 113 N.Y. 450, 21
N.E. 172, 4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280, 23, Abb. N. Cos.
133065 C. J. p. 980 Note 32).
The fact that the California case has been stayed pending
determination of the instant case only means that should this case be
dismissed, the California case can proceed to its final determination.
Furthermore, when the plaintiff filed the California case for the
transfer of legal title and possession of the Kern property to the
plaintiff it in effect ratified the transaction for "by taking the proceeds
or product of a wrongful transfer of trust property or funds, the
beneficiary ratifies the transaction" (Board of Commissioner vs.
Strawn [CA6 Ohio] 157 F. 49, 76 Am Jur. 2d Section 253).
Consequently the purchase price of the California property received
by defendant Poblador from Javier is no longer the proper subject
matter of litigation and the movement and disposition of the purchase
price is therefore within the scope of the absolutely confidential nature
of bank deposits as provided by Sec. 2, R.A. 1405 as amended by PD
No. 1792.
Mellon Bank moved for reconsideration, alleging that said order prevented the
presentation of evidence on the purchase price of the California property; that the
California case cannot be considered a waiver of the pursuit of the purchase price
as even if said case was filed fifteen days prior to the filing of the original
complaint in this case, except for the Javiers, no other defendants raised in their
answers the affirmative defense of the filing of the California case; that after the
amendment of the complaint, none of the defendants raised the matter of "election
of remedies" in their answers; that realizing this procedural error, Paramount
sought the amendment of its answer to reflect the "defence" of "election of
remedies"; that, disregarding its previous orders allowing evidence and testimonies
on Account No. 2825-1, the court made a turnabout and ruled that the testimonies
on said account were irrelevant and confidential under Republic Act No. 1405; that
Philippine law and jurisprudence does not require the election of remedies for they
favor availment of all remedies; that even United States jurisprudence frowns upon
election of remedies if it will lead to an inequitable result; that, as held by this
Court in Radiowealth vs. Javier, 7 there can be no binding election of remedies
before the decision on the merits is had; that until Mellon Bank gets full recovery
of the trust moneys, any contention of election of remedy is premature, and that,
the purchase price being the subject of litigation, inquiring into its movement,
including its deposit in banks, is allowed under Republic Act No. 1405.
Defendants filed their respective comments and oppositions to the motion for
reconsideration. In its reply, the Mellon Bank presented proof to the effect that in
the California case, defendants filed motions to stake out the cross-complaint of
Mellon Bank, for summary judgment and to stay or dismiss the action on the
ground of inconvenient forum but the first two motions and the motion to dismiss
 79

were denied "without prejudice to renew upon determination of the Philippine

action." The motion to stay proceedings was "granted until determination of the
Philippine action." 8
On October 28, 1983, the lower court, through Judge Acosta, denied the motion for
reconsideration and ordered the continuation of the hearing (Rollo, p. 182). The
plaintiff filed a motion for the reconsideration of both the September 10, 1982 and
October 28, 1983 orders. After the parties had filed comments, opposition and
reply, the court, through Judge Celso L. Magsino, denied Mellon Bank's second
motion for reconsideration on the ground that it was "prescribed by the 1983
Interim Rules of Court" in an order dated July 9, 1985. 9
The court ruled that the determination of the relevancy of the testimonies of
Baylosis and Red was "premised directly and principally" on whether or not
Mellon Bank could still recover the purchase price of the California property
notwithstanding the filing of the case in California to recover title and possession
of the said property. After quoting the resolution of September 10, 1982, the Court
ruled that it was a "final order or a definitive judgment with respect to the claim of
plaintiff for the recovery" of the purchase price of the California property. It stated:
The adjudication in the Order of September 10, 1982 and the Order of
October 28, 1983, which has the effect of declaring that plaintiff has
no cause of action against the defendants for the recovery of the
proceeds of the sale of Kern property in the amount of Three Million
Three Hundred Fifty Thousand Pesos (P3,500,000.00 [sic]) for having
filed a complaint for the recovery of the Kern property in the Superior
Court of California, County of Kern is a final and definitive
disposition of the claim of the plaintiff to recover in the instant action
the proceeds of sale of said property against the defendants. The issue
of "election of remedy" by the plaintiff was lengthily and thoroughly
discussed and argued by the parties before the rendition of the
resolution of September 10, 1982, and in the motion for
reconsideration and oppositions thereto before its resolution in the
Order of October 28, 1983. Such issue is a substantive one as it refers
to the existence of plaintiffs cause of action to recover the proceeds of
the sale of the Kern property in this action, and that issue was
presented to the Court as if a motion to dismiss or a preliminary
hearing of an affirmative defense on the ground that plaintiff has no
cause of action, and was resolved against plaintiff in the Order of
September 10, 1982, after a full hearing of all the parties. Said Order
of September 10, 1982 has the effect of putting an end to the
controversy between the parties as to the right of plaintiff to claim or
recover the proceeds of the sale of the Kern property from the
defendants. It is therefore an adjudication upon the merits. 10
Hence, Mellon Bank filed the instant petition for certiorari claiming that the
resolution of September 10, 1982 and the orders of October 28, 1983 and July 9,
1985 are void for being unlawful and oppressive exercises of legal authority,
subversive of the fair administration of justice, and in excess of jurisdiction. The
petition is founded on its allegations that: (a) the resolution of September 10, 1982
is interlocutory as it does not dispose of Civil Case No. 26899 completely: (b) the
 80

