G.R. No.
189871               August 13, 2013 separation pay in lieu of reinstatement in the amount
DARIO NACAR, PETITIONER,
vs.
GALLERY FRAMES AND/OR FELIPE
BORDEY, JR., RESPONDENTS.
DECISION
PERALTA, J.:
This is a petition for review on certiorari assailing the
Decision1 dated September 23, 2008 of the Court of
Appeals (CA) in CA-G.R. SP No. 98591, and the
Resolution2 dated October 9, 2009 denying
petitioner’s motion for reconsideration.
The factual antecedents are undisputed.
Petitioner Dario Nacar filed a complaint for
constructive dismissal before the Arbitration Branch
of the National Labor Relations Commission (NLRC)
against respondents Gallery Frames (GF) and/or
Felipe Bordey, Jr., docketed as NLRC NCR Case No.
01-00519-97.
On October 15, 1998, the Labor Arbiter rendered a
Decision3 in favor of petitioner and found that he was
dismissed from employment without a valid or just
cause. Thus, petitioner was awarded backwages and
of ₱158,919.92. The dispositive portion of the
decision, reads:
With the foregoing, we find and so rule that
respondents failed to discharge the burden of showing
that complainant was dismissed from employment for
a just or valid cause. All the more, it is clear from the
records that complainant was never afforded due
process before he was terminated. As such, we are
perforce constrained to grant complainant’s prayer for
the payments of separation pay in lieu of
reinstatement to his former position, considering the
strained relationship between the parties, and his
apparent reluctance to be reinstated, computed only
up to promulgation of this decision as follows:
SEPARATION PAY
Date Hired = August 1990
Rate = ₱198/day
Date of Decision = Aug. 18, 1998
Length of Service = 8 yrs. & 1 month
₱198.00 x 26 days x 8 months = ₱41,184.00
BACKWAGES pesos and 56/100 (₱62,986.56) Pesos representing his
separation pay;
Date Dismissed = January 24, 1997
To pay jointly and severally the complainant the
Rate per day = ₱196.00 amount of nine (sic) five thousand nine hundred
thirty-three and 36/100 (₱95,933.36) representing his
Date of Decisions = Aug. 18, 1998 backwages; and
All other claims are hereby dismissed for lack of
a) 1/24/97 to 2/5/98 = 12.36 mos.
merit.
₱196.00/day x 12.36 mos. = ₱62,986.56 SO ORDERED.4

b) 2/6/98 to 8/18/98 = 6.4 months
Prevailing Rate per day
₱198.00 x 26 days x 6.4 mos.
Respondents appealed to the NLRC, but it was
dismissed for lack of merit in the Resolution5 dated
= ₱62,986.00 February 29, 2000. Accordingly, the NLRC sustained
the decision of the Labor Arbiter. Respondents filed a
= ₱32,947.20 motion for reconsideration, but it was denied.6

TOTAL = ₱95.933.76 Dissatisfied, respondents filed a Petition for Review

xxxx
WHEREFORE, premises considered, judgment is
hereby rendered finding respondents guilty of
constructive dismissal and are therefore, ordered:
on Certiorari before the CA. On August 24, 2000, the
CA issued a Resolution dismissing the petition.
Respondents filed a Motion for Reconsideration, but it
was likewise denied in a Resolution dated May 8,
2001.7

To pay jointly and severally the complainant the Respondents then sought relief before the Supreme
amount of sixty-two thousand nine hundred eighty-six Court, docketed as G.R. No. 151332. Finding no
reversible error on the part of the CA, this Court
denied the petition in the Resolution dated April 17,
2002.8
An Entry of Judgment was later issued certifying that
the resolution became final and executory on May 27,
2002.9 The case was, thereafter, referred back to the
Labor Arbiter. A pre-execution conference was
consequently scheduled, but respondents failed to
appear.10
On November 5, 2002, petitioner filed a Motion for
Correct Computation, praying that his backwages be
computed from the date of his dismissal on January
24, 1997 up to the finality of the Resolution of the
Supreme Court on May 27, 2002.11 Upon
recomputation, the Computation and Examination
Unit of the NLRC arrived at an updated amount in the
sum of ₱471,320.31.12
On December 2, 2002, a Writ of Execution13 was
issued by the Labor Arbiter ordering the Sheriff to
collect from respondents the total amount of
₱471,320.31. Respondents filed a Motion to Quash
Writ of Execution, arguing, among other things, that
since the Labor Arbiter awarded separation pay of
₱62,986.56 and limited backwages of ₱95,933.36, no
more recomputation is required to be made of the said
awards. They claimed that after the decision becomes
final and executory, the same cannot be altered or
amended anymore.14 On January 13, 2003, the Labor
Arbiter issued an Order15 denying the motion. Thus,
an Alias Writ of Execution16 was issued on January
14, 2003.
Respondents again appealed before the NLRC, which
on June 30, 2003 issued a Resolution17 granting the
appeal in favor of the respondents and ordered the
recomputation of the judgment award.
On August 20, 2003, an Entry of Judgment was issued
declaring the Resolution of the NLRC to be final and
executory. Consequently, another pre-execution
conference was held, but respondents failed to appear
on time. Meanwhile, petitioner moved that an Alias
Writ of Execution be issued to enforce the earlier
recomputed judgment award in the sum of
₱471,320.31.18
The records of the case were again forwarded to the
Computation and Examination Unit for
recomputation, where the judgment award of
petitioner was reassessed to be in the total amount of
only ₱147,560.19.
Petitioner then moved that a writ of execution be
issued ordering respondents to pay him the original
amount as determined by the Labor Arbiter in his
Decision dated October 15, 1998, pending the final
computation of his backwages and separation pay.
On January 14, 2003, the Labor Arbiter issued an
Alias Writ of Execution to satisfy the judgment award
that was due to petitioner in the amount of
₱147,560.19, which petitioner eventually received.
Petitioner then filed a Manifestation and Motion
praying for the re-computation of the monetary award
to include the appropriate interests.19
On May 10, 2005, the Labor Arbiter issued an
Order20 granting the motion, but only up to the amount
of ₱11,459.73. The Labor Arbiter reasoned that it is
the October 15, 1998 Decision that should be enforced
considering that it was the one that became final and
executory. However, the Labor Arbiter reasoned that
since the decision states that the separation pay and
backwages are computed only up to the promulgation
of the said decision, it is the amount of ₱158,919.92
that should be executed. Thus, since petitioner already
received ₱147,560.19, he is only entitled to the
balance of ₱11,459.73.
Petitioner then appealed before the NLRC,21 which
appeal was denied by the NLRC in its
Resolution22 dated September 27, 2006. Petitioner
filed a Motion for Reconsideration, but it was likewise
denied in the Resolution23 dated January 31, 2007.
Aggrieved, petitioner then sought recourse before the
CA, docketed as CA-G.R. SP No. 98591.
On September 23, 2008, the CA rendered a
Decision24 denying the petition. The CA opined that
since petitioner no longer appealed the October 15,
1998 Decision of the Labor Arbiter, which already
became final and executory, a belated correction
thereof is no longer allowed. The CA stated that there
is nothing left to be done except to enforce the said
judgment. Consequently, it can no longer be modified
in any respect, except to correct clerical errors or
mistakes.
Petitioner filed a Motion for Reconsideration, but it
was denied in the Resolution25 dated October 9, 2009.
Hence, the petition assigning the lone error:
I
WITH DUE RESPECT, THE HONORABLE
COURT OF APPEALS SERIOUSLY ERRED,
COMMITTED GRAVE ABUSE OF DISCRETION
AND DECIDED CONTRARY TO LAW IN
UPHOLDING THE QUESTIONED RESOLUTIONS
OF THE NLRC WHICH, IN TURN, SUSTAINED
THE MAY 10, 2005 ORDER OF LABOR ARBITER
MAGAT MAKING THE DISPOSITIVE PORTION
OF THE OCTOBER 15, 1998 DECISION OF
LABOR ARBITER LUSTRIA SUBSERVIENT TO
AN OPINION EXPRESSED IN THE BODY OF
THE SAME DECISION.26
Petitioner argues that notwithstanding the fact that
there was a computation of backwages in the Labor
Arbiter’s decision, the same is not final until
reinstatement is made or until finality of the decision,
in case of an award of separation pay. Petitioner
maintains that considering that the October 15, 1998
decision of the Labor Arbiter did not become final and
executory until the April 17, 2002 Resolution of the
Supreme Court in G.R. No. 151332 was entered in the
Book of Entries on May 27, 2002, the reckoning point
for the computation of the backwages and separation
pay should be on May 27, 2002 and not when the
decision of the Labor Arbiter was rendered on
October 15, 1998. Further, petitioner posits that he is
also entitled to the payment of interest from the
finality of the decision until full payment by the
respondents.
On their part, respondents assert that since only
separation pay and limited backwages were awarded
to petitioner by the October 15, 1998 decision of the
Labor Arbiter, no more recomputation is required to
be made of said awards. Respondents insist that since
the decision clearly stated that the separation pay and
backwages are "computed only up to [the]
promulgation of this decision," and considering that
petitioner no longer appealed the decision, petitioner
is only entitled to the award as computed by the Labor
Arbiter in the total amount of ₱158,919.92.
Respondents added that it was only during the
execution proceedings that the petitioner questioned
the award, long after the decision had become final
and executory. Respondents contend that to allow the
further recomputation of the backwages to be awarded
to petitioner at this point of the proceedings would
substantially vary the decision of the Labor Arbiter as
it violates the rule on immutability of judgments.
The petition is meritorious.
The instant case is similar to the case of Session
Delights Ice Cream and Fast Foods v. Court of
Appeals (Sixth Division),27 wherein the issue
submitted to the Court for resolution was the propriety
of the computation of the awards made, and whether
this violated the principle of immutability of
judgment. Like in the present case, it was a distinct
feature of the judgment of the Labor Arbiter in the
above-cited case that the decision already provided for
the computation of the payable separation pay and
backwages due and did not further order the
computation of the monetary awards up to the time of
the finality of the judgment. Also in Session Delights,
the dismissed employee failed to appeal the decision
of the labor arbiter. The Court clarified, thus:
In concrete terms, the question is whether a re-
computation in the course of execution of the labor
arbiter's original computation of the awards made,
pegged as of the time the decision was rendered and
confirmed with modification by a final CA decision,
is legally proper. The question is posed, given that the
petitioner did not immediately pay the awards stated
in the original labor arbiter's decision; it delayed
payment because it continued with the litigation until
final judgment at the CA level.
A source of misunderstanding in implementing the
final decision in this case proceeds from the way the
original labor arbiter framed his decision. The
decision consists essentially of two parts.
The first is that part of the decision that cannot now be
disputed because it has been confirmed with finality.
This is the finding of the illegality of the dismissal
and the awards of separation pay in lieu of
reinstatement, backwages, attorney's fees, and legal
interests.
The second part is the computation of the awards
made. On its face, the computation the labor arbiter
made shows that it was time-bound as can be seen
from the figures used in the computation. This part,
being merely a computation of what the first part of
the decision established and declared, can, by its
nature, be re-computed. This is the part, too, that the
petitioner now posits should no longer be re-computed
because the computation is already in the labor
arbiter's decision that the CA had affirmed. The public
and private respondents, on the other hand, posit that a
re-computation is necessary because the relief in an
illegal dismissal decision goes all the way up to
reinstatement if reinstatement is to be made, or up to
the finality of the decision, if separation pay is to be
given in lieu reinstatement.
That the labor arbiter's decision, at the same time that
it found that an illegal dismissal had taken place, also
made a computation of the award, is understandable in
light of Section 3, Rule VIII of the then NLRC Rules
of Procedure which requires that a computation be
made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving
monetary awards and at all events, as far as
practicable, shall embody in any such decision or
order the detailed and full amount awarded.
Clearly implied from this original computation is its
currency up to the finality of the labor arbiter's
decision. As we noted above, this implication is
apparent from the terms of the computation itself, and
no question would have arisen had the parties
terminated the case and implemented the decision at
that point.
However, the petitioner disagreed with the labor
arbiter's findings on all counts - i.e., on the finding of
illegality as well as on all the consequent awards
made. Hence, the petitioner appealed the case to the
NLRC which, in turn, affirmed the labor arbiter's
decision. By law, the NLRC decision is final,
reviewable only by the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the
NLRC decision on jurisdictional grounds through a
timely filed Rule 65 petition for certiorari. The CA
decision, finding that NLRC exceeded its authority in
affirming the payment of 13th month pay and
indemnity, lapsed to finality and was subsequently
returned to the labor arbiter of origin for execution.
It was at this point that the present case arose.
Focusing on the core illegal dismissal portion of the
original labor arbiter's decision, the implementing
labor arbiter ordered the award re-computed; he
apparently read the figures originally ordered to be
paid to be the computation due had the case been
terminated and implemented at the labor arbiter's
level. Thus, the labor arbiter re-computed the award to
include the separation pay and the backwages due up
to the finality of the CA decision that fully terminated
the case on the merits. Unfortunately, the labor
arbiter's approved computation went beyond the
finality of the CA decision (July 29, 2003) and
included as well the payment for awards the final CA
decision had deleted - specifically, the proportionate
13th month pay and the indemnity awards. Hence, the
CA issued the decision now questioned in the present
petition.
We see no error in the CA decision confirming that a
re-computation is necessary as it essentially
considered the labor arbiter's original decision in
accordance with its basic component parts as we
discussed above. To reiterate, the first part contains
the finding of illegality and its monetary
consequences; the second part is the computation of
the awards or monetary consequences of the illegal
dismissal, computed as of the time of the labor recourses against the Labor Arbiter's decision. Article
arbiter's original decision.28 279 provides for the consequences of illegal dismissal
in no uncertain terms, qualified only by jurisprudence
Consequently, from the above disquisitions, under the
in its interpretation of when separation pay in lieu of
terms of the decision which is sought to be executed
reinstatement is allowed. When that happens, the
by the petitioner, no essential change is made by a
finality of the illegal dismissal decision becomes the
recomputation as this step is a necessary consequence
reckoning point instead of the reinstatement that the
that flows from the nature of the illegality of dismissal
law decrees. In allowing separation pay, the final
declared by the Labor Arbiter in that decision.29 A
decision effectively declares that the employment
recomputation (or an original computation, if no
relationship ended so that separation pay and
previous computation has been made) is a part of the
backwages are to be computed up to that point.31
law – specifically, Article 279 of the Labor Code and
the established jurisprudence on this provision – that Finally, anent the payment of legal interest. In the
is read into the decision. By the nature of an illegal landmark case of Eastern Shipping Lines, Inc. v.
dismissal case, the reliefs continue to add up until full Court of Appeals,32 the Court laid down the guidelines
satisfaction, as expressed under Article 279 of the regarding the manner of computing legal interest, to
Labor Code. The recomputation of the consequences wit:
of illegal dismissal upon execution of the decision
II. With regard particularly to an award of interest in
does not constitute an alteration or amendment of the
the concept of actual and compensatory damages, the
final decision being implemented. The illegal
rate of interest, as well as the accrual thereof, is
dismissal ruling stands; only the computation of
imposed, as follows:
monetary consequences of this dismissal is affected,
and this is not a violation of the principle of 1. When the obligation is breached, and it consists in
immutability of final judgments.30 the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that
That the amount respondents shall now pay has
which may have been stipulated in writing.
greatly increased is a consequence that it cannot avoid
Furthermore, the interest due shall itself earn legal
as it is the risk that it ran when it continued to seek
interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be
12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil
Code.
2. When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on
unliquidated claims or damages except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially
or extrajudicially (Art. 1169, Civil Code) but when
such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is
made (at which time the quantification of damages
may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from
such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a
forbearance of credit.33
Recently, however, the Bangko Sentral ng Pilipinas
Monetary Board (BSP-MB), in its Resolution No. 796
dated May 16, 2013, approved the amendment of
Section 234 of Circular No. 905, Series of 1982 and,
accordingly, issued Circular No. 799,35 Series of 2013,
effective July 1, 2013, the pertinent portion of which
reads:
The Monetary Board, in its Resolution No. 796 dated
16 May 2013, approved the following revisions
governing the rate of interest in the absence of
stipulation in loan contracts, thereby amending
Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or
forbearance of any money, goods or credits and the
rate allowed in judgments, in the absence of an
express contract as to such rate of interest, shall be six
percent (6%) per annum.
Section 2. In view of the above, Subsection
X305.136 of the Manual of Regulations for Banks and
Sections 4305Q.1,37 4305S.338 and 4303P.139 of the
Manual of Regulations for Non-Bank Financial
Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Thus, from the foregoing, in the absence of an express
stipulation as to the rate of interest that would govern
the parties, the rate of legal interest for loans or
forbearance of any money, goods or credits and the
rate allowed in judgments shall no longer be twelve
percent (12%) per annum - as reflected in the case of
Eastern Shipping Lines40 and Subsection X305.1 of
the Manual of Regulations for Banks and Sections
4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions,
before its amendment by BSP-MB Circular No. 799 -
but will now be six percent (6%) per annum effective
July 1, 2013. It should be noted, nonetheless, that the
new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%)
per annum legal interest shall apply only until June
30, 2013. Come July 1, 2013 the new rate of six
percent (6%) per annum shall be the prevailing rate of
interest when applicable.
Corollarily, in the recent case of Advocates for Truth
in Lending, Inc. and Eduardo B. Olaguer v. Bangko
Sentral Monetary Board,41 this Court affirmed the
authority of the BSP-MB to set interest rates and to
issue and enforce Circulars when it ruled that "the
BSP-MB may prescribe the maximum rate or rates of
interest for all loans or renewals thereof or the
forbearance of any money, goods or credits, including
those for loans of low priority such as consumer
loans, as well as such loans made by pawnshops,
finance companies and similar credit institutions. It
even authorizes the BSP-MB to prescribe different
maximum rate or rates for different types of
borrowings, including deposits and deposit
substitutes, or loans of financial intermediaries."
Nonetheless, with regard to those judgments that have
become final and executory prior to July 1, 2013, said
judgments shall not be disturbed and shall continue to
be implemented applying the rate of interest fixed
therein.1awp++i1
To recapitulate and for future guidance, the guidelines
laid down in the case of Eastern Shipping Lines42 are
accordingly modified to embody BSP-MB Circular
No. 799, as follows:
I. When an obligation, regardless of its source, i.e.,
law, contracts, quasi-contracts, delicts or quasi-delicts
is breached, the contravenor can be held liable for
damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining
the measure of recoverable damages.1âwphi1
II. With regard particularly to an award of interest in
the concept of actual and compensatory damages, the
rate of interest, as well as the accrual thereof, is
imposed, as follows:
When the obligation is breached, and it consists in the
payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be that
which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 6%
per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to
the provisions of Article 1169 of the Civil Code.
When an obligation, not constituting a loan or
forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until
the demand can be established with reasonable
certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially
or extrajudicially (Art. 1169, Civil Code), but when
such certainty cannot be so reasonably established at
the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is
made (at which time the quantification of damages
may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest
shall, in any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance
of credit.
And, in addition to the above, judgments that have
become final and executory prior to July 1, 2013, shall
not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.
WHEREFORE, premises considered, the Decision
dated September 23, 2008 of the Court of Appeals in
CA-G.R. SP No. 98591, and the Resolution dated
October 9, 2009 are REVERSED and SET ASIDE.
Respondents are Ordered to Pay petitioner:
(1) backwages computed from the time petitioner was
illegally dismissed on January 24, 1997 up to May 27,
2002, when the Resolution of this Court in G.R. No.
151332 became final and executory;
(2) separation pay computed from August 1990 up to
May 27, 2002 at the rate of one month pay per year of
service; and
(3) interest of twelve percent (12%) per annum of the
total monetary awards, computed from May 27, 2002
to June 30, 2013 and six percent (6%) per annum from
July 1, 2013 until their full satisfaction.
The Labor Arbiter is hereby ORDERED to make
another recomputation of the total monetary benefits
awarded and due to petitioner in accordance with this
Decision.
SO ORDERED.
G.R. No. 102970 May 13, 1993 in Safety Deposit Box No. 54 which had been rented
from the defendant pursuant to a contract
LUZAN SIA, petitioner,
denominated as a Lease Agreement. 3 Judgment
vs.
therein was rendered in favor of the dispositive
COURT OF APPEALS and SECURITY BANK
portion of which reads:
and TRUST COMPANY, respondents.
WHEREFORE, premises considered, judgment is
Asuncion Law Offices for petitioner.
hereby rendered in favor of the plaintiff and against
Cauton, Banares, Carpio & Associates for private the defendant, Security Bank & Trust Company,
respondent. ordering the defendant bank to pay the plaintiff the
sum of —
a) Twenty Thousand Pesos (P20,000.00), Philippine
DAVIDE, JR., J.: Currency, as actual damages;

The Decision of public respondent Court of Appeals b) One Hundred Thousand Pesos (P100,000.00),
in CA-G.R. CV No. 26737, promulgated on 21 Philippine Currency, as moral damages; and
August 1991,1 reversing and setting aside the c) Five Thousand Pesos (P5,000.00), Philippine
Decision, dated 19 February 1990, 2 of Branch 47 of Currency, as attorney's fees and legal expenses.
the Regional Trial Court (RTC) of Manila in Civil
The counterclaim set up by the defendant are hereby
Case No. 87-42601, entitled "LUZAN
dismissed for lack of merit.
SIA vs. SECURITY BANK and TRUST CO.," is
challenged in this petition for review No costs.
on certiorari under Rule 45 of the Rules Court.
SO ORDERED.4
Civil Case No. 87-42601 is an action for damages
The antecedent facts of the present controversy are
arising out of the destruction or loss of the stamp
summarized by the public respondent in its challenged
collection of the plaintiff (petitioner herein) contained
decision as follows:
The plaintiff rented on March 22, 1985 the Safety xxx xxx xxx
Deposit Box No. 54 of the defendant bank at its
"13. The Bank is not a depository of the contents of
Binondo Branch located at the Fookien Times
the safe and it has neither the possession nor the
Building, Soler St., Binondo, Manila wherein he
control of the same. The Bank has no interest
placed his collection of stamps. The said safety
whatsoever in said contents, except as herein
deposit box leased by the plaintiff was at the bottom
provided, and it assumes absolutely no liability in
or at the lowest level of the safety deposit boxes of the
connection therewith."
defendant bank at its aforesaid Binondo Branch.
The defendant bank also contended that its contract
During the floods that took place in 1985 and 1986,
with the plaintiff over safety deposit box No. 54 was
floodwater entered into the defendant bank's premises,
one of lease and not of deposit and, therefore,
seeped into the safety deposit box leased by the
governed by the lease agreement (Exhs. "A", "L")
plaintiff and caused, according to the plaintiff,
which should be the applicable law; that the
damage to his stamps collection. The defendant bank
destruction of the plaintiff's stamps collection was due
rejected the plaintiff's claim for compensation for his
to a calamity beyond obligation on its part to notify
damaged stamps collection, so, the plaintiff instituted
the plaintiff about the floodwaters that inundated its
an action for damages against the defendant bank.
premises at Binondo branch which allegedly seeped
The defendant bank denied liability for the damaged into the safety deposit box leased to the plaintiff.
stamps collection of the plaintiff on the basis of the
The trial court then directed that an ocular inspection
"Rules and Regulations Governing the Lease of Safe
on (sic) the contents of the safety deposit box be
Deposit Boxes" (Exhs. "A-1", "1-A"), particularly
conducted, which was done on December 8, 1988 by
paragraphs 9 and 13, which reads (sic):
its clerk of court in the presence of the parties and
"9. The liability of the Bank by reason of the lease, is their counsels. A report thereon was then submitted on
limited to the exercise of the diligence to prevent the December 12, 1988 (Records, p. 98-A) and confirmed
opening of the safe by any person other than the in open court by both parties thru counsel during the
Renter, his authorized agent or legal representative; hearing on the same date (Ibid., p. 102) stating:
"That the Safety Box Deposit No. 54 was opened by
both plaintiff Luzan Sia and the Acting Branch
Manager Jimmy B. Ynion in the presence of the
undersigned, plaintiff's and defendant's counsel. Said
Safety Box when opened contains two albums of
different sizes and thickness, length and width and a
tin box with printed word 'Tai Ping Shiang Roast Pork
in pieces with Chinese designs and character."
Condition of the above-stated Items —
"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in length, 8
inches in width and 3/4 in thick. The leaves of the
album are attached to every page and cannot be lifted
without destroying it, hence the stamps contained
therein are no longer visible.
2. The second album measure 12 1/2 inches in length,
9 3/4 in width 1 inch thick. Some of its pages can still
be lifted. The stamps therein can still be distinguished
but beyond restoration. Others have lost its original
form.
3. The tin box is rusty inside. It contains an album
with several pieces of papers stuck up to the cover of
the box. The condition of the album is the second
abovementioned album."5
The SECURITY BANK AND TRUST COMPANY,
hereinafter referred to as SBTC, appealed the trial
court's decision to the public respondent Court of
Appeals. The appeal was docketed as CA-G.R. CV
No. 26737.
In urging the public respondent to reverse the decision
of the trial court, SBTC contended that the latter erred
in (a) holding that the lease agreement is a contract of
adhesion; (b) finding that the defendant had failed to
exercise the required diligence expected of a bank in
maintaining the safety deposit box; (c) awarding to
the plaintiff actual damages in the amount of
P20,000.00, moral damages in the amount of
P100,000.00 and attorney's fees and legal expenses in
the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its
decision the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby
REVERSED and instead the appellee's complaint is
hereby DISMISSED. The appellant bank's
counterclaim is likewise DISMISSED. No costs.6
In reversing the trial court's decision and absolving
SBTC from liability, the public respondent found and
ruled that:
a) the fine print in the "Lease Agreement " (Exhibits
"A" and "1" ) constitutes the terms and conditions of
the contract of lease which the appellee (now
petitioner) had voluntarily and knowingly executed
with SBTC;
b) the contract entered into by the parties regarding
Safe Deposit Box No. 54 was not a contract of deposit
wherein the bank became a depositary of the subject
stamp collection; hence, as contended by SBTC, the
provisions of Book IV, Title XII of the Civil Code on
deposits do not apply;
c) The following provisions of the questioned lease
agreement of the safety deposit box limiting SBTC's
liability:
9. The liability of the bank by reason of the lease, is
limited to the exercise of the diligence to prevent the
opening of the Safe by any person other than the
Renter, his authorized agent or legal representative.
xxx xxx xxx
13. The bank is not a depository of the contents of the
Safe and it has neither the possession nor the control
of the same. The Bank has no interest whatsoever in
said contents, except as herein provided, and it
assumes absolutely no liability in connection
therewith.
are valid since said stipulations are not contrary to
law, morals, good customs, public order or public
policy; and
d) there is no concrete evidence to show that SBTC
failed to exercise the required diligence in maintaining
the safety deposit box; what was proven was that the
floods of 1985 and 1986, which were beyond the
control of SBTC, caused the damage to the stamp
collection; said floods were fortuitous events which
SBTC should not be held liable for since it was not
shown to have participated in the aggravation of the
damage to the stamp collection; on the contrary, it
offered its services to secure the assistance of an
expert in order to save most of the stamps, but the
appellee refused; appellee must then bear the lose
under the principle of "res perit domino."
Unsuccessful in his bid to have the above decision
reconsidered by the public respondent, 7 petitioner
filed the instant petition wherein he contends that:
I
IT WAS A GRAVE ERROR OR AN ABUSE OF
DISCRETION ON THE PART OF THE
RESPONDENT COURT WHEN IT RULED THAT Petitioner insists that the trial court correctly ruled
RESPONDENT SBTC DID NOT FAIL TO that SBTC had failed "to exercise the required
EXERCISE THE REQUIRED DILIGENCE IN diligence expected of a bank maintaining such safety
MAINTAINING THE SAFETY DEPOSIT BOX OF deposit box . . . in the light of the environmental
THE PETITIONER CONSIDERING THAT circumstance of said safety deposit box after the
SUBSTANTIAL EVIDENCE EXIST (sic) floods of 1985 and 1986." He argues that such a
PROVING THE CONTRARY. conclusion is supported by the evidence on record, to
wit: SBTC was fully cognizant of the exact location of
II
the safety deposit box in question; it knew that the
THE RESPONDENT COURT SERIOUSLY ERRED premises were inundated by floodwaters in 1985 and
IN EXCULPATING PRIVATE RESPONDENT 1986 and considering that the bank is guarded twenty-
FROM ANY LIABILITY WHATSOEVER BY four (24) hours a day , it is safe to conclude that it was
REASON OF THE PROVISIONS OF also aware of the inundation of the premises where the
PARAGRAPHS 9 AND 13 OF THE AGREEMENT safety deposit box was located; despite such
(EXHS. "A" AND "A-1"). knowledge, however, it never bothered to inform the
III petitioner of the flooding or take any appropriate
measures to insure the safety and good maintenance
THE RESPONDENT COURT SERIOUSLY ERRED of the safety deposit box in question.
IN NOT UPHOLDING THE AWARDS OF THE
TRIAL COURT FOR ACTUAL AND MORAL SBTC does not squarely dispute these facts; rather, it
DAMAGES, INCLUDING ATTORNEY'S FEES relies on the rule that findings of facts of the Court of
AND LEGAL EXPENSES, IN FAVOR OF THE Appeals, when supported by substantial exidence, are
PETITIONER.8 not reviewable on appeal by certiorari. 10

We subsequently gave due course the petition and The foregoing rule is, of course, subject to certain
required both parties to submit their respective exceptions such as when there exists a disparity
memoranda, which they complied with.9 between the factual findings and conclusions of the
Court of Appeals and the trial court. 11 Such a
disparity obtains in the present case.
