EN BANC STANDARD CHARTERED BANK (Philippine Branch), PAUL SIMON MORRIS, SUNDARA RAMESH, OWEN BELMAN, SANJAY AGGARWAL,

RAJAMANI CHANDRASHEKAR, MARIVEL GONZALES, MA. ELLEN VICTOR, CHONA G. REYES, ZENAIDA IGLESIAS, RAMONA BERNAD, MICHAELANGELO AGUILAR, and FERNAND TANSINGCO, Petitioners, - versus SENATE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, as represented by its Chairperson, HON. EDGARDO J. ANGARA, Respondent. G.R. No. 167173

to be conducted by respondent, particularly that set on March 15, 2005; and (3) enforcing any holddeparture order (HDO) and/or putting the petitioners on the Watch List. It also prays that judgment be rendered (1) annulling thesubpoenae ad testificandum and duces tecum issued to petitioners, and (2) prohibiting the respondent from compelling petitioners to appear and testify in the inquiry being conducted pursuant to P.S. Resolution No. 166. The facts are as follows:

Present: PUNO, C.J., QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES, AZCUNA, TINGA, CHICO-NAZARIO, VELASCO, JR., NACHURA, REYES, and LEONARDO-DE CASTRO,JJ. Promulgated: December 27, 2007

On February 1, 2005, Senator Juan Ponce Enrile, Vice Chairperson of respondent, delivered a privilege speech entitled Arrogance of Wealth[1] before the Senate based on a letter from Atty. Mark R. Bocobo denouncing SCB-Philippines for selling unregistered foreign securities in violation of the Securities Regulation Code (R.A. No. 8799) and urging the Senate to immediately conduct an inquiry, in aid of legislation, to prevent the occurrence of a similar fraudulent activity in the future. Upon motion of Senator Francis Pangilinan, the speech was referred to respondent. Prior to the privilege speech, Senator Enrile had introduced P.S. Resolution No. 166,[2] to wit: RESOLUTION DIRECTING THE COMMITTEE ON BANKS, FINANCIAL INSTITUTIONS AND CURRENCIES, TO CONDUCT AN INQUIRY, IN AID OF LEGISLATION, INTO THE ILLEGAL SALE OF UNREGISTERED AND HIGH-RISK SECURITIES BY STANDARD CHARTERED BANK, WHICH RESULTED IN BILLIONS OF PESOS OF LOSSES TO THE INVESTING PUBLIC WHEREAS, Republic Act No. 7721, otherwise known as the "Law Liberalizing the Entry and Scope of Operations of Foreign Banks in the Philippines, was approved on May 18, 1994 to promote greater participation of foreign banks in the Philippine Banking Industry that will stimulate economic growth and serve as a channel for the flow of funds into the economy; WHEREAS, to promote greater competition in the Philippine Banking Industry, foreign banks were accorded the same privileges, allowed to perform the same functions and subjected to the same limitations under relevant banking laws imposed upon domestic banks; WHEREAS, Standard Chartered Bank was among the foreign banks granted the privilege to do business in our country under Republic Act No. 7721; WHEREAS, there are complaints against Standard Chartered Bank whose actions have reportedly defrauded hundreds of Filipino investors of billions of pesos through the sale of unregistered securities in the form of high-risk mutual funds falsely advertised and marketed as safe investment havens; WHEREAS, there are reports that Standard Chartered Bank clearly knew that its actions were violative of Philippine banking and securities laws but cleverly disguised its illegal acts through the use of pro-forma agreements containing waivers of liability in favor of the bank; WHEREAS, there are reports that in the early stages of conducting these questionable activities, the Bangko Sentral ng Pilipinas warned and eventually fined Standard Chartered Bank a measly P30,000 for violating Philippine banking laws; WHEREAS, the particular operations of Standard Chartered Bank may constitute "conducting business in an unsafe and unsound manner,punishable under Section 37 of Republic Act No. 7653 and should have drawn the higher penalty of revocation of its quasi-banking license; WHEREAS, Republic Act No. 8791 or the "General Banking Act of 2000" deems a particular act or omission as conducting business in an unsafe and unsound manner as follows:

x-----------------------------------------------------------------------------------------x

DECISION NACHURA, J.:

Before us is a Petition for Prohibition (With Prayer for Issuance of Temporary Restraining Order and/or Injunction) dated and filed onMarch 11, 2005 by petitioners against respondent Senate Committee on Banks, Financial Institutions and Currencies, as represented by its Chairperson Edgardo J. Angara (respondent). Petitioner Standard Chartered Bank (SCB)-Philippines is an institution incorporated in England with limited liability and is licensed to engage in banking, trust, and other related operations in the Philippines. Petitioners Paul Simon Morris, Sundara Ramesh, Owen Belman, Sanjay Aggarwal, Rajamani Chandrashekar, Marivel Gonzales, Ma. Ellen Victor, Chona G. Reyes, Zenaida Iglesias, Ramona Bernad, Michaelangelo Aguilar, and Fernand Tansingco are the Chief Executive Officer, Chief Operations Officer, Country Head of Consumer Banking, General Manager for Credit Card and Personal Loans, Chief Financial Officer, Legal and Compliance Officer, former Trust and Investment Services Head, Country Tax Officer, Head of Corporate Affairs, Head of Banking Services, Head of Client Relationships, and the Head of Global Markets of SCB-Philippines, respectively. Respondent, on the other hand, is one of the permanent committees of the Senate of the Philippines. The petition seeks the issuance of a temporary restraining order (TRO) to enjoin respondent from (1) proceeding with its inquiry pursuant to Philippine Senate (P.S.) Resolution No. 166; (2) compelling petitioners who are officers of petitioner SCB-Philippines to attend and testify before any further hearing