evidence stricken from the records is relevant on the basis of the allegations of the
amended and supplemental complaint, and (c) the doctrine of election of remedies,
which has long been declared obsolete in the United States, is not applicable in this
case.
With the exception of the Javiers, all the respondents filed their respective
comments on the petition. Having failed to file said comment, the Javiers' counsel
of record, Azada, Tomacruz & Cacanindin, 11 was required to show cause why
disciplinary action should not be taken against it. And, having also failed to show
cause, it was fined P300.
In his motion for reconsideration of the resolution imposing said fine, Cipriano
Azada alleged that in Civil Case No. 26899, the Javiers were indeed represented by
the law firm of Poblador, Azada, Tomacruz & Cacanindin but he was never the
lawyer of the Javiers' in his personal capacity; that after the death of Honorio
Poblador, Jr., he had withdrawn from the partnership; that he is the counsel of the
Administratrix of the Estate of Honorio Poblador, Jr. for which he had filed a
comment, and that should the Court still require him to file comment for the
Javiers despite the lack of client-lawyer relationship, he would adopt the comment
he had filed for the said Administratrix. 12
In its effort to locate the Javiers so that their side could be heard, we required the
petitioner to furnish us with the Javiers' address as well as the name and address of
their counsel. 13 In compliance therewith, counsel for petitioner manifested that the
Javiers had two known addresses in San Juan, Metro Manila and in Sampaloc,
Manila; that since their conviction in Crim. Case No. CCC-VII 2369-P.C. of the
Pasig Regional Trial Court, the Javiers had gone into hiding and warrants for their
arrest still remain unserved; 14 that the Javiers' counsel of record in Civil Case No.
26899 is Atty. Cipriano Azada; that the same counsel appeared for the Javiers in
Criminal Case No. 39851 of the Pasig Regional Trial Court which is a tax evasion
case filed by the Republic of the Philippines, and that during the hearings of the
civil and tax evasion cases against the Javiers, Atty. Cipriano Azada, Jr.
represented them. 15
Inasmuch as copies of the resolution requiring comment on the petition and the
petition itself addressed to Melchor Javier were returned with the notations
"moved" and "deceased", the Court required that said copies be sent to Mrs. Javier
herself and that petitioner should inform the Court of the veracity of Javier's
death. 16 A copy of the resolution addressed to Mrs. Javier was returned also with
the notation "deceased." 17
Counsel for petitioner accordingly informed the Court that he learned that the
Javiers had fled the country and that he had no way of verifying whether Melchor
Javier had indeed died. 18
In view of these circumstances, the Javiers' comment on the petition shall be
dispensed with as the Court deems the pleadings filed by the parties sufficient
bases for resolving this case. The Javiers shall be served copies of this decision in
accordance with Section 6, Rule 13 of the Rules of Court by delivering said copies
to the clerk of court of the lower court, with proof of failure of both personal
service and service by mail.
We hold that the lower court gravely abused its discretion in ruling that the
resolution of September 10, 1982 is a "final and definitive disposition" of
 81