As We see it, SBTC's theory, which was upheld by
the public respondent, is that the "Lease Agreement "
covering Safe Deposit Box No. 54 (Exhibit "A and
"1") is just that — a contract of lease — and not a
contract of deposit, and that paragraphs 9 and 13
thereof, which expressly limit the bank's liability as
follows:
9. The liability of the bank by reason of the lease, is
limited to the exercise of the diligence to prevent the
opening of the Safe by any person other than the
Renter, his autliorized agent or legal representative;
xxx xxx xxx
13. The bank is not a depository of the contents of the
Safe and it has neither the possession nor the control
of the same. The Bank has no interest whatsoever said
contents, except as herein provided, and it assumes
absolutely no liability in connection therewith. 12
are valid and binding upon the parties. In the
challenged decision, the public respondent further
avers that even without such a limitation of liability,
SBTC should still be absolved from any responsibility
for the damage sustained by the petitioner as it
appears that such damage was occasioned by a
fortuitous event and that the respondent bank was free
from any participation in the aggravation of the injury.
We cannot accept this theory and ratiocination.
Consequently, this Court finds the petition to be
impressed with merit.
In the recent case CA Agro-Industrial Development
Corp. vs. Court of Appeals, 13 this Court explicitly
rejected the contention that a contract for the use of a
safety deposit box is a contract of lease governed by
Title VII, Book IV of the Civil Code. Nor did We
fully subscribe to the view that it is a contract of
deposit to be strictly governed by the Civil Code
provision on deposit; 14 it is, as We declared, a special
kind of deposit. The prevailing rule in American
jurisprudence — that the relation between a bank
renting out safe deposit boxes and its customer with
respect to the contents of the box is that of a bailor
and bailee, the bailment for hire and mutual
benefit 15 — has been adopted in this jurisdiction,
thus:
In the context of our laws which authorize banking
institutions to rent out safety deposit boxes, it is clear
that in this jurisdiction, the prevailing rule in the
United States has been adopted. Section 72 of the
General Banking Act [R.A. 337, as amended]
pertinently provides:
"Sec. 72. In addition to the operations specifically
authorized elsewhere in this Act, banking institutions
other than building and loan associations may perform
the following services:
(a) Receive in custody funds, documents, and valuable
objects, and rent safety deposit boxes for the
safequarding of such effects.
xxx xxx xxx
The banks shall perform the services permitted under
subsections (a), (b) and (c) of this section
as depositories or as agents. . . ."(emphasis supplied)
Note that the primary function is still found within the
parameters of a contract of deposit, i.e., the receiving
in custody of funds, documents and other valuable
objects for safekeeping. The renting out of the safety
deposit boxes is not independent from, but related to
or in conjunction with, this principal function. A
contract of deposit may be entered into orally or in
writing (Art. 1969, Civil Code] and, pursuant to
Article 1306 of the Civil Code, the parties thereto may
establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs,
public order or public policy. The depositary's
responsibility for the safekeeping of the objects
deposited in the case at bar is governed by Title I,
Book IV of the Civil Code. Accordingly, the
depositary would be liable if, in performing its
obligation, it is found guilty of fraud, negligence,
delay or contravention of the tenor of the agreement
[Art. 1170, id.]. In the absence of any stipulation
prescribing the degree of diligence required, that of a
good father of a family is to be observed [Art.
1173, id.]. Hence, any stipulation exempting the
depositary from any liability arising from the loss of
the thing deposited on account of fraud, negligence or
delay would be void for being contrary to law and
public policy. In the instant case, petitioner maintains
that conditions 13 and l4 of the questioned contract of
lease of the safety deposit box, which read:
"13. The bank is a depositary of the contents of the
safe and it has neither the possession nor control of
the same.
"14. The bank has no interest whatsoever in said
contents, except as herein expressly provided, and it
assumes absolutely no liability in connection
therewith."
are void as they are contrary to law and public policy. the contract in question are void and ineffective. It has
We find Ourselves in agreement with this proposition been said:
for indeed, said provisions are inconsistent with the
"With respect to property deposited in a safe-deposit
respondent Bank's responsibility as a depositary under
box by a customer of a safe-deposit company, the
Section 72 (a) of the General Banking Act. Both
parties, since the relation is a contractual one, may by
exempt the latter from any liability except as
special contract define their respective duties or
contemplated in condition 8 thereof which limits its
provide for increasing or limiting the liability of the
duty to exercise reasonable diligence only with
deposit company, provided such contract is not in
respect to who shall be admitted to any rented safe, to
violation of law or public policy. It must clearly
wit:
appear that there actually was such a special contract,
"8. The Bank shall use due diligence that no however, in order to vary the ordinary obligations
unauthorized person shall be admitted to any rented implied by law from the relationship of the parties;
safe and beyond this, the Bank will not be responsible liability of the deposit company will not be enlarged
for the contents of any safe rented from it." or restricted by words of doubtful meaning. The
company, in renting safe-deposit boxes, cannot
Furthermore condition 13 stands on a wrong premise
exempt itself from liability for loss of the contents by
and is contrary to the actual practice of the Bank. It is
its own fraud or negligence or that, of its agents or
not correct to assert that the Bank has neither the
servants, and if a provision of the contract may be
possession nor control of the contents of the box since
construed as an attempt to do so, it will be held
in fact, the safety deposit box itself is located in its
ineffective for the purpose. Although it has been held
premises and is under its absolute control; moreover,
that the lessor of a safe-deposit box cannot limit its
the respondent Bank keeps the guard key to the said
liability for loss of the contents thereof through its
box. As stated earlier, renters cannot open their
own negligence, the view has been taken that such a
respective boxes unless the Bank cooperates by
lessor may limit its liability to some extent by
presenting and using this guard key. Clearly then, to
agreement or stipulation ."[10 AM JUR 2d., 466].
the extent above stated, the foregoing conditions in
(citations omitted) 16
It must be noted that conditions No. 13 and No. 14 in
the Contract of Lease of Safety Deposit Box in CA
Agro-Industrial Development Corp. are strikingly
similar to condition No. 13 in the instant case. On the
other hand, both condition No. 8 in CA Agro-
Industrial Development Corp. and condition No. 9 in
the present case limit the scope of the exercise of due
diligence by the banks involved to merely seeing to it
that only the renter, his authorized agent or his legal
representative should open or have access to the
safety deposit box. In short, in all other situations, it
would seem that SBTC is not bound to exercise
diligence of any kind at all. Assayed in the light of
Our aforementioned pronouncements in CA Agro-
lndustrial Development Corp., it is not at all difficult
to conclude that both conditions No. 9 and No. 13 of
the "Lease Agreement" covering the safety deposit
box in question (Exhibits "A" and "1") must be
stricken down for being contrary to law and public
policy as they are meant to exempt SBTC from any
liability for damage, loss or destruction of the contents
of the safety deposit box which may arise from its
own or its agents' fraud, negligence or delay.
Accordingly, SBTC cannot take refuge under the said
conditions.
Public respondent further postulates that SBTC cannot
be held responsible for the destruction or loss of the
stamp collection because the flooding was a fortuitous
event and there was no showing of SBTC's
participation in the aggravation of the loss or injury. It
states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by the law, or
when it is otherwise declared by stipulation, or when
the nature of the obligation requires the assumption of
risk, no person shall be responsible for those events
which could not be foreseen, or which, though
foreseen, were inevitable.'
In its dissertation of the phrase "caso
fortuito" the Enciclopedia Jurisdicada
17
Española   says: "In a legal sense and, consequently,
also in relation to contracts, a "caso fortuito" prevents
(sic) 18 the following essential characteristics: (1) the
cause of the unforeseen ands unexpected occurrence,
or of the failure of the debtor to comply with his
obligation, must be independent of the human will; (2)
it must be impossible to foresee the event which
constitutes the "caso fortuito," or if it can be foreseen,
it must be impossible to avoid; (3) the occurrence
must be such as to render it impossible for one debtor
to fulfill his obligation in a normal manner; and (4)
the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor."
(cited in Servando vs. Phil., Steam Navigation
Co., supra). 19
Here, the unforeseen or unexpected inundating floods
were independent of the will of the appellant bank and
the latter was not shown to have participated in
aggravating damage (sic) to the stamps collection of
the appellee. In fact, the appellant bank offered its
services to secure the assistance of an expert to save
most of the then good stamps but the appelle refused
and let (sic) these recoverable stamps inside the safety
deposit box until they were ruined. 20
Both the law and authority cited are clear enough and
require no further elucidation. Unfortunately,
however, the public respondent failed to consider that
in the instant case, as correctly held by the trial court,
SBTC was guilty of negligence. The facts constituting
negligence are enumerated in the petition and have
been summarized in this ponencia. SBTC's
negligence aggravated the injury or damage to the
stamp collection. SBTC was aware of the floods of
1985 and 1986; it also knew that the floodwaters
inundated the room where Safe Deposit Box No. 54
was located. In view thereof, it should have lost no
time in notifying the petitioner in order that the box
could have been opened to retrieve the stamps, thus
saving the same from further deterioration and loss. In
this respect, it failed to exercise the reasonable care
and prudence expected of a good father of a family,
thereby becoming a party to the aggravation of the
injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent Article
1170 of the Civil Code, which reads:
Those who in the performance of their obligation are
guilty of fraud, negligence, or delay, and those who in
any manner contravene the tenor thereof, are liable for
damages,
thus comes to the succor of the petitioner. The
destruction or loss of the stamp collection which was,
in the language of the trial court, the "product of 27
years of patience and diligence" 21 caused the
petitioner pecuniary loss; hence, he must be
compensated therefor.
We cannot, however, place Our imprimatur on the
trial court's award of moral damages. Since the
relationship between the petitioner and SBTC is based
on a contract, either of them may be held liable for
moral damages for breach thereof only if said party
had acted fraudulently or in bad faith. 22 There is here
no proof of fraud or bad faith on the part of SBTC.
WHEREFORE, the instant petition is hereby
GRANTED. The challenged Decision and Resolution
of the public respondent Court of Appeals of 21
August 1991 and 21 November 1991, respectively, in
CA-G.R. CV No. 26737, are hereby SET ASIDE and
the Decision of 19 February 1990 of Branch 47 of the
Regional Trial Court of Manila in Civil Case No. 87-
42601 is hereby REINSTATED in full, except as to
the award of moral damages which is hereby set aside.
Costs against the private respondent.
SO ORDERED.
G.R. No. 138677               February 12, 2002
TOLOMEO LIGUTAN and LEONIDAS DE LA
LLANA, petitioners,
vs.
HON. COURT OF APPEALS & SECURITY
BANK & TRUST COMPANY, respondents.
DECISION
VITUG, J.:
Before the Court is a petition for review
on certiorari under Rule 45 of the Rules of Court,
assailing the decision and resolutions of the Court of
Appeals in CA-G.R. CV No. 34594, entitled "Security
Bank and Trust Co. vs. Tolomeo Ligutan, et al."
Petitioners Tolomeo Ligutan and Leonidas dela Llana
obtained on 11 May 1981 a loan in the amount of
P120,000.00 from respondent Security Bank and
Trust Company. Petitioners executed a promissory
note binding themselves, jointly and severally, to pay
the sum borrowed with an interest of 15.189% per
annum upon maturity and to pay a penalty of 5%
every month on the outstanding principal and interest
in case of default. In addition, petitioners agreed to
pay 10% of the total amount due by way of attorney’s
fees if the matter were indorsed to a lawyer for
collection or if a suit were instituted to enforce
payment. The obligation matured on 8 September
1981; the bank, however, granted an extension but
only up until 29 December 1981.
Despite several demands from the bank, petitioners
failed to settle the debt which, as of 20 May 1982,
amounted to P114,416.10. On 30 September 1982, the
bank sent a final demand letter to petitioners
informing them that they had five days within which
to make full payment. Since petitioners still defaulted
on their obligation, the bank filed on 3 November
1982, with the Regional Trial Court of Makati,
Branch 143, a complaint for recovery of the due
amount.
After petitioners had filed a joint answer to the
complaint, the bank presented its evidence and, on 27
March 1985, rested its case. Petitioners, instead of
introducing their own evidence, had the hearing of the
case reset on two consecutive occasions. In view of
the absence of petitioners and their counsel on 28
August 1985, the third hearing date, the bank moved,
and the trial court resolved, to consider the case
submitted for decision.
Two years later, or on 23 October 1987, petitioners
filed a motion for reconsideration of the order of the
trial court declaring them as having waived their right
to present evidence and prayed that they be allowed to
prove their case. The court a quo denied the motion in
an order, dated 5 September 1988, and on 20 October
1989, it rendered its decision,1 the dispositive portion
of which read:
"WHEREFORE, judgment is hereby rendered in favor
of the plaintiff and against the defendants, ordering
the latter to pay, jointly and severally, to the plaintiff,
as follows:
"1. The sum of P114,416.00 with interest thereon at
the rate of 15.189% per annum, 2% service charge
and 5% per month penalty charge, commencing on 20
May 1982 until fully paid;
"2. To pay the further sum equivalent to 10% of the
total amount of indebtedness for and as attorney’s
fees; and
"3. To pay the costs of the suit."2
Petitioners interposed an appeal with the Court of
Appeals, questioning the rejection by the trial court of
their motion to present evidence and assailing the
imposition of the 2% service charge, the 5% per
month penalty charge and 10% attorney's fees. In its
decision3 of 7 March 1996, the appellate court
affirmed the judgment of the trial court except on the
matter of the 2% service charge which was deleted
pursuant to Central Bank Circular No. 783. Not fully
satisfied with the decision of the appellate court, both
parties filed their respective motions for
reconsideration.4 Petitioners prayed for the reduction
of the 5% stipulated penalty for being unconscionable.
The bank, on the other hand, asked that the payment
of interest and penalty be commenced not from the
date of filing of complaint but from the time of default
as so stipulated in the contract of the parties.
On 28 October 1998, the Court of Appeals resolved
the two motions thusly:
"We find merit in plaintiff-appellee’s claim that the
principal sum of P114,416.00 with interest thereon
must commence not on the date of filing of the
complaint as we have previously held in our decision
but on the date when the obligation became due.
"Default generally begins from the moment the
creditor demands the performance of the obligation.
However, demand is not necessary to render the
obligor in default when the obligation or the law so
provides.
"In the case at bar, defendants-appellants executed a
promissory note where they undertook to pay the
obligation on its maturity date 'without necessity of
demand.' They also agreed to pay the interest in case
of non-payment from the date of default.
"x x x           x x x          x x x
"While we maintain that defendants-appellants must
be bound by the contract which they acknowledged
and signed, we take cognizance of their plea for the
application of the provisions of Article 1229 x x x.
"Considering that defendants-appellants partially
complied with their obligation under the promissory
note by the reduction of the original amount of
P120,000.00 to P114,416.00 and in order that they
will finally settle their obligation, it is our view and
we so hold that in the interest of justice and public
policy, a penalty of 3% per month or 36% per annum
would suffice.
"x x x           x x x          x x x
"WHEREFORE, the decision sought to be
reconsidered is hereby MODIFIED. The defendants-
appellants Tolomeo Ligutan and Leonidas dela Llana
are hereby ordered to pay the plaintiff-appellee
Security Bank and Trust Company the following:
"1. The sum of P114,416.00 with interest thereon at
the rate of 15.189% per annum and 3% per month
penalty charge commencing May 20, 1982 until fully
paid;
"2. The sum equivalent to 10% of the total amount of
the indebtedness as and for attorney’s fees."5
On 16 November 1998, petitioners filed an omnibus
motion for reconsideration and to admit newly
discovered evidence,6 alleging that while the case was
pending before the trial court, petitioner Tolomeo
Ligutan and his wife Bienvenida Ligutan executed a
real estate mortgage on 18 January 1984 to secure the
existing indebtedness of petitioners Ligutan and dela
Llana with the bank. Petitioners contended that the
execution of the real estate mortgage had the effect of
novating the contract between them and the bank.
Petitioners further averred that the mortgage was
extrajudicially foreclosed on 26 August 1986, that
they were not informed about it, and the bank did not
credit them with the proceeds of the sale. The
appellate court denied the omnibus motion for
reconsideration and to admit newly discovered
evidence, ratiocinating that such a second motion for
reconsideration cannot be entertained under Section 2,
Rule 52, of the 1997 Rules of Civil Procedure.
Furthermore, the appellate court said, the newly-
discovered evidence being invoked by petitioners had
actually been known to them when the case was
brought on appeal and when the first motion for
reconsideration was filed.7
Aggrieved by the decision and resolutions of the
Court of Appeals, petitioners elevated their case to
this Court on 9 July 1999 via a petition for review
on certiorari under Rule 45 of the Rules of Court,
submitting thusly -
"I. The respondent Court of Appeals seriously erred in
not holding that the 15.189% interest and the penalty
of three (3%) percent per month or thirty-six (36%)
percent per annum imposed by private respondent
bank on petitioners’ loan obligation are still
manifestly exorbitant, iniquitous and unconscionable.
"II. The respondent Court of Appeals gravely erred in
not reducing to a reasonable level the ten (10%)
percent award of attorney’s fees which is highly and
grossly excessive, unreasonable and unconscionable.
"III. The respondent Court of Appeals gravely erred in
not admitting petitioners’ newly discovered evidence
which could not have been timely produced during the
trial of this case.
"IV. The respondent Court of Appeals seriously erred
in not holding that there was a novation of the cause
of action of private respondent’s complaint in the
instant case due to the subsequent execution of the
real estate mortgage during the pendency of this case
and the subsequent foreclosure of the mortgage."8
Respondent bank, which did not take an appeal,
would, however, have it that the penalty sought to be
deleted by petitioners was even insufficient to fully
cover and compensate for the cost of money brought
about by the radical devaluation and decrease in the
purchasing power of the peso, particularly vis-a-
vis the U.S. dollar, taking into account the time frame
of its occurrence. The Bank would stress that only the
amount of P5,584.00 had been remitted out of the
entire loan of P120,000.00.9
A penalty clause, expressly recognized by law,10 is an
accessory undertaking to assume greater liability on
the part of an obligor in case of breach of an
obligation. It functions to strengthen the coercive
force of the obligation11 and to provide, in effect, for
what could be the liquidated damages resulting from
such a breach. The obligor would then be bound to
pay the stipulated indemnity without the necessity of
proof on the existence and on the measure of damages
caused by the breach.12 Although a court may not at
liberty ignore the freedom of the parties to agree on
such terms and conditions as they see fit that
contravene neither law nor morals, good customs,
public order or public policy, a stipulated penalty,
nevertheless, may be equitably reduced by the courts
if it is iniquitous or unconscionable or if the principal
obligation has been partly or irregularly complied
with.13
The question of whether a penalty is reasonable or
iniquitous can be partly subjective and partly
objective. Its resolution would depend on such factors
as, but not necessarily confined to, the type, extent
and purpose of the penalty, the nature of the
obligation, the mode of breach and its consequences,
the supervening realities, the standing and relationship
of the parties, and the like, the application of which,
by and large, is addressed to the sound discretion of
the court. In Rizal Commercial Banking Corp. vs.
Court of Appeals,14 just an example, the Court has
tempered the penalty charges after taking into account
the debtor’s pitiful situation and its offer to settle the
entire obligation with the creditor bank. The stipulated
penalty might likewise be reduced when a partial or
irregular performance is made by the debtor.15 The
stipulated penalty might even be deleted such as when
there has been substantial performance in good faith
by the obligor,16 when the penalty clause itself suffers
from fatal infirmity, or when exceptional
circumstances so exist as to warrant it.17
The Court of Appeals, exercising its good judgment in
the instant case, has reduced the penalty interest from
5% a month to 3% a month which petitioner still
disputes. Given the circumstances, not to mention the
repeated acts of breach by petitioners of their
contractual obligation, the Court sees no cogent
ground to modify the ruling of the appellate court..
Anent the stipulated interest of 15.189% per annum,
petitioners, for the first time, question its
reasonableness and prays that the Court reduce the
amount. This contention is a fresh issue that has not
been raised and ventilated before the courts below. In
any event, the interest stipulation, on its face, does not
appear as being that excessive. The essence or
rationale for the payment of interest, quite often
referred to as cost of money, is not exactly the same
as that of a surcharge or a penalty. A penalty
stipulation is not necessarily preclusive of interest, if
there is an agreement to that effect, the two being
distinct concepts which may separately be
demanded.18 What may justify a court in not allowing
the creditor to impose full surcharges and penalties,
despite an express stipulation therefor in a valid
agreement, may not equally justify the non-payment
or reduction of interest. Indeed, the interest prescribed
in loan financing arrangements is a fundamental part
of the banking business and the core of a bank's
existence.19
Petitioners next assail the award of 10% of the total
amount of indebtedness by way of attorney's fees for
being grossly excessive, exorbitant and
unconscionable vis-a-vis the time spent and the extent
of services rendered by counsel for the bank and the
nature of the case. Bearing in mind that the rate of
attorney’s fees has been agreed to by the parties and
intended to answer not only for litigation expenses but
also for collection efforts as well, the Court, like the
appellate court, deems the award of 10% attorney’s
fees to be reasonable.
Neither can the appellate court be held to have erred
in rejecting petitioners' call for a new trial or to admit
newly discovered evidence. As the appellate court so
held in its resolution of 14 May 1999 -
"Under Section 2, Rule 52 of the 1997 Rules of Civil
Procedure, no second motion for reconsideration of a
judgment or final resolution by the same party shall be
entertained. Considering that the instant motion is
already a second motion for reconsideration, the same
must therefore be denied.
"Furthermore, it would appear from the records
available to this court that the newly-discovered
evidence being invoked by defendants-appellants have
actually been existent when the case was brought on
appeal to this court as well as when the first motion
for reconsideration was filed.1âwphi1 Hence, it is
quite surprising why defendants-appellants raised the
alleged newly-discovered evidence only at this stage
when they could have done so in the earlier pleadings
filed before this court.
"The propriety or acceptability of such a second
motion for reconsideration is not contingent upon the
averment of 'new' grounds to assail the judgment, i.e.,
grounds other than those theretofore presented and
rejected. Otherwise, attainment of finality of a
judgment might be stayed off indefinitely, depending
on the party’s ingenuousness or cleverness in
conceiving and formulating 'additional flaws' or
'newly discovered errors' therein, or thinking up some
injury or prejudice to the rights of the movant for
reconsideration."20
At any rate, the subsequent execution of the real estate
mortgage as security for the existing loan would not
have resulted in the extinguishment of the original
contract of loan because of novation. Petitioners
acknowledge that the real estate mortgage contract
does not contain any express stipulation by the parties
intending it to supersede the existing loan agreement
between the petitioners and the bank.21 Respondent loan;26 (2) the object or principal conditions, such as a
bank has correctly postulated that the mortgage is but change of the nature of the prestation; or (3) the
an accessory contract to secure the loan in the subjects, such as the substitution of a debtor27 or the
promissory note. subrogation of the creditor. Extinctive novation does
not necessarily imply that the new agreement should
Extinctive novation requires, first, a previous valid
be complete by itself; certain terms and conditions
obligation; second, the agreement of all the parties to
may be carried, expressly or by implication, over to
the new contract; third, the extinguishment of the
the new obligation.
obligation; and fourth, the validity of the new one.22 In
order that an obligation may be extinguished by WHEREFORE, the petition is DENIED.
another which substitutes the same, it is imperative
SO ORDERED.
that it be so declared in unequivocal terms, or that the
old and the new obligation be on every point
incompatible with each other.23 An obligation to pay a
sum of money is not extinctively novated by a new
instrument which merely changes the terms of
payment or adding compatible covenants or where the
old contract is merely supplemented by the new
one.24 When not expressed, incompatibility is required
so as to ensure that the parties have indeed intended
such novation despite their failure to express it in
categorical terms. The incompatibility, to be sure,
should take place in any of the essential elements of
the obligation, i.e., (1) the juridical relation or tie,
such as from a mere commodatum to lease of things,
or from negotiorum gestio to agency, or from a
mortgage to antichresis,25 or from a sale to one of
G.R. Nos. 157294-95             November 30, 2006
JOSEPH VICTOR G. EJERCITO, Petitioner,
vs.
SANDIGANBAYAN (Special Division) and
PEOPLE OF THE PHILIPPINES, Respondents.
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.
Ejercito’s 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
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 Panel1 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 ₱2,000,000.00;
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 ₱42,716,554.22;
d. Urban Bank Corp. MC # 37661 dated November
23, 1999 in the amount of ₱54,161,496.52;
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 Manager’s Check and their
corresponding Urban Bank Manager’s Check
Application Forms, as follows:
1. MC # 039975 dated January 18, 2000 in the amount
of ₱70,000,000.00;
2. MC # 039976 dated January 18, 2000 in the amount
of ₱2,000,000.00;
3. MC # 039977 dated January 18, 2000 in the amount
of ₱2,000,000.00;
4. MC # 039978 dated January 18, 2000 in the amount
of ₱1,000,000.00;
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 undersigned’s 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 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
prosecution’s 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.
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
₱2,000,000 as Bank of Commerce MC #0256256 in
the amount of ₱200,000,000 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;
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, 2003 directed to Aurora
Baldoz be quashed for the same reasons which he
cited in the Motion to Quash4 he had earlier filed.
On the same day, February 7, 2003, the
Sandiganbayan issued a Resolution denying
petitioner’s Motion to Quash Subpoenae Duces
Tecum/Ad Testificandum dated January 28, 2003.
Subsequently or on February 12, 2003, the
Sandiganbayan issued a Resolution denying
petitioner’s Urgent Motion to Quash Subpoena Duces
Tecum/Ad Testificandum dated February 7, 2003.
Petitioner’s 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 petitioner’s Trust Account No. 858 is
covered by the term "deposit" as used in R.A. 1405;
2. Whether petitioner’s 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 Panel’s requests
for subpoena was obtained through a prior illegal
disclosure of petitioner’s bank accounts, in violation
of the "fruit of the poisonous tree" doctrine.
Respondent People posits that Trust Account No.
8585 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:
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. Gancayco7 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.
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 person and/or entity in connection with any
considered by the court. The court shall declare any government contract or project or by reason of the
and all ill-gotten wealth and their interests and other office or position of the public officer concerned;
incomes and assets including the properties and shares
3) By the illegal or fraudulent conveyance or
of stock derived from the deposit or investment
disposition of assets belonging to the National
thereof forfeited in favor of the State. (Emphasis and
Government or any of its subdivisions, agencies or
underscoring supplied)
instrumentalities or government-owned or -controlled
An examination of the "overt or criminal acts as corporations and their subsidiaries;
described in Section 1(d)" of R.A. No. 7080 would
4) By obtaining, receiving or accepting directly or
make the similarity between plunder and bribery even
indirectly any shares of stock, equity or any other
more pronounced since bribery is essentially included
form of interest or participation including promise of
among these criminal acts. Thus Section 1(d) states:
future employment in any business enterprise or
d) "Ill-gotten wealth" means any asset, property, undertaking;
business enterprise or material possession of any
5) By establishing agricultural, industrial or
person within the purview of Section Two (2) hereof,
commercial monopolies or other combinations and/or
acquired by him directly or indirectly through
implementation of decrees and orders intended to
dummies, nominees, agents, subordinates and or
benefit particular persons or special interests; or
business associates by any combination or series of
the following means or similar schemes. 6) By taking undue advantage of official position,
authority, relationship, connection or influence to
1) Through misappropriation, conversion, misuse, or
unjustly enrich himself or themselves at the expense
malversation of public funds or raids on the public
and to the damage and prejudice of the Filipino people
treasury;
and the Republic of the Philippines. (Emphasis
2) By receiving, directly or indirectly, any supplied)
commission, gift, share, percentage, kickbacks or
any other form of pecuniary benefit from any
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 petitioner’s 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 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 petitioner’s
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.
In light then of this Court’s 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. Desierto10 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.
Petitioner’s 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 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. See Michaelian, 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"
doctrine13 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 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")
The Office of the Ombudsman then requested for the
manger’s 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 manager’s checks thus requested under cover
letter dated March 16, 2001. (Attachment
14
"6")  (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
petitioner’s 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 Appeals16 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. Purisima17.
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 Tanodbayan’s 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 While the Morales-Galit doctrine eventually became
through Banco Filipino. part of Section 12(1) of the 1987 Constitution, that
doctrine affords no comfort to appellant Luvendino
The Marquez ruling that there must be a pending case
for the requirements and restrictions outlined
in order for the Ombudsman to validly inspect bank
in Morales and Galit have no retroactive effect and
records in camera thus reversed a prevailing
do not reach waivers made prior to 26 April
doctrine.21 Hence, it may not be retroactively applied.
1983 the date of promulgation of Morales. (Emphasis
The Ombudsman’s inquiry into the subject bank supplied)
accounts prior to the filing of any case before a court
In fine, the subpoenas issued by the Ombudsman in
of competent jurisdiction was therefore valid at the
this case were legal, hence, invocation of the "fruit of
time it was conducted.
the poisonous tree" doctrine is misplaced.
Likewise, the Marquez ruling that "the account holder
At all events, even if the challenged subpoenas are
must be notified to be present during the inspection"
quashed, the Ombudsman is not barred from requiring
may not be applied retroactively to the inquiry of the
the production of the same documents based solely on
Ombudsman subject of this case. This ruling is not a
information obtained by it from
judicial interpretation either of R.A. 6770 or R.A.
sources independent of its previous inquiry.
1405, but a "judge-made" law which, as People v.