"Section 56.2 The act or omission has resulted or may result in material loss or damage or abnormal risk to the institution's depositors, creditors, investors, stockholders or to the Bangko Sentral or to the public in general." WHEREAS, the sale of unregistered securities is also a clear violation of Republic Act No. 8799 or "The Securities Regulation Code of 2000" which states: "Section 8.1 Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser." WHEREAS, the Securities and Exchange Commission (SEC) reportedly issued a Cease-and-Desist Order (CDO) against Standard Chartered Bank for the sale of these unregistered securities but the case was reportedly settled administratively and dismissed after Standard Chartered Bank paid a fine of P7 Million; WHEREAS, the SEC reportedly made an official finding that Standard Chartered Bank actively engaged in promoting and marketing the so-called "Global Third Party Mutual Funds to the investing public and even set revenue quotas for the sale of these funds; WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the sale of unregistered securities and in effectively enforcing the registration rules intended to protect the investing public from fraudulent practices; WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the conduct of proscribed activities in a manner that would protect the investing public; WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of proportionate penalties to offending entities and their directors, officers and representatives among other additional regulatory measures; Now, therefore, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to direct the Committee on Banks, Currencies, and Financial Institutions, to conduct an inquiry, in aid of legislation, into the reported sale of unregistered and high-risk securities by Standard Chartered Bank which resulted in billions of losses to the investing public.

Respondent then proceeded with the investigation proper. Towards the end of the hearing, petitioners, through counsel, made an Opening Statement[4] that brought to the attention of respondent the lack of proper authorization from affected clients for the bank to make disclosures of their accounts and the lack of copies of the accusing documents mentioned in Senator Enrile's privilege speech, and reiterated that there were pending court cases regarding the alleged sale in the Philippines by SCBPhilippines of unregistered foreign securities. The February 28, 2005 hearing was adjourned without the setting of the next hearing date. However, petitioners were later served by respondent with subpoenae ad testificandum and duces tecum to compel them to attend and testify at the hearing set on March 15, 2005. Hence, this petition. The grounds relied upon by petitioners are as follows: I. THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN CONDUCTING AN INVESTIGATION, PURPORTEDLY IN AID OF LEGISLATION, BUT IN REALITY PROBING INTO THE ISSUE OF WHETHER THE STANDARD CHARTERED BANK HAD SOLD UNREGISTERED FOREIGN SECURITIES IN THE PHILIPPINES. SAID ISSUE HAS LONG BEEN THE SUBJECT OF CRIMINAL AND CIVIL ACTIONS NOW PENDING BEFORE THE COURT OF APPEALS, REGIONAL TRIAL COURT OF PASIG CITY, METROPOLITAN TRIAL COURT OF MAKATI CITY AND THE PROSECUTOR'S OFFICE OF MAKATI CITY. II. THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION BY CONDUCTING AN INVESTIGATION, PURPORTEDLY IN AID OF LEGISLATION, BUT IN REALITY IN AID OF COLLECTION BY A HANDFUL OF TWO (2) CLIENTS OF STANDARD CHARTERED BANK OF LOSSES WHICH WERE FOR THEIR ACCOUNT AND RISK. AT ANY RATE, SUCH COLLECTION IS WITHIN THE PROVINCE OF THE COURT RATHER THAN OF THE LEGISLATURE. III. THE COMMITTEE ACTED WITHOUT JURISDICTION AND/OR ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN COMPELLING PETITIONERS, SOME OF WHOM ARE RESPONDENTS IN THE PENDING CRIMINAL AND CIVIL ACTIONS BROUGHT BY SAID CLIENTS, IN VIOLATION OF PETITIONERS RIGHT AGAINST SELF-INCRIMINATION AND RIGHT TO PURSUE AND DEFEND THEIR CAUSE IN COURT RATHER THAN ENGAGE IN TRIAL BY PUBLICITY A CLEAR VIOLATION OF DUE PROCESS, RIGHT TO PRIVACY AND TO TRAVEL. IV.

Acting on the referral, respondent, through its Chairperson, Senator Edgardo J. Angara, set the initial hearing on February 28, 2005 to investigate, in aid of legislation, the subject matter of the speech and resolution filed by Senator Enrile. Respondent invited petitioners, among others, to attend the hearing, requesting them to submit their written position paper. Petitioners, through counsel, submitted to respondent a letter[3] dated February 24, 2005 presenting their position, particularly stressing that there were cases pending in court allegedly involving the same issues subject of the legislative inquiry, thereby posing a challenge to the jurisdiction of respondent to continue with the inquiry. On February 28, 2005, respondent commenced the investigation. Senator Enrile inquired who among those invited as resource persons were present and who were absent. Thereafter, Senator Enrile moved that subpoenae be issued to those who did not attend the hearing and that the Senate request the Department of Justice, through the Bureau of Immigration and Deportation, to issue an HDO against them and/or include them in the Bureaus Watch List. Senator Juan Flavier seconded the motion and the motion was approved.

THE COMMITTEE ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION BY DISREGARDING ITS OWN RULES.[5]

Petitioners argue that respondent has no jurisdiction to conduct the inquiry because its subject matter is the very same subject matter of the following cases, to wit: (a) CA-G.R. SP No. 85078, entitled Manuel V. Baviera vs. Hon. Esperanza P. Rosario, et al., pending before the 9th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the dismissal by the Department of Justice of his complaint against Standard Chartered Bank and its officers accusing them of SELLING UNREGISTERED FOREIGN SECURITIES IN VIOLATION OF P.D. NO. 1869 (SYNDICATED ESTAFA) AND ARTICLE 315 OF THE REVISED PENAL CODE.