petitioner's claim for the purchase price of the Kern property. The resolution is
interlocutory and means no more than what it states in its dispositive portion-the
testimonies of Baylosis and Red and the documents they testified on, should be
stricken from the record.
That the resolution discusses the common-law principle of election of remedies, a
subject matter which shall be dealt with later, is beside the point. It is interlocutory
because the issue resolved therein is merely the admissibility of the plaintiff's
evidence. 19 As such, it does not dispose of the case completely but leaves
something more to be done upon its merits. 20 There are things left undone in Civil
Case No. 26899 after the issuance of the September 10, 1982 resolution not only
because of its explicit dispositive portion but also due to the fact that even until
now, the case is still pending and being heard. 21
Furthermore, the lower court's holding in its July 9, 1985 order that petitioner's
second motion for reconsideration is proscribed by the 1983 Interim Rules of Court
which disallows such motion on a final order or judgment, should be rectified. As
explained above, the resolution of September 10, 1982 is not a final one. It also
contains conclusions on procedural matters which, if left unchecked, would
prejudice petitioner's substantive rights.
In effect, therefore, the July 9, 1985 order is a shortcut disposition of Civil Case
No. 26899 in total disregard of petitioner's right to a thorough ventilation of its
claims. By putting a premium on procedural technicalities over the resolution of
the merits of the case, the lower court rode roughshod over the basic judicial tenet
that litigations should, as much as possible, be decided on their merits and not on
technicalities. 22 The trial court's patent grave abuse of discretion therefore forces
us to exercise supervisory authority to correct its errors notwithstanding the fact
that ordinarily, this Court would not entertain a petition for certiorari questioning
the legality and validity of an interlocutory order. 23
Respondents' principal objection to the testimonies of Baylosis and Red is their
alleged irrelevance to the issues raised in Civil Case No. 26899. The fallacy of this
objection comes to fore upon a scrutiny of the complaint. Petitioner's theory therein
is that after the Javiers had maliciously appropriated unto themselves $999,000, the
other private respondents conspired and participated in the concealment and
dissipation of said amount. The testimonies of Baylosis and Red are therefore
needed to establish the scheme to hide the erroneously sent amount.
Private respondents' protestations that to allow the questioned testimonies to
remain on record would be in violation of the provisions of Republic Act No. 1405
on the secrecy of bank deposits, is unfounded. Section 2 of said law allows the
disclosure of bank deposits in cases where the money deposited is the subject
matter of the litigation. 24Inasmuch as Civil Case No. 26899 is aimed at recovering
the amount converted by the Javiers for their own benefit, necessarily, an inquiry
into the whereabouts of the illegally acquired amount extends to whatever is
concealed by being held or recorded in the name of persons other than the one
responsible for the illegal acquisition. 25
We view respondents' reliance on the procedural principle of election of remedies
as part of their ploy to terminate Civil Case No. 26899 prematurely. With the
exception of the Javiers, respondents failed to raise it as a defense in their answers
and therefore, by virtue of Section 2, Rule 9 of the Rules of Court, such defense is
 82

deemed waived. 26Notwithstanding its lengthy and thorough discussion during the

hearing and in pleadings subsequent to the answers, the issue of election of
remedies has not, contrary to the lower court's assertion, been elevated to a
"substantive one." Having been waived as a defense, it cannot be treated as if it has
been raised in a motion to dismiss based on the nonexistence of a cause of action.
Moreover, granting that the defense was properly raised, it is inapplicable in this
case. In its broad sense, election of remedies refers to the choice by a party to an
action of one of two or more coexisting remedial rights, where several such rights
arise out of the same facts, but the term has been generally limited to a choice by a
party between inconsistent remedial rights, the assertion of one being necessarily
repugnant to, or a repudiation of, the other. In its technical and more restricted
sense, election of remedies is the adoption of one of two or more coexisting
remedies, with the effect of precluding a resort to the others. 27
As a technical rule of procedure, the purpose of the doctrine of election of
remedies is not to prevent recourse to any remedy, but to prevent double redress
for a single wrong. 28 It is regarded as an application of the law of estoppel, upon
the theory that a party cannot, in the assertion of his right occupy inconsistent
positions which form the basis of his respective remedies. However, when a certain
state of facts under the law entitles a party to alternative remedies, both founded
upon the Identical state of facts, these remedies are not considered inconsistent
remedies. In such case, the invocation of one remedy is not an election which will
bar the other, unless the suit upon the remedy first invoked shall reach the stage of
final adjudication or unless by the invocation of the remedy first sought to be
enforced, the plaintiff shall have gained an advantage thereby or caused detriment
or change of situation to the other. 29 It must be pointed out that ordinarily, election
of remedies is not made until the judicial proceedings has gone to judgment on the
merits. 30
Consonant with these rulings, this Court, through Justice J.B.L. Reyes, opined that
while some American authorities hold that the mere initiation of proceedings
constitutes a binding choice of remedies that precludes pursuit of alternative
courses, the better rule is that no binding election occurs before a decision on the
merits is had or a detriment to the other party supervenes. 31 This is because the
principle of election of remedies is discordant with the modern procedural concepts
embodied in the Code of Civil Procedure which Permits a party to seek
inconsistent remedies in his claim for relief without being required to elect
between them at the pleading stage of the litigation. 32
It should be noted that the remedies pursued in the California case and in Civil
Case No. 26899 are not exactly repugnant or inconsistent with each other. If ever,
they are merely alternative in view of the inclusion of parties in the latter case who
are not named defendants in the former. The causes of action, although they all
stem from the erroneous transmittal of dollars, are distinct as shown by the
complaints lengthily set out above. The bar of an election of remedies does not
apply to the assertion of distinct causes of action against different persons arising
out of independent transactions. 33
As correctly pointed out by the petitioner, the doctrine of election of remedies is
not favored in the United States for being harsh. 34 Its application with regard to
two cases filed in two different jurisdictions is also circumscribed by jurisprudence
 83