Luvendino22 instructs, can only be given prospective In particular, the Ombudsman, even before its inquiry,
application: had already possessed information giving him
grounds to believe that (1) there are bank accounts
x x x The doctrine that an uncounselled waiver of
bearing the number "858," (2) that such accounts are
the right to counsel is not to be given legal effect
in the custody of Urban Bank, and (3) that the same
was initially a judge-made one and was first
are linked with the bank accounts of former President
announced on 26 April 1983 in Morales v.
Joseph Estrada who was then under investigation for
Enrile and reiterated on 20 March 1985 in People
plunder.
v. Galit. x x x
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,
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.1âwphi1
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 petitioner’s 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
petitioner’s 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
petitioner’s 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
petitioner’s 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 Court’s 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.
CONCHITA CARPIO MORALES
ROMEO J.
Associate Justice DANTE O. TINGA
CALLEJO, SR.
Associate Justice
WE CONCUR: Associate Justice
ARTEMIO V. PANGANIBAN
Chief Justice MINITA V. CANCIO C.
CHICO-NAZARIO GARCIA
CONSUELO Associate Justice Associate Justice
REYNATO S.
YNARES-
PUNO PRESBITERO J. VELASCO, JR.
SANTIAGO
Associate Justice Associate Justice
Associate Justice
CERTIFICATION
ANGELINA Pursuant to Article VIII, Section 13 of the
LEONARDO A.
SANDOVAL- Constitution, it is hereby certified that the conclusions
QUISUMBING
GUTIERREZ in the above Decision were reached in consultation
Associate Justice
Associate Justice before the case was assigned to the writer of the
opinion of the Court.
MA. ALICIA
ANTONIO T. ARTEMIO V. PANGANIBAN
AUSTRIA-
CARPIO Chief Justice
MARTINEZ
Associate Justice
Associate Justice

RENATO C. ADOLFO S. Footnotes

CORONA AZCUNA 1
Associate Justice Associate Justice  Composed of the Ombudsman, the Special
Prosecutor, Deputy Special Prosecutor, Assistant
Ombudsman, Special Prosecution Officer III, and
Special Prosecution Officer II, (Rollo, pp. 492-493).
2 directed to the President of the EIB dated January 21,
 "Petitioner is the owner of Trust Account No. 858
which was originally opened at Urban Bank but which
is now maintained at Export and Industry Bank, which
is the purchaser and owner now of the former Urban
Bank and Urbancorp Investment, Inc. Petitioner is
also the owner of Savings Account No. 0116-17345-9
which was originally opened at Urban Bank but which
is now maintained at Export and Industry Bank, which
is the purchaser and owner of the former Urban Bank
and Urbancorp Investment, Inc. x x x" (Petition, pp. 3-
4, rollo, pp. 10-11)
3
 The first paragraph of the motion identifies the
subpoenas sought to be quashed as those allegedly
issued on January 24, 2003 directed to the
representative/s of the Urban Bank (now EIB) and to
Ms. Aurora C. Baldoz, Vice-President-CR-II of the
Philippine Deposit Insurance Corporation. However,
the second motion to quash later filed by petitioner
with the assistance of counsel stated that the
subpoenas subject of the previous motion to quash
were those issued on January 21, 2003, addressed to
the President of the EIB and to the President of
Equitable-PCI Bank, or their representatives.
Despite the apparent conflict, it may be inferred that
the first motion to quash covered the subpoenas
2003 and January 24, 2003, the January 24 subpoena
being a mere reiteration of the January 21 subpoena.
As there is nothing in the records before this Court
which show that a subpoena dated January 24, 2003
was ever issued to Ms. Baldoz, the Court will consider
petitioner’s first Motion to Quash as concerned only
with the subpoenas directed to the President of the
EIB.
The statement in the second motion to quash that the
first motion covered the January 21 subpoenas issued
to the President of EIB and to the President
of Equitable-PCI Bank may only be an error arising
from the fact that a subpoena to each of these officers
were granted by the Sandiganbayan through the same
Resolution dated January 21, 2003. The petitioner
could not have been referring to the subpoena directed
to the President of Equitable-PCI Bank since the
subject thereof were the Jose Velarde accounts which
he has never claimed to be his, even in the present
petition.
4
 Rollo, p. 171
5
 Respondent People of the Philippines argue on the case." (Sandiganbayan Resolution dated February 7,
premise that Trust Account No. 858 covers Savings 2003, rollo, p. 72)
Account No. 0116-17345-9. 16
 G.R. No. 110318, August 28, 1996, 261 SCRA 144,
6
 Rollo, p. 708. 168.
7 17
 122 Phil. 503, 508 (1965).  G.R. No. L-56429. May 28, 1988, 161 SCRA 576.
8 18
 Philippine National Bank v. Gancayco, supra at note  Section 2 of P.D. 1630 entitled "FURTHER
7. REVISING PRESIDENTIAL DECREE NO. 1487,
9 AS REVISED BY PRESIDENTIAL DECREE NO.
 378 Phil. 1177, 1182-1183 (1999).
1607, CREATING THE OFFICE OF THE
10
 412 Phil. 387, 397 (2001). TANODBAYAN" states: "An independent Office of
11
 780 F.2d 1461 (1986). the Ombudsman, to be called the Office of the
Tanodbayan, is hereby created. The Chief of said
12
 936 F.2d 1249 (1991). Office of the Tanodbayan shall be called the
13
 "According to this rule, once the primary source Tanodbayan who shall have two (2) deputies for
(the "tree") is shown to have been unlawfully Luzon, one for the Visayas and one for Mindanao."
obtained, any secondary or derivative evidence (the (Underscoring supplied)
"fruit") derived from it is also inadmissible." [People 19
 Vide note 18.
v. Alicando, 321 Phil. 656, 690 (1995)]. 20
 Supra at 582.
14
 Rollo, pp. 439- 442. 21
 Vide Rafael A. Morales, The Philippine General
15
 "As clarified by the prosecution, the documents Banking Law (Annotated), 2nd ed. (2004), page 145:
listed in the request were obtained in February 2001, "It used to be believed too that the Secrecy of Bank
pursuant to the power conferred on the Ombudsman Deposits Law did not apply to the Ombudsman, on
under Section 15(8) of R.A. 6770, long before the account of his authority, under Section 15(8) of the
Supreme Court promulgated the Marquez v. Desierto Ombudsman Act of 1989 (Republic Act No. 6770), to
‘examine and have access to bank accounts and
records.’ However, the Supreme Court in Marquez vs.
Hon. Aniano A. Desierto, et al.,  G.R. No. 135882,
June 27, 2001, restricted the Ombudsman’s power x x
x." (Underscoring supplied)
22
 G.R. No. 69971, July 3, 1992, 211 SCRA 36, 49-50,
reiterated in Filoteo v. Sandiganbayan, 331 Phil. 531,
573 (1996).
23
 Rollo, p. 439.
24
 Amunategue Vda. de Gentugao v. Court of
Appeals (G.R. No. L-30340. June 30, 1976, 71 SCRA
565, 574); vide Ortigas and Co. Ltd. Partnership v.
Velasco (G.R. No. 109645, July 25, 1994, 234 SCRA
455, 501).
The Lawphil Project - Arellano Law Foundation
CONCURRING OPINION
CALLEJO, SR., J.
I concur in the encompassing ponencia of our
esteemed colleague Mme. Justice Conchita Carpio-
Morales, however, I find it imperative to submit my
concurring opinion and elucidate on the basis thereof.
The basic factual and procedural antecedents of the
case are restated as follows:
In connection with Criminal Cases Nos. 26558
(Plunder) and 26565 (Illegal Use of Alias) filed
against former President Joseph Ejercito Estrada, and
upon the written requests of the Special Prosecution
Panel, the Sandiganbayan issued the subpoenae duces
tecum/ad testificandum dated January 21 and 24, 2003
addressed to the respective Presidents of the Export
and Industry Bank (EIB, formerly Urban Bank and
Urbancorp Investment, Inc.) and Equitable-PCIBank.
The subpoenas directed the said officers, or their
authorized representatives, to appear before the
Sandiganbayan and bring with them documents,
among others, pertaining to Trust Account No. 858
(with Urban Bank) and Savings Account No. 0116-
17345-9 (also with Urban Bank), both in the name of
petitioner Joseph Victor (JV) G. Ejercito.
The written requests of the Special Prosecution Panel
enumerated the following documents to be
subpoenaed as follows:
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
₱2,000,000;
b) Urban Bank Corp. MC#34181 dated November 8,
1999 in the amount of ₱10,875,749.43;
c) Urban Bank MC#34182 dated November 8, 1999 in
the amount of ₱42,716,554.22;
d) Urban Bank MC#37661 dated November 23, 1999
in the amount of ₱54,161,496.52;
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 #858
1. signature cards; and
2. statement of account/ledger
III Urban Bank Manager’s Check and their
corresponding Urban Bank’s Check Application Form
as follows:
1. MC#039975 dated January 18, 2000 in the amount
of ₱70,000,000.00;
2. MC#039976 dated January 18, 2000 in the amount
of ₱2,000,000.00;
3. MC#039977 dated January 18, 2000 in the amount
of ₱2,000,000.00; and
4. MC#039978 dated January 18, 2000 in the amount
of ₱1,000,000.00.
Claiming to have learned about the subpoenae duces
tecum/ad testificandum only through news reports,
petitioner JV Ejercito filed motions to quash them
alleging that (a) they violated the bank secrecy laws
(Republic Act No. 14051 as amended by Presidential
Decree No. 1792 and Republic Act 8791); (b) his case
is not one of the recognized exceptions enumerated in
the said laws as he is not an accused in the plunder
and illegal use of alias cases; (c) there appears to be a
conspiracy between the bank officials and the
prosecution to violate the bank secrecy laws as the
requests for the subpoenas contained particulars
which could have been known only if the bank had
released in advance the information containing the
details of his bank accounts; (d) under Republic Act
No. 30192 inquiry by subpoena into bank deposits can
only be had if it was established that: (1) the accused
public official has been found to have acquired during
his incumbency an amount of property manifestly out
of proportion to his salary; (2) the ownership of the
property unlawfully acquired is concealed by
recording the same in the name of friends or relatives;
and (3) the acquisition through legitimate means of
the money so deposited cannot be satisfactorily
shown.
Former President Estrada for himself likewise moved
for the quashal of the subpoenas on the same grounds
relied upon by petitioner JV Ejercito and, additionally,
that the documents sought were not relevant to the
amended information against him.
Acting thereon, the Sandiganbayan issued the assailed
Resolution dated February 7, 2003, denying the
motions to quash the subpoenas holding that its
issuance of the same properly falls under one of the
exceptions to the bank secrecy laws, particularly the
clause in Section 2 of Republic Act (RA) 1405 thus:
"upon order of a competent court in cases of bribery
or dereliction of duty of public officials." The
Sandiganbayan reasoned that the crime of plunder was
analogous to the said cases. It opined that the fact that
petitioner JV Ejercito was not an accused in the
plunder cases was of no moment because RA 3019
allows the inquiry into the bank deposits not only of
the accused public official but also those of his spouse
and children. Further, whether or not the amount of
deposits was manifestly out of proportion to the
income need not be proved first before inquiry could
be had on the bank deposits, rather such inquiry could
be used in proving the case.
The Sandiganbayan also held that petitioner JV
Ejercito’s reliance on Marquez v. Desierto3 was
misplaced. In Marquez, the Court disallowed the in
camera inspection of accounts in connection with a
case pending before the Ombudsman. In the present
case, however, the Sandiganbayan held that there was
precisely a pending case before it, a competent court
within the meaning of the exception to the bank
secrecy laws. The Sandiganbayan also pointed out
that there was nothing irregular in the issuance of the
subpoenas because it was not required that the other
party be notified of such requests. No violation of due
process resulted by such lack of notice since the other
parties would have ample opportunity to examine the
witnesses and documents subpoenaed once they are
presented in court.
A similar motion was filed by petitioner JV Ejercito
involving the subpoenae duces tecum/ad
testificandum issued to the representative of the Urban
Bank and Mrs. Aurora Baldoz of the Philippine
Deposit Insurance Commission (PDIC). The said
motion was denied by Sandiganbayan in the assailed
Resolution dated February 12, 2003. The motions for
reconsideration were denied in the assailed Resolution
dated March 11, 2003.
Petitioner JV Ejercito now comes to the Court
assailing the Sandiganbayan’s resolutions denying his
motions to quash the subpoenae duces tecum/ad
testificandum.
As the petitioner himself submits, the following are
the issues for the Court’s resolution:
WHETHER OR NOT RESPONDENT COURT
ACTED IN EXCESS OF ITS JURISDICTION OR
WITH GRAVE ABUSE OF DISCRETION IN
RULING THAT THE SUBPOENA ON
PETITIONER’S BANK ACCOUNTS FALLS
UNDER THE EXCEPTIONS PROVIDED UNDER
R.A. NO. 1405
WHETHER OR NOT RESPONDENT COURT
ACTED IN EXCESS OF ITS JURISDICTION OR
WITH GRAVE ABUSE OF DISCRETION IN
RULING THAT THE CASES OF PNB VS.
GANCAYCO AND BANCO FILIPINO VS.
PURISIMA ARE APPLICABLE TO THE INSTANT
CASE
WHETHER OR NOT RESPONDENT COURT
ACTED IN EXCESS OF ITS JURISDICTION OR
WITH GRAVE ABUSE OF DISCRETION IN
RULING THAT THE MARQUEZ VS. DESIERTO
CASE IS NOT APPLICABLE TO THE INSTANT
CASE.4
The petitioner does not deny his ownership of Trust
Account No. 858 and Savings Account No. 0116-
17345-9. In fact, he expressly admits the same and
even explains that these were originally opened at
Urban Bank but are now maintained at Export and
Industry Bank.5
The petitioner argues that his accounts do not fall
under any of the exceptions enumerated under Section
2 of RA 1405. The said provision reads:
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, when
the examination is made in the course of a special or
general examination of a bank and is specifically
authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe that
a bank fraud or serious irregularity has been or is
being committed and that it is necessary to look into
the deposit to establish such fraud or irregularity, or
when the examination is made by an independent
auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes
only and the results thereof shall be for the exclusive
use of the bank, or upon written permission of the
depositor, or in case 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. (As amended by PD No. 1792)
Based on this provision, it has been declared that bank
deposits are absolutely confidential except in the
following instances:
(1) In an examination made in the course of a special
or general examination of a bank that is specifically
authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe that
a bank fraud or serious irregularity has been or is
being committed and that it is necessary to look into
the deposit to establish such fraud or irregularity;
(2) In an examination made by an independent auditor
hired by the bank to conduct its regular audit provided
that the examination is for audit purposes only and the
results thereof shall be for the exclusive use of the
bank;
(3) Upon written permission of the depositor;
(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 litigation.6
The petitioner points out that one of the exceptions
mentioned is "upon order of a competent court in
cases of bribery or dereliction of duty of public
officials." Since the cases filed against his father,
former President Estrada, are not for these crimes but
for plunder and illegal use of alias, then the said
exception does not allegedly apply. Further, his
accounts do not fall under exception (6) as they are
not allegedly "subject matter of litigation."
This argument of the petitioner is not persuasive.
Former President Estrada is being charged with
plunder as defined and penalized under Section 2 of
RA 7080,7 to wit:
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 Fifty
million pesos (₱50,000,000.00) shall be guilty of the
crime of plunder and shall be punished by reclusion
perpetua to death. Any person who participated with
the said public officer in the commission of an offense
contributing to the crime of plunder shall likewise be
punished for such offense. In the imposition of
penalties, the degree of participation and the
attendance of mitigating and extenuating
circumstances, as provided by the Revised Penal
Code, shall be considered by the court. The court shall
declare any and all ill-gotten wealth and their interest
and other incomes and assets including the properties
and shares of stocks derived from the deposit or
investment thereof forfeited in favor of the State. (As
amended by Sec. 12, RA 7659).
Section 1(d) of the same law defines "ill-gotten
wealth" as "any asset, property, business enterprise or
material possession of any person within the purview
of Section 2 thereof, 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;
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 the promise
of future employment in any business enterprise or
undertaking;
5. By establishing agricultural, industrial or
commercial monopolies or other combination and/or
implementation of decrees and others 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.
It can be readily gleaned that the gravamen of plunder
is the amassing, accumulating or acquiring of ill-
gotten wealth by a public officer, his family or close
associates. In Philippine National Bank v.
Gancayco,8 the Court explained that "cases of
unexplained wealth are similar to cases of bribery or
dereliction of public 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 enters upon its
discharge does so with full knowledge that his life, so
far as relevant to his duty, is open to public scrutiny."9
A plain reading of the definition of plunder and the
manner by which it may be committed as provided in
RA 7080 reveals that its policy also rests upon the
fundamental tenet that "public office is a public
trust."10 There is thus no cogent reason to treat plunder
any different from the cases of bribery or dereliction
of public duty for purposes of RA 1405.
The petitioner next contends that Gancayco and
Banco Filipino Savings v. Purisima,11 insofar as they
expounded Section 8 of RA 3019 are not applicable to
his case. He reasons that in these cases, when the
subpoenas subject thereof were issued, the text of
Section 8 of RA 3019 provided that: "x x x Properties
in the name of the spouse and unmarried children of
such public official may be taken into consideration x
x x. Bank deposits shall be taken into consideration in
the enforcement of this section, notwithstanding any
provision of law to the contrary notwithstanding."
On the other hand, Section 8 of RA 3019, as presently
worded upon its amendment by Batas Pambansa Blg.
195 on March 16, 1986, reads:
SEC. 8. Prima facie evidence of and 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
dependents of such public official may be taken into
consideration, when their acquisition through
legitimate means cannot be satisfactorily shown. Bank
deposits in the name of or manifestly excessive
expenditures incurred by the public official, his
spouse or any of their dependents including but not
limited to activities in any club or association or any
ostentatious display of wealth including frequent
travel abroad of a non-official character by any public
official when such activities entail expenses evidently
out of proportion to legitimate income, shall likewise
be taken into consideration in the enforcement of this
section, notwithstanding any provision of law to the
contrary. The circumstances hereinabove mentioned
shall constitute valid ground for the administrative
suspension of the public official concerned for an
indefinite period until the investigation of the
unexplained wealth is completed.
The petitioner theorizes that prior to the amendment,
the following may be taken into consideration in the
enforcement of Section 8 of RA 3019:
c) properties in the name of the spouse and unmarried
children of the public official; and
d) bank deposits (without any qualification by law).12
After its amendment on March 16, 1982, the
following may allegedly be taken into consideration in
the enforcement of Section 8 of RA 3019:
c) properties in the name of the spouse and
dependents of the public official; and
d) bank deposits in the name of the public official, his
spouse or any of their dependents.13
According to the petitioner, although he is the son of
former President Estrada, he is absolutely not his
dependent. Petitioner avers that he is in his own right
a legitimate businessman having investments in
several entities when he opened the subject accounts
in Urban Bank, now Export and Industry Bank.
Further, he is also the Municipal Mayor of San Juan,
Manila. He thus urges the Court against applying the
rulings in Gancayco and Banco Filipino in the light of
the amendment of Section 8 of RA 3019.
The petitioner’s contention is equally unpersuasive. It
should be recalled that the petitioner in Banco Filipino
posited that the inquiry into illegally acquired
property should be restricted to property held by or in
the name of the government official or employee or
his spouses and unmarried children. The Court
rejected this argument as it pronounced that:
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
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
acquired 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.14
At this point, it is well to mention that based on the
evidence presented by the prosecution before the
Sandiganbayan, hundreds of millions of pesos flowed
from the petitioner’s Trust Account No. 858 to the
alleged Jose Velarde account purportedly maintained
by former President Estrada at Equitable PCIBank. In
fact, one manager’s check, marked as Exhibit "L" for
the prosecution, in the amount of ₱107,191,780.85
was drawn from, and funded by the said trust account
of petitioner JV Ejercito.
Considering the mind-boggling sums of money that
flowed out of the petitioner’s Trust Account No. 858
and its nexus to former President Estrada’s alleged
Jose Velarde account, it is logical for the prosecution
to pursue the theory that the money in the said trust
account forms part of the unexplained wealth of the
latter. As such, the money in the accounts of the
petitioner may be properly considered as "subject
matter" of the plunder cases falling under number (6)
of the enumerated exceptions to the absolute
confidentiality of bank deposits.
Viewed in this context, the petitioner’s assertion that
since he is no longer a dependent of his father, then
the rulings in Gancayco and Banco Filipino are not
applicable to his case is, to say the least, quite lame.
In fact, to sustain his theory would, as the Court stated
in Banco Filipino, "make available to persons in
government who illegally acquired 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."15
The petitioner bewails the "extremely-detailed"
information contained in the Special Prosecution
Panel’s requests for the subpoenae duces tecum/ad
testificandum. The information upon which the
requests were based was allegedly illegally and
improperly obtained.
The petitioner opines that there had been prior
disclosure by the bank and its personnel of data and
information relative to his trust and savings accounts
considering the very detailed information contained in
the request for the subpoenas, to wit:
a) Trading Order No. 020385 dated January 29, 1999;
b) Confirmation Advice TA 858;
c) Trust Agreement dated January 1999;
d) Special Private Account No. (SPAN) 858;
e) Savings Account No. 0116-17345-9;
f) Letter of authority dated November 23, 1999
re:SPAN 858;
g) Letter of authority dated January 29, 2000 re:
SPAN 858;
h) Letter of authority dated April 24, 2000 re: SPAN
858;
i) Urban Bank check no. 052092 dated April 24, 2000
for the amount of ₱36,572,315.43;
j) Urban Bank check no. 052093 dated April 24, 2000
the amount of ₱107,191,780.85.
According to the petitioner, the bank officials and
personnel are criminally liable for releasing, without
his knowledge, consent and authorization, information
relative to his accounts to the prosecution. Further,
since the information used to support the requests for
the subpoenas was not secured by court order, such
information was illegally acquired and the requests for
subpoenas containing the said illegally acquired
information are already a direct violation of RA 1405.
Consequently, such illegally acquired information
cannot be used in any proceeding. He invokes the
constitutional provision on the right of the people to
be secure in their persons, houses, papers and effects
against unreasonable searches and seizures of
whatever nature and purpose and that any evidence
obtained in violation thereof shall be inadmissible in
evidence.16
The petitioner cites the following pronouncement of
the Court in Marquez:
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 communication. 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.17
A review of the incidents related to the present case
will show why the petitioner’s reliance on Marquez is
misplaced. In the said case, the Office of the
Ombudsman issued a subpoena addressed to Marquez,
a bank officer of Union Bank, directing her to bring
several bank documents for in camera inspection in
connection with an investigation being conducted by
the Office of the Ombudsman.
Marquez refused to comply with the said directive and
sought recourse to the Court by filing a petition and
raising therein the issue of whether the order of the
Office of the Ombudsman to have an in camera
inspection of the questioned account was allowed as
an exception to the law on secrecy of bank deposits.
According to the Court, notwithstanding Section
15(8) 18 of RA 6770 (The Ombudsman Act), "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."19
Marquez was promulgated by the Court on June 27,
2001. However, as early as February 8, 2001 or before
the promulgation of Marquez, the Office of the
Ombudsman, relying on Section 15(8) of RA 6770
and on the basis of information obtained during the
impeachment proceedings of former President
Estrada, issued a subpoena addressed to Urban Bank.
The documents sought under the subpoena pertained
to numbered accounts 727, 737, 747, 757 and 858
allegedly in the names of Jose Velarde, Joseph E.
Estrada, Laarni Enriquez, Guia Gomez, Joy
Melendrez, Peachy Osorio, Rowena Lopez, Kevin or
Kelvin Garcia.
In compliance with the said subpoena, the PDIC, as
then receiver of Urban Bank, issued a certification on
February 13, 2001, 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. Based on the PDIC
certification, the Office of the Ombudsman issued on
February 16, 2001 another subpoena directing the
production of documents pertinent to accounts A/C
858 and T/C 858. The PDIC again complied and
furnished the Office of the Ombudsman on February
21, 2001 certified copies of the following documents:
1. Transaction registers dated 7-02-99, 8-16-99, 9-17-
99, 10-18-99, 11-22-99,1-07-00, 01-17-00, 04-03-00
and 04-24-00;
2. Report of Unregularized TAFs & DTs 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")20
Upon the request of the Office of the Ombudsman, the
PDIC furnished the said office copies of the
manager’s checks. With respect to the other
documents described by petitioner JV Ejercito as
"extremely-detailed," the Special Prosecution Panel
explains how they came to know about these
documents in this manner:
What is more, Attachment "2-a," the compliance letter
from the PDIC, specifically mentioned, as among the
documents transmitted thereby, a LIST (Attachment
"2-B") pertaining to the documents available in
connection with Account No. 858, which list and
documents (listed therein) were furnished the Office
of the Ombudsman:
In compliance with the Subpoena Duces Tecum dated
February 8, 2001 issued by the Office of the
Ombudsman, transmitted are:
1. Certification on available bank documents relating
to A/C 858 and T/A 858 contained in a list attached
thereto xxx (emphasis supplied)
There is a list, therefor, apart from the documents
themselves (furnished the Office of the Ombudsman)
to which said list is attached, from which details can
be lifted. Thus, as to Trading Order No. 020385 dated
January 29, 1999, it must be noted that it is the second
item in the list (Attachment "2-b" hereof) under
document no. A-2. It is also among the documents
furnished by the PDIC.
As to Confirmation Advice TA 858, it must be noted
that this is a specific but not detailed document being
sought in the subpoena regarding Account No. 858, in
general. For those familiar with banking practice, such
is an expected document of course, or one issued in
the course of placements since it has been previously
established that Account No. 858 is a Trust Account.
A confirmation advice, therefore, is a reasonable and
expected document to be found in trust accounts to
evidence participation in specific amounts. A sample
of said confirmation advice, in the amount of ₱200
Million, and which is among the documents officially
furnished the Office of the Ombudsman during the
investigation leading to the charge for plunder against
former President Joseph Estrada, et al., is attached as
Attachment "36."
Further, the list (Attachment "2-b" hereof) enumerates
a number of confirmation advices sufficient for the
plaintiff to ask for the same in the instant subpoena.
However, as earlier explained, even in the absence of
such a list, any person could reasonably expect such a
document in Trust Account No. 858 to evidence
participation.
As to the Trust Agreement dated January 1999, since
the account had been established as a Trust Account,
it is reasonable to presume and expect that there is
such a Trust Agreement on or about January 1999,
coinciding with the date of the Trading Order, existing
in the records.
Surely, this needs no stretch of imagination to reckon
that such a document should exist in a truth account.
As to Special Private Account No. (SPAN) 858,
SPAN 858 is yet another detail derived from a study
of the documents and list furnished by the PDIC to the
Office of the Ombudsman. For example, document
no. C-2 in the list would yield a Trading Order No.
046352 for ₱40 Million with the customer being
identified as SPAN 858.
As to Savings Account No. 0116-17345-9, again,
among the documents furnished by the receiver of
Urban Bank to the Office of the Ombudsman pursuant
to its constitutional powers is a copy of the Specimen
Signature Card for SPAN 858, opened on March 9,
1999 under Account No. 0116-17345-9. It must be
emphasized that Account No. 0116-17345-9 is an
entry in the said document.
As to the Letter of Authority dated November 23,
1999 re: SPAN 858, it is document no. E-3 in the list.
It must be emphasized that this letter of authority
dated November 23, 1999 authorized the release of
more than ₱100 Million worth of manager’s checks,
where the ultimate recipient, for its deposit to the Jose
Velarde account was, Baby Ortaliza. It must be
recalled that prosecution witnesses Teresa Barcelona
and Glyzelyn H. Bejec testified that it was Ortaliza
who deposited the manager’s checks subject of the
letter of authority dated November 23, 1999 to the
Jose Velarde account via Equitable PCIBank
Greenhills Branch.
It must be recalled that plaintiff has presented
voluminous evidence to establish beyond any doubt
that Lucena "Baby" Ortaliza worked for accused
Joseph Estrada in the Office of the Vice President, as
testified to by prosecution witness Remedios Aguilar
of the Office of the Vice President. The same fact is
also shown by Exhibits "Y5," "Z5," "A6" (Ortaliza’s
appoint papers designating her as Vice-Presidential
Staff Officer II signed by then Vice President Jose
Estrada), "B6" (Certification of Employment), "C6"
(Oath of Office), "D6" (Position Description Form),
"E6" (Notice of Salary Adjustment) "F6"
(Certification) and "G6" (Personal Data Sheet).
Ortaliza also worked for accused Joseph Estrada at the
Office of the President as testified to by witness Lita
Sison of the Office of the President and as proved by
Exhibits "I6" (Master Personnel Records File), "H6"
(Registration letter of Ortaliza from the Office of the
President), "J6" (Personnel Assessment Form), "K6"
(appointment papers designating her as Presidential
Staff Officer VI, Internal House, signed by then
President Joseph Estrada), "L6" (Oath of Office), "M6"
(Certification of Employment), "N6" (Position
Description Form), "O6" (Personal Data Sheet) and
"P6" (Ortaliza’s public service record). The same
"Baby" Ortaliza also transacted on behalf of former
President Joseph Estrada with respect to his personal
bank accounts. Indeed, Baby Ortaliza, as testified to
by numerous prosecution witnesses and as shown by
the documents they identified, is also the same person
who transacted with Equitable PCIBank in connection
with the Jose Velarde account and with Citibank in
connection with the conjugal bank account of former
President Joseph Estrada and Sen. Luisa Ejercito
wherein the ₱8 Million check of Gov. Luis "Chavit"
Singson was deposited. In addition to the foregoing
and the testimonies of Clarissa Ocampo and Manuel
Curato of Equitable PCIBank, the documents relating
to Trust Account No. 858, thus, constitute further
proof that accused Joseph Estrada is Jose Velarde.