(b) CA-G.R. SP No. 86200, entitled Manuel V. Baviera vs. Hon. Rafael Buenaventura, et al., pending before the 15th Division of the Court of Appeals. In the petition, Mr. Baviera seeks to annul and set aside the termination for lack of probable cause by the Anti-Money Laundering Council (AMLC) of the investigation of Standard Chartered Bank for money laundering activities BY SELLING UNREGISTERED FOREIGN SECURITIES. (c) CA-G.R. SP No. 87328, entitled Manuel V. Baviera vs. Hon. Esperanza Paglinawan Rozario, et al., pending before the 16th Division of the Court of Appeals. The petition seeks to annul and set aside the dismissal by the Department of Justice of Mr. Baviera's complaint accusing SCB and its officers of violation of the Securities Regulation Code by SELLING UNREGISTERED FOREIGN SECURITIES. (d) Civil Case No. 70173, entitled Mr. Noel G. Sanchez, et al. vs. Standard Chartered Bank, pending before Branch 155 of the Regional TrialCourt of Pasig City. Plaintiff seeks damages and recovery of their investment accusing the bank of SELLING UNREGISTERED FOREIGN SECURITIES. (e) Criminal Case No. 332034, entitled People of the Philippines vs. Manuel V. Baviera, pending before Branch 64 of the Metropolitan TrialCourt of Makati City. Petitioner Morris is the private complainant in this information for extortion or blackmail against Mr. Baviera for demanding the payment of US$2 Million with the threat to EXPOSE THE BANK'S LARGE SCALE SCAM CONSISTING *OF+ ILLEGAL SELLING OF UNREGISTERED FOREIGN SECURITIES BY THE BANK, before various government offices, such as the Department of Justice, the BIR, Bangko Sentral ng Pilipinas, Regional Trial Courts, and both houses of Congress. (f) Criminal Case No. 331395, entitled People of the Philippines vs. Manuel V. Baviera, pending before Branch 64 of the Metropolitan TrialCourt of Makati City. Petitioners Victor and Chona Reyes are the private complainants in this information for perjury committed by Mr. Baviera in securing a hold departure order against the petitioners herein from the Department of Justice for their alleged involvement in syndicated estafa and swindling BY SELLING UNREGISTERED FOREIGN SECURITIES. (g) I.S. No. 2004-B-2279-80, entitled Aurelio Litonjua III and Aurelio Litonjua, Jr. vs. Antonette de los Reyes, et al., pending before the Office of the Prosecutor, Makati City. This is a criminal complaint accusing SCB and its officers of estafa for SELLING UNREGISTERED FOREIGN SECURITIES.[6] Citing Bengzon, Jr. v. Senate Blue Ribbon Committee,[7] the petitioners claim that since the issue of whether or not SCB-Philippines illegally sold unregistered foreign securities is already preempted by the courts that took cognizance of the foregoing cases, the respondent, by this investigation, would encroach upon the judicial powers vested solely in these courts. The argument is misplaced. Bengzon does not apply squarely to petitioners case. It is true that in Bengzon, the Court declared that the issue to be investigated was one over which jurisdiction had already been acquired by the Sandiganbayan, and to allow the [Senate Blue Ribbon] Committee to investigate the matter would create the possibility of conflicting judgments; and that the inquiry into the same justiciable controversy would be an encroachment on the exclusive domain of judicial jurisdiction that had set in much earlier. To the extent that, in the case at bench, there are a number of cases already pending in various courts and administrative bodies involving the petitioners, relative to the alleged sale of unregistered foreign securities, there is a resemblance between this case andBengzon. However, the similarity ends there. Central to the Courts ruling in Bengzon -- that the Senate Blue Ribbon Committee was without any constitutional mooring to conduct the legislative investigation -- was the Courts determination that the

intended inquiry was not in aid of legislation. The Court found that the speech of Senator Enrile, which sought such investigation contained no suggestion of any contemplated legislation; it merely called upon the Senate to look into possible violations of Section 5, Republic Act No. 3019. Thus, the Court held that the requested probe failed to comply with a fundamental requirement of Section 21, Article VI of the Constitution, which states: The Senate or the House of Representatives or any of its respective committees may conduct inquiries in aid of legislation in accordance with its duly published rules of procedure. The rights of persons appearing in or affected by such inquiries shall be respected.

Accordingly, we stopped the Senate Blue Ribbon Committee from proceeding with the legislative investigation in that case. Unfortunately for the petitioners, this distinguishing factual milieu in Bengzon does not obtain in the instant case. P.S. Resolution No. 166 is explicit on the subject and nature of the inquiry to be (and already being) conducted by the respondent Committee, as found in the last three Whereas clauses thereof, viz.: WHEREAS, existing laws including the Securities Regulation Code seem to be inadequate in preventing the sale of unregistered securities and in effectively enforcing the registration rules intended to protect the investing public from fraudulent practices; WHEREAS, the regulatory intervention by the SEC and BSP likewise appears inadequate in preventing the conduct of proscribed activities in a manner that would protect the investing public; WHEREAS, there is a need for remedial legislation to address the situation, having in mind the imposition of proportionate penalties to offending entities and their directors, officers and representatives among other additional regulatory measures; (emphasis supplied)

The unmistakable objective of the investigation, as set forth in the said resolution, exposes the error in petitioners allegation that the inquiry, as initiated in a privilege speech by the very same Senator Enrile, was simply to denounce the illegal practice committed by a foreign bank in selling unregistered foreign securities x x x. This fallacy is made more glaring when we consider that, at the conclusion of his privilege speech, Senator Enrile urged the Senate to immediately conduct an inquiry, in aid of legislation, so as to prevent the occurrence of a similar fraudulent activity in the future. Indeed, the mere filing of a criminal or an administrative complaint before a court or a quasi-judicial body should not automatically bar the conduct of legislative investigation. Otherwise, it would be extremely easy to subvert any intended inquiry by Congress through the convenient ploy of instituting a criminal or an administrative complaint. Surely, the exercise of sovereign legislative authority, of which the power of legislative inquiry is an essential component, cannot be made subordinate to a criminal or an administrative investigation. As succinctly stated in the landmark case Arnault v. Nazareno[8] [T]he power of inquiry with process to enforce it is an essential and appropriate auxiliary to the legislative function. A legislative body cannot legislate wisely or effectively in the absence of information respecting the conditions which the legislation is intended to affect or change; and where the legislative body does not itself possess the requisite information which is not infrequently true recourse must be had to others who possess it.