on abatement of suits. Thus, in Brooks Erection Co. v. William R. Montgomery &

Associates, Inc., 35 it is held:
The pendency of an action in the courts of one state or country is not a
bar to the institution of another action between the same parties and
for the same cause of action in a court of another state or country, nor
is it the duty of the court in which the latter action is brought to stay
the same pending a determination of the earlier action, even though
the court in which the earlier action is brought has jurisdiction
sufficient to dispose of the entire controversy. Nevertheless,
sometimes stated as a matter of comity not of right, it is usual for the
court in which the later action is brought to stay proceedings under
such circumstances until the earlier action is determined.
However, in view of the fact that the California court wherein the case for recovery
of the Kern property was first filed against the Javiers had stayed proceedings
therein until after the termination of Civil Case No. 26899, the court below can do
no less than expedite the disposition of said case.
We cannot dispose of this case without condemning in the strongest terms possible
the acts of chicanery so apparent from the records. The respective liabilities of the
respondents are still being determined by the court below. We must warn,
however, against the use of technicalities and obstructive tactics to delay a just
settlement of this case. The taking advantage of the petitioner's mistake to gain
sudden and undeserved wealth is marked by circumstances so brazen and shocking
that any further delay will reflect poorly on the kind of justice our courts dispense.
The possible involvement of lawyers in this sorry scheme stamps a black mark on
the legal profession. The Integrated Bar of the Philippines (IBP) must be made
aware of the ostensible participation, if not instigation, in the spiriting away of the
missing funds. The IBP must take the proper action at the appropriate time against
all lawyers involved in any misdeeds arising from this case.
WHEREFORE, the resolution of September 10, 1982 and the orders of October 28,
1982 and July 9, 1985 are hereby annulled. The lower court is ordered to proceed
with dispatch in the disposition of Civil case No. 26899, considering that thirteen
(13) years have gone by since the original erroneous remittance.
Service of this decision on the Javier spouses shall be in accordance with Section
6, Rule 13 of the Rules of Court. A copy of this decision shall be served on the
Integrated Bar of the Philippines.
The decision is immediately executory. Costs against private respondents.
SO ORDERED.
epublic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-56429 May 28, 1988
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, 
vs.
 84

HON. FIDEL PURISIMA, etc., and HON. VICENTE ERICTA and JOSE
DEL FIERO, etc., respondents.

NARVASA, J.:
The verdict in this special civil action of certiorari turns upon the question of
whether or not the "Law on Secrecy of Bank Deposits" 1 precludes production by
subpoena duces tecum of bank records of transactions by or in the names of the
wife, children and friends of a special agent of the Bureau of Customs, accused
before the Tanodbayan of having allegedly acquired property manifestly out of
proportion to his salary and other lawful income, in violation of the "Anti-Graft
and Corrupt Practices Act." 2
The Customs special agent involved is Manuel Caturla, and the accusation against
him was filed by the Bureau of Internal Revenue. 3 In the course of the preliminary
investigation thereof, the Tanodbayan issued a subpoena duces tecum to the Banco
Filipino Savings & Mortgage Bank, commanding its representative to appear at a
specified time at the Office of the Tanodbayan and furnish the latter with duly
certified copies of the records in all its branches and extension offices, of the loans,
savings and time deposits and other banking transactions, dating back to 1969,
appearing in the names of Caturla, his wife, Purita Caturla, their children —
Manuel, Jr., Marilyn and Michael — and/or Pedro Escuyos. 4
Caturla moved to quash the subpoena duces tecum 5 arguing that compliance
therewith would result in a violation of Sections 2 and 3 of the Law on Secrecy of
Bank Deposits. Then Tanodbayan Vicente Ericta not only denied the motion for
lack of merit, and directed compliance with the subpoena, 6 but also expanded its
scope through a second subpoena duces tecum,7 this time requiring production by
Banco Filipino of the bank records in all its branches and extension offices, of
Siargao Agro-Industrial Corporation, Pedro Escuyos or his wife, Emeterio
Escuyos, Purita Caturla, Lucia Escuyos or her husband, Romeo Escuyos, Emerson
Escuyos, Fraterno Caturla, Amparo Montilla, Cesar Caturla, Manuel Caturla or his
children, Manuel Jr., Marilyn and Michael, LTD Pub/Restaurant, and Jose Buo or
his wife, Evelyn. Two other subpoena of substantially the same tenor as the second
were released by the Tanodbayan's Office. 8 The last required obedience under
sanction of contempt.
The Banco Filipino Savings & Mortgage Bank, hereafter referred to simply as BF
Bank, took over from Caturla in the effort to nullify the subpoenae. It filed a
complaint for declaratory relief with the Court of First Instance of Manila, 9which
was assigned by raffle to the sala of respondent Judge Fidel Purisima. BF Bank
prayed for a judicial declaration as to whether its compliance with the
subpoenae duces tecum would constitute an infringement of the provisions of
Sections 2 and 3 of R.A. No. 1405 in relation to Section 8 of R.A. No. 3019. It also
asked that pending final resolution of the question, the Tanodbayan be
provisionally restrained from exacting compliance with the subpoenae.
Respondent Judge Purisima issued an Order denying for lack of merit the
application by BF Bank for a preliminary injunction and/or restraining order. 10
This Order is now impugned in the instant certiorari action instituted by BF Bank
before this Court, as having been issued with grave abuse of discretion, amounting
 85