Indeed, the surfacing of the name Baby Ortaliza in
this Account No. 858 and her participation herein,
coupled with the previous evidence presented as to
who she worked for, all the more make Trust Account
No. 858 not only relevant and material, but also the
very subject matter of litigation in the instant case.
Indeed, her participation herein more than establishes
a pattern of behavior, a custom, a modus operandi
among accused Joseph Estrada, herself and the other
co-accused in appearing for, representing, accused
Joseph Estrada and transacting with respect to his
bank accounts.
As to Letter of Authority dated January 17, 2000 re
SPAN 858, it is document no. E-4 in the list.
As to Letter of Authority dated April 24, 2000 re:
SPAN 858, it is document no. E-5 in the list.
As to Urban Bank Check No. 052093 dated April 24,
2000 in the amount of P36,572,315.43 and Urban
Bank Check No. 052093 dated April 24, 2000 in the
amount of ₱107,191,780.85, the foregoing details
were culled from the contents of the letter of authority
dated April 24, 2000. Indeed, said letter of authority
authorizes the issuance of manager’s checks in
accordance with the details therein provided:
1) AMOUNT :PHP107,191,780.85
DATE :APRIL 24, 2000
PAYEE :CASH
MC # :052093
2) AMOUNT :PHP36,572,315.43
DATE :APRIL 24, 2000
PAYEE :CASH
MC# :052092
It must be emphasized that the foregoing details were
adopted in seeking for the production of the two (2)
Urban Bank manager’s checks.21
As shown by the Special Prosecution Panel, some of
the details about the accounts of petitioner JV Ejercito
were obtained from various sources gathered during
the impeachment proceedings against former
President Estrada. The various sources included
reports, articles and investigative journals, which are
legitimate sources.
The other details were gathered upon compliance by
the PDIC and/or Urban Bank with the subpoenas
issued by the Office of the Ombudsman prior to the
promulgation by the Court of Marquez. The Office of
the Ombudsman, in issuing the subpoenas relied on
Section 15(8) of RA 6770 giving it the power "to
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."
The Marquez ruling, it bears reiterating, came after
the subpoenas were issued by the Office of the
Ombudsman and the PDIC and Urban Bank had
already complied therewith by furnishing it the
necessary information. The said information cannot
thus be considered "illegal" because Marquez, which
applied and interpreted the power of the Office of the
Ombudsman under Section 15(8) of RA 6770, cannot
be given retroactive application. In Filoteo, Jr. v.
Sandiganbayan,22 the Court emphasized that "judge-
made" laws are to be applied prospectively:
The prospective application of "judge-made" laws was
underscored in Co v. Court of Appeals where the
Court ruled thru Chief Justice Andres R. Narvasa that
in accordance with Article 8 of the Civil Code which
provides that "(j)udicial decisions applying or
interpreting the laws or the Constitution shall form
part of the legal system of the Philippines," and
Article 4 of the same Code which states that "(l)aws
shall have no retroactive effect unless the contrary is
provided," the principle of prospectivity of statutes,
original or amendatory, shall apply to judicial
decisions, which, although in themselves are not laws,
are nevertheless evidence of what the law means.23
Contrary to the petitioner’s contention, therefore, the
"extremely-detailed" information of the Office of the
Ombudsman on which it based its requests for
subpoenae duces tecum/ad testificandum can hardly
be characterized as "illegal." In any case, even if
Marquez were to be given retroactive application,
still, the crux of the Court’s ruling in the said case has
no application to the present case. In Marquez, the
Court disallowed the Ombudsman from conducting an
in camera inspection of the bank account because
"there was no pending case in court which would
warrant the opening of the bank account for
inspection."
On the other hand, it is indubitable that in the present
case, the plunder and illegal use of alias cases against
former President Estrada are pending before the
Sandiganbayan and, unlike in Marquez, the Special
Prosecution Panel has asked leave of court in
accordance with RA 1405 for the production of the
said documents. Consequently, the subpoenae duces
tecum/ad testificandum issued by the Sandiganbayan
are allowable exceptions to the bank secrecy laws as
they properly fall under the following categories in
Section 2 thereof:
(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 litigation.24
Finally, the petitioner has sought to suppress the
"extremely-detailed" information that the Special
Prosecution Panel has requested. He invokes his
constitutional right against unreasonable search and
seizures and that any evidence obtained in violation
thereof shall be inadmissible in evidence. In her
concurring and dissenting opinion, Mme. Justice
Angelina Sandoval-Gutierrez agrees with petitioner
JV Ejercito as she supports his plea to quash the
subpoenae duces tecum/ad testificandum issued by the
Sandiganbayan characterizing them as "unreasonable
and oppressive" for being based on information
allegedly obtained in violation of his constitutional
right to privacy.
To my mind, the application of the exclusionary rule
or the "fruit of the poisonous tree" doctrine is not
warranted in the present case not only because, as
discussed earlier, there is no "illegally obtained
evidence" to speak of but also because nowhere is it
stated in RA 1405, and even in Marquez, that a
violation thereof warrants application of the
exclusionary rule. Section 5 of RA 1405 provides that
"[a]ny 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."
Interestingly, the United States has the Bank Secrecy
Act (BSA).25 However, unlike RA 1405, the US BSA
was precisely enacted by the US Congress as a means
of providing federal law investigators with an
effective tool to fight criminal financial activity:
The conclusion reached by Congress in the early
hearings was summarized by Robert Morgenthau,
U.S. Attorney, Southern District of New York, "Secret
numbered foreign bank accounts have become an ever
increasing widespread and versatile tool for the
evasion of our laws and regulations and for the
commission of crimes by American citizens and for
hiding the fruits of crimes already committed.
This wave of criminal activity is fostered by the
failure of fairly complete criminal investigations to
ripen into prosecutions because there has been no
disclosure of the real parties in interest; investigators
cannot point to any particular individual. Even if
identity is revealed, the evidence remains inadmissible
hearsay. Most modern secrecy law prohibits the
banker from coming forth with the disclosure. Thus,
the prosecution lacks the competent and qualified
business representative who could state evidence of
account information as a business records exception to
the hearsay rule.
In response to the public outcry over this reported
criminal activity and as a means of providing federal
law investigators with an effective investigative tool,
Congress enacted the Bank Secrecy Act (BSA).26
The important feature of the BSA is its regulatory
structure that is designed to be used as an
investigative tool in the fight against white collar
crime, and its passage is a broad delegation of
commerce power to the Treasury Department. Title I
thereof authorizes the Secretary of the Treasury
Department to require financial institutions to record
vast amounts of information on financial transactions.
Title II provides a regulatory access to information via
required reporting by the financial institutions and
expressly authorized governmental interagency
exchange of the accessed information.27
In California Bankers Association v. Schulz,28 the US
Supreme Court held that the BSA is a constitutionally
valid and proper regulatory device. In United States v.
Miller,29 the US Supreme Court reaffirmed its stance
by holding that government access to a customer
account records is not an unreasonable search and
seizure even if realized through defective legal
process and without customer notification.
Miller was convicted of operating an illegal still,
functioning as a distiller without having posted bond,
and committing tax evasion. The convictions were
based on evidence subpoenaed pursuant to the BSA.
Miller moved to suppress the bank records on the
grounds that they were obtained by means of a
defective subpoena duces tecum which resulted in a
seizure violative of the fourth amendment.
The US Supreme Court held that Miller had no
"protectable" fourth amendment interest in the
subpoenaed documents. Justice Powell, speaking for
the US Supreme Court, reasoned that the subpoenaed
documents were not Miller’s "private papers" and that
he could assert neither ownership nor possession.
Rather, these were the business records of the bank.
The said Court also debunked Miller’s claim that he
had a legitimate "expectation of privacy" concerning
the contents of the bank documents, e.g., checks and
deposit slips:
Even if we direct our attention to the original checks
and deposit slips, rather than to the microfilm copies
actually viewed and obtained by means of the
subpoena, we perceive no legitimate "expectation of
privacy" in their contents. The checks are not
confidential communications but negotiable
instruments to be used in commercial transactions. All
of the documents obtained, including financial
statements and deposit slips, contain only information
voluntarily conveyed to the banks and exposed to
their employees in the ordinary course of business.
The lack of any legitimate expectation of privacy
concerning the information kept in bank records was
assumed by Congress in enacting the Bank Secrecy
Act, the express purpose of which is to require records
to be maintained because they "have a high degree of
usefulness in criminal tax, and regulatory
investigations and proceedings."
The depositor takes the risk, in revealing his affairs to
another, that the information will be conveyed by that
person to the Government. The Court has held
repeatedly that the Fourth Amendment does not
prohibit the obtaining of information revealed to a
third party and conveyed by him to Government
authorities, even if the information is revealed on the
assumption that it will be used only for a limited
purpose and the confidence placed in the third party
will not be betrayed.30
Because the customer had no "protectable" fourth
amendment rights, according to the US Supreme
Court, the case was controlled by the general rule that
a subpoena issued to a third party, for that party’s
records, does not violate the rights of the third party’s
client.
Largely in response to Miller and California Bankers,
the US Congress enacted the Right to Financial
Privacy Act of 1978 (RFPA).31 It enumerates the legal
processes available for federal agency access to
customer’s account information. Access is
conditioned upon one of the following procedures:
customer authorization,32 administrative subpoena or
summons,33 search warrant,34 judicial
subpoena,35 grand jury subpoena,36 or formal written
agency request.37
Case law provides, however, that a violation of the
procedures set forth in RFPA does not warrant
exclusion of the evidence obtained because courts
should not imply a suppression remedy unless the
statute expressly refers to the exclusionary rule. The
RFPA states that civil penalties are the only
authorized remedy for its violation.38 In United States
v. Frazin,39 for example, Frazin and Miller were
charged with mail and wire fraud. During its
investigation, banks furnished the Federal Bureau of
Investigation (FBI) information about the account of
Frazin without his knowledge or consent and without
warrant. Frazin sought to suppress the bank records
and other information obtained in violation of RFPA.
The United States Court of Appeals, Ninth Circuit,
held against Frazin ratiocinating that had Congress
intended to authorize a suppression remedy, it surely
would have included it among the remedies it
expressly authorized. The said US appellate court
likewise refused to suppress the financial evidence
pursuant to its supervisory powers over the
administration of justice. It opined that "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 where we
to authorize a remedy not provided for by the statute."
The said ruling in Frazin was reiterated by the US
Court of Appeals, Second Circuit, in United States v.
Daccarett,40 a civil forfeiture proceeding instituted by
the United States Government against monies of Cali
cartel, a Colombian conglomerate headed by Jose
Santacruz-Londono, which allegedly imported 3000
kilograms of cocaine a month into the US. The cartel
allegedly used bank accounts throughout the US,
Europe, Central and South America to store and move
its narcotic proceeds. Funds were moved through
various international banks by means of electronic
fund transfers for ultimate deposit into Colombian
bank accounts.
Several associates of Santacruz-Londono were
arrested in Luxembourg. Anticipating that the arrests
would trigger an effort by the cartel to move its
monies to Colombia, the Luxembourg law
enforcement authorities requested the assistance of
several countries to freeze monies related to the cartel.
The US Drug Enforcement Agency (DEA) instructed
intermediary banks in New York to attach "all funds"
on deposit in the names of entities and individuals
connected with Santacruz-Londono. The DEA also
subpoenaed from the intermediary banks financial
records of related accounts.
The entities and individuals who claimed to be the
beneficiaries of the seized funds argued, among
others, that their fourth amendment rights against
unreasonable searches and seizures were violated
when the government gained access to their financial
records from the intermediary banks without a
warrant. They contended that evidence obtained from
the subpoenas should have been suppressed at trial.
The US appellate court, in rejecting this argument,
cited Frazin and succinctly held that "because the
RFPA states that civil penalties are the only
authorized remedy for its violation, it would be
inappropriate for the courts to imply a suppression
remedy as well."
Also in United States v. Thompson,41 the US Court of
Appeals, Eleventh Circuit, made the following
disquisition:
x x x [T]he defendant would have to show that
Congress had provided such a remedy for a violation
of the statute, either specifically or by inference.
Clearly Congress intended to place limits on the
Government’s ability to monitor the private activities
of individuals when it passed this statute. Congress
did not, however, suggest that any information
obtained in violation of the statute’s provisions should
be excluded. Instead the statute only provides for fines
and possible imprisonment for knowing violations.
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. Absent a specific reference to the exclusionary
rule, it is not appropriate for the courts to read such a
provision into the act.42
Under prevailing jurisprudence in the United States
therefore, violations of the RFPA do not warrant the
 3
application of the exclusionary rule with respect to the  412 Phil. 387 (2001).
evidence obtained. 4
 Memorandum of the petitioner, p. 17.
Nonetheless, in the present case, there is no violation 5
 Id. at 3.
of RA 1405 precisely because petitioner JV Ejercito’s
6
case properly falls under the recognized exceptions to  Union Bank of the Philippines v. Court of Appeals,
the rule on confidentiality of bank deposits. Further, 378 Phil. 1177 (1999).
the Special Prosecution Panel has properly requested 7
 An Act Defining and Penalizing the Crime of
the Sandiganbayan for the issuance of the subpoenae Plunder.
duces tecum/ad testificandum for the production of
8
documents relating to the bank accounts of petitioner  122 Phil. 503 (1965).
JV Ejercito in connection with the plunder and illegal 9
 Id. at 96.
use of alias cases against former President Estrada.
10
The Sandiganbayan, in issuing the assailed  Section 1, Article XI of the 1987 Constitution.
resolutions, clearly committed no grave abuse of 11
 L-56429, May 28, 1988, 161 SCRA 576.
discretion. 12
 Supra note 4, at 44-45.
ACCORDINGLY, I vote to DISMISS the petition. 13
 Id.
ROMEO J. CALLEJO, SR. 14
Associate Justice  Supra note 11, at 582.
15
 Id.
16
 Sections 2 and 3, Article III of the Constitution
Footnotes read;
1
 The Secrecy of Bank Deposits Act. SEC. 2. The right of the people to be secure in their
persons, houses, papers, and effects against
2
 The Anti-Graft and Corrupt Practices Act. unreasonable searches and seizures of whatever nature
and for any purpose shall be inviolable, and no search or inquiry, including the power to examine and have
warrant or warrant of arrest shall issue except upon access to bank accounts and records;
probable cause to be determined personally by the 19
 Supra note 3, at 397.
judge after examination under oath or affirmation of
20
the complainant and the witnesses he may produce,  Memorandum of respondent People, pp. 63-64.
and particularly describing the place to be searched 21
 Memorandum of respondent People, pp. 66-72.
and the persons and things to be seized.
22
 331 Phil. 531 (1996).
SEC. 3. (1) The privacy of communication and
23
correspondence shall be inviolable except upon lawful  Id. at 573-574. Citations omitted.
order of the court, or when public safety or order 24
 Supra note 6.
requires otherwise as prescribed by law.
25
 12 U.S.C. §§ 1730d, 1829b, 1951-1959 (1982); 31
(2) Any evidence obtained in violation of this or the U.S.C. §§ 5311-5322 (1982), as amended by 31
preceding section shall be inadmissible for any U.S.C.A. §§ 5316 (a), 5317(c), 5323 (West Supp.
purpose in any proceeding. 1985).
17
 Supra note 3, at 398-399. 26
 Eldridge, The Bank Secrecy Act; Privacy, Comity,
18
 Section 15 (8) of RA 6770 reads: and the Politics of Contraband, 11 N.C.J Int’l L. &
Com. Reg. 667 (Summer, 1986).
SEC. 15. Powers, Functions and Duties. – The Office
27
of the Ombudsman shall have the following powers,  Id. at 672.
functions and duties: 28
 416 US 21 (1974).
xxxx 29
 425 US 435 (1976).
(8) Administer oaths, issue subpoena and subpoena 30
 Id. at 442-443.
duces tecum and take testimony in any investigation
31
 12 U.S.C. §§ 3401-3422.
32
 Id. § 3404. I regret I cannot give my assent to the ponencia of
33 Madame Justice Conchita Carpio Morales. To my
 Id. § 3405.
mind, no member of a democratic society can
34
 Id. § 3406. honestly argue that there is nothing wrong in an
35
 Id. § 3407. examination of a bank account to the complete
ignorance of its holder. This is the kind of conduct
36
 Id. § 3420. referred to in Rochin v. California,1 as one that
37
 Id. § 3408. "shocks the conscience," "one that is bound to offend
hardened sensibilities." This abusive conduct must be
38
 12 U.S.C. § 3417(d). stricken if we are to maintain decency, fair play, and
39
 780 F.2d 1461 (1986). fairness in our judicial system. Nothing can destroy a
40
government more quickly than its failure to observe
 6 F.3d 37 (1993). its own laws, its disregard of the character of its own
41
 936 F.2d 1249 (1991). existence. The government should not demean but
42
protect the Bill of Rights, because the highest function
 Id. at 1251. of authority is to exalt liberty. Here, petitioner Joseph
Victor G. Ejercito’s right to privacy has been violated.
The Lawphil Project - Arellano Law Foundation I cannot, in my conscience, tolerate such violation.
Zones of privacy are recognized and protected by our
laws.2 Within these zones, any form of intrusion is
impermissible unless excused by law and in
accordance with customary legal process. The
DISSENTING OPINION meticulous regard this Court accord to these zones
arises not only from the conviction that the right to
SANDOVAL-GUTIERREZ, J.: privacy is a "constitutional right" and "the right most
valued by civilized men,"3 but also from our
adherence to the Universal Declaration of Human Estrada, et al." for plunder, pending before the
Rights which mandates that "no one shall be subjected Sandiganbayan (respondent herein), had requested the
to arbitrary interference with his privacy" and said court to issue subpoenae duces tecum/ad
"everyone has the right to the protection of the law testificandum to the EIB for the production and
against such interference or attacks."4 examination of his two (2) bank accounts.
For easy reference, a narration of the factual and legal Alarmed, petitioner attended the hearing of the
antecedents is imperative. plunder case set the next day and submitted to
respondent Sandiganbayan a letter expressing his deep
This petition for certiorari under Rule 65 of the 1997
concern on his bank accounts being the subject of a
Rules of Civil Procedure, as amended, seeks to annul
"subpoena duces tecum/ad testificandum." He also
and set aside Sandiganbayan (a) Resolutions, dated
requested that he be given time to retain the services
February 75 and February 12, 2003, 6 denying Joseph
of a lawyer, thus:
Victor G. Ejercito’s two succeeding motions to quash
three (3) subpoenae duces tecum/ad testificandum; "Your Honors:
and (b) Resolution dated March 11, 20037 denying his
It is with much respect that I write this court relative
motion for reconsideration all issued in Criminal Case
to the concern of subpoenaing the undersigned’s bank
No. 26558 for plunder against former President
account which I have learned through the media.
Joseph Ejercito Estrada, et al.
I am sure the prosecution is aware of our banking
Joseph Victor G. Ejercito (petitioner herein) is the
secrecy laws everyone supposed to observe. But,
holder of two (2) bank accounts with the Urban Bank
instead of prosecuting those who may have breached
and Urbancorp Investment, Inc., now Export and
such laws, it seems it is even going to use supposed
Industry Bank (EIB); one is Trust Account No. 858
evidence which I have reason to believe could only
and the other is Savings Account No. 0116-17345-9.
have been illegally obtained.
On January 26, 2003, petitioner learned from the
The prosecution was not content with a general
media that the Special Prosecution Panel in Criminal
request. It even lists and identifies specific documents
Case No. 26558,8 entitled "People vs. Joseph Ejercito
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
xxxxxx
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
prosecution’s request for the issuance of subpoena
concerning my accounts." 9 (Emphasis supplied)
To petitioner’s surprise, respondent Sandiganbayan
advised him "to file a motion to quash" not later than
12:00 noon of January 28, 2003, or the following
day. It dawned upon petitioner that respondent
court had already issued a "subpoena duces tecum/ad
testificandum."
Upon verification of the records, petitioner found that
the Special Prosecution Panel had filed with
respondent Sandiganbayan two (2) requests for the
issuance of subpoenae duces tecum/ad testificandum,
one dated January 2010 and the other January
23,11 2003 for the EIB President or his authorized
representative to appear and testify on certain dates
and to bring the original or certified true copies of the
following documents:
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
₱2,000,000.00;
b) Urban Bank Corp. MC# 34181 dated November 8,
1999 in the amount of ₱10,875,749.43;
c) Urban Bank MC# 34182 dated November 8, 1999
in the amount of ₱42,716,554.22;
d) Urban Bank Corp. MC#37661 dated November 23,
1999 in the amount of ₱54,161,496.52;
5. Trust Agreement dated January 1999;
Trustee: Joseph Victor G. 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 # 858
1. Signature Cards; and
2. Statement of Account/Ledger
III. Urban Bank Manager’s Checks and their
corresponding Urban Bank Manager’s Checks
Application Form, as follows:
1. MC # 039975 dated January 18, 2000 in the amount
of ₱70,000,000.00;
2. MC # 039976 dated January 18, 2000 in the amount
of ₱2,000,000.00;
3. MC # 039977 dated January 18, 2000 in the amount
of ₱2,000,000.00; and
4. MC# 039978 dated January 18, 2000 in the amount
of ₱1,000,000.00;
Petitioner also came to know that respondent court
had granted both requests12 and issued the
corresponding subpoenae duces tecum/ad
13 14
testificandum dated January 21  and 24,  2003.
Immediately, or on January 29, 2003, petitioner filed a
motion to quash the two (2) subpoenae.15
Meanwhile, on January 31, 2003, the Special
Prosecution Panel filed another request for the
issuance of a subpoena duces tecum/ad testificandum
pertaining to the same documents.16 On the same day,
respondent Sandiganbayan granted the request and
issued the corresponding subpoena. Again, petitioner
filed a motion to quash.17
In both motions to quash, petitioner bewailed the
"extremely-detailed" information contained in the
Special Prosecution Panel’s requests, alleging that a
prior illegal disclosure of his bank accounts took
place.
During the exchange of pleadings, petitioner learned
that there was indeed a prior disclosure of his bank
accounts. In fact, as early as February 8, 2001, the
Office of the Ombudsman had issued a subpoena
duces tecum addressed to the "President or Chief
Executive Officer of Urban Bank" requiring him to
produce "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, Joseph E. Estrada, Laarni Enriquez, Guia
Gomez, Joy Melendrez, Peachy Osorio, Rowena
Lopez, Kevin or Kelvin Garcia, 727, 737, 747, 757
and 858."18
On February 13, 2001, the Philippine Deposit
Insurance Corporation (PDIC), as receiver of Urban
Bank, responded to the subpoena and certified the
availability of bank documents relating to "T/A 858
and A/C 858" and the non-availability of bank records
as to the other accounts, thus:
We certify that from the gathering and research we
have conducted to date into the records of the closed
Urban Bank under the custody and control of the
Philippine Deposit Insurance Corporation (PDIC), as
Receiver of said bank, the documents enumerated in
the attached list refer to "A/C 858" and "T/A 858."
We further certify that Accounts "A/C 858" and "T/A
858" do not appear in the Registry of Deposits of
Urban Bank and therefore said accounts are not part
of the deposit liabilities of said bank.19
Based on the foregoing certification, the Office of the
Ombudsman again issued a subpoena duces tecum
dated February 16, 2001 directing the production of
documents pertinent to accounts "T/C 858 and A/C
858."20 In compliance, the PDIC furnished the Office
of the Ombudsman certified copies of the following
documents:
1. Transaction registers dated 7-02-99, 8-16-99, 9-17-
99, 10-18-99, 11-22-99, 1-07-00, 01-17-00, 04-03-00
and 04-24-00;
2. Report of Unregularized TAF & DTS 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.21
The Office of the Ombudsman, in another subpoena
duces tecum22 dated March 7, 2001, directed the
production of Manager’s/Cashier’s Checks in the
following amounts:
a. ₱10,875,749.43 dated November 8, 1999
b. ₱ 2,000,000.00 dated January 18, 2000
c. ₱ 2,000,000.00 dated January 18, 2000
d. ₱ 1,000,000.00 dated January 18, 2000
e. ₱70,000,000.00 dated January 18, 200023
The PDIC complied with the said subpoena.
On the basis of the foregoing documents released by
the PDIC to the Office of the Ombudsman, the
Special Prosecution Panel filed with respondent
Sandiganbayan its own requests for the issuance of
subpoenae duces tecum/ad testificandum.
On February 7, 2003, respondent Sandiganbayan
denied petitioner’s motion to quash subpoenae duces
tecum/ad testificandum dated January 21 and 24,
2003.24 Thus:
"At the threshold, we state that we are not in accord
with the stand of the prosecution that a trust account is
not included in the term "deposit of whatever nature."
A "bank deposit" is defined as a contractual
relationship ensuing from the delivery, by one known
as the depositor of money, funds or even things into
the possession of the bank, which receives the same
upon the agreement to pay, repay or return, upon the
order or demand of the depositor, the money, funds,
or equivalent amount. This agreement on the part of
the bank is usually a tacit one and implied, and it may
include an implied promise to pay interest upon the
deposit, depending upon the nature of the deposit and
the account into which it is placed (10 Am Jur 2d
Banks 337, cited in page 121, Ballentine’s Law
Dictionary, Third Edition). x x x The Court is inclined
to adopt the broader or expanded definition of the
word "deposit" in R.A. 1405 as to encompass trust
accounts consistently with the state policy declared in
Section 1 thereof which is "to give encouragement to
the people to deposit their money in banking
institution 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." In fact, the law itself
adverts to "deposit of whatever nature."
xxxxxx
The Bank Secrecy Laws which prohibit the disclosure
of or inquiry into deposits with any banking
institution provides for exceptions as follows:
xxxxxx
3. Upon order of a competent court in cases of (a)
bribery or dereliction of duty or (b) where the money
deposited or invested is the subject matter of
litigation;
xxxxxx
We now agree with the prosecution that the issuance
of the subpoena to Export and Industry bank
(formerly Urban Bank) and PDIC falls under the
exception. The questioned subpoena was issued by
this Court in relation to the instant cases against
former President Joseph Estrada for Plunder and
Illegal Use of Alias. The case for plunder which
involves betrayal of public trust, undeniably, is
analogous to the cases enumerated by law for the
exception to apply. As expressed by the Supreme
Court in the cases of Philippine National Bank v.
Gancayco (ibid) and Philippine National Bank v.
Dionisio (9 SCRA 10), "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 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." x x x
xxxxxx
Further, movant’s claim that the subpoena must be
quashed in view of the apparent conspiracy between
the prosecution panel, officials of Export and Industry
Bank, and Ms. Aurora Baldoz of the Philippine
Deposit Insurance Corporation as revealed by the fact
that the prosecution panel knows the documents
which are supposedly very internal to the bank and its
clients, deserves scant consideration. Aside from it
being not recognized as one of the grounds to quash
the subpoena, the mere fact that the request for
subpoena specified the documents which are to be
brought to court, cannot, by itself proved that there
was conspiracy on the part of the prosecution, the
officials of Export and Industry Bank as well as of the
officials of the PDIC to violate the bank secrecy law.
As clarified by the prosecution, the documents listed
in the request were obtained in February, 2001,
pursuant to the power conferred on the Ombudsman
under Section 15 (8) of R.A. 6770, long before the
Supreme Court promulgated the Marquez v. Desierto
case. Conspicuously, since the investigation was
conducted in February, 2001, these cases are already
pending, hence, the Marquez ruling will not likewise
apply. Besides, as already discussed, we declare that
this case falls under the exception of the aforecited
law, hence, the premise on which this argument
proceeds, does not any more exist.
xxxxxx
x x x The allegation that movant’s constitutional right
to due process was violated by the failure of the
prosecution to give notice to him and accused Estrada
is devoid of merit. In the case of Adorio v. Bersamin
(273 SCRA 217), the Supreme Court ruled that:
‘Contrary to petitioner’s allegations, there was
nothing irregular in the issuance of the
subpoenas duces tecum. Requests by a party for the
issuance of subpoenas do not require notice to other
parties to the action. No violation of due process
results by such lack of notice since the other parties
would have ample opportunity to examine the
witnesses and documents subpoenaed once they are
presented in court.’"
On February 12, 2003, respondent Sandiganbayan
likewise denied petitioner’s motion to quash subpoena
duces tecum/ad testificandum dated January 31, 2003.
Petitioner filed a motion for reconsideration but was
denied in the Resolution dated March 11, 2003.
Hence, the present petition for certiorari anchored on
the following arguments:
(1) Whether the inquiry by subpoenae into the bank
accounts of petitioner falls under the exceptions
provided for by R.A. No. 1405; and
(2) Whether petitioner should have been notified by
respondent court, by furnishing him copies of the
subpoenae, that his bank accounts are subject of the
litigation therein.
Petitioner maintains that the inquiry into his bank
accounts does not fall under the exceptions provided
by Republic Act No. 1405 (Secrecy of Bank Deposits
Act), i.e., "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." He stresses that plunder
is neither bribery nor dereliction of duty and that his
bank accounts are not the "subject matter"25 of the
plunder case. In this regard, he contends that the
rulings of this Court in Philippine National Bank v.
Gancayco26 and Banco Filipino Savings and Mortgage
Bank v. Purisima27 are not applicable to the instant
case. Finally, he insists that the "extremely-detailed"
information in the Special Prosecution Panel’s
requests for subpoenae duces tecum/ad testificandum
shows prior illegal disclosure of his bank accounts, in
violation of his constitutional right to due process and
privacy.