Neither can the petitioners claim that they were singled out by the respondent Committee. The Court notes that among those invited as resource persons were officials of the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas (BSP). These officials were subjected to the same critical scrutiny by the respondent relative to their separate findings on the illegal sale of unregistered foreign securities by SCB-Philippines. It is obvious that the objective of the investigation was the quest for remedies, in terms of legislation, to prevent the recurrence of the allegedly fraudulent activity. Still, petitioners insist that the inquiry conducted by respondent was, in fact, in aid of collection. They claim that Atty. Bocobo and Manuel Baviera, the latter a party to the pending court cases cited by petitioners, were only seeking a friendly forum so that they could recover their investments from SCBPhilippines; and that the respondent has allowed itself to be used as the conveniently available vehicle to effect this purpose. However, as correctly pointed out by respondent in its Comment on the petition, Atty. Bocobo did not file a complaint before the Senate for the purpose of recovering his investment. On the contrary, and as confirmed during the initial hearing on February 28, 2005, his letter-complaint humbly requested the Senate to conduct an inquiry into the purportedly illegal activities of SCB-Philippines, with the end view of preventing the future occurrence of any similar fraudulent activity by the banks in general.[9] Baviera, on the other hand, was not a complainant but merely a witness in the investigation, invited to testify on the alleged illegal sale of unregistered foreign securities by SCB-Philippines, being one of the supposed victims thereof. The Court further notes that when it denied petitioners prayer for the issuance of a TRO to restrain the hearing set on March 15, 2005,[10] respondent proceeded with the investigation. On the said date, outraged by petitioners imputation that it was conducting the investigation in aid of collection, respondent held petitioners, together with their counsel, Atty. Reynaldo Geronimo, in contempt and ordered their detention for six hours. Petitioners filed a Motion for Partial Reconsideration of this Courts Resolution dated March 14, 2005 only with respect to the denial of the prayer for the issuance of a TRO and/or writ of preliminary injunction, alleging that their being held in contempt was without legal basis, as the phrase in aid of collection partakes of an absolutely privileged allegation in the petition. We do not agree. The Court has already expounded on the essence of the contempt power of Congress and its committees in this wise The principle that Congress or any of its bodies has the power to punish recalcitrant witnesses is founded upon reason and policy. Said power must be considered implied or incidental to the exercise of legislative power. How could a legislative body obtain the knowledge and information on which to base intended legislation if it cannot require and compel the disclosure of such knowledge and information, if it is impotent to punish a defiance of its power and authority? When the framers of the Constitution adopted the principle of separation of powers, making each branch supreme within the realm of its respective authority, it must have intended each departments authority to be full and complete, independently of each others authority or power. And how could the authority and power become complete if for every act of refusal, every act of defiance, every act of contumacy against it, the legislative body must resort to the judicial department for the appropriate remedy, because it is impotent by itself to punish or deal therewith, with affronts committed against its authority or dignity.[11]

In this case, petitioners imputation that the investigation was in aid of collection is a direct challenge against the authority of the Senate Committee, as it ascribes ill motive to the latter. In this light, we find the contempt citation against the petitioners reasonable and justified. Furthermore, it is axiomatic that the power of legislative investigation includes the power to compel the attendance of witnesses. Corollary to the power to compel the attendance of witnesses is the power to ensure that said witnesses would be available to testify in the legislative investigation. In the case at bench, considering that most of the officers of SCB-Philippines are not Filipino nationals who may easily evade the compulsive character of respondents summons by leaving the country, it was reasonable for the respondent to request the assistance of the Bureau of Immigration and Deportation to prevent said witnesses from evading the inquiry and defeating its purpose. In any event, no HDO was issued by a court. The BID instead included them only in the Watch List, which had the effect of merely delaying petitioners intended travel abroad for five (5) days, provided no HDO is issued against them.[13] With respect to the right of privacy which petitioners claim respondent has violated, suffice it to state that privacy is not an absolute right. While it is true that Section 21, Article VI of the Constitution, guarantees respect for the rights of persons affected by the legislative investigation, not every invocation of the right to privacy should be allowed to thwart a legitimate congressional inquiry. In Sabio v. Gordon,[14] we have held that the right of the people to access information on matters of public concern generally prevails over the right to privacy of ordinary financial transactions. In that case, we declared that the right to privacy is not absolute where there is an overriding compelling state interest. Employing the rational basis relationship test, as laid down in Morfe v. Mutuc,[15] there is no infringement of the individuals right to privacy as the requirement to disclosure information is for a valid purpose, in this case, to ensure that the government agencies involved in regulating banking transactions adequately protect the public who invest in foreign securities. Suffice it to state that this purpose constitutes a reason compelling enough to proceed with the assailed legislative investigation.[16] As regards the issue of self-incrimination, the petitioners, officers of SCB-Philippines, are not being indicted as accused in a criminal proceeding. They were summoned by respondent merely as resource persons, or as witnesses, in a legislative inquiry. As distinguished by this Court [An] accused occupies a different tier of protection from an ordinary witness. Whereas an ordinary witness may be compelled to take the witness stand and claim the privilege as each question requiring an incriminating answer is shot at him, an accused may altogether refuse to take the witness stand and refuse to answer any and all questions.[17]

Concededly, this right of the accused against self-incrimination is extended to respondents in administrative investigations that partake of the nature of or are analogous to criminal proceedings. The privilege has consistently been held to extend to all proceedings sanctioned by law; and to all cases in which punishment is sought to be visited upon a witness, whether a party or not.[18] However, in this case, petitioners neither stand as accused in a criminal case nor will they be subjected by the respondent to any penalty by reason of their testimonies. Hence, they cannot altogether decline appearing before respondent, although they may invoke the privilege when a question calling for an incriminating answer is propounded.[19] Petitioners argument, that the investigation before respondent may result in a recommendation for their prosecution by the appropriate government agencies, such as the Department of Justice or the Office of the Ombudsman, does not persuade. As held in Sinclair v. United States[20] --

The exercise by Congress or by any of its committees of the power to punish contempt is based on the principle of self-preservation. As the branch of the government vested with the legislative power, independently of the judicial branch, it can assert its authority and punish contumacious acts against it. Such power is sui generis, as it attaches not to the discharge of legislative functions per se, but to the sovereign character of the legislature as one of the three independent and coordinate branches of government.[12]

It may be conceded that Congress is without authority to compel disclosures for the purpose of aiding the prosecution of pending suits; but the authority of that body, directly or through its Committees, to require pertinent disclosures in aid of its own constitutional power is not abridged because the information sought to be elicited may also be of use in such suits. x x x It is plain that investigation of the matters involved in suits brought or to be commenced under the Senate resolution directing the institution of suits for the cancellation of the leases might directly aid in respect of legislative action.