to lack of jurisdiction. It is the bank's theory that the order declining to grant that
remedy operated as a premature adjudication of the very issue raised in the
declaratory suit, and as judicial sufferance of a transgression of the bank deposits
statute, and so constituted grievous error correctible by certiorari. It further argues
that subpoenae in question are in the nature of "fishing expeditions" or "general
warrants" since they authorize indiscriminate inquiry into bank records; that,
assuming that such an inquiry is allowed as regards public officials under
investigation for a violation of the Anti-Graft & Corrupt Practices Act, it is
constitutionally impermissible with respect to private individuals or public officials
not under investigation on a charge of violating said Act; and that while
prosecution of offenses should not, as a rule, be enjoined, there are recognized
exceptions to the principle one of which is here present, i.e. to avoid multiplicity of
suits, similar subpoenae having been directed to other banks as well.
It is difficult to see how the refusal by the Court a quo to issue the temporary
restraining order applied for by the petitioner — in other words, its disagreement
with the petitioner's advocated theory — could be deemed so whimsical,
capricious, despotic or oppressive an act as to constitute grave abuse of discretion.
Obviously, the writ of certiorari cannot issue simply on a showing of disagreement
between a party and the court upon some material factual or legal issue. There
must be a reasonable demonstration that a party's contentions are so clearly correct,
or the court's ruling thereon so clearly wrong, to justify the issuance of a writ
of certiorari. No such demonstration exists in this case. Indeed, for aught that the
record shows, the Court's refusal to grant the application for a restraining order
was, in the premises, licit and proper, or its validity, fairly debatable, at the very
least. Be this as it may, on the merits the petitioner cannot succeed. Its declared
theory is untenable.
The provisions of R.A. No. 1405 subject of BF's declaratory action, read 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 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 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
The other provision involved in the declaratory action is Section 8 of R.A. No.
3019. It reads:
Sec. 8. Dismissal due to unexplained wealth. — If in accordance with
the provisions of Republic Act Numbered One thousand three
hundred seventy-nine, a public official has been found to have
acquired during his incumbency, whether in his name or in the name
 86