On the other hand, respondent People contends that
petitioner’s bank deposits are actually proceeds of a
"trust account," hence, subject of inquiry under R.A.
No. 1405.
I find the petition impressed with merit.
The case at bar brings to fore R.A. No. 1405 or the
Secrecy of Bank Deposits Act. A glimpse at its
history provides an adequate backdrop for our ensuing
discussion.
On September 9, 1955, the Philippine Legislature
enacted R.A. No. 1405. Its rationale is to discourage
private hoarding and encourage people to deposit
money in banks to be utilized in authorized loans. It
happened that after World War II, capital and credit
facilities for agricultural and industrial development
in the country were lacking. Rehabilitation of the
banking system became a major government thrust.
However, private hoarding of money was rampant
because people feared government inquiry into their
bank deposits and bond investments for tax collection
purposes. Thus, even if the members of Congress at
that time recognized the possible danger of R.A. No.
1405, such as providing a climate conducive to tax
evasion, still, they passed the law with the belief that
the benefits accruing to the economy with the influx
of deposits and bond investments would
counterbalance immeasurably the losses of the
Government from such tax evasion.28 Section 2, the
core of R.A. No. 1405, then reads:
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.
In 1981, Former President Ferdinand E. Marcos
issued Presidential Decree (P.D.) No. 1792 to provide
for additional exceptions to the "absolutely
confidential nature" of bank deposits. These additional
exceptions are: (1) when the examination is made in
the course of a special or general examination of a
bank; or (2) when the examination is made by an
independent auditor hired by the bank to conduct its
regular audit. Section 2 of R.A. No. 1405, as
amended, thus reads:
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, when
the examination is made in the course of a special or
general examination of a bank and is specifically
authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe that
a bank fraud or serious irregularity has been or is
being committed and that it is necessary to look into
the deposit to establish such fraud or irregularity, or
when the examination is made by an independent
auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes
only and the results thereof shall be for the exclusive
use of the bank, or upon written permission of the
depositor, or in case 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. (Emphasis supplied)
The foregoing amendment was premised on the
realization that the old provision adversely limited the
examining authority of the Central Bank. Allegedly,
such limitation was contrary to the effective
supervision of banks and endangered the safety of
deposits.
However, in 1992, P.D. No. 1792 was expressly
repealed by Republic Act (R.A.) No. 7653, otherwise
known as the New Central Bank Act.29 Aside from
encouraging domestic savings, R.A. No. 7653 sought
to uphold the right of citizens to privacy. Also, the
then members of Congress were of the consensus that
relaxed disclosure rules are not conducive to healthy
competition among banks and other financial
institutions.30
Thus, we go back to the original provision of Section
2 of R.A. No. 1405 allowing deposits to be
"examined, inquired or looked into" under the
following exceptions: (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; or (4) in cases
where the
money deposited or invested is the subject matter of
the litigation.31
I shall now resolve both issues.
Inquiry Falls Under the Exceptions
to the Confidentiality Rule and, therefore,
may be Inquired into by Respondent Sandiganbayan.
Petitioner contends that plunder is neither bribery nor
dereliction of duty, hence, the inquiry on his bank
accounts cannot be considered an exception under
R.A. No. 1405.
The argument is utterly without merit.
In the 1965 Philippine National Bank v.
Gancayco32 case, this Court held for the first time that
the exception "upon order of a competent court in
cases of bribery or dereliction of duty of public
officials" is not exclusive, and that analogous cases
may be considered as falling within the same
exception. There, "cases of unexplained wealth" were
considered analogous to "cases of bribery or
dereliction of duty." The Court’s instructive
pronouncement is quoted hereunder:
"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 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.
Twenty-three (23) years thereafter, in 1988, the Court
echoed the same principle in the Banco Filipino
Savings and Mortgage Bank v.
33
Purisima.  Incidentally, both cases involve Republic
Act No. 3019, the Anti-Graft and Corrupt Practices
Act.
Today, this Court is faced with this important query –
is plunder analogous to bribery, dereliction of duty or
cases of unexplained wealth? I need not indulge in a
lengthy disquisition to show that plunder belongs to
the same genre of cases. Under Republic Act No.
7080, An Act Penalizing the Crime of Plunder, this
crime is committed by a public officer who, by
himself or in connivance with others, amasses,
accumulates or acquires ill-gotten wealth, the
aggregate amount or total value of which is at least
Fifty Million Pesos (₱50,000,000.00), through a
combination or series of overt or criminal acts. The
essence of plunder lies in the phrase "combination or
series of overt or criminal acts." Bribery and
violations of R.A. No. 3019 are only some of the
criminal acts that comprise the more serious crime of
plunder. In other words, these are some of the
predicate crimes of plunder.34 All the criminal acts are
enumerated hereunder:
(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;
(3) By the illegal or fraudulent conveyance or
disposition of assets belonging to the National
Government or any of its subdivision, 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 the 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 person or special interests; or
(6) By taking undue advantage of official position, that may be considered, when a public official’s
authority, relationship, connection, or influence to acquisition of properties through legitimate means
unjustly enrich himself or themselves at the expense cannot be satisfactory shown, are only those of his
and to the damage and prejudice of the Filipino people "spouse and unmarried children."38 However, under
and the Republic of the Philippines. the new provision, the phrase "spouse and unmarried
children" was changed to "spouse and
A reading of the provisions of the Revised Penal Code 39
dependents."  Thus, he contends that while he is a
concerning bribery35 and dereliction of duty,36 as well
"son" of the accused in the plunder case, he is not his
as corrupt practices under R.A. 3019, readily shows
"dependent."40
the striking resemblance between them and the
predicate crimes of plunder. Paragraph 2 actually Petitioner’s argument lacks merit.
constitutes indirect bribery while paragraphs 4 and 5
The amendment of Section 8 could not have the effect
constitute corrupt practices under R.A. No.
of limiting the government’s inquiry only to the
3019.37 Logically, if the criminal acts that make up the
properties of the "spouse and dependents" of a public
crime of plunder are categorized as exceptions to the
official. This is in light of this Court’s broad
confidentiality rule, with more reason that the more
pronouncement in Banco Filipino that the inquiry
serious crime of plunder should be considered as
extends to "any other persons," and that "restricting
falling within the same exception. All involve
the inquiry only to property held by or in the name of
dishonesty and lack of integrity in public service.
the government official or employee, or his spouse
There is no reason why plunder should be treated
and unmarried children" is "unwarranted" and "an
differently.
absurdity that we cannot ascribe to our lawmakers."
Petitioner now avers that this Court’s rulings in Thus:
Philippine National Bank and Banco Filipino do not
The inquiry into legally acquired property – or
apply to the present case because the subpoenae duces
property NOT "legitimately acquired" – extends to
tecum/ad testificandum in said cases were issued prior
cases where such property is concealed by being held
to the amendment of Section 8, R.A. No. 3019. He
by or recorded in the name of other persons. This
stresses that under the old provision, the properties
proposition is made clear by R.A. No. 301941 which
quite categorically states that the term, legitimately
acquired property of a public office or employee shall
not include x x x 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.
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
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.
Undoubtedly, the policy enunciated is to prevent a
public official from evading prosecution or
investigation by allowing government inquiry even to
properties in the name of his "spouse, ascendants,
descendants, relatives or any other persons." The
Court’s pronouncement renders insignificant the
personal circumstance of the public official’s child,
i.e. whether he is a dependent or independent, married
or unmarried. This is entirely logical. Section 8 itself
starts with the statement: "If in accord 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." Likewise, Republic Act No.
42
1379,  excludes the following properties from the
definition of "other legitimately acquired property:"
"1. Property unlawfully acquired by the respondent,
but its ownership is concealed by its being recorded in
the name of, or held by, the respondent’s spouse,
ascendants, descendants, relatives or any other person.
3. Property unlawfully acquired by the respondent, but
transferred by him to another person or persons on or
after the effectivity of this Act."
How can the government establish the nexus between
a public official and his property in the name of other
persons if this Court will limit the inquiry only to his
"spouse and dependents"? Indeed, there is truth in
respondent People’s statement that "the extension of
inquiry into property held by, or in the name of
another persons other than the public official, is
sustained by a recognized legislative and public policy
adhered to by the courts."
Accordingly, the fact that petitioner is not an accused
in the plunder case does not insulate his bank accounts
from inquiry. Such inquiry is justified by the fact that
the Special Prosecution Panel is establishing a nexus
between his bank accounts and their alleged owner,
Former President Estrada, an accused in the plunder
case. Furthermore, as pointed out by respondent
Sandiganbayan, there is nothing in the exception
"upon order or a competent court in cases of bribery
or dereliction of duty of public officials" "which
would suggest that in order for the exception to apply,
the owner of the deposit or of the account must be an
accused in the case where the information relative to
the account is sought to be adduced."
Petitioner also contends that the money deposited in
his bank accounts cannot be considered the "subject
matter" of the plunder case.
I am not persuaded.
The "subject matter of litigation" as used in R.A. No.
1405 is expounded in Union Bank of the Philippines
v. Court of Appeals,43 where the Court held:
"Union Bank is now before this Court insisting that
the money deposited in Account No. 0111-01854-8 is
the subject matter of the litigation. Petitioner cites the
case of Mathay vs. Consolidated Bank and Trust
Company, where we defined ‘subject matter’ of the
action," thus:
‘By the phrase ‘subject matter of the action’ is meant
‘the physical facts, the things real or personal, the
money, lands, chattels, and the like, in relation to
which the suit is prosecuted, and not the delict or
wrong committed by the defendant."
Petitioner contends that the Court of Appeals confuses
the ‘cause of action’ with the ‘subject of the action.’
In Yusingco v. Ong 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 petitioner’s
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 so deposited was the very
thing in dispute."
There is no denying that the subject matter of a
plunder case is the ill-gotten wealth accumulated,
amassed or acquired by a public officer either by
himself or in connivance with members of his family,
relatives by affinity or consanguinity, business
associates, subordinates or other persons,
the aggregate or total value of which is at least
₱50,000,000.00.44 Since the money deposited in
petitioner’s bank accounts is being proven to be a
portion of former President Estrada’s ill-gotten
wealth, it follows that it is the "thing or matter with
respect to which the crime of plunder has arisen."
Without the ill-gotten wealth, there can be no plunder.
Correspondingly, R.A. No. 7080 penalizing plunder
mandates that courts shall declare any and all ill-
gotten wealth forfeited in favor of the
State.45 Government recovery of the ill-gotten wealth
being a consequence of plunder, necessarily an
inquiry into the whereabouts of the ill-gotten wealth
extends to properties being held or recorded in the
name of persons other than the one responsible for the
crime of plunder.
"Extremely-Detailed" Information contained
in the Special Prosecution Panel’s Requests for
Subpoena Duces Tecum/Ad Testificandum - Violative
of
Petitioner’s Right to Due Process and Privacy
Petitioner also asserts that the "extremely-detailed"
information in the Special Prosecution Panel’s
requests shows prior illegal disclosure of his bank
accounts.
I agree.
In Grisworld v. Connecticut,46 the United States
Supreme Court announced for the first time that the
right to privacy is an independent constitutional right;
and that: "Specific guarantees in the Bill of Rights
have penumbras, formed by emanation from those
guarantees that help give them life and substance.
Various guarantees create zones of privacy." Our Bill
of Rights, enshrined in Article III of the Constitution,
provides at least two guarantees that explicitly create
zones of privacy. They highlight a person’s "right to
be let alone" or the "right to determine what, how
much, to whom and when information about himself
shall be disclosed."47 Section 2 guarantees "the right
of the people to be secure in their persons, houses,
papers and effects against unreasonable searches and
seizures of whatever nature and for any purpose."
Section 3 renders inviolable the "privacy of
communication and correspondence" and further
cautions that "any evidence obtained in violation of
this or the preceding section shall be inadmissible for
any purpose in any proceeding."
These zones of privacy are also recognized and
protected in our laws,48 such as civil and criminal
laws. Article 26 of the Civil Code mandates that
"every person shall respect the dignity, personality,
privacy and peace of mind of his neighbors and other
persons" and punishes as actionable torts acts such as
"prying into the privacy of another’s residence; and
meddling with or disturbing the private life or family
relations of another." Article 32 states that "any public
officer or employee, or any private individual, who
directly obstructs, defeats, violates or in any manner
impedes or impairs x x x the right to be secure in
one’s person, house, papers, and effects against
unreasonable searches and seizures; x x x the privacy
of communication and correspondence" shall be liable
for damages. On the other hand, Article
209,49 Articles 290-292,50 and Articles 280-28151 of
the Revised Penal Code treat as crimes (a) revelation
of secrets by an attorney-at-law or solicitor, (b)
discovery and revelation of industrial secrets, and (c)
trespass to dwelling, respectively.
Aside from the foregoing, invasion of privacy is
considered an offense in special laws such as the Anti-
Wiretapping Law,52 the Intellectual Property Code of
the Philippines53 and, of course, R.A. No. 1405, the
Secrecy of Bank Deposits Act.
The myriad of laws enumerated only show that there
are certain areas in a person’s life which even if
accessible to the public, may be constitutionally and
legally protected as "private."
Now, in evaluating a claim for violation of the right to
privacy, a court must determine whether a person has
exhibited a reasonable expectation of privacy and, if
so, whether that expectation has been violated by
unreasonable government intrusion.54 Applying these
to the case at bar, the important inquiries are: first, did
petitioner exhibit a reasonable expectation of privacy
over his bank accounts?; and second, did the
government violate such expectation?
The answers to both are in the affirmative.
It cannot be gainsaid that the customer of a bank
expects that the documents which he transmits to the
bank in the course of his business operations, will
remain private, and that such an expectation is
reasonable.55 Financial transactions can reveal much
about a person’s affairs, activities, beliefs, habits and
associations. Indeed, the totality of bank records
provides a virtual current biography.56 Checks, for
instance, in a sense, define a person. By examining
them, the agents get to know his doctors, lawyers,
creditors, political allies, social connections, religious
affiliations, educational interests, the papers and
magazines he reads, and so on ad infinitum.57 In other
words, one’s bank account mirrors not only his
finances, but also his debts, his way of life, his family
and his civic commitment. Such reality places a
customer’s bank account within the "expectations of
privacy" category. In the Philippines, the expectation
is heightened by the enactment of R.A. No. 1405
which mandates that all deposits of whatever nature
are considered as of an "absolutely confidential
nature" and "may not be examined, inquired or looked
into by any person" except under the instances therein.
Admittedly, a bank customer knowingly and
voluntarily divulges his financial affairs with the
bank, but such is immaterial. The fact that one has
disclosed private papers to the bank within the context
of confidential customer-bank relationship, does not
mean that one has waived all right to the privacy of
the papers. Like the user of the pay phone in Katz v.
United States,58 who, having paid the toll, was entitled
to "assume that the words he utters into the
mouthpiece will not be broadcast to the world," so the
customer of a bank, having written or deposited a
check, has a reasonable expectation that his check will
be examined for bank purposes only. Practically
speaking, a customer’s disclosure of his financial
affairs is not entirely volitional, since it is impossible
to participate in the economic life of contemporary
society without maintaining a bank
59
account.  Consequently, the customer’s reasonable
expectation is that, absent customary legal process,
the matter he reveals to the bank will be utilized by
the bank only for internal banking purposes.60
In the instant case, while admittedly, respondent
Sandiganbayan’s inquiry into petitioner’s bank
accounts falls under the two exceptions mentioned in
R.A. No. 1405,61 however, this Court observes that the
manner of inquiry violates petitioner’s rights to due
process and privacy. At this juncture, it is worthy to
note that petitioner’s bank accounts were inquired into
twice, first was through subpoenae duces tecum
issued by the Office of the Ombudsman and second
was through subpoenae duces tecum/ad testificandum
issued by respondent Sandiganbayan. Under both
instances, petitioner was completely unaware of the
issuances of such subpoenae.
Petitioner persistently bewailed before respondent
Sandiganbayan the prior disclosure of his bank
accounts pursuant to the subpoenae issued by the
Office of the Ombudsman absent any pending case in
court and personal notice to him. He sought the
quashal of respondent Sandiganbayan’s subpoenae
duces tecum/ad testificandum on the ground that the
Special Prosecution Panel’s requests for the issuance
of the said subpoenae were based on information
illegally acquired by the Office of the Ombudsman.
I am swayed with the merit of petitioner’s grievance.
In Marquez v. Desierto,62 Ombudsman Aniano A.
Desierto ordered petitioner Lourdes Marquez, a
Branch Manager of Union Bank, to produce for
purposes of an in camera inspection certain bank
documents relative to a case pending before the Office
of the Ombudsman. Ombudsman Desierto cited the
Constitution and Section 15 (8) of R.A. No. 6770 as
bases of his authority. Petitioner Marquez initially
refused but, after having been threatened with a
contempt proceeding, she filed a petition for
declaratory relief seeking a clarification of the issue
"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." The Court’s ruling is enlightening, thus:
"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 v. Gancayco.
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 that 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.’
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, at al.,
with the Sandiganbayan. Clearly, there was no
pending case in court which would warrant the
opening of the bank account for inspection."
Thus, as held by the Court, before an in camera
inspection of bank documents maybe allowed, there
must be a pending case before a court of competent
jurisdiction. The Information for plunder against
Former President Estrada was filed with respondent
Sandiganbayan on April 4, 2001. On the other hand,
the Ombudsman issued the subpoenae duces tecum on
February 8, 16, and March 7, 2001. Clearly, there was
yet no pending litigation before any court when such
subpoenae were issued. Following the Court’s ruling
in Marquez, what the Office of the Ombudsman
would wish to do was to "fish for evidence" in order
to formally charge former President Estrada before
respondent Sandiganbayan.
At this point, it should be emphasized that the
authority of the Ombudsman "to examine and have
access to bank accounts and records" must be read in
conjunction with Section 2 of R.A. No. 1405
providing that deposits of whatever nature shall be
considered confidential except in several instances
already mentioned. This is because bank deposits
belong to a protected zone where government
intrusion could infringe legitimate expectation of
privacy. An opposite course is unwarranted.
In United States v. United States District Court,63 the
US Supreme Court held that the potential for abuse is
particularly acute where the legislative scheme
permits access to information without invocation of
the judicial process. In such instances, the important
responsibility for balancing societal and individual
interests is left to unreviewed executive discretion,
rather than the scrutiny of a neutral magistrate. In
Katz v. United States,64 the same Court ruled that,
"[t[he prosecutors’ duty and responsibility is to
enforce the laws, to investigate and to prosecute.
Those charged with the investigative and
prosecutorial duty should not be the sole judges of
when to utilize constitutionally sensitive means in
pursuing their tasks. The historical judgment is that
unreviewed executive discretion may yield too readily
to pressures to obtain incriminating evidence and
overlook potential invasions of privacy." Between the
government and the citizen, there must be a neutral
entity that should balance the former’s claim of
authority vis-à-vis the latter’s assertion of rights.
By the natural scheme of things, the Office of the
Ombudsman can hardly be characterized as detached,
disinterested and neutral. Its mandate is to investigate
and prosecute any act or omission of any public
officer or employee, office or agency that appears to
be illegal, unjust, improper or inefficient.65 In carrying
out such mandate, it is expected to act with vigor and
aggressiveness. But to permit such office to have
access to bank records without any judicial control as
to relevancy or other traditional requirements of due
process and to allow the evidence to be used in any
subsequent prosecution, opens the door to a vast and
unlimited range of very real abuses of police
power.66 True, there are administrative summonses for
documents67 recognized in other jurisdictions, but
there is a requirement that their enforcement receives
a judicial scrutiny and a judicial order.68 In this regard,
I am appalled by the "whole sale" subpoena duces
tecum issued by the Ombudsman directing the
"President or Chief Executive Officer of Urban Bank"
to produce "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, Joseph E. Estrada, Laarni Enriquez, Guia
Gomez, Joy Melendrez, Peachy Osorio, Rowena
Lopez, Kevin or Kelvin Garcia, 727, 737, 747, 757
and 858." Indubitably, such blanket subpoena
provides occasions for "fishing expedition."
Above everything else, however, what strikes us most
is the patent unfairness of the process. First in the Bill
of Rights is the mandate that no person shall be
deprived of his life, liberty or property without due
process of law. Courts have held that the right of
personal privacy is one aspect
of the "liberty" protected by the Due Process
Clause.69 Basic due process demands that the Office
of the Ombudsman furnish petitioner a copy of the
subpoenae duces tecum it issued. In Marquez v.
Desierto,70 this Court held: "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." Such
notice is not too much to ask for, after all, an
accountholder bears the risk not only of losing his
privacy but, also, his property.71 Of course, not to
mention the procedural impasse that is encountered by
such accountholder who cannot contest the propriety
of the issuance of a subpoena.
In this case, petitioner was completely unaware of the
issuance of subpoenae duces tecum, hence, he never
had the opportunity to challenge them. As a matter of
fact, almost two years had passed before he learned of
such issuance and the resulting disclosure. Indeed, the
ugly truth here is that neither the Office of the
Ombudsman nor the PDIC notified petitioner of the
impending and actual disclosure of his bank accounts.
Such absence of notice is a fatal constitutional defect
that inheres in a process that omits provision for
notice to the bank customer of an invasion of his
protected right.72
Now, let us take a glimpse at the proceedings before
respondent Sandiganbayan.
The proceedings before respondent Sandiganbayan
also leave much to be desired. Neither respondent
Sandiganbayan nor the Special Prosecution Panel nor
PDIC furnished petitioner copies of the subpoenae
duces tecum/ad testificandum or of the requests for
their issuance. It bears reiterating that it was only
through the media that petitioner learned about such
requests. Definitely, something is inherently wrong in
a public proceeding that allows a holder of bank
account, subject of litigation, to be completely
uninformed. Also not to be overlooked is the
respondent Sandiganbayan’s oral directive to
petitioner to file his motion to quash not later than
12:00 noon of January 28, 2003. This notwithstanding
the fact that it was only the day before, or on January
27, 2003, that petitioner learned about the requests
and that he was yet to procure the services of a
counsel. Every civilized state adheres to the principle
that when a person’s life and liberty are jeopardized
by government action, it behooves a democratic
government to see to it that this jeopardy is fair,
reasonable and according to time-honored tradition.
The importance of this principle is eloquently
underscored by one observer who said: "The quality
of a civilization is largely determined by the fairness
of its criminal trials."73
Respondent Sandiganbayan cannot justify its omission
by relying on Adorio v. Bersamin,74 which held that:
"Requests by a party for the issuance of subpoenas do
not require notice to other parties to the action. No
violation of due process results by such lack of notice
since the other parties would have ample opportunity
to examine the witnesses and documents subpoenaed
once they are presented in court." Suffice it to say that
petitioner was not a party to the plunder case, hence,
he could not have the opportunity to examine the
witnesses and the documents subpoenaed.
True, bank accounts at times harbor criminal plans.
But this is not a reason to declare an open season for
inquiry. Customers have a constitutionally justifiable
expectation of privacy in the documentary details of
the financial transactions reflected in their bank
accounts. That wall of privacy, however, is not
impregnable. Our Constitution, as well as our laws,
provides procedures whereby the confidentiality of
one’s financial affairs may be disclosed. In other
words, access to bank records is controlled by
adequate legal process. Here, the subpoenae issued by
respondent Sandiganbayan, tainted as they are by the
vices that afflict the proceedings before the Office of
the Ombudsman, cannot be considered to have been
issued pursuant to such adequate legal process.
Petitioner, therefore, has reason to feel aggrieved.
Section 4, Rule 21 of the 1997 Rules of Civil
Procedure, as amended, provides that the court may
quash a subpoenae duces tecum upon motion if it is
"unreasonable and oppressive."75 Here, the three (3)
subpoenae duces tecum/ad testificandum issued by
respondent Sandiganbayan are "unreasonable and
oppressive" for the reasons earlier mentioned. I thus
find respondent Sandiganbayan to have committed
grave abuse of discretion in issuing them.
One last word. The violation of petitioner’s right to
privacy could have been obviated had respondent
court complied with its duty to be watchful for the
constitutional rights of the citizens and against any
stealthy encroachments thereon. The motto should
always be obsta principiis.76
IN VIEW OF THE FOREGOING, I vote
to GRANT the Petition. The assailed Resolutions
dated February 7, February 12 and March 11, 2003
issued by respondent Sandiganbayan in Criminal Case
No. 26558, "People of the Philippines v. Former
President Joseph Ejercito Estrada, et al." being tainted
with grave abuse of discretion, should be SET
ASIDE. The subpoenae duces tecum/ad testificandum
dated January 21, 24 and 31, 2003, should be
QUASHED for being unreasonable and oppressive.
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
G.R. No. 174629             February 14, 2008
REPUBLIC OF THE PHILIPPINES, Represented
by THE ANTI-MONEY LAUNDERING
COUNCIL (AMLC), petitioner,
vs.
HON. ANTONIO M. EUGENIO, JR., AS
PRESIDING JUDGE OF RTC, MANILA,
BRANCH 34, PANTALEON ALVAREZ and
LILIA CHENG, respondents.
DECISION
TINGA, J.:
The present petition for certiorari and prohibition
under Rule 65 assails the orders and resolutions issued
by two different courts in two different cases. The
courts and cases in question are the Regional Trial
Court of Manila, Branch 24, which heard SP Case No.
06-1142001 and the Court of Appeals, Tenth Division,
which heared CA-G.R. SP No. 95198.2 Both cases
arose as part of the aftermath of the ruling of this
Court in Agan v. PIATCO3 nullifying the concession
agreement awarded to the Philippine International
Airport Terminal Corporation (PIATCO) over the
Ninoy Aquino International Airport – International
Passenger Terminal 3 (NAIA 3) Project.
I.
Following the promulgation of Agan, a series of
investigations concerning the award of the NAIA 3
contracts to PIATCO were undertaken by the
Ombudsman and the Compliance and Investigation
Staff (CIS) of petitioner Anti-Money Laundering
Council (AMLC). On 24 May 2005, the Office of the
Solicitor General (OSG) wrote the AMLC requesting
the latter’s assistance "in obtaining more evidence to
completely reveal the financial trail of corruption
surrounding the [NAIA 3] Project," and also noting
that petitioner Republic of the Philippines was
presently defending itself in two international
arbitration cases filed in relation to the NAIA 3
Project.4 The CIS conducted an intelligence database
search on the financial transactions of certain
individuals involved in the award, including
respondent Pantaleon Alvarez (Alvarez) who had
been the Chairman of the PBAC Technical
Committee, NAIA-IPT3 Project.5 By this time,
Alvarez had already been charged by the Ombudsman
with violation of Section 3(j) of R.A. No. 3019.6 The
search revealed that Alvarez maintained eight (8)
bank accounts with six (6) different banks.7
On 27 June 2005, the AMLC issued Resolution No.
75, Series of 2005,8 whereby the Council resolved to
authorize the Executive Director of the AMLC "to inexcusable negligence, in violation of Section 3(e) of
sign and verify an application to inquire into and/or Republic Act No. 3019."12
examine the [deposits] or investments of Pantaleon
Under the authority granted by the Resolution, the
Alvarez, Wilfredo Trinidad, Alfredo Liongson, and
AMLC filed an application to inquire into or examine
Cheng Yong, and their related web of accounts
the deposits or investments of Alvarez, Trinidad,
wherever these may be found, as defined under Rule
Liongson and Cheng Yong before the RTC of Makati,
10.4 of the Revised Implementing Rules and
Branch 138, presided by Judge (now Court of Appeals
Regulations;" and to authorize the AMLC Secretariat
Justice) Sixto Marella, Jr. The application was
"to conduct an inquiry into subject accounts once the
docketed as AMLC No. 05-005.13 The Makati RTC
Regional Trial Court grants the application to inquire
heard the testimony of the Deputy Director of the
into and/or examine the bank accounts" of those four
AMLC, Richard David C. Funk II, and received the
individuals.9 The resolution enumerated the particular
documentary evidence of the AMLC.14 Thereafter, on
bank accounts of Alvarez, Wilfredo Trinidad
4 July 2005, the Makati RTC rendered an Order
(Trinidad), Alfredo Liongson (Liongson) and Cheng
(Makati RTC bank inquiry order) granting the AMLC
Yong which were to be the subject of the
the authority to inquire and examine the subject bank
inquiry.10 The rationale for the said resolution was
accounts of Alvarez, Trinidad, Liongson and Cheng
founded on the cited findings of the CIS that amounts
Yong, the trial court being satisfied that there existed
were transferred from a Hong Kong bank account
"[p]robable cause [to] believe that the deposits in
owned by Jetstream Pacific Ltd. Account to bank
various bank accounts, details of which appear in
accounts in the Philippines maintained by Liongson
paragraph 1 of the Application, are related to the
and Cheng Yong.11 The Resolution also noted that
offense of violation of Anti-Graft and Corrupt
"[b]y awarding the contract to PIATCO despite its
Practices Act now the subject of criminal prosecution
lack of financial capacity, Pantaleon Alvarez caused
before the Sandiganbayan as attested to by the
undue injury to the government by giving PIATCO
Informations, Exhibits C, D, E, F, and G."15 Pursuant
unwarranted benefits, advantage, or preference in the
to the Makati RTC bank inquiry order, the CIS
discharge of his official administrative functions
through manifest partiality, evident bad faith, or gross
proceeded to inquire and examine the deposits,
investments and related web accounts of the four.16
Meanwhile, the Special Prosecutor of the Office of the
Ombudsman, Dennis Villa-Ignacio, wrote a letter
dated 2 November 2005, requesting the AMLC to
investigate the accounts of Alvarez, PIATCO, and
several other entities involved in the nullified
contract. The letter adverted to probable cause to
believe that the bank accounts "were used in the
commission of unlawful activities that were
committed" in relation to the criminal cases then
pending before the Sandiganbayan.17 Attached to the
letter was a memorandum "on why the investigation
of the [accounts] is necessary in the prosecution of the
above criminal cases before the Sandiganbayan."18
In response to the letter of the Special Prosecutor, the
AMLC promulgated on 9 December 2005 Resolution
No. 121 Series of 2005,19 which authorized the
executive director of the AMLC to inquire into and
examine the accounts named in the letter, including
one maintained by Alvarez with DBS Bank and two
other accounts in the name of Cheng Yong with
Metrobank. The Resolution characterized the
memorandum attached to the Special Prosecutor’s
letter as "extensively justif[ying] the existence of
probable cause that the bank accounts of the persons
and entities mentioned in the letter are related to the
unlawful activity of violation of Sections 3(g) and
3(e) of Rep. Act No. 3019, as amended."20
Following the December 2005 AMLC Resolution, the
Republic, through the AMLC, filed an
21
application  before the Manila RTC to inquire into
and/or examine thirteen (13) accounts and two (2)
related web of accounts alleged as having been used
to facilitate corruption in the NAIA 3 Project. Among
said accounts were the DBS Bank account of Alvarez
and the Metrobank accounts of Cheng Yong. The case
was raffled to Manila RTC, Branch 24, presided by
respondent Judge Antonio Eugenio, Jr., and docketed
as SP Case No. 06-114200.