The prosecution of offenders by the prosecutorial agencies and the trial before the courts is for the punishment of persons who transgress the law. The intent of legislative inquiries, on the other hand, is to arrive at a policy determination, which may or may not be enacted into law. Except only when it exercises the power to punish for contempt, the respondent, as with the other Committees of the Senate or of the House of Representatives, cannot penalize violators even if there is overwhelming evidence of criminal culpability. Other than proposing or initiating amendatory or remedial legislation, respondent can only recommend measures to address or remedy whatever irregularities may be unearthed during the investigation, although it may include in its Report a recommendation for the criminal indictment of persons who may appear liable. At best, the recommendation, along with the evidence, contained in such a Report would be persuasive, but it is still up to the prosecutorial agencies and the courts to determine the liabilities of the offender. Finally, petitioners sought anew, in their Manifestation and Motion[21] dated June 21, 2006, the issuance by this Court of a TRO and/or writ of preliminary injunction to prevent respondent from submitting its Committee Report No. 75 to the Senate in plenary for approval. However, 16 days prior to the filing of the Manifestation and Motion, or on June 5, 2006, respondent had already submitted the report to the Senate in plenary. While there is no showing that the said report has been approved by the Senate, the subject of the Manifestation and Motion has inescapably become moot and academic. WHEREFORE, the Petition for Prohibition is DENIED for lack of merit. The Manifestation and Motion dated June 21, 2006 is, likewise, DENIED for being moot and academic. SO ORDERED.

G.R. No. 168644 February 16, 2010 BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN, Petitioner, vs. SALLY GO a.k.a. SALLY GO-BANGAYAN, Respondent. DECISION PERALTA, J.: This is a Petition for Review under Rule 45 of the Rules of Court assailing the Decision of the Court of Appeals in CA-G.R. SP No. 876001 dated April 20, 2005, which reversed and set aside the September 13, 20042 and November 5, 20043Orders issued by the Regional Trial Court of Manila, Branch 364 in Criminal Case No. 02-202158 for qualified theft. The said orders, in turn, respectively denied the motion filed by herein respondent Sally Go for the suppression of the testimonial and documentary evidence relative to a Security Bank account, and denied reconsideration. The basic antecedents are no longer disputed. Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided by its herein representative, Ricardo Bangayan (Bangayan). Respondent Sally Go, alternatively referred to as Sally Sia Go and Sally Go-Bangayan, is Bangayans wife, who was employed in the company as a cashier, and was engaged, among others, to receive and account for the payments made by the various customers of the company. In 2002, Bangayan filed with the Manila Prosecutors Office a complaint for estafa and/or qualified theft5 against respondent, alleging that several checks6 representing the aggregate amount of P1,534,135.50 issued by the companys customers in payment of their obligation were, instead of

being turned over to the companys coffers, indorsed by respondent who deposited the same to her personal banking account maintained at Security Bank and Trust Company (Security Bank) in Divisoria, Manila Branch.7 Upon a finding that the evidence adduced was uncontroverted, the assistant city prosecutor recommended the filing of the Information for qualified theft against respondent.8 Accordingly, respondent was charged before the Regional Trial Court of Manila, Branch 36, in an Information, the inculpatory portion of which reads: That in or about or sometime during the period comprised (sic) between January 1988 [and] October 1989, inclusive, in the City of Manila, Philippines, the said accused did then and there willfully, unlawfully and feloniously with intent [to] gain and without the knowledge and consent of the owner thereof, take, steal and carry away cash money in the total amount ofP1,534,135.50 belonging to BSB GROUP OF COMPANIES represented by RICARDO BANGAYAN, to the damage and prejudice of said owner in the aforesaid amount of P1,534,135.50, Philippine currency. That in the commission of the said offense, said accused acted with grave abuse of confidence, being then employed as cashier by said complainant at the time of the commission of the said offense and as such she was entrusted with the said amount of money. Contrary to law.9 Respondent entered a negative plea when arraigned.10 The trial ensued. On the premise that respondent had allegedly encashed the subject checks and deposited the corresponding amounts thereof to her personal banking account, the prosecution moved for the issuance of subpoena duces tecum /ad testificandum against the respective managers or records custodians of Security Banks Divisoria Branch, as well as of the Asian Savings Bank (now Metropolitan Bank & Trust Co. [Metrobank]), in Jose Abad Santos, Tondo, Manila Branch.11 The trial court granted the motion and issued the corresponding subpoena.12 Respondent filed a motion to quash the subpoena dated November 4, 2003, addressed to Metrobank, noting to the court that in the complaint-affidavit filed with the prosecutor, there was no mention made of the said bank account, to which respondent, in addition to the Security Bank account identified as Account No. 01-14-006, allegedly deposited the proceeds of the supposed checks. Interestingly, while respondent characterized the Metrobank account as irrelevant to the case, she, in the same motion, nevertheless waived her objection to the irrelevancy of the Security Bank account mentioned in the same complaint-affidavit, inasmuch as she was admittedly willing to address the allegations with respect thereto.13 Petitioner, opposing respondents move, argued for the relevancy of the Metrobank account on the ground that the complaint-affidavit showed that there were two checks which respondent allegedly deposited in an account with the said bank.14 To this, respondent filed a supplemental motion to quash, invoking the absolutely confidential nature of the Metrobank account under the provisions of Republic Act (R.A.) No. 1405.15 The trial court did not sustain respondent; hence, it denied the motion to quash for lack of merit.16 Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan (Marasigan), the representative of Security Bank. In a nutshell, Marasigans testimony sought to prove that between 1988 and 1989, respondent, while engaged as cashier at the BSB Group, Inc., was able to run away with the checks issued to the company by its customers, endorse the same, and credit the corresponding amounts to her personal deposit account with Security Bank. In the course of the testimony, the subject checks were presented to Marasigan for identification and marking as the same checks received by respondent, endorsed, and then deposited in her personal account with Security Bank.17 But before the testimony could be completed, respondent filed a Motion to Suppress,18 seeking the exclusion of Marasigans testimony and accompanying documents thus far received, bearing on the subject Security Bank account. This time respondent invokes, in addition to irrelevancy, the privilege of confidentiality under R.A. No. 1405. The trial court, nevertheless, denied the motion in its September 13, 2004 Order.19 A motion for reconsideration was subsequently filed, but it was also denied in the Order dated November 5, 2004.20 These two orders are the subject of the instant case. Aggrieved, and believing that the trial court gravely abused its discretion in acting the way it did, respondent elevated the matter to the Court of Appeals via a petition for certiorari under Rule 65. Finding merit in the petition, the Court of Appeals reversed and set aside the assailed orders of the trial court in its April 20, 2005 Decision.21 The decision reads:

WHEREFORE, the petition is hereby GRANTED. The assailed orders dated September 13, 2004 and November 5, 2004 are REVERSED and SET ASIDE. The testimony of the SBTC representative is ordered stricken from the records. SO ORDERED.22 With the denial of its motion for reconsideration,23 petitioner is now before the Court pleading the same issues as those raised before the lower courts. In this Petition24 under Rule 45, petitioner averred in the main that the Court of Appeals had seriously erred in reversing the assailed orders of the trial court, and in effect striking out Marasigans testimony dealing with respondents deposit account with Security Bank.25 It asserted that apart from the fact that the said evidence had a direct relation to the subject matter of the case for qualified theft and, hence, brings the case under one of the exceptions to the coverage of confidentiality under R.A. 1405.26 Petitioner believed that what constituted the subject matter in litigation was to be determined by the allegations in the information and, in this respect, it alluded to the assailed November 5, 2004 Order of the trial court, which declared to be erroneous the limitation of the present inquiry merely to what was contained in the information.27 For her part, respondent claimed that the money represented by the Security Bank account was neither relevant nor material to the case, because nothing in the criminal information suggested that the money therein deposited was the subject matter of the case. She invited particular attention to that portion of the criminal Information which averred that she has stolen and carried away cash money in the total amount of P1,534,135.50. She advanced the notion that the term "cash money" stated in the Information was not synonymous with the checks she was purported to have stolen from petitioner and deposited in her personal banking account. Thus, the checks which the prosecution had Marasigan identify, as well as the testimony itself of Marasigan, should be suppressed by the trial court at least for violating respondents right to due process.28 More in point, respondent opined that admitting the testimony of Marasigan, as well as the evidence pertaining to the Security Bank account, would violate the secrecy rule under R.A. No. 1405.29 In its reply, petitioner asserted the sufficiency of the allegations in the criminal Information for qualified theft, as the same has sufficiently alleged the elements of the offense charged. It posits that through Marasigans testimony, the Court would be able to establish that the checks involved, copies of which were attached to the complaint-affidavit filed with the prosecutor, had indeed been received by respondent as cashier, but were, thereafter, deposited by the latter to her personal account with Security Bank. Petitioner held that the checks represented the cash money stolen by respondent and, hence, the subject matter in this case is not only the cash amount represented by the checks supposedly stolen by respondent, but also the checks themselves.30 We derive from the conflicting advocacies of the parties that the issue for resolution is whether the testimony of Marasigan and the accompanying documents are irrelevant to the case, and whether they are also violative of the absolutely confidential nature of bank deposits and, hence, excluded by operation of R.A. No. 1405. The question of admissibility of the evidence thus comes to the fore. And the Court, after deliberative estimation, finds the subject evidence to be indeed inadmissible. Prefatorily, fundamental is the precept in all criminal prosecutions, that the constitutive acts of the offense must be established with unwavering exactitude and moral certainty because this is the critical and only requisite to a finding of guilt. 31 Theft is present when a person, with intent to gain but without violence against or intimidation of persons or force upon things, takes the personal property of another without the latters consent. It is qualified when, among others, and as alleged in the instant case, it is committed with abuse of confidence.32 The prosecution of this offense necessarily focuses on the existence of the following elements: (a) there was taking of personal property belonging to another; (b) the taking was done with intent to gain; (c) the taking was done without the consent of the owner; (d) the taking was done without violence against or intimidation of persons or force upon things; and (e) it was done with abuse of confidence.33 In turn, whether these elements concur in a way that overcomes the presumption of guiltlessness, is a question that must pass the test of relevancy and competency in accordance with Section 334 Rule 128 of the Rules of Court. Thus, whether these pieces of evidence sought to be suppressed in this case the testimony of Marasigan, as well as the checks purported to have been stolen and deposited in respondents Security Bank account are relevant, is to be addressed by considering whether they have such direct relation to the fact in issue as to induce belief in its existence or non-existence; or whether they relate collaterally