of other persons, an amount of property and/or money manifestly out

of proportion to this salary and to his other lawful income, that fact
shall be a ground for dismissal or removal. Properties in the name of
the spouse and unmarried children of such public official may be
taken into consideration, when their acquisition through legitimate
means cannot be satisfactorily shown. Bank deposits shall be taken
into consideration in the enforcement of this section, notwithstanding
any prohibition of law to the contrary.
In our decision in Philippine National Bank v. Gancayco, rendered on September
30, 1966, 11 we upheld the judgment of the Trial Court "sustaining the power of the
defendants (special prosecutors of the Department of Justice) to compel the
disclosure (by PNB) of bank accounts of ACCFA Administrator Jimenez (then
under investigation for unexplained wealth), .. (it being ruled) that, by enacting
section 8 of the Anti-Graft and Corrupt Practices Act, Congress clearly intended to
provide an additional ground for the examination of bank deposits .. (for) without
such provision, the .. prosecutors would be hampered if not altogether frustrated in
the prosection of those charged with having acquired unexplained wealth while in
public office. 12 We ourselves declared in said case that 13—
.. while Republic Act No. 1405 provides that bank deposits are
"absolutely confidential .. and [therefore] may not be examined,
inquired or looked into," except in those cases enumerated therein, the
Anti-Graft Law directs in mandatory terms that bank deposits "shall
be taken into consideration in the enforcement of this
section, notwithstanding any provision of law to the contrary." The
only conclusion possible is that section 8 of the Anti-Graft Law is
intended to amend section 2 of Republic Act No. 1405 by providing
an additional exception to the rule against the disclosure of bank
desposits.
xxx xxx xxx
... Cases of unexplained wealth 14 are similar to cases of bribery or
dereliction of duty 15 and no reason is seen why these two classes of
cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy
as to the other. This policy expresses the notion that a public office is
a public trust and any person who enters upon its discharge does so
with the full knowledge that his life, so far as relevant to his duty, is
open to public scrutiny.
The inquiry into illegally acquired property — or property NOT "legitimately
acquired" — extends to cases where such property is concealed by being held by or
recorded in the name of other persons. This proposition is made clear by R.A. No.
3019 which quite categorically states that the term, "legitimately acquired property
of a public officer or employee shall not include .. property unlawfully acquired by
the respondent, but its ownership is concealed by its being recorded in the name of,
or held by, respondent's spouse, ascendants, descendants, relatives or any other
persons." 16
To sustain the petitioner's theory, and restrict the inquiry only to property held by
or in the name of the government official or employee, or his spouse and
 87

unmarried children is unwarranted in the light of the provisions of the statutes in

question, and would make available to persons in government who illegally
acquire property an easy and fool-proof means of evading investigation and
prosecution; all they would have to do would be to simply place the property in the
possession or name of persons other than their spouse and unmarried children. This
is an absurdity that we will not ascribe to the lawmakers.
The power of the Tanodbayan to issue subpoenae ad testificandcum and
subpoenae duces tecum at the time in question is not disputed, and at any rate does
not admit of doubt. 17 The subpoenae issued by him, will be sustained against the
petitioner's impugnation.
WHEREFORE, the petition for certiorari is DISMISSED, with costs against
petitioner.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 84526             January 28, 1991

PHILIPPINE COMMERCIAL & INDUSTRIAL BANK and JOSE

HENARES, petitioners, 
vs.
THE HON. COURT OF APPEALS and MARINDUQUE MINING AND
INDUSTRIAL CORPORATION, respondents.

Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioners.

Rexes V. Alejano for private respondent.

SARMIENTO, J.:

This is a petition for review on certiorari which assails both the resolution1 dated

June 27, 1988 of the Court of Appeals2 which reconsidered and set aside its earlier
decisions3 dated February 26, 1988 reversing the decision4 of the trial court and the
subsequent resolution5 dated August 3, 1988 which denied the petitioners' motion
for reconsideration. The dispositive portion of the resolution in question dated June
27, 1988 reads as follows:

x x x           x x x          x x x

For the reasons above adduced, 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, 1985 of the Regional
Trial Court of Manila, Branch 11, in Civil Case No. 103100 entitled
"Marinduque Mining and Industrial Corporation (MMIC) vs. Philippine
Commercial and Industrial Bank, et al."6

The undisputed facts7 as gathered from the findings of the trial court are as follows:
 88

The instant case originated from an action8 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 P205,853.00 against the
private respondent.

On April 26, 1976, the said Commission issued a writ of execution directing the
Deputy Sheriff of Negros Occidental, one Damian Rojas, to enforce the
aforementioned judgment. The pertinent portion of the said writ reads as follows:

x x x           x x x          x x x

Further, you are to collect from same respondent the total amount of
P205,853.00 as their backwage (sic) for twelve (12) months and then turn
over said amount to this commission for further disposition. In case you fail
to collect said amount in cash, you are to cause the satisfaction of the same
on the movable or immovable properties of the respondent not exempt from
execution. (Exhs. G, G-1 and G-3, also Exh. 3; Emphasis supplied).9

Accordingly, on April 28, 1976, the aforenamed deputy sheriff went to the mining
site of the private respondent and served the writ of execution on the persons
concerned, but nothing seemed to have happened thereat.

Thereafter, the Sheriff prepared on his own a Notice of Garnishment dated April
29, 1976 addressed to six (6) banks, all located in Bacolod City, one of which
being the petitioner herein, directing the bank concerned to immediately issue a
check in the name of the Deputy Provincial Sheriff of Negros Occidental in an
amount equivalent to the amount of the garnishment and that proper receipt would
be issued therefor.