On 12 January 2006, the Manila RTC issued an Order
(Manila RTC bank inquiry order) granting the Ex
Parte Application expressing therein "[that] the
allegations in said application to be impressed with
merit, and in conformity with Section 11 of R.A. No.
9160, as amended, otherwise known as the Anti-
Money Laundering Act (AMLA) of 2001 and Rules
11.1 and 11.2 of the Revised Implementing Rules and
Regulations."22 Authority was thus granted to the
AMLC to inquire into the bank accounts listed
therein.
On 25 January 2006, Alvarez, through counsel,
entered his appearance23 before the Manila RTC in SP
Case No. 06-114200 and filed an Urgent Motion to
Stay Enforcement of Order of January 12,
2006.24 Alvarez alleged that he fortuitously learned of
the bank inquiry order, which was issued following
an ex parte application, and he argued that nothing in
R.A. No. 9160 authorized the AMLC to seek the
authority to inquire into bank accounts ex parte.25 The
day after Alvarez filed his motion, 26 January 2006,
the Manila RTC issued an Order26 staying the
enforcement of its bank inquiry order and giving the
Republic five (5) days to respond to Alvarez’s motion.
The Republic filed an Omnibus Motion for
Reconsideration27 of the 26 January 2006 Manila RTC
Order and likewise sought to strike out Alvarez’s
motion that led to the issuance of said order. For his
part, Alvarez filed a Reply and Motion to
Dismiss28 the application for bank inquiry order. On 2
May 2006, the Manila RTC issued an Omnibus
Order29 granting the Republic’s Motion for
Reconsideration, denying Alvarez’s motion to dismiss
and reinstating "in full force and effect" the Order
dated 12 January 2006. In the omnibus order, the
Manila RTC reiterated that the material allegations in
the application for bank inquiry order filed by the
Republic stood as "the probable cause for the
investigation and examination of the bank accounts
and investments of the respondents."30
Alvarez filed on 10 May 2006 an Urgent
Motion31 expressing his apprehension that the AMLC
would immediately enforce the omnibus order and
would thereby render the motion for reconsideration
he intended to file as moot and academic; thus he
sought that the Republic be refrained from enforcing
the omnibus order in the meantime. Acting on this
motion, the Manila RTC, on 11 May 2006, issued an
Order32 requiring the OSG to file a
comment/opposition and reminding the parties that
judgments and orders become final and executory
upon the expiration of fifteen (15) days from receipt
thereof, as it is the period within which a motion for
reconsideration could be filed. Alvarez filed his
Motion for Reconsideration33 of the omnibus order on
15 May 2006, but the motion was denied by the
Manila RTC in an Order34 dated 5 July 2006.
On 11 July 2006, Alvarez filed an Urgent Motion and
Manifestation35 wherein he manifested having
received reliable information that the AMLC was
about to implement the Manila RTC bank inquiry
order even though he was intending to appeal from it.
On the premise that only a final and executory
judgment or order could be executed or implemented,
Alvarez sought that the AMLC be immediately
ordered to refrain from enforcing the Manila RTC
bank inquiry order.
On 12 July 2006, the Manila RTC, acting on
Alvarez’s latest motion, issued an Order36 directing
the AMLC "to refrain from enforcing the order dated
January 12, 2006 until the expiration of the period to
appeal, without any appeal having been filed." On the
same day, Alvarez filed a Notice of Appeal37 with the
Manila RTC.
On 24 July 2006, Alvarez filed an Urgent Ex
Parte Motion for Clarification.38 Therein, he alleged
having learned that the AMLC had began to inquire
into the bank accounts of the other persons mentioned
in the application for bank inquiry order filed by the
Republic.39 Considering that the Manila RTC bank
inquiry order was issued ex parte, without notice to
those other persons, Alvarez prayed that the AMLC
be ordered to refrain from inquiring into any of the
other bank deposits and alleged web of accounts
enumerated in AMLC’s application with the RTC;
and that the AMLC be directed to refrain from using,
disclosing or publishing in any proceeding or venue
any information or document obtained in violation of
the 11 May 2006 RTC Order.40
On 25 July 2006, or one day after Alvarez filed his
motion, the Manila RTC issued an Order41 wherein it
clarified that "the Ex Parte Order of this Court dated
January 12, 2006 can not be implemented against the
deposits or accounts of any of the persons enumerated
in the AMLC Application until the appeal of movant
Alvarez is finally resolved, otherwise, the appeal
would be rendered moot and academic or even
nugatory."42 In addition, the AMLC was ordered "not
to disclose or publish any information or document
found or obtained in [v]iolation of the May 11, 2006
Order of this Court."43 The Manila RTC reasoned that
the other persons mentioned in AMLC’s application
were not served with the court’s 12 January 2006
Order. This 25 July 2006 Manila RTC Order is the
first of the four rulings being assailed through this
petition.
In response, the Republic filed an Urgent Omnibus
Motion for Reconsideration44 dated 27 July 2006,
urging that it be allowed to immediately enforce the
bank inquiry order against Alvarez and that Alvarez’s
notice of appeal be expunged from the records since
appeal from an order of inquiry is disallowed under
the Anti money Laundering Act (AMLA).
Meanwhile, respondent Lilia Cheng filed with the
Court of Appeals a Petition for Certiorari, Prohibition
and Mandamus with Application for TRO and/or Writ
of Preliminary Injunction45 dated 10 July 2006,
directed against the Republic of the Philippines
through the AMLC, Manila RTC Judge Eugenio, Jr.
and Makati RTC Judge Marella, Jr.. She identified
herself as the wife of Cheng Yong46 with whom she
jointly owns a conjugal bank account with Citibank
that is covered by the Makati RTC bank inquiry order,
and two conjugal bank accounts with Metrobank that
are covered by the Manila RTC bank inquiry order.
Lilia Cheng imputed grave abuse of discretion on the
part of the Makati and Manila RTCs in granting
AMLC’s ex parte applications for a bank inquiry
order, arguing among others that the ex
parte applications violated her constitutional right to
due process, that the bank inquiry order under the
AMLA can only be granted in connection with
violations of the AMLA and that the AMLA can not
apply to bank accounts opened and transactions
entered into prior to the effectivity of the AMLA or to
bank accounts located outside the Philippines.47
On 1 August 2006, the Court of Appeals, acting on
Lilia Cheng’s petition, issued a Temporary
Restraining Order48 enjoining the Manila and Makati
trial courts from implementing, enforcing or executing
the respective bank inquiry orders previously issued,
and the AMLC from enforcing and implementing
such orders. On even date, the Manila RTC issued an
Order49 resolving to hold in abeyance the resolution of
the urgent omnibus motion for reconsideration then
pending before it until the resolution of Lilia Cheng’s
petition for certiorari with the Court of Appeals. The
Court of Appeals Resolution directing the issuance of
the temporary restraining order is the second of the
four rulings assailed in the present petition.
The third assailed ruling50 was issued on 15 August
2006 by the Manila RTC, acting on the Urgent
Motion for Clarification51 dated 14 August 2006 filed
by Alvarez. It appears that the 1 August 2006 Manila
RTC Order had amended its previous 25 July 2006
Order by deleting the last paragraph which stated that
the AMLC "should not disclose or publish any
information or document found or obtained in
violation of the May 11, 2006 Order of this
Court."52 In this new motion, Alvarez argued that the
deletion of that paragraph would allow the AMLC to
implement the bank inquiry orders and publish
whatever information it might obtain thereupon even
before the final orders of the Manila RTC could
become final and executory.53 In the 15 August 2006
Order, the Manila RTC reiterated that the bank
inquiry order it had issued could not be implemented
or enforced by the AMLC or any of its representatives implementation of the restraining orders it had earlier
until the appeal therefrom was finally resolved and issued.
that any enforcement thereof would be unauthorized.54
Oral arguments were held on 17 January 2007. The
55
The present Consolidated Petition  for certiorari and Court consolidated the issues for argument as follows:
prohibition under Rule 65 was filed on 2 October
1. Did the RTC-Manila, in issuing the Orders dated 25
2006, assailing the two Orders of the Manila RTC
July 2006 and 15 August 2006 which deferred the
dated 25 July and 15 August 2006 and the Temporary
implementation of its Order dated 12 January 2006,
Restraining Order dated 1 August 2006 of the Court
and the Court of Appeals, in issuing its Resolution
of Appeals. Through an Urgent Manifestation and
dated 1 August 2006, which ordered the status quo in
Motion56 dated 9 October 2006, petitioner informed
relation to the 1 July 2005 Order of the RTC-Makati
the Court that on 22 September 2006, the Court of
and the 12 January 2006 Order of the RTC-Manila,
Appeals hearing Lilia Cheng’s petition had granted a
both of which authorized the examination of bank
writ of preliminary injunction in her
57 accounts under Section 11 of Rep. Act No. 9160
favor.  Thereafter, petitioner sought as well the
(AMLA), commit grave abuse of discretion?
nullification of the 22 September 2006 Resolution of
the Court of Appeals, thereby constituting the fourth (a) Is an application for an order authorizing inquiry
ruling assailed in the instant petition.58 into or examination of bank accounts or investments
under Section 11 of the AMLA ex-parte in nature or
The Court had initially granted a Temporary
one which requires notice and hearing?
Restraining Order59 dated 6 October 2006 and later on
a Supplemental Temporary Restraining Order60 dated (b) What legal procedures and standards should be
13 October 2006 in petitioner’s favor, enjoining the observed in the conduct of the proceedings for the
implementation of the assailed rulings of the Manila issuance of said order?
RTC and the Court of Appeals. However, on (c) Is such order susceptible to legal challenges and
respondents’ motion, the Court, through a judicial review?
Resolution61 dated 11 December 2006, suspended the
2. Is it proper for this Court at this time and in this
case to inquire into and pass upon the validity of the 1
July 2005 Order of the RTC-Makati and the 12
January 2006 Order of the RTC-Manila, considering
the pendency of CA G.R. SP No. 95-198 (Lilia Cheng
v. Republic) wherein the validity of both orders was
challenged?62
After the oral arguments, the parties were directed to
file their respective memoranda, which they did,63 and
the petition was thereafter deemed submitted for
resolution.
II.
Petitioner’s general advocacy is that the bank inquiry
orders issued by the Manila and Makati RTCs are
valid and immediately enforceable whereas the
assailed rulings, which effectively stayed the
enforcement of the Manila and Makati RTCs bank
inquiry orders, are sullied with grave abuse of
discretion. These conclusions flow from the posture
that a bank inquiry order, issued upon a finding of
probable cause, may be issued ex parte and, once
issued, is immediately executory. Petitioner further
argues that the information obtained following the
bank inquiry is necessarily beneficial, if not
indispensable, to the AMLC in discharging its
awesome responsibility regarding the effective
implementation of the AMLA and that any restraint in
the disclosure of such information to appropriate
agencies or other judicial fora would render
meaningless the relief supplied by the bank inquiry
order.
Petitioner raises particular arguments questioning
Lilia Cheng’s right to seek injunctive relief before the
Court of Appeals, noting that not one of the bank
inquiry orders is directed against her. Her "cryptic
assertion" that she is the wife of Cheng Yong cannot,
according to petitioner, "metamorphose into the
requisite legal standing to seek redress for an
imagined injury or to maintain an action in behalf of
another." In the same breath, petitioner argues that
Alvarez cannot assert any violation of the right to
financial privacy in behalf of other persons whose
bank accounts are being inquired into, particularly
those other persons named in the Makati RTC bank
inquiry order who did not take any step to oppose
such orders before the courts.
Ostensibly, the proximate question before the Court is
whether a bank inquiry order issued in accordance
with Section 10 of the AMLA may be stayed by
injunction. Yet in arguing that it does, petitioner relies
on what it posits as the final and immediately
executory character of the bank inquiry orders issued
by the Manila and Makati RTCs. Implicit in that
position is the notion that the inquiry orders are valid,
and such notion is susceptible to review and
validation based on what appears on the face of the
orders and the applications which triggered their
issuance, as well as the provisions of the AMLA
governing the issuance of such orders. Indeed, to test
the viability of petitioner’s argument, the Court will
have to be satisfied that the subject inquiry orders are
valid in the first place. However, even from a cursory
examination of the applications for inquiry order and
the orders themselves, it is evident that the orders are
not in accordance with law.
III.
A brief overview of the AMLA is called for.
Money laundering has been generally defined by the
International Criminal Police Organization (Interpol)
`as "any act or attempted act to conceal or disguise the
identity of illegally obtained proceeds so that they
appear to have originated from legitimate
sources."64 Even before the passage of the AMLA, the
problem was addressed by the Philippine government
through the issuance of various circulars by the
Bangko Sentral ng Pilipinas. Yet ultimately,
legislative proscription was necessary, especially with
the inclusion of the Philippines in the Financial
Action Task Force’s list of non-cooperative countries
and territories in the fight against money
laundering.65 The original AMLA, Republic Act
(R.A.) No. 9160, was passed in 2001. It was amended
by R.A. No. 9194 in 2003.
Section 4 of the AMLA states that "[m]oney
laundering is a crime whereby the proceeds of an
unlawful activity as [defined in the law] are
transacted, thereby making them appear to have
originated from legitimate sources."66 The section
further provides the three modes through which the
crime of money laundering is committed. Section 7
creates the AMLC and defines its powers, which
generally relate to the enforcement of the AMLA
provisions and the initiation of legal actions
authorized in the AMLA such as civil forefeiture
proceedings and complaints for the prosecution of
money laundering offenses.67
In addition to providing for the definition and
penalties for the crime of money laundering, the
AMLA also authorizes certain provisional remedies
that would aid the AMLC in the enforcement of the
AMLA. These are the "freeze order" authorized under
Section 10, and the "bank inquiry order" authorized circumspect in filing complaints against suspect
under Section 11. account holders. After all, under such set-up the
preferred strategy would be to allow or even
Respondents posit that a bank inquiry order under
encourage the indiscriminate filing of complaints
Section 11 may be obtained only upon the pre-
under the AMLA with the hope or expectation that the
existence of a money laundering offense case already
evidence of money laundering would somehow
filed before the courts.68 The conclusion is based on
surface during the trial. Since the AMLC could not
the phrase "upon order of any competent court in
make use of the bank inquiry order to determine
cases of violation of this Act," the word "cases"
whether there is evidentiary basis to prosecute the
generally understood as referring to actual cases
suspected malefactors, not filing any case at all would
pending with the courts.
not be an alternative. Such unwholesome set-up
We are unconvinced by this proposition, and agree should not come to pass. Thus Section 11 cannot be
instead with the then Solicitor General who conceded interpreted in a way that would emasculate the
that the use of the phrase "in cases of" was remedy it has established and encourage the
unfortunate, yet submitted that it should be interpreted unfounded initiation of complaints for money
to mean "in the event there are violations" of the laundering.
AMLA, and not that there are already cases pending
Still, even if the bank inquiry order may be availed of
in court concerning such violations.69 If the contrary
without need of a pre-existing case under the AMLA,
position is adopted, then the bank inquiry order would
it does not follow that such order may be availed of ex
be limited in purpose as a tool in aid of litigation of
parte. There are several reasons why the AMLA does
live cases, and wholly inutile as a means for the
not generally sanction ex parte applications and
government to ascertain whether there is sufficient
issuances of the bank inquiry order.
evidence to sustain an intended prosecution of the
account holder for violation of the AMLA. Should IV.
that be the situation, in all likelihood the AMLC
would be virtually deprived of its character as a
discovery tool, and thus would become less
It is evident that Section 11 does not specifically
authorize, as a general rule, the issuance ex parte of
the bank inquiry order. We quote the provision in full:
SEC. 11. Authority to Inquire into Bank Deposits. ―
Notwithstanding the provisions of Republic Act No.
1405, as amended, Republic Act No. 6426, as
amended, Republic Act No. 8791, and other laws, the
AMLC may inquire into or examine any particular
deposit or investment with any banking institution or
non bank financial institution upon order of any
competent court in cases of violation of this
Act, when it has been established that there is
probable cause that the deposits or investments are
related to an unlawful activity as defined in Section
3(i) hereof or a money laundering offense under
Section 4 hereof, except that no court order shall
be required in cases involving unlawful activities
defined in Sections 3(i)1, (2) and (12).
To ensure compliance with this Act, the Bangko
Sentral ng Pilipinas (BSP) may inquire into or
examine any deposit of investment with any banking
institution or non bank financial institution when the
examination is made in the course of a periodic or
special examination, in accordance with the rules of
examination of the BSP.70 (Emphasis supplied)
Of course, Section 11 also allows the AMLC to
inquire into bank accounts without having to obtain a
judicial order in cases where there is probable cause
that the deposits or investments are related to
kidnapping for ransom,71 certain violations of the
Comprehensive Dangerous Drugs Act of
72
2002,  hijacking and other violations under R.A. No.
6235, destructive arson and murder. Since such
special circumstances do not apply in this case, there
is no need for us to pass comment on this proviso.
Suffice it to say, the proviso contemplates a situation
distinct from that which presently confronts us, and
for purposes of the succeeding discussion, our
reference to Section 11 of the AMLA excludes said
proviso.
In the instances where a court order is required for the
issuance of the bank inquiry order, nothing in Section
11 specifically authorizes that such court order may
be issued ex parte. It might be argued that this silence
does not preclude the ex parte issuance of the bank
inquiry order since the same is not prohibited under
Section 11. Yet this argument falls when the
immediately preceding provision, Section 10, is
examined.
SEC. 10. Freezing of Monetary Instrument or
Property. ― The Court of Appeals,
upon application ex parte by the AMLC and after
determination that probable cause exists that any
monetary instrument or property is in any way related
to an unlawful activity as defined in Section 3(i)
hereof, may issue a freeze order which shall be
effective immediately. The freeze order shall be for a
period of twenty (20) days unless extended by the
court.73
Although oriented towards different purposes, the
freeze order under Section 10 and the bank inquiry
order under Section 11 are similar in that they are
extraordinary provisional reliefs which the AMLC
may avail of to effectively combat and prosecute
money laundering offenses. Crucially, Section 10 uses
specific language to authorize an ex parte application
for the provisional relief therein, a circumstance
absent in Section 11. If indeed the legislature had
intended to authorize ex parte proceedings for the
issuance of the bank inquiry order, then it could have
easily expressed such intent in the law, as it did with
the freeze order under Section 10.
Even more tellingly, the current language of Sections
10 and 11 of the AMLA was crafted at the same time,
through the passage of R.A. No. 9194. Prior to the
amendatory law, it was the AMLC, not the Court of
Appeals, which had authority to issue a freeze order,
whereas a bank inquiry order always then required,
without exception, an order from a competent
court.74 It was through the same enactment that ex
parte proceedings were introduced for the first time
into the AMLA, in the case of the freeze order which
now can only be issued by the Court of Appeals. It
certainly would have been convenient, through the
same amendatory law, to allow a similar ex
parte procedure in the case of a bank inquiry order
had Congress been so minded. Yet nothing in the
provision itself, or even the available legislative
record, explicitly points to an ex parte judicial
procedure in the application for a bank inquiry order,
unlike in the case of the freeze order.
That the AMLA does not contemplate ex
parte proceedings in applications for bank inquiry
orders is confirmed by the present implementing rules
and regulations of the AMLA, promulgated upon the
passage of R.A. No. 9194. With respect to freeze
orders under Section 10, the implementing rules do
expressly provide that the applications for freeze
orders be filed ex parte,75 but no similar clearance is
granted in the case of inquiry orders under Section
11.76 These implementing rules were promulgated by
the Bangko Sentral ng Pilipinas, the Insurance
Commission and the Securities and Exchange
Commission,77 and if it was the true belief of these
institutions that inquiry orders could be issued ex
parte similar to freeze orders, language to that effect
would have been incorporated in the said Rules. This
is stressed not because the implementing rules could
authorize ex parte applications for inquiry orders
despite the absence of statutory basis, but rather
because the framers of the law had no intention to
allow such ex parte applications.
Even the Rules of Procedure adopted by this Court in
A.M. No. 05-11-04-SC78 to enforce the provisions of
the AMLA specifically authorize ex parte applications
with respect to freeze orders under Section 1079 but
make no similar authorization with respect to bank
inquiry orders under Section 11.
The Court could divine the sense in allowing ex
parte proceedings under Section 10 and in proscribing
the same under Section 11. A freeze order under
Section 10 on the one hand is aimed at preserving
monetary instruments or property in any way deemed
related to unlawful activities as defined in Section 3(i)
of the AMLA. The owner of such monetary
instruments or property would thus be inhibited from
utilizing the same for the duration of the freeze order.
To make such freeze order anteceded by a judicial
proceeding with notice to the account holder would
allow for or lead to the dissipation of such funds even
before the order could be issued.
On the other hand, a bank inquiry order under Section
11 does not necessitate any form of physical seizure
of property of the account holder. What the bank
inquiry order authorizes is the examination of the
particular deposits or investments in banking
institutions or non-bank financial institutions. The
monetary instruments or property deposited with such
banks or financial institutions are not seized in a
physical sense, but are examined on particular details
such as the account holder’s record of deposits and
transactions. Unlike the assets subject of the freeze
order, the records to be inspected under a bank inquiry
order cannot be physically seized or hidden by the
account holder. Said records are in the possession of
the bank and therefore cannot be destroyed at the
instance of the account holder alone as that would
require the extraordinary cooperation and devotion of
the bank.
Interestingly, petitioner’s memorandum does not
attempt to demonstrate before the Court that the bank
inquiry order under Section 11 may be issued ex
parte, although the petition itself did devote some
space for that argument. The petition argues that the
bank inquiry order is "a special and peculiar remedy,
drastic in its name, and made necessary because of a
public necessity… [t]hus, by its very nature, the
application for an order or inquiry must necessarily,
be ex parte." This argument is insufficient
justification in light of the clear disinclination of
Congress to allow the issuance ex parte of bank
inquiry orders under Section 11, in contrast to the
legislature’s clear inclination to allow the ex
parte grant of freeze orders under Section 10.
Without doubt, a requirement that the application for a
bank inquiry order be done with notice to the account
holder will alert the latter that there is a plan to inspect
his bank account on the belief that the funds therein
are involved in an unlawful activity or money
laundering offense.80 Still, the account holder so
alerted will in fact be unable to do anything to conceal
or cleanse his bank account records of suspicious or
anomalous transactions, at least not without the
whole-hearted cooperation of the bank, which
inherently has no vested interest to aid the account
holder in such manner.
V.
The necessary implication of this finding that Section
11 of the AMLA does not generally authorize the
issuance ex parte of the bank inquiry order would be
that such orders cannot be issued unless notice is
given to the owners of the account, allowing them the
opportunity to contest the issuance of the order.
Without such a consequence, the legislated distinction
between ex parte proceedings under Section 10 and
those which are not ex parte under Section 11 would
be lost and rendered useless.
There certainly is fertile ground to contest the
issuance of an ex parte order. Section 11 itself
requires that it be established that "there is probable
cause that the deposits or investments are related to
unlawful activities," and it obviously is the court
which stands as arbiter whether there is indeed such
probable cause. The process of inquiring into the
existence of probable cause would involve the
function of determination reposed on the trial court.
Determination clearly implies a function of
adjudication on the part of the trial court, and not a
mechanical application of a standard pre-
determination by some other body. The word
"determination" implies deliberation and is, in normal
legal contemplation, equivalent to "the decision of a
court of justice."81
The court receiving the application for inquiry order
cannot simply take the AMLC’s word that probable
cause exists that the deposits or investments are
related to an unlawful activity. It will have to exercise
its
own determinative function in order to be convinced
of such fact. The account holder would be certainly
capable of contesting such probable cause if given the
opportunity to be apprised of the pending application
to inquire into his account; hence a notice requirement
would not be an empty spectacle. It may be so that the
process of obtaining the inquiry order may become
more cumbersome or prolonged because of the notice
requirement, yet we fail to see any unreasonable
burden cast by such circumstance. After all, as earlier
stated, requiring notice to the account holder should
not, in any way, compromise the integrity of the bank
records subject of the inquiry which remain in the
possession and control of the bank.
Petitioner argues that a bank inquiry order necessitates
a finding of probable cause, a characteristic similar to
a search warrant which is applied to and heard ex
parte. We have examined the supposed analogy
between a search warrant and a bank inquiry order yet
we remain to be unconvinced by petitioner.
The Constitution and the Rules of Court prescribe
particular requirements attaching to search warrants
that are not imposed by the AMLA with respect to
bank inquiry orders. A constitutional warrant requires
that the judge personally examine under oath or
affirmation the complainant and the witnesses he may
produce,82 such examination being in the form of
searching questions and answers.83 Those are
impositions which the legislative did not specifically
prescribe as to the bank inquiry order under the
AMLA, and we cannot find sufficient legal basis to
apply them to Section 11 of the AMLA. Simply put, a
bank inquiry order is not a search warrant or warrant
of arrest as it contemplates a direct object but not the
seizure of persons or property.
Even as the Constitution and the Rules of Court
impose a high procedural standard for the
determination of probable cause for the issuance of
search warrants which Congress chose not to
prescribe for the bank inquiry order under the AMLA,
Congress nonetheless disallowed ex parte applications
for the inquiry order. We can discern that in exchange
for these procedural standards normally applied to
search warrants, Congress chose instead to legislate a
right to notice and a right to be heard— characteristics
of judicial proceedings which are not ex parte. Absent
any demonstrable constitutional infirmity, there is no
reason for us to dispute such legislative policy
choices.
VI.
The Court’s construction of Section 11 of the AMLA
is undoubtedly influenced by right to privacy
considerations. If sustained, petitioner’s argument that
a bank account may be inspected by the government
following an ex parte proceeding about which the
depositor would know nothing would have significant
implications on the right to privacy, a right innately
cherished by all notwithstanding the legally
recognized exceptions thereto. The notion that the
government could be so empowered is cause for
concern of any individual who values the right to
privacy which, after all, embodies even the right to be
"let
alone," the most comprehensive of rights and the right
most valued by civilized people.84
One might assume that the constitutional dimension of
the right to privacy, as applied to bank deposits,
warrants our present inquiry. We decline to do so.
Admittedly, that question has proved controversial in
American jurisprudence. Notably, the United States
Supreme Court in U.S. v. Miller85 held that there was
no legitimate expectation of privacy as to the bank
records of a depositor.86 Moreover, the text of our
Constitution has not bothered with the triviality of
allocating specific rights peculiar to bank deposits.
However, sufficient for our purposes, we can assert
there is a right to privacy governing bank accounts in
the Philippines, and that such right finds application to
the case at bar. The source of such right is statutory,
expressed as it is in R.A. No. 1405 otherwise known
as the Bank Secrecy Act of 1955. The right to privacy
is enshrined in Section 2 of that law, to wit:
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 supplied)
Because of the Bank Secrecy Act, the confidentiality
of bank deposits remains a basic state policy in the
Philippines.87 Subsequent laws, including the AMLA,
may have added exceptions to the Bank Secrecy Act,
yet the secrecy of bank deposits still lies as the
general rule. It falls within the zones of privacy
recognized by our laws.88 The framers of the 1987
Constitution likewise recognized that bank accounts
are not covered by either the right to
information89 under Section 7, Article III or under the
requirement of full public disclosure90 under Section
28, Article II.91 Unless the Bank Secrecy Act is
repealed or
amended, the legal order is obliged to conserve the
absolutely confidential nature of Philippine bank
deposits.
Any exception to the rule of absolute confidentiality
must be specifically legislated. Section 2 of the Bank
Secrecy Act itself prescribes exceptions whereby
these bank accounts may be examined by "any person,
government official, bureau or office"; namely when:
(1) upon written permission of the depositor; (2) in
cases of impeachment; (3) the examination of bank
accounts is upon order of a competent court in cases
of bribery or dereliction of duty of public officials;
and (4) the money deposited or invested is the subject
matter of the litigation. Section 8 of R.A. Act No.