to a fact from which, by process of logic, an inference may be made as to the existence or non-existence of the fact in issue.35 The fact in issue appears to be that respondent has taken away cash in the amount of P1,534,135.50 from the coffers of petitioner. In support of this allegation, petitioner seeks to establish the existence of the elemental act of taking by adducing evidence that respondent, at several times between 1988 and 1989, deposited some of its checks to her personal account with Security Bank. Petitioner addresses the incongruence between the allegation of theft of cash in the Information, on the one hand, and the evidence that respondent had first stolen the checks and deposited the same in her banking account, on the other hand, by impressing upon the Court that there obtains no difference between cash and check for purposes of prosecuting respondent for theft of cash. Petitioner is mistaken. In theft, the act of unlawful taking connotes deprivation of personal property of one by another with intent to gain, and it is immaterial that the offender is able or unable to freely dispose of the property stolen because the deprivation relative to the offended party has already ensued from such act of execution.36 The allegation of theft of money, hence, necessitates that evidence presented must have a tendency to prove that the offender has unlawfully taken money belonging to another. Interestingly, petitioner has taken pains in attempting to draw a connection between the evidence subject of the instant review, and the allegation of theft in the Information by claiming that respondent had fraudulently deposited the checks in her own name. But this line of argument works more prejudice than favor, because it in effect, seeks to establish the commission, not of theft, but rather of some other crime probably estafa. Moreover, that there is no difference between cash and check is true in other instances. In estafa by conversion, for instance, whether the thing converted is cash or check, is immaterial in relation to the formal allegation in an information for that offense; a check, after all, while not regarded as legal tender, is normally accepted under commercial usage as a substitute for cash, and the credit it represents in stated monetary value is properly capable of appropriation. And it is in this respect that what the offender does with the check subsequent to the act of unlawfully taking it becomes material inasmuch as this offense is a continuing one.37 In other words, in pursuing a case for this offense, the prosecution may establish its cause by the presentation of the checks involved. These checks would then constitute the best evidence to establish their contents and to prove the elemental act of conversion in support of the proposition that the offender has indeed indorsed the same in his own name.38 Theft, however, is not of such character. Thus, for our purposes, as the Information in this case accuses respondent of having stolen cash, proof tending to establish that respondent has actualized her criminal intent by indorsing the checks and depositing the proceeds thereof in her personal account, becomes not only irrelevant but also immaterial and, on that score, inadmissible in evidence. We now address the issue of whether the admission of Marasigans testimony on the particulars of respondents account with Security Bank, as well as of the corresponding evidence of the checks allegedly deposited in said account, constitutes an unallowable inquiry under R.A. 1405. It is conceded that while the fundamental law has not bothered with the triviality of specifically addressing privacy rights relative to banking accounts, there, nevertheless, exists in our jurisdiction a legitimate expectation of privacy governing such accounts. The source of this right of expectation is statutory, and it is found in R.A. No. 1405,39 otherwise known as the Bank Secrecy Act of 1955. 40 R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and at the same time encourage the people to deposit their money in banking institutions, so that it may be utilized by way of authorized loans and thereby assist in economic development.41 Owing to this piece of legislation, the confidentiality of bank deposits remains to be a basic state policy in the Philippines.42 Section 2 of the law institutionalized this policy by characterizing as absolutely confidential in general all deposits of whatever nature with banks and other financial institutions in the country. It declares: 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.1avvphi1

Subsequent statutory enactments43 have expanded the list of exceptions to this policy yet the secrecy of bank deposits still lies as the general rule, falling as it does within the legally recognized zones of privacy.44 There is, in fact, much disfavor to construing these primary and supplemental exceptions in a manner that would authorize unbridled discretion, whether governmental or otherwise, in utilizing these exceptions as authority for unwarranted inquiry into bank accounts. It is then perceivable that the present legal order is obliged to conserve the absolutely confidential nature of bank deposits.45 The measure of protection afforded by the law has been explained in China Banking Corporation v. Ortega.46 That case principally addressed the issue of whether the prohibition against an examination of bank deposits precludes garnishment in satisfaction of a judgment. Ruling on that issue in the negative, the Court found guidance in the relevant portions of the legislative deliberations on Senate Bill No. 351 and House Bill No. 3977, which later became the Bank Secrecy Act, and it held that the absolute confidentiality rule in R.A. No. 1405 actually aims at protection from unwarranted inquiry or investigation if the purpose of such inquiry or investigation is merely to determine the existence and nature, as well as the amount of the deposit in any given bank account. Thus, x x x The lower court did not order an examination of or inquiry into the deposit of B&B Forest Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform the court whether or not the defendant B&B Forest Development Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold the same intact and not allow any withdrawal until further order. It will be noted from the discussion of the conference committee report on Senate Bill No. 351 and House Bill No. 3977which later became Republic Act No. 1405, that it was not the intention of the lawmakers to place banks deposits beyond the reach of execution to satisfy a final judgmentThus: x x x Mr. Marcos: Now, for purposes of the record, I should like the Chairman of the Committee on Ways and Means to clarify this further. Suppose an individual has a tax case. He is being held liable by the Bureau of Internal Revenue [(BIR)] or, say, P1,000.00 worth of tax liability, and because of this the deposit of this individual [has been] attached by the [BIR]. Mr. Ramos: The attachment will only apply after the court has pronounced sentence declaring the liability of such person. But where the primary aim is to determine whether he has a bank deposit in order to bring about a proper assessment by the [BIR], such inquiry is not allowed by this proposed law. Mr. Marcos: But under our rules of procedure and under the Civil Code, the attachment or garnishment of money deposited is allowed. Let us assume for instance that there is a preliminary attachment which is for garnishment or for holding liable all moneys deposited belonging to a certain individual, but such attachment or garnishment will bring out into the open the value of such deposit. Is that prohibited by... the law? Mr. Ramos: It is only prohibited to the extent that the inquiry... is made only for the purpose of satisfying a tax liability already declared for the protection of the right in favor of the government; but when the object is merely to inquire whether he has a deposit or not for purposes of taxation, then this is fully covered by the law. x x x Mr. Marcos: The law prohibits a mere investigation into the existence and the amount of the deposit. Mr. Ramos: Into the very nature of such deposit. x x x47 In taking exclusion from the coverage of the confidentiality rule, petitioner in the instant case posits that the account maintained by respondent with Security Bank contains the proceeds of the checks that she has fraudulently appropriated to herself and, thus, falls under one of the exceptions in Section 2 of R.A. No. 1405 that the money kept in said account is the subject matter in litigation. To highlight this thesis, petitioner avers, citing Mathay v. Consolidated Bank and Trust Co.,48 that the subject matter of the action refers to the physical facts; the things real or personal; the money, lands, chattels and the like, in relation to which the suit is prosecuted, which in the instant case should refer to the money deposited in the Security Bank account.49 On the surface, however, it seems that petitioners theory is valid to a point, yet a deeper treatment tends to show that it has argued quite off-tangentially. This, because, while Mathay did explain what the subject matter of an action is, it nevertheless did so only to determine whether the class suit in that case was properly brought to the court. What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405 has been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals,50 in which the Court noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be premised on the fact that the money deposited in the account is itself the subject of the action.51 Given this perspective, we