Incidentally, the house lawyer of the private respondent, Atty. Rexes V. Alejano,
acting on a tip regarding the existence of the said notice of garnishment,
communicated with the bank manager, the petitioner Jose Henares, verbally at first
at around 2:00 o'clock in the afternoon of that day, April 29, 1976, and later
confirmed in a formal letter received by the petitioner Henares at about 5:00
o'clock of that same day, requesting the withholding of any release of the deposit
of the private respondent with the petitioner bank.

Meanwhile, at about 9:30 in the morning of April 29, 1976, the deputy sheriff
presented the Notice of Garnishment and the Writ of Execution attached therewith
to the petitioner Henares and later in the afternoon, demanded from the latter,
under pain of contempt, the release of the deposit of the private respondent.

The petitioner Henares, upon knowing from the Acting Provincial Sheriff that
there was no restraining order from the National Labor Relations Commission and
on the favorable advice of the bank's legal counsel, issued a debit memo for the full
balance of the private respondent's account with the petitioner bank. Thereafter, he
issued a manager's check in the name of the Deputy Provincial Sheriff of Negros
Occidental for the amount of P37,466.18, which was the exact balance of the
private respondent's account as of that day.
 89

On the following day, April 30, 1976, at about 1:00 o'clock in the afternoon, the
deputy sheriff returned to the bank in order to encash the check but before the
actual encashment, the petitioner Henares once again inquired about any existing
restraining order from the NLRC and upon being told that there was none, the
latter allowed the said encashment.

On July 6, 1976, the private respondent, then plaintiff, filed a complaint before the
Regional Trial Court of Manila, Branch II, against the petitioners and Damian
Rojas, the Deputy Provincial Sheriff of Negros Occidental, then defendants,
alleging that the former's current deposit with the petitioner bank was levied upon,
garnished, and with undue haste unlawfully allowed to be withdrawn, and
notwithstanding the alleged unauthorized disclosure of the said current deposit and
unlawful release thereof, the latter have failed and refused to restore the amount of
P37,466.18 to the former's account despite repeated demands.

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, including
a cross-claim of the former against the latter. The third-party complaint of the
petitioners against the forty-nine (49) laborers in the NLRC case was, however,
dismissed for failure of the sheriff to serve summons upon the latter.

On January 23, 1982, after several postponements, the pre-trial was finally
conducted and terminated with only the petitioners and the private respondent
participating, through their respective counsel.

On January 15, 1985, the trial court rendered its judgment in favor of the private
respondent, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and

against the three (3) defendants by ordering the latter to pay, jointly and
severally, the plaintiff the following amounts, to wit:

(a) the sum of P37,466.18, with interest thereon at the rate of 12% per
annum from date of first demand on April 29, 1976 until the amount shall
have been fully and completely restored and paid;

(b) the sum of P10,000.00 as attorney's fees.

Defendants are ordered to pay, jointly and severally, double costs.10

x x x           x x x          x x x

On appeal, the respondent court in a decision dated February 26, 1988, first
reversed the said judgment of the lower court, but however, on the motion for
reconsideration filed by the private respondent, subsequently annulled and set aside
its said decision in the resolution dated June 27, 1988. On August 3, 1988, the
respondent court denied the petitioner's own motion for reconsideration.

Hence, this petition.

 90

The petitioners raise two issues,11 to wit:

1. Whether or not petitioners had legal basis in releasing the garnished

deposit of private respondent to the sheriff.

2. Whether or not petitioners violated Republic Act No. 1405, otherwise

known as the Secrecy of Bank Deposits Act, when they allowed the sheriff
to garnish the deposit of private respondent.

The petition is impressed with merit.

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, 1988, held that the
petitioners were liable, in this wise:

In the case at bar, defendant-appellant PCIB, despite vigorous objections

from plaintiff-appellee, 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, thus:

In the second place, 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, or one in whose hands property is attached or

garnished, is universally regarded as charged with its legal custody
pending outcome of the attachment or garnishment unless, by local
statute and practice, he is permitted to surrender or pay the garnished
property or funds into court, to the attaching officer, or to a receiver or
trustee appointed to receive them. (5 Am. Jur. 14)

The effect of the garnishment, therefore, was to require the Philippine

Trust Company, holder of the funds of the Luzon Surety Co., to set
aside said amount from the funds of the Luzon Surety Co., and keep
the same subject to the final orders of the Court. In the case at bar
there was never an order to deliver the full amount garnished to the
plaintiff-appellee; all that was ordered to be delivered after the
judgment had become final was the amount found by the Court of
Appeals to be due. The balance of the amount garnished, therefore,
remained all the time in the possession of the bank as part of the funds
of the Luzon Surety Co. although the same could not be disposed of
by the owner. (De la Rama vs. Villarosa, et al., L-17927, June 29,
1963, 8 SCRA 413, 418-419; Emphasis supplied).12
 91

The above-mentioned contention citing De la Rama is not exactly on all fours with

the facts of the case at bar. In De la Rama, the amount garnished was not actually
taken possession of by the sheriff, even from the time of garnishment, 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.