3019, the Anti-Graft and Corrupt Practices Act, has
been recognized by this Court as constituting an
additional exception to the rule of absolute
confidentiality,92 and there have been other similar
recognitions as well.93
The AMLA also provides exceptions to the Bank
Secrecy Act. Under Section 11, the AMLC may
inquire into a bank account upon order of any
competent court in cases of violation of the AMLA, it
having been established that there is probable cause
that the deposits or investments are related to
unlawful activities as defined in Section 3(i) of the
law, or a money laundering offense under Section 4
thereof. Further, in instances where there is probable
cause that the deposits or investments are related to
kidnapping for ransom,94 certain violations of the
Comprehensive Dangerous Drugs Act of
95
2002,  hijacking and other violations under R.A. No.
6235, destructive arson and murder, then there is no
need for the AMLC to obtain a court order before it
could inquire into such accounts.
It cannot be successfully argued the proceedings
relating to the bank inquiry order under Section 11 of
the AMLA is a "litigation" encompassed in one of the
exceptions to the Bank Secrecy Act which is when
"the money deposited or invested is the subject matter
of the litigation." The orientation of the bank inquiry
order is simply to serve as a provisional relief or The presence of this statutory right to privacy
remedy. As earlier stated, the application for such addresses at least one of the arguments raised by
does not entail a full-blown trial. petitioner, that Lilia Cheng had no personality to
assail the inquiry orders before the Court of Appeals
Nevertheless, just because the AMLA establishes
because she was not the subject of said orders. AMLC
additional exceptions to the Bank Secrecy Act it does
Resolution No. 75, which served as the basis in the
not mean that the later law has dispensed with the
successful application for the Makati inquiry order,
general principle established in the older law that
expressly adverts to Citibank Account No. 88576248
"[a]ll deposits of whatever nature with banks or
"owned by Cheng Yong and/or Lilia G. Cheng with
banking institutions in the Philippines x x x are hereby
Citibank N.A.,"97 whereas Lilia Cheng’s petition
considered as of an absolutely confidential
before the Court of Appeals is accompanied by a
nature."96 Indeed, by force of statute, all bank deposits
certification from Metrobank that Account Nos.
are absolutely confidential, and that nature is
300852436-0 and 700149801-7, both of which are
unaltered even by the legislated exceptions referred to
among the subjects of the Manila inquiry order, are
above. There is disfavor towards construing these
accounts in the name of "Yong Cheng or Lilia
exceptions in such a manner that would authorize
Cheng."98 Petitioner does not specifically deny that
unlimited discretion on the part of the government or
Lilia Cheng holds rights of ownership over the three
of any party seeking to enforce those exceptions and
said accounts, laying focus instead on the fact that she
inquire into bank deposits. If there are doubts in
was not named as a subject of either the Makati or
upholding the absolutely confidential nature of bank
Manila RTC inquiry orders. We are reasonably
deposits against affirming the authority to inquire into
convinced that Lilia Cheng has sufficiently
such accounts, then such doubts must be resolved in
demonstrated her joint ownership of the three
favor of the former. Such a stance would persist
accounts, and such conclusion leads us to
unless Congress passes a law reversing the general
acknowledge that she has the standing to assail via
state policy of preserving the absolutely confidential
certiorari the inquiry orders authorizing the
nature of Philippine bank accounts.
examination of her bank accounts as the orders
interfere with her statutory right to maintain the
secrecy of said accounts.
While petitioner would premise that the inquiry into
Lilia Cheng’s accounts finds root in Section 11 of the
AMLA, it cannot be denied that the authority to
inquire under Section 11 is only exceptional in
character, contrary as it is to the general rule
preserving the secrecy of bank deposits. Even though
she may not have been the subject of the inquiry
orders, her bank accounts nevertheless were, and she
thus has the standing to vindicate the right to secrecy
that attaches to said accounts and their owners. This
statutory right to privacy will not prevent the courts
from authorizing the inquiry anyway upon the
fulfillment of the requirements set forth under Section
11 of the AMLA or Section 2 of the Bank Secrecy
Act; at the same time, the owner of the accounts have
the right to challenge whether the requirements were
indeed complied with.
VII.
There is a final point of concern which needs to be
addressed. Lilia Cheng argues that the AMLA, being
a substantive penal statute, has no retroactive effect
and the bank inquiry order could not apply to deposits
or investments opened prior to the effectivity of Rep.
Act No. 9164, or on 17 October 2001. Thus, she
concludes, her subject bank accounts, opened between
1989 to 1990, could not be the subject of the bank
inquiry order lest there be a violation of the
constitutional prohibition against ex post facto laws.
No ex post facto law may be enacted,99 and no law
may be construed in such fashion as to permit a
criminal prosecution offensive to the ex post
facto clause. As applied to the AMLA, it is plain that
no person may be prosecuted under the penal
provisions of the AMLA for acts committed prior to
the enactment of the law on 17 October 2001. As
much was understood by the lawmakers since they
deliberated upon the AMLA, and indeed there is no
serious dispute on that point.
Does the proscription against ex post facto laws apply
to the interpretation of Section 11, a provision which
does not provide for a penal sanction but which
merely authorizes the inspection of suspect accounts
and deposits? The answer is in the affirmative. In this
jurisdiction, we have defined an ex post facto law as
one which either:
(1) makes criminal an act done before the passage of
the law and which was innocent when done, and
punishes such an act;
(2) aggravates a crime, or makes it greater than it was,
when committed;
(3) changes the punishment and inflicts a greater
punishment than the law annexed to the crime when
committed;
(4) alters the legal rules of evidence, and authorizes
conviction upon less or different testimony than the
law required at the time of the commission of the
offense;
(5) assuming to regulate civil rights and remedies
only, in effect imposes penalty or deprivation of a
right for something which when done was lawful; and
(6) deprives a person accused of a crime of some
lawful protection to which he has become entitled,
such as the protection of a former conviction or
acquittal, or a proclamation of amnesty. (Emphasis
supplied)100
Prior to the enactment of the AMLA, the fact that
bank accounts or deposits were involved in activities
later on enumerated in Section 3 of the law did not, by
itself, remove such accounts from the shelter of
absolute confidentiality. Prior to the AMLA, in order
that bank accounts could be examined, there was need
to secure either the written permission of the depositor
or a court order authorizing such examination,
assuming that they were involved in cases of bribery
or dereliction of duty of public officials, or in a case
where the money deposited or invested was itself the
subject matter of the litigation. The passage of the
AMLA stripped another layer off the rule on absolute
confidentiality that provided a measure of lawful
protection to the account holder. For that reason, the
application of the bank inquiry order as a means of
inquiring into records of transactions entered into
prior to the passage of the AMLA would be
constitutionally infirm, offensive as it is to the ex post
facto clause.
Still, we must note that the position submitted by Lilia
Cheng is much broader than what we are willing to
affirm. She argues that the proscription against ex
post facto laws goes as far as to prohibit any inquiry
into deposits or investments included in bank accounts
opened prior to the effectivity of the AMLA even if
the suspect transactions were entered into when the
law had already taken effect. The Court recognizes
that if this argument were to be affirmed, it would
create a horrible loophole in the AMLA that would in
turn supply the means to fearlessly engage in money
laundering in the Philippines; all that the criminal has
to do is to make sure that the money laundering
activity is facilitated through a bank account opened legislative record that unqualifiedly supports
prior to 2001. Lilia Cheng admits that "actual money respondent Lilia Cheng’s thesis, there is no cause for
launderers could utilize the ex post facto provision of us to sustain her interpretation of the AMLA, fatal as
the Constitution as a shield" but that the remedy lay it is to the anima of that law.
with Congress to amend the law. We can hardly
IX.
presume that Congress intended to enact a self-
defeating law in the first place, and the courts are We are well aware that Lilia Cheng’s petition
inhibited from such a construction by the cardinal rule presently pending before the Court of Appeals
that "a law should be interpreted with a view to likewise assails the validity of the subject bank
upholding rather than destroying it."101 inquiry orders and precisely seeks the annulment of
said orders. Our current declarations may indeed have
Besides, nowhere in the legislative record cited by
the effect of preempting that0 petition. Still, in order
Lilia Cheng does it appear that there was an
for this Court to rule on the petition at bar which
unequivocal intent to exempt from the bank inquiry
insists on the enforceability of the said bank inquiry
order all bank accounts opened prior to the passage of
orders, it is necessary for us to consider and rule on
the AMLA. There is a cited exchange between
the same question which after all is a pure question of
Representatives Ronaldo Zamora and Jaime Lopez
law.
where the latter confirmed to the former that "deposits
are supposed to be exempted from scrutiny or WHEREFORE, the PETITION is DISMISSED. No
monitoring if they are already in place as of the time pronouncement as to costs.
the law is enacted."102 That statement does indicate SO ORDERED.
that transactions already in place when the AMLA
was passed are indeed exempt from scrutiny through a
bank inquiry order, but it cannot yield any
interpretation that records of transactions undertaken
after the enactment of the AMLA are similarly
exempt. Due to the absence of cited authority from the
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
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 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 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
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 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.
G.R. No. L-34964 January 31, 1973
CHINA BANKING CORPORATION and TAN
KIM LIONG, petitioners-appellants,
vs.
HON. WENCESLAO ORTEGA, as Presiding
Judge of the Court of First Instance of Manila,
Branch VIII, and VICENTE G.
ACABAN, respondents-appellees.
Sy Santos, Del Rosario and Associates for petitioners-
appellants.
Tagalo, Gozar and Associates for respondents-
appellees.
MAKALINTAL, J.:
The only issue in this petition for certiorari to review
the orders dated March 4, 1972 and March 27, 1972,
respectively, of the Court of First Instance of Manila
in its Civil Case No. 75138, is whether or not a
banking institution may validly refuse to comply with
a court process garnishing the bank deposit of a
judgment debtor, by invoking the provisions of
Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a
complaint in the court a quo against Bautista Logging
Co., Inc., B & B Forest Development Corporation and
Marino Bautista for the collection of a sum of money.
Upon motion of the plaintiff the trial court declared
the defendants in default for failure to answer within
the reglementary period, and authorized the Branch
Clerk of Court and/or Deputy Clerk to receive the
plaintiff's evidence. On January 20, 1970 judgment by
default was rendered against the defendants.
To satisfy the judgment, the plaintiff sought the
garnishment of the bank deposit of the defendant B &
B Forest Development Corporation with the China
Banking Corporation. Accordingly, a notice of
garnishment was issued by the Deputy Sheriff of the
trial court and served on said bank through its cashier,
Tan Kim Liong. In reply, the bank' cashier invited the
attention of the Deputy Sheriff to the provisions of
Republic Act No. 1405 which, it was alleged, prohibit
the disclosure of any information relative to bank
deposits. Thereupon the plaintiff filed a motion to cite
Tan Kim Liong for contempt of court.
In an order dated March 4, 1972 the trial court denied
the plaintiff's motion. However, Tan Kim Liong was
ordered "to inform the Court within five days from
receipt of this order whether or not there is a deposit
in the China Banking Corporation of defendant B & B
Forest Development Corporation, and if there is any
deposit, to hold the same intact and not allow any
withdrawal until further order from this Court." Tan
Kim Liong moved to reconsider but was turned down
by order of March 27, 1972. In the same order he was
directed "to comply with the order of this Court dated
March 4, 1972 within ten (10) days from the receipt of
copy of this order, otherwise his arrest and
confinement will be ordered by the Court." Resisting
the two orders, the China Banking Corporation and
Tan Kim Liong instituted the instant petition.
The pertinent provisions of Republic Act No. 1405
relied upon by the petitioners reads:
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
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.
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.
Sec. 5. Any violation of this law will subject offender
upon conviction, to an imprisonment of not more than
five years or a fine of not more than twenty thousand
pesos or both, in the discretion of the court.
The petitioners argue that the disclosure of the
information required by the court does not fall within
any of the four (4) exceptions enumerated in Section
2, and that if the questioned orders are complied with
Tan Kim Liong may be criminally liable under
Section 5 and the bank exposed to a possible damage
suit by B & B Forest Development Corporation.
Specifically referring to this case, the position of the
petitioners is that the bank deposit of judgment debtor
B & B Forest Development Corporation cannot be
subject to garnishment to satisfy a final judgment
against it in view of the aforequoted provisions of
law.
We do not view the situation in that light. The lower
court did not order an examination of or inquiry into
the deposit of B & B Forest Development bring about a proper assessment by the Bureau of
Corporation, as contemplated in the law. It merely Internal Revenue, such inquiry is not authorized by
required Tan Kim Liong to inform the court whether this proposed law.
or not the defendant B & B Forest Development
Mr. MARCOS. But under our rules of procedure and
Corporation had a deposit in the China Banking
under the Civil Code, the attachment or garnishment
Corporation only for purposes of the garnishment
of money deposited is allowed. Let us assume, for
issued by it, so that the bank would hold the same
instance, that there is a preliminary attachment which
intact and not allow any withdrawal until further
is for garnishment or for holding liable all moneys
order. It will be noted from the discussion of the
deposited belonging to a certain individual, but such
conference committee report on Senate Bill No. 351
attachment or garnishment will bring out into the open
and House Bill No. 3977, which later became
the value of such deposit. Is that prohibited by this
Republic Act 1405, that it was not the intention of the
amendment or by this law?
lawmakers to place bank deposits beyond the reach of
execution to satisfy a final judgment. Thus: Mr. RAMOS. It is only prohibited to the extent that
the inquiry is limited, or rather, the inquiry is made
Mr. MARCOS. Now, for purposes of the record, I
only for the purpose of satisfying a tax liability
should like the Chairman of the Committee on Ways
already declared for the protection of the right in favor
and Means to clarify this further. Suppose an
of the government; but when the object is merely to
individual has a tax case. He is being held liable by
inquire whether he has a deposit or not for purposes of
the Bureau of Internal Revenue for, say, P1,000.00
taxation, then this is fully covered by the law.
worth of tax liability, and because of this the deposit
of this individual is attached by the Bureau of Internal Mr. MARCOS. And it protects the depositor, does it
Revenue. not?
Mr. RAMOS. The attachment will only apply after the Mr. RAMOS. Yes, it protects the depositor.
court has pronounced sentence declaring the liability Mr. MARCOS. The law prohibits a mere investigation
of such person. But where the primary aim is to into the existence and the amount of the deposit.
determine whether he has a bank deposit in order to
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question.
Therefore, preliminary garnishment or attachment of
the deposit is not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the
established rule of procedure as well as the
substantive law on the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a
decision, definitely establishing the liability of an
individual for taxation purposes and this judgment is
sought to be executed ... in the execution of that
judgment, does this bill, or this proposed law, if
approved, allow the investigation or scrutiny of the
bank deposit in order to execute the judgment?
Mr. RAMOS. To satisfy a judgment which has
become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the
tax liability is P1,000,000 and the deposit is half a
million, will this bill allow scrutiny into the deposit in
order that the judgment may be executed?
Mr. RAMOS. Merely to determine the amount of such
money to satisfy that obligation to the Government,
but not to determine whether a deposit has been made
in evasion of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an
ordinary civil action for the recovery of a sum of
money the plaintiff wishes to attach the properties of
the defendant to insure the satisfaction of the
judgment. Once the judgment is rendered, does the
gentleman mean that the plaintiff cannot attach the
bank deposit of the defendant?
Mr. RAMOS. That was the question raised by the
gentleman from Pangasinan to which I replied that
outside the very purpose of this law it could be
reached by attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil
cases it can be attached?
Mr. RAMOS. That is so.
(Vol. II, Congressional Record, House of
Representatives, No. 12, pp. 3839-3840, July 27,
1955).
It is sufficiently clear from the foregoing discussion of
the conference committee report of the two houses of
Congress that the prohibition against examination of
or inquiry into a bank deposit under Republic Act
1405 does not preclude its being garnished to insure
satisfaction of a judgment. Indeed there is no real
inquiry in such a case, and if the 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.
WHEREFORE, the orders of the lower court dated
March 4 and 27, 1972, respectively, are hereby
affirmed, with costs against the petitioners-appellants.
G.R. No. 138967             April 24, 2007
LEIDEN E. FERNANDEZ, GLORIA B.
ADRIANO, EMELDA A. NEGAPATAN, JESUS
P. TOMONGHA, ELEONOR A. QUIÑANOLA,
ASTEMA C. CAMPO, FLORIDA VILLACERAN,
FLORIDA B. TALLEDO AND BRENDA
GADIANO, Petitioners,
vs.
NICASIO C. ANIÑON, the Labor Arbiter of the
Regional Arbitration Branch VII-Cebu City;
MARGUERITE LHUILLIER; and ALVAREZ
CAÑETE LOPEZ PANGANDOYON AHAT &
PAREDES LAW OFFICES, represented by
ATTY. WILFREDO S. PANGANDOYON,
JR., Respondents.
DECISION
GARCIA, J.:
The instant petition is a proceeding for contempt in
connection with the execution of a final and executory
Decision1 of this Court in G.R. No. 105892, entitled
Leiden E. Fernandez, et al., v. National Labor
Relations Commission, et al., a labor case involving
the illegal dismissal of herein petitioners by
respondent Marguerite Lhuillier from their
employment at Agencia Cebuana-H. Lhuillier
Pawnshop (Agencia Cebuana, hereafter), of which the
latter is the sole proprietor. Via the present recourse,
petitioners pray the Court to hold the respondents
guilty of civil and criminal contempts for failure to
comply with and implement the Decision of the Court
in G.R. No. 105892. They also seek the inhibition of
respondent Labor Arbiter Nicasio C. Aniñon from
taking part in further execution proceedings relative to
the same case, and request that a final computation be
made by the Court of the exact amount of the
monetary awards due them under the same Decision.
Stripped to the bare essentials, the material facts
briefly stated as follows:
In 1990, petitioners filed their respective complaints
against respondent Marguerite Lhuillier and/or
Agencia Cebuana with the Regional Arbitration
Branch VII, Cebu City, for illegal dismissal, service
incentive pay, reinstatement with full back wages, and
damages. Their complaints were consolidated and
assigned to then Labor Arbiter Gavino Velasquez, Jr.
who, in a decision2 dated August 30, 1991, found for
the petitioners, to wit:
WHEREFORE, judgment is hereby rendered in favor
of the complainants [petitioners] and against the
respondent. The respondent is hereby ordered:
1. To reinstate the complainants to their respective
position at the Agencia Cebuana with full back wages
without qualifications; if reinstatement is not feasible,
for one reason or another, to pay to the complainants
their respective separation pay, service incentive leave
pay with full back wages without qualification
computed hereunder as follows:
xxx xxx xxx
2. To pay to all the complainants the amount of
P100,000.00 for moral damages and the amount of
another P100,000.00 for exemplary damages, plus the
amount of P98,018.25 as attorney’s fees representing
10% of the total award and the amount of P30,000.00
for litigation expenses.
Claiming denial of due process, respondent
Marguerite Lhuillier appealed to the National Labor
Relations Commission (NLRC), in connection with
which she filed a cash bond of ₱748,411.34. In a
decision dated March 11, 1992, the NLRC vacated the
decision of Labor Arbiter Velasquez, Jr. and
remanded the case to the Regional Arbitration Branch
VII, Cebu City, for further proceedings.
Following the NLRC’s denial of their motion for
reconsideration, petitioners went to this Court on a
petition for certiorari in G.R. 105892.1awphi1.nét
In a Decision3 promulgated on January 28, 1998, the
Court granted the certiorari petition, reversed and set
aside the assailed decision and resolution of the
NLRC and reinstated with modifications the decision
of Labor Arbiter Velasquez, Jr., thus:
WHEREFORE, the petition is hereby GRANTED and Court’s Decision in G.R. No. 105892, issued a writ of
the assailed Decision and Resolution are REVERSED execution4 commanding the Deputy Sheriff to:
and SET ASIDE. The labor arbiter’s decision is
x x x REINSTATE the complainants [petitioners] at
REINSTATED with MODIFICATIONS, such that
the respondent Agencia Cebuana and to proceed to the
the award of separation pay is deleted and the service
premises of the respondent located at Calderon St.,
incentive leave pay is computed from December 16,
Cebu City or wherever the same could be found and
1975 up to the petitioners’ actual reinstatement. Full
collect from the respondent the sum of P3,505,092.33
back wages, including the accrued thirteenth month
representing complainants award plus execution fee of
pay, are also awarded to the nine petitioners - - Leiden
P34,550.92 and the deposit fee of P17,535.46 or a
Fernandez, Brenda Gadiano, Gloria Adriano, Emelia
total sum of P3,556,178.71 and thereafter turn over
Negapatan, Jesus Tomongha, Eleonor Quiñanola,
the said sum to this Office for appropriate disposition.
Asteria Campo, Florida Villaceran and Florida
Should you fail to collect said sum in cash, you are
Talledo - - from the date of their illegal dismissal to
hereby authorized to cause the satisfaction of the same
the time of their actual reinstatement. Petitioners Lim
on the movable or immovable properties of the
and Canonigo, whom we find to have voluntarily
respondent not exempt from execution.
resigned, are not entitled to any benefit.
On April 15 and 16, 1999, the Deputy Sheriff,
SO ORDERED.
garnished the Citibank and Metrobank accounts of
On April 28, 1998, the Decision became final and respondent Marguerite Lhuillier and levied on a parcel
executory and an Entry of Judgment was made of land belonging to her located in Mandaue City.
thereon in the Book of Entries of Judgment.
On April 20, 1999, petitioners filed with the same
What transpired next lies at the core of the instant Regional Arbitration Branch VII, Cebu City, a motion
petition for contempt. for the release to them of respondent’s cash bond
earlier posted by her in connection with her appeal to
On April 8, 1999, herein public respondent Labor
the NLRC from the adverse decision of Labor Arbiter
Arbiter Nicasio C. Aniñon, by way enforcing this
Velasquez, Jr. On the very same day, respondent
Labor Arbiter Aniñon issued an Order directing the
release of the cash bond to the petitioners. Petitioners
received the amount of ₱748,411.34.
Then, on May 14, 1999, respondents Alvarez Cañete
Lopez Pangandoyon Ahat & Paredes Law Offices,
through respondent Atty. Wilfredo S. Pangandoyon,
Jr., filed with Labor Arbiter Nicasio C. Aniñon, on
behalf of Marguerite Lhuillier, a motion5 to lift or set
aside the writ of garnishment alleging that the
garnished accounts were not in the name of
Marguerite Lhuillier alone but were joint accounts
with Christopher Darza and Claudine Darza. The
motion further claims that the writ of execution was
directed only against Agencia Cebuana, hence, not
even Marguerite Lhuillier can be made personally
liable thereunder.
Petitioners vigorously opposed the motion to lift,
arguing that respondents Alvarez Cañete Lopez
Pangandoyon Ahat & Paredes Law Offices have no
legal personality to represent Margruerite Lhuillier as
they are not her counsels on record. Petitioners point
out that the counsels on record for Marguerite
Lhuillier are Atty. Amadeo D. Seno and Atty. Luis V.
Diores and that there had been no proper substitution
of counsel made. Moreover, petitioners claim in the
same opposition that the garnished bank accounts are
not joint accounts but are accounts only in the name
of Marguerite Lhuillier, who, contrary to the
allegations in the motion, is just as liable under the
writ as Agencia Cebuana.
In a resolution dated June 10, 1999, respondent Labor
Arbiter Nicasio C. Aniñon granted the motion to lift
or set aside the writ of garnishment and directed the
Deputy Sheriff to enforce this Court’s Decision in
G.R. No. 105892 only on the properties of Agencia
Cebuana.
On June 21, 1999, petitioners appealed the
aforementioned resolution of Labor Arbiter Añinon to
the NLRC. Subsequently, they also filed with this
Court the instant petition for "civil and criminal
contempt and other disciplinary sanctions; inhibition
of the respondent labor arbiter; final computation of
the exact figure of petitioners’ monetary awards
including separation pay; with request to consolidate
petitioners’ recent appeal filed with the [NLRC] to
this instant petition." In sum, petitioners’ submit that
the collective acts of the public and private
respondents constitute contempt of this Court in that
they thwarted the implementation of the final and
executory Decision of the Court in G.R. No. 105892.
First off, it greatly saddens the Court that petitioner
employees, who were illegally dismissed way back in
1990 -- seventeen (17) years before this date -- have
yet to be fully compensated for the injustice that had
befallen them almost two decades ago despite the
final and executory judgment of this very Court in
their favor. It is in the interests of justice, therefore,
that the Court must make conclusive clarifications as
to the execution of its final Decision against
respondent Marguerite Lhuillier.
In an individual proprietorship, the owner has
unlimited personal liability for all the debts and
obligations of the business.6 As sole proprietor of
Agencia Cebuana, from whose employment the
petitioners were unlawfully removed, Marguerite
Lhuillier is the party against whom the Court’s final
and executory Decision in G.R. No. 105892 is
enforceable. Put differently, Marguerite Lhuillier is
personally liable under the same Decision.
Garnishment and levy over her property are proper in
the dispensation of justice.
Be that as it may, we do not find, however, any
contumacious act to have been committed by both the
public and private respondents, either individually or
collectively. As it were, there was never an attempt on
their part to subvert or hold at bay the final
implementation of the executory Decision of the
Court in the main case. Quite the contrary,
recognizing the executory character of this Court’s
Decision in question, respondent Labor Arbiter
Nicasio Aniñon issued a writ of execution for its
implementation. For their part, the private respondents
did not actually or maliciously resist the writ thus
issued. What they opposed was the garnishment of the
bank accounts allegedly jointly owned by respondent
Marguerite Lhuillier and two others, not the writ of
execution itself. We hold, however, that such
accounts, even if joint as claimed by the private
respondents, are subject to garnishment. It is in the
nature of joint accounts that anyone of the depositors
has access to the entire funds therein. If, afterwards,
there should be squabbling amongst the supposed
joint depositors as to the share of each, they can sort it
out amongst themselves.
We reiterate for the purpose of clarity that private
respondent Marguerite Lhuillier is personally liable
under this Court’s Decision in dispute. Her co-
respondent Agencia Cebuana is a sole proprietorship
without a juridical personality of its own. But while
the position taken by the public and private
respondents that the judgment in question is not
enforceable against respondent Marguerite Lhuillier,
but solely against Agencia Cebuana is wrong, they are
not liable for contempt.
For one, the filing of the respondent law firm of
Alvarez Cañete Lopez Pangandoyon Ahat & Paredes
Law Offices of its motion to lift the order of
garnishment cannot be adjudged contumacious simply
because they do not appear as counsel of record of
respondent Marguerite Lhuillier/Agencia Cebuana.
Their engagement to file that particular motion does
not appear to be a replacement or substitution of
counsel where the withdrawal or consent of former
counsel is required. There was no intention on their
part to replace or substitute the counsels on record of
Marguerite Lhuillier and/or Agencia Cebuana. For
sure, the services of the counsels on record were never
terminated. In this light, we are inclined to believe
that the engagement of the law firm of Alvarez Cañete
Lopez Pangandoyon & Paredes Law Offices appears
to have been on collaborative effort basis. Besides, it
is settled rule in our jurisdiction that a lawyer is
presumed to be properly authorized to represent any
cause in which he appears.7 It is hard to imagine that
the respondent law firm who has no personal interest
in the case would fight for and defend a case with
persistence and vigor if it had not been authorized or
employed by the party concerned.8 Besides, it must be
stressed that the respondent law firm merely filed a
motion to lift the order of garnishment, an appearance
which is basically limited in character.
On the part of the respondent Labor Arbiter, it appears
clear to us that it was never his intent to defy the final
and executory Decision of this Court in the main case,
much less to delay its enforcement. He did, after all,
issue a writ of execution on April 8, 1999. Not only
that. When the petitioners filed their motion for the
release to them of respondent’s cash bond in
connection with her appeal to the NLRC from the
earlier adverse decision of Labor Arbiter Velasquez
Jr., respondent Labor Arbiter Nicasio C. Aniñon
issued an order directing such release that very same
day and petitioners did receive the amount of
₱748,411.34. Hence, the Decision of this Court in
question had, in fact, already been partially executed.
For this reason, we do not see the need for the
inhibition of Labor Arbiter Nicasio Aniñon in the
enforcement process of the same Decision. He is,
however, directed with all dispatch to satisfy the final
and executory Decision of this Court in G.R. No.
105892. The petitioners have waited long enough for
the justly deserved fruits of their labor. As regards the
companion request of the petitioners for a final
computation by the Court of the exact amounts of
monetary awards due them under the same Decision,
the Court is not inclined to venture thereon
considering that said computation had already been
done by Labor Arbiter Velasquez, Jr., in his decision
of March 11, 1992, as affirmed with modifications by
the Court in its Decision in G.R. No. 105892.
IN VIEW WHEREOF, and finding no contumacious
act on the part of the herein respondents, the instant
petition is DISMISSED but the respondent Labor
Arbiter Nicasio C. Añinon is DIRECTED to
IMMEDIATELY IMPLEMENT this Court’s
Decision in G.R. No. 105892.
No Costs.
SO ORDERED.
G.R. No. 94723 August 21, 1997
KAREN E. SALVACION, minor, thru Federico N.
Salvacion, Jr., father and Natural Guardian, and
Spouses FEDERICO N. SALVACION, JR., and
EVELINA E. SALVACION, petitioners,
vs.
CENTRAL BANK OF THE PHILIPPINES,
CHINA BANKING CORPORATION and GREG
BARTELLI y NORTHCOTT, respondents.
TORRES, JR., J.:
In our predisposition to discover the "original intent"
of a statute, courts become the unfeeling pillars of
the status quo. Ligle do we realize that statutes or
even constitutions are bundles of compromises thrown
our way by their framers. Unless we exercise
vigilance, the statute may already be out of tune and
irrelevant to our day.