On the other hand, 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.

On the contrary, 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, belie any allegation of undue and indecent haste
in the release of the said deposit in question.

The cases more in point to the present controversy are the recent decisions
in Engineering Construction Inc. v. National Power Corporation13 and Rizal
Commercial Banking Corporation (RCBC) vs. De Castro14 where the Court
absolved both garnishees, MERALCO and RCBC, respectively, from any liability
for their prompt compliance in the release of garnished funds,

The rationale behind Engineering Construction, Inc. and which was quoted

in Rizal Commercial Banking Corporation is persuasive

x x x           x x x          x x x

But while partial restitution is warranted in favor of NPC, we find that the
Appellate Court erred in not absolving MERALCO, the garnishee, from its
obligations to NPC with respect to the payment to ECI of P1,114,543.23,
thus in effect subjecting MERALCO to double liability. MERALCO should
not have been faulted for its prompt obedience to a writ of garnishment.
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, 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.

Section 8, Rule 57 of the Rules of Court provides:

Effect of attachment of debts and credits. — 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, or owing any debts to the same, at the time of service upon
them of a copy of the order of attachment and notice as provided in
the last preceding section, shall be liable to the applicant of the
amount of such credits, debts or other property, until the attachment
be discharged, or any judgment recovered by him be satisfied, unless
 92

such property be delivered or transferred, or such debts be paid, to the

clerk, sheriff or other proper officer of the court issuing the
attachment.1âwphi1

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. Under the above-cited rule, the garnishee [the third person] is
obliged to deliver the credits, etc. 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,
. . . if such property be delivered or transferred, . . . to the clerk, sheriff, or
other officer of the court in which the action is pending."

Applying the foregoing to the case at bar, MERALCO, as garnishee, 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, should be released from all responsibilities over such amount after
delivery thereof to the sheriff. The reason for the rule is self evident. To
expose garnishees to risks for obeying court orders and processes would
only undermine the administration of justice. (Emphasis ours.)15

x x x           x x x          x x x

Moreover, 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, the said deposit being considered a credit in favor of the depositor
against the bank.16 We therefore see no application for Sec. 39, Rule 39 of the
Rules of Court invoked by the private respondent as to necessitate the
"examination of the debtor of the judgment debtor."17

Rather, we find the immediate release of the funds by the petitioners on the
strength of the notice of garnishment and writ of execution, whose issuance, absent
any patent defect, enjoys the presumption of regularity, sufficiently supported by
Sec. 41, Rule 39 of the Rules of Court which reads:

x x x           x x x          x x x

After an execution against property has issued, a person indebted to the

judgment debtor, 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, 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.

x x x           x x x          x x x

Finally, we likewise take cognizance of the subject of the judgment sought to be

enforced in the writ of execution in question, namely, laborers' backwages. We
believe that the petitioners should rather be commended for having acted with
urgent dispatch despite attempts by the private respondent, as with so many
scheming employers, to frustrate or unjustifiably delay the prompt satisfaction of
 93

final judgments which often result in undue prejudice to the legitimate claims of
labor.

With regard to the second issue, we find no violation whatsoever by the petitioners
of Republic Act No. 1405, otherwise known as the Secrecy of Bank Deposits Act.
The Court in China Banking Corporation vs. Ortega18 had the occasion to dispose
of this issue when it stated, thus:

It is clear from the discussion of the conference committee report on Senate

Bill No. 351 and House Bill No. 3977, which later became Republic Act
1405, 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. Indeed there is no real inquiry in such a
case, and if existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is hard to conceive that it was ever
within the intention of Congress to enable debtors to evade payment of their
just debts, even if ordered by the Court, through the expedient of converting
their assets into cash and depositing the same in a bank.

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, a duly
authorized officer of the court, we can not therefore hold the petitioners liable
under R.A. 1405.

While the general rule is that the findings of fact of the appellate court are binding
on this Court, the said rule however admits of exceptions, such as when the Court
of Appeals clearly misconstrued and misapplied the law, drawn from the incorrect
conclusions of fact established by evidence and otherwise at certain conclusions
which are based on misapprehension of facts,19 as in the case at bar.

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, the petition is GRANTED and the challenged Resolutions dated

June 27, 1988 and August 13, 1988 of the Court of Appeals are hereby
ANNULLED and SET ASIDE and its Decision dated February 26, 1988
dismissing the complaint is hereby REINSTATED. With costs against the private
respondent.

SO ORDERED.