The petition is for declaratory relief. It prays for the
following reliefs:
a.) Immediately upon the filing of this petition, an
Order be issued restraining the respondents from
applying and enforcing Section 113 of Central Bank
Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respective rights and duties of
petitioners and respondents;
2.) Adjudging Section 113 of Central Bank Circular
No. 960 as contrary to the provisions of the
Constitution, hence void; because its provision that
"Foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process
of any court, legislative body, government agency or
any administrative body whatsoever
i.) has taken away the right of petitioners to have the
bank deposit of defendant Greg Bartelli y Northcott
garnished to satisfy the judgment rendered in
petitioners' favor in violation of substantive due
process guaranteed by the Constitution;
ii.) has given foreign currency depositors an undue
favor or a class privilege in violation of the equal
protection clause of the Constitution;
iii.) has provided a safe haven for criminals like the
herein respondent Greg Bartelli y Northcott since
criminals could escape civil liability for their
wrongful acts by merely converting their money to a
foreign currency and depositing it in a foreign
currency deposit account with an authorized bank.
The antecedent facts:
On February 4, 1989, Greg Bartelli y Northcott, an
American tourist, coaxed and lured petitioner Karen
Salvacion, then 12 years old to go with him to his
apartment. Therein, Greg Bartelli detained Karen
Salvacion for four days, or up to February 7, 1989 and
was able to rape the child once on February 4, and
three times each day on February 5, 6, and 7, 1989.
On February 7, 1989, after policemen and people
living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal Jail.
The policemen recovered from Bartelli the following
items: 1.) Dollar Check No. 368, Control No.
021000678-1166111303, US 3,903.20;
COCOBANK Bank Book No. 104-108758-8 (Peso
Acct.); 3.) Dollar Account — China Banking Corp.,
US$/A#54105028-2; 4.) ID-122-30-8877; 5.)
Philippine Money (P234.00) cash; 6.) Door Keys 6
pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing
the complainant.
On February 16, 1989, Makati Investigating Fiscal
Edwin G. Condaya filed against Greg Bartelli,
Criminal Case No. 801 for Serious Illegal Detention
and Criminal Cases Nos. 802, 803, 804, and 805 for
four (4) counts of Rape. On the same day, petitioners
filed with the Regional Trial Court of Makati Civil
Case No. 89-3214 for damages with preliminary
attachment against Greg Bartelli. On February 24,
1989, the day there was a scheduled hearing for
Bartelli's petition for bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscal's
Urgent Ex-Parte Motion for the Issuance of Warrant
of Arrest and Hold Departure Order. Pending the
arrest of the accused Greg Bartelli y Northcott, the
criminal cases were archived in an Order dated
February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge
issued an Order dated February 22, 1989 granting the
application of herein petitioners, for the issuance of
2.)
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 Ms. Erlinda S. Carolino
that the garnishment did not violate the secrecy of 12 Pres. Osmena Avenue
bank deposits since the disclosure is merely incidental South Admiral Village
to a garnishment properly and legally made by virtue Paranaque, Metro Manila
of a court order which has placed the subject deposits
Dear Ms. Carolino:
in custodia legis. In answer to this letter of the Deputy
Sheriff of Makati, China Banking Corporation, in a This is in reply to your letter dated April 25, 1989
letter dated March 20, 1989, invoked Section 113 of regarding your inquiry on Section 113, CB Circular
Central Bank Circular No. 960 to the effect that the No. 960 (1983).
dollar deposits or defendant Greg Bartelli are exempt The cited provision is absolute in application. It does
from attachment, garnishment, or any other order or not admit of any exception, nor has the same been
process of any court, legislative body, government repealed nor amended.
agency or any administrative body, whatsoever.
The purpose of the law is to encourage dollar accounts
This prompted the counsel for petitioners to make an within the country's banking system which would help
inquiry with the Central Bank in a letter dated April in the development of the economy. There is no
25, 1989 on whether Section 113 of CB Circular No. intention to render futile the basic rights of a person as
960 has any exception or whether said section has was suggested in your subject letter. The law may be
been repealed or amended since said section has harsh as some perceive it, but it is still the law.
rendered nugatory the substantive right of the plaintiff Compliance is, therefore, enjoined.
to have the claim sought to be enforced by the civil
action secured by way of the writ of preliminary Very truly yours,
attachment as granted to the plaintiff under Rule 57 of (SGD) AGAPITO S. FAJARDO
the Revised Rules of Court. The Central Bank Director1
responded as follows:
Meanwhile, on April 10, 1989, the trial court granted
May 26, 1989 petitioners' motion for leave to serve summons by
publication in the Civil Case No. 89-3214 entitled
"Karen Salvacion, et al. vs. Greg Bartelli y Northcott."
Summons with the complaint was a published in the
Manila Times once a week for three consecutive
weeks. Greg Bartelli failed to file his answer to the
complaint and was declared in default on August 7,
1989. After hearing the case ex-parte, the court
rendered judgment in favor of petitioners on March
29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor
of plaintiffs and against defendant, ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of
P500,000.00 as moral damages;
2. To pay her parents, plaintiffs spouses Federico N.
Salvacion, Jr., and Evelina E. Salvacion the amount of
P150,000.00 each or a total of P300,000.00 for both of
them;
3. To pay plaintiffs exemplary damages of
P100,000.00; and
4. To pay attorney's fees in an amount equivalent to
25% of the total amount of damages herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondent Greg Bartelli which
gave rise to the award were related in graphic detail
by the trial court in its decision as follows:
The defendant in this case was originally detained in
the municipal jail of Makati but was able to escape
therefrom on February 24, 1989 as per report of the
Jail Warden of Makati to the Presiding Judge,
Honorable Manuel M. Cosico of the Regional Trial
Court of Makati, Branch 136, where he was charged
with four counts of Rape and Serious Illegal
Detention (Crim. Cases Nos. 802 to 805).
Accordingly, upon motion of plaintiffs, through
counsel, summons was served upon defendant by
publication in the Manila Times, a newspaper of
general circulation as attested by the Advertising
Manager of the Metro Media Times, Inc., the
publisher of the said newspaper. Defendant, however,
failed to file his answer to the complaint despite the
lapse of the period of sixty (60) days from the last
publication; hence, upon motion of the plaintiffs,
through counsel, defendant was declared in default
and plaintiffs were authorized to present their
evidence ex parte.
In support of the complaint, plaintiffs presented as
witnesses the minor Karen E. Salvacion, her father,
Federico N. Salvacion, Jr., a certain Joseph Aguilar
and a certain Liberato Madulio, who gave the
following testimony:
Karen took her first year high school in St. Mary's
Academy in Pasay City but has recently transferred to
Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the
Plaza Fair Makati Cinema Square, with her friend
Edna Tangile whiling away her free time. At about
3:30 p.m. while she was finishing her snack on a
concrete bench in front of Plaza Fair, an American
approached her. She was then alone because Edna
Tangile had already left, and she was about to go
home. (TSN, Aug. 15, 1989, pp. 2 to 5)
The American asked her name and introduced himself
as Greg Bartelli. He sat beside her when he talked to
her. He said he was a Math teacher and told her that
he has a sister who is a nurse in New York. His sister
allegedly has a daughter who is about Karen's age and
who was with him in his house along Kalayaan
Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
The American asked Karen what was her favorite
subject and she told him it's Pilipino. He then invited
her to go with him to his house where she could teach
Pilipino to his niece. He even gave her a stuffed toy to
persuade her to teach his niece. (Id., pp. 5-6)
They walked from Plaza Fair along Pasong Tamo,
turning right to reach the defendant's house along
Kalayaan Avenue. (Id., p. 6)
When they reached the apartment house, Karen
noticed that defendant's alleged niece was not outside
the house but defendant told her maybe his niece was
inside. When Karen did not see the alleged niece
inside the house, defendant told her maybe his niece
was upstairs, and invited Karen to go upstairs. (Id., p.
7)
Upon entering the bedroom defendant suddenly
locked the door. Karen became nervous because his
niece was not there. Defendant got a piece of cotton
cord and tied Karen's hands with it, and then he
undressed her. Karen cried for help but defendant
strangled her. He took a packing tape and he covered
her mouth with it and he circled it around her head.
(Id., p. 7)
Then, defendant suddenly pushed Karen towards the
bed which was just near the door. He tied her feet and
hands spread apart to the bed posts. He knelt in front
of her and inserted his finger in her sex organ. She felt
severe pain. She tried to shout but no sound could
come out because there were tapes on her mouth.
When defendant withdrew his finger it was full of
blood and Karen felt more pain after the withdrawal
of the finger. (Id., p. 8)
He then got a Johnson's Baby Oil and he applied it to
his sex organ as well as to her sex organ. After that he
forced his sex organ into her but he was not able to do
so. While he was doing it, Karen found it difficult to
breathe and she perspired a lot while feeling severe
pain. She merely presumed that he was able to insert
his sex organ a little, because she could not see. Karen
could not recall how long the defendant was in that
position. (Id. pp. 8-9)
After that, he stood up and went to the bathroom to
wash. He also told Karen to take a shower and he
untied her hands. Karen could only hear the sound of
the water while the defendant, she presumed, was in
the bathroom washing his sex organ. When she took a
shower more blood came out from her. In the
meantime, defendant changed the mattress because it
was full of blood. After the shower, Karen was
allowed by defendant to sleep. She fell asleep because
she got tired crying. The incident happened at about
4:00 p.m. Karen had no way of determining the exact
time because defendant removed her watch.
Defendant did not care to give her food before she
went to sleep. Karen woke up at about 8:00 o'clock
the following morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after
a breakfast of biscuit and coke at about 8:30 to 9:00
a.m. defendant raped Karen while she was still
bleeding. For lunch, they also took biscuit and coke.
She was raped for the second time at about 12:00 to
2:00 p.m. In the evening, they had rice for dinner
which defendant had stored downstairs; it was he who
cooked the rice that is why it looks like "lugaw". For
the third time, Karen was raped again during the
night. During those three times defendant succeeded
in inserting his sex organ but she could not say
whether the organ was inserted wholly.
Karen did not see any firearm or any bladed weapon.
The defendant did not tie her hands and feet nor put a
tape on her mouth anymore but she did not cry for
help for fear that she might be killed; besides, all the
windows and doors were closed. And even if she
shouted for help, nobody would hear her. She was so
afraid that if somebody would hear her and would be
able to call the police, it was still possible that as she
was still inside the house, defendant might kill her.
Besides, the defendant did not leave that Sunday,
ruling out her chance to call for help. At nighttime he
slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three
times, once in the morning for thirty minutes after a
breakfast of biscuits; again in the afternoon; and again
in the evening. At first, Karen did not know that there
was a window because everything was covered by a
carpet, until defendant opened the window for around
fifteen minutes or less to let some air in, and she
found that the window was covered by styrofoam and
plywood. After that, he again closed the window with
a hammer and he put the styrofoam, plywood, and
carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for
help, although defendant left but kept the door closed.
She went to the bathroom and saw a small window
covered by styrofoam and she also spotted a small
hole. She stepped on the bowl and she cried for help
through the hole. She cried: "Maawa no po kayo so
akin. Tulungan n'yo akong makalabas dito. Kinidnap
ako!" Somebody heard her. It was a woman, probably
a neighbor, but she got angry and said she was
"istorbo". Karen pleaded for help and the woman told
her to sleep and she will call the police. She finally
fell asleep but no policeman came. (TSN, Aug. 15,
1989, pp. 15-16)
She woke up at 6:00 o'clock the following morning,
and she saw defendant in bed, this time sleeping. She
waited for him to wake up. When he woke up, he
again got some food but he always kept the door
locked. As usual, she was merely fed with biscuit and
coke. On that day, February 7, 1989, she was again
raped three times. The first at about 6:30 to 7:00 a.m.,
the second at about 8:30 — 9:00, and the third was
after lunch at 12:00 noon. After he had raped her for
the second time he left but only for a short while.
Upon his return, he caught her shouting for help but
he did not understand what she was shouting about.
After she was raped the third time, he left the house.
(TSN, Aug. 15, 1989, pp. 16-17) She again went to
the bathroom and shouted for help. After shouting for
about five minutes, she heard many voices. The
voices were asking for her name and she gave her
name as Karen Salvacion. After a while, she heard a
voice of a woman saying they will just call the police.
They were also telling her to change her clothes. She
went from the bathroom to the room but she did not
change her clothes being afraid that should the
neighbors call for the police and the defendant see her
in different clothes, he might kill her. At that time she
was wearing a T-shirt of the American because the
latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and he opened the door.
He asked her if she had asked for help because there
were many policemen outside and she denied it. He
told her to change her clothes, and she did change to
the one she was wearing on Saturday. He instructed
her to tell the police that she left home and willingly;
then he went downstairs but he locked the door. She
could hear people conversing but she could not
understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were
conversing downstairs, she knocked repeatedly at the
door as hard as she could. She heard somebody going
upstairs and when the door was opened, she saw a
policeman. The policeman asked her name and the
reason why she was there. She told him she was
kidnapped. Downstairs, he saw about five policemen
in uniform and the defendant was talking to them.
"Nakikipag-areglo po sa mga pulis," Karen added.
"The policeman told him to just explain at the
precinct. (Id., p. 20)
They went out of the house and she saw some of her
neighbors in front of the house. They rode the car of a
certain person she called Kuya Boy together with
defendant, the policeman, and two of her neighbors
whom she called Kuya Bong Lacson and one Ate
Nita. They were brought to Sub-Station I and there
she was investigated by a policeman. At about 2:00
a.m., her father arrived, followed by her mother
together with some of their neighbors. Then they were
brought to the second floor of the police headquarters.
(Id., p. 21)
At the headquarters, she was asked several questions
by the investigator. The written statement she gave to
the police was marked as Exhibit A. Then they
proceeded to the National Bureau of Investigation
together with the investigator and her parents. At the
NBI, a doctor, a medico-legal officer, examined her
private parts. It was already 3:00 in the early morning
of the following day when they reached the NBI.
(TSN, Aug. 15, 1989, p. 22) The findings of the
medico-legal officer has been marked as Exhibit B.
She was studying at the St. Mary's Academy in Pasay
City at the time of the incident but she subsequently
transferred to Apolinario Mabini, Arellano University,
situated along Taft Avenue, because she was ashamed
to be the subject of conversation in the school. She
first applied for transfer to Jose Abad Santos, Arellano
University along Taft Avenue near the Light Rail
Transit Station but she was denied admission after she
told the school the true reason for her transfer. The
reason for their denial was that they might be
implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does
not play with her brother and sister anymore, and she
is always in a state of shock; she has been absent-
minded and is ashamed even to go out of the house.
(TSN, Sept. 12, 1989, p. 10) She appears to be restless
or sad, (Id., p. 11) The father prays for P500,000.00
moral damages for Karen for this shocking experience
which probably, she would always recall until she
reaches old age, and he is not sure if she could ever
recover from this experience. (TSN, Sept. 24, 1989,
pp. 10-11)
Pursuant to an Order granting leave to publish notice
of decision, said notice was published in the Manila
Bulletin once a week for three consecutive weeks.
After the lapse of fifteen (15) days from the date of
the last publication of the notice of judgment and the
decision of the trial court had become final,
petitioners tried to execute on Bartelli's dollar deposit
with China Banking Corporation. Likewise, the bank
invoked Section 113 of Central Bank Circular No.
960.
Thus, petitioners decided to seek relief from this
Court.
The issues raised and the arguments articulated by the
parties boil down to two:
May this Court entertain the instant petition despite
the fact that original jurisdiction in petitions for
declaratory relief rests with the lower court? Should
Section 113 of Central Bank Circular No. 960 and
Section 8 of R.A. 6426, as amended by P.D. 1246,
otherwise known as the Foreign Currency Deposit Act
be made applicable to a foreign transient?
Petitioners aver as heretofore stated that Section 113
of Central Bank Circular No. 960 providing that
"Foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process
of any court, legislative body, government agency or
any administrative body whatsoever." should be
adjudged as unconstitutional on the grounds that: 1.) it
has taken away the right of petitioners to have the
bank deposit of defendant Greg Bartelli y Northcott
garnished to satisfy the judgment rendered in
petitioners' favor in violation of substantive due
process guaranteed by the Constitution; 2.) it has
given foreign currency depositors an undue favor or a
class privilege in violation of the equal protection
clause of the Constitution; 3.) it has provided a safe
haven for criminals like the herein respondent Greg
Bartelli y Northcott since criminals could escape civil
liability for their wrongful acts by merely converting based on a law; b.) the law seems to be reasonable; c.)
their money to a foreign currency and depositing it in it is enforced according to regular methods of
a foreign currency deposit account with an authorized procedure; and d.) it applies to all members of a class.
bank; and 4.) The Monetary Board, in issuing Section
Expanding, the Central Bank said; that one reason for
113 of Central Bank Circular No. 960 has exceeded
exempting the foreign currency deposits from
its delegated quasi-legislative power when it took
attachment, garnishment or any other order or process
away: a.) the plaintiffs substantive right to have the
of any court, is to assure the development and speedy
claim sought to be enforced by the civil action secured
growth of the Foreign Currency Deposit System and
by way of the writ of preliminary attachment as
the Offshore Banking System in the Philippines; that
granted by Rule 57 of the Revised Rules of Court; b.)
another reason is to encourage the inflow of foreign
the plaintiffs substantive right to have the judgment
currency deposits into the banking institutions thereby
credit satisfied by way of the writ of execution out of
placing such institutions more in a position to
the bank deposit of the judgment debtor as granted to
properly channel the same to loans and investments in
the judgment creditor by Rule 39 of the Revised Rules
the Philippines, thus directly contributing to the
of Court, which is beyond its power to do so.
economic development of the country; that the subject
On the other hand, respondent Central Bank, in its section is being enforced according to the regular
Comment alleges that the Monetary Board in issuing methods of procedure; and that it applies to all foreign
Section 113 of CB Circular No. 960 did not exceed its currency deposits made by any person and therefore
power or authority because the subject Section is does not violate the equal protection clause of the
copied verbatim from a portion of R.A. No. 6426 as Constitution.
amended by P.D. 1246. Hence, it was not the
Respondent Central Bank further avers that the
Monetary Board that grants exemption from
questioned provision is needed to promote the public
attachment or garnishment to foreign currency
interest and the general welfare; that the State cannot
deposits, but the law (R.A. 6426 as amended) itself;
just stand idly by while a considerable segment of the
that it does not violate the substantive due process
society suffers from economic distress; that the State
guaranteed by the Constitution because a.) it was
had to take some measures to encourage economic
development; and that in so doing persons and
property may be subjected to some kinds of restraints
or burdens to secure the general welfare or public
interest. Respondent Central Bank also alleges that
Rule 39 and Rule 57 of the Revised Rules of Court
provide that some properties are exempted from
execution/attachment especially provided by law and
R.A. No. 6426 as amended is such a law, in that it
specifically provides, among others, that foreign
currency deposits shall be exempted from attachment,
garnishment, or any other order or process of any
court, legislative body, government agency or any
administrative body whatsoever.
For its part, respondent China Banking Corporation,
aside from giving reasons similar to that of respondent
Central Bank, also stated that respondent China Bank
is not unmindful of the inhuman sufferings
experienced by the minor Karen E. Salvacion from the
beastly hands of Greg Bartelli; that it is only too
willing to release the dollar deposit of Bartelli which
may perhaps partly mitigate the sufferings petitioner
has undergone; but it is restrained from doing so in
view of R.A. No. 6426 and Section 113 of Central
Bank Circular No. 960; and that despite the harsh
effect of these laws on petitioners, CBC has no other
alternative but to follow the same.
This Court finds the petition to be partly meritorious.
Petitioner deserves to receive the damages awarded to
her by the court. But this petition for declaratory relief
can only be entertained and treated as a petition
for mandamus to require respondents to honor and
comply with the writ of execution in Civil Case No.
89-3214.
This Court has no original and exclusive jurisdiction
over a petition for declaratory relief.2 However,
exceptions to this rule have been recognized. Thus,
where the petition has far-reaching implications and
raises questions that should be resolved, it may be
treated as one for mandamus.3
Here is a child, a 12-year old girl, who in her belief
that all Americans are good and in her gesture of
kindness by teaching his alleged niece the Filipino
language as requested by the American, trustingly
went with said stranger to his apartment, and there she
was raped by said American tourist Greg Bartelli. Not
once, but ten times. She was detained therein for four
(4) days. This American tourist was able to escape
from the jail and avoid punishment. On the other
hand, the child, having received a favorable judgment
in the Civil Case for damages in the amount of more
than P1,000,000.00, which amount could alleviate the
humiliation, anxiety, and besmirched reputation she
had suffered and may continue to suffer for a long,
long time; and knowing that this person who had
wronged her has the money, could not, however get
the award of damages because of this unreasonable
law. This questioned law, therefore makes futile the
favorable judgment and award of damages that she
and her parents fully deserve. As stated by the trial
court in its decision,
Indeed, after hearing the testimony of Karen, the
Court believes that it was undoubtedly a shocking and
traumatic experience she had undergone which could
haunt her mind for a long, long time, the mere recall
of which could make her feel so humiliated, as in fact
she had been actually humiliated once when she was
refused admission at the Abad Santos High School,
Arellano University, where she sought to transfer
from another school, simply because the school
authorities of the said High School learned about what
happened to her and allegedly feared that they might
be implicated in the case.
xxx xxx xxx
The reason for imposing exemplary or corrective
damages is due to the wanton and bestial manner
defendant had committed the acts of rape during a
period of serious illegal detention of his hapless
victim, the minor Karen Salvacion whose only fault
was in her being so naive and credulous to believe
easily that defendant, an American national, could not
have such a bestial desire on her nor capable of
committing such a heinous crime. Being only 12 years
old when that unfortunate incident happened, she has
never heard of an old Filipino adage that in every
forest there is a
4
snake, . . . .
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 question whether the protection against attachment,
process of law for being unreasonable and oppressive. garnishment or other court process accorded to
The intention of the questioned law may be good foreign currency deposits by PD No. 1246 and CB
when enacted. The law failed to anticipate the Circular No. 960 applies when the deposit does not
iniquitous effects producing outright injustice and come from a lender or investor but from a mere
inequality such as the case before us. transient or tourist who is not expected to maintain the
deposit in the bank for long.
It has thus been said that —
The resolution of this question is important for the
But I also know,5 that laws and institutions must go
protection of nationals who are victimized in the
hand in hand with the progress of the human mind. As
forum by foreigners who are merely passing through.
that becomes more developed, more enlightened, as
new discoveries are made, new truths are disclosed xxx xxx xxx
and manners and opinions change with the change of
. . . Respondents China Banking Corporation and
circumstances, institutions must advance also, and
Central Bank of the Philippines refused to honor the
keep pace with the times. . . We might as well require
writ of execution issued in Civil Case No. 89-3214 on
a man to wear still the coat which fitted him when a
the strength of the following provision of Central
boy, as civilized society to remain ever under the
Bank Circular No. 960:
regimen of their barbarous ancestors.
Sec. 113. Exemption from attachment. — Foreign
In his Comment, the Solicitor General correctly
currency deposits shall be exempt from attachment,
opined, thus:
garnishment, or any other order or process of any
The present petition has far-reaching implications on court, legislative body, government agency or any
the right of a national to obtain redress for a wrong administrative body whatsoever.
committed by an alien who takes refuge under a law
Central Bank Circular No. 960 was issued pursuant to
and regulation promulgated for a purpose which does
Section 7 of Republic Act No. 6426:
not contemplate the application thereof envisaged by
the alien. More specifically, the petition raises the
Sec. 7. Rules and Regulations. The Monetary Board
of the Central Bank shall promulgate such rules and
regulations as may be necessary to carry out the
provisions of this Act which shall take effect after the
publication of such rules and regulations in the
Official Gazette and in a newspaper of national
circulation for at least once a week for three
consecutive weeks. In case the Central Bank
promulgates new rules and regulations decreasing the
rights of depositors, the rules and regulations at the
time the deposit was made shall govern.
The aforecited Section 113 was copied from Section 8
of Republic Act NO. 6426, as amended by P.D. 1246,
thus:
Sec. 8. Secrecy of Foreign Currency Deposits. — All
foreign currency deposits authorized under this Act,
as amended by Presidential Decree No. 1035, as well
as foreign currency deposits authorized under
Presidential Decree No. 1034, are hereby declared as
and considered of an absolutely confidential nature
and, except upon the written permission of the
depositor, in no instance shall such foreign currency
deposits be examined, inquired or looked into by any
person, government official, bureau or office whether
judicial or administrative or legislative or any other
entity whether public or private: Provided, however,
that said foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or
process of any court, legislative body, government
agency or any administrative body whatsoever.
The purpose of PD 1246 in according protection
against attachment, garnishment and other court
process to foreign currency deposits is stated in its
whereases, viz.:
WHEREAS, under Republic Act No. 6426, as
amended by Presidential Decree No. 1035, certain
Philippine banking institutions and branches of
foreign banks are authorized to accept deposits in
foreign currency;
WHEREAS, under the provisions of Presidential
Decree No. 1034 authorizing the establishment of an
offshore banking system in the Philippines, offshore
banking units are also authorized to receive foreign
currency deposits in certain cases;
WHEREAS, in order to assure the development and
speedy growth of the Foreign Currency Deposit
System and the Offshore Banking System in the
Philippines, certain incentives were provided for
under the two Systems such as confidentiality of
deposits subject to certain exceptions and tax
exemptions on the interest income of depositors who
are nonresidents and are not engaged in trade or
business in the Philippines;
WHEREAS, making absolute the protective cloak of
confidentiality over such foreign currency deposits,
exempting such deposits from tax, and guaranteeing
the vested rights of depositors would better encourage
the inflow of foreign currency deposits into the
banking institutions authorized to accept such deposits
in the Philippines thereby placing such institutions
more in a position to properly channel the same to
loans and investments in the Philippines, thus directly
contributing to the economic development of the
country;
Thus, one of the principal purposes of the protection
accorded to foreign currency deposits is "to assure the
development and speedy growth of the Foreign
Currency Deposit system and the Offshore Banking in
the Philippines" (3rd Whereas).
The Offshore Banking System was established by PD
No. 1034. In turn, the purposes of PD No. 1034 are as
follows:
WHEREAS, conditions conducive to the
establishment of an offshore banking system, such as
political stability, a growing economy and adequate
communication facilities, among others, exist in the
Philippines;
WHEREAS, it is in the interest of developing
countries to have as wide access as possible to the
sources of capital funds for economic development;
WHEREAS, an offshore banking system based in the
Philippines will be advantageous and beneficial to the
country by increasing our links with foreign lenders,
facilitating the flow of desired investments into the
Philippines, creating employment opportunities and
expertise in international finance, and contributing to
the national development effort.
WHEREAS, the geographical location, physical and
human resources, and other positive factors provide
the Philippines with the clear potential to develop as
another financial center in Asia;
On the other hand, the Foreign Currency Deposit
system was created by PD. No. 1035. Its purposes are
as follows:
WHEREAS, the establishment of an offshore banking
system in the Philippines has been authorized under a
separate decree;
WHEREAS, a number of local commercial banks, as
depository bank under the Foreign Currency Deposit
Act (RA No. 6426), have the resources and
managerial competence to more actively engage in
foreign exchange transactions and participate in the
grant of foreign currency loans to resident
corporations and firms;
WHEREAS, it is timely to expand the foreign
currency lending authority of the said depository
banks under RA 6426 and apply to their transactions
the same taxes as would be applicable to transaction
of the proposed offshore banking units;
It is evident from the above [Whereas clauses] that the
Offshore Banking System and the Foreign Currency
Deposit System were designed to draw deposits from
foreign lenders and investors (Vide second Whereas
of PD No. 1034; third Whereas of PD No. 1035). It is
these deposits that are induced by the two laws and
given protection and incentives by them.
Obviously, the foreign currency deposit made by a
transient or a tourist is not the kind of deposit
encouraged by PD Nos. 1034 and 1035 and given
incentives and protection by said laws because such
depositor stays only for a few days in the country and,
therefore, will maintain his deposit in the bank only
for a short time.
Respondent Greg Bartelli, as stated, is just a tourist or
a transient. He deposited his dollars with respondent
China Banking Corporation only for safekeeping
during his temporary stay in the Philippines.
For the reasons stated above, the Solicitor General
thus submits that the dollar deposit of respondent
Greg Bartelli is not entitled to the protection of
Section 113 of Central Bank Circular No. 960 and PD
No. 1246 against attachment, garnishment or other
court processes.6
In fine, the application of the law depends on the
extent of its justice. Eventually, if we rule that the
questioned Section 113 of Central Bank Circular No.
960 which exempts from attachment, garnishment, or
any other order or process of any court, legislative
body, government agency or any administrative body
whatsoever, is applicable to a foreign transient,
injustice would result especially to a citizen aggrieved
by a foreign guest like accused Greg Bartelli. This
would negate Article 10 of the New Civil Code which
provides that "in case of doubt in the interpretation or
application of laws, it is presumed that the lawmaking
body intended right and justice to prevail. "Ninguno
non deue enriquecerse tortizeramente con dano de
otro." Simply stated, when the statute is silent or
ambiguous, this is one of those fundamental solutions
that would respond to the vehement urge of RTC Makati and to RELEASE to petitioners the
conscience. (Padilla vs. Padilla, 74 Phil. 377). dollar deposit of respondent Greg Bartelli y Northcott
in such amount as would satisfy the judgment.
It would be unthinkable, that the questioned Section
113 of Central Bank No. 960 would be used as a SO ORDERED.
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,