deduce that the subject matter of the action in the case at bar is to be determined from the indictment that charges respondent with the offense, and not from the evidence sought by the prosecution to be admitted into the records. In the criminal Information filed with the trial court, respondent, unqualifiedly and in plain language, is charged with qualified theft by abusing petitioners trust and confidence and stealing cash in the amount of P1,534,135.50. The said Information makes no factual allegation that in some material way involves the checks subject of the testimonial and documentary evidence sought to be suppressed. Neither do the allegations in said Information make mention of the supposed bank account in which the funds represented by the checks have allegedly been kept. In other words, it can hardly be inferred from the indictment itself that the Security Bank account is the ostensible subject of the prosecutions inquiry. Without needlessly expanding the scope of what is plainly alleged in the Information, the subject matter of the action in this case is the money amounting to P1,534,135.50 alleged to have been stolen by respondent, and not the money equivalent of the checks which are sought to be admitted in evidence. Thus, it is that, which the prosecution is bound to prove with its evidence, and no other. It comes clear that the admission of testimonial and documentary evidence relative to respondents Security Bank account serves no other purpose than to establish the existence of such account, its nature and the amount kept in it. It constitutes an attempt by the prosecution at an impermissible inquiry into a bank deposit account the privacy and confidentiality of which is protected by law. On this score alone, the objection posed by respondent in her motion to suppress should have indeed put an end to the controversy at the very first instance it was raised before the trial court. In sum, we hold that the testimony of Marasigan on the particulars of respondents supposed bank account with Security Bank and the documentary evidence represented by the checks adduced in support thereof, are not only incompetent for being excluded by operation of R.A. No. 1405. They are likewise irrelevant to the case, inasmuch as they do not appear to have any logical and reasonable connection to the prosecution of respondent for qualified theft. We find full merit in and affirm respondents objection to the evidence of the prosecution. The Court of Appeals was, therefore, correct in reversing the assailed orders of the trial court. A final note. In any given jurisdiction where the right of privacy extends its scope to include an individuals financial privacy rights and personal financial matters, there is an intermediate or heightened scrutiny given by courts and legislators to laws infringing such rights.52 Should there be doubts in upholding the absolutely confidential nature of bank deposits against affirming the authority to inquire into such accounts, then such doubts must be resolved in favor of the former. This attitude persists unless congress lifts its finger to reverse the general state policy respecting the absolutely confidential nature of bank deposits.53 WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 87600 dated April 20, 2005, reversing the September 13, 2004 and November 5, 2004 Orders of the Regional Trial Court of Manila, Branch 36 in Criminal Case No. 02-202158, is AFFIRMED. SO ORDERED.

EN BANC JOSEPH VICTOR G. EJERCITO, Petitioner, G.R. Nos. 157294-95 Present: PANGANIBAN, C.J., PUNO, QUISUMBING, YNARES-SANTIAGO, SANDOVAL-GUTIERREZ, CARPIO, AUSTRIA-MARTINEZ, CORONA, CARPIO MORALES,

- versus -

SANDIGANBAYAN (SPECIAL DIVISION) AND PEOPLE OF THEPHILIPPINES,

Respondents.

CALLEJO, SR., AZCUNA, TINGA, CHICO-NAZARIO, GARCIA, and VELASCO, JR., JJ. Promulgated:

III. Urban Bank Managers Check and their corresponding Urban Bank Managers Check Application Forms, as follows: 1. 2. 3. 4. MC # 039975 dated January 18, 2000 in the amount of P70,000,000.00; MC # 039976 dated January 18, 2000 in the amount of P2,000,000.00; MC # 039977 dated January 18, 2000 in the amount of P2,000,000.00; MC # 039978 dated January 18, 2000 in the amount of P1,000,000.00;

November 30, 2006 x----------- ---------------------------------------x DECISION CARPIO MORALES, J.: The present petition for certiorari under Rule 65 assails the Sandiganbayan Resolutions dated February 7 and 12, 2003 denying petitioner Joseph Victor G. Ejercitos Motions to Quash Subpoenas Duces Tecum/Ad Testificandum, and Resolution dated March 11, 2003denying 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 Panel filed on January 20, 2003 before the Sandiganbayan a Request for Issuance of Subpoena Duces Tecum for the issuance of a subpoena directing the President of Export and Industry Bank (EIB, formerly Urban Bank) or his/her authorized representative to produce the following documents during the hearings scheduled on January 22 and 27, 2003: I. 1. 2. 3. 4. a. b. c. d. For Trust Account No. 858; Account Opening Documents; Trading Order No. 020385 dated January 29, 1999; Confirmation Advice TA 858; Original/Microfilm copies, including the dorsal side, of the following: Bank of Commerce MC # 0256254 in the amount of P2,000,000.00; Urban bank Corp. MC # 34181 dated November 8, 1999 in the amount of P10,875,749.43; Urban Bank MC # 34182 dated November 8, 1999 in the amount of P42,716,554.22; Urban Bank Corp. MC # 37661 dated November 23, 1999 in the amount of P54,161,496.52;
[1]

The Special Prosecution Panel also filed on January 20, 2003, a Request for Issuance of Subpoena Duces Tecum/Ad Testificandum directed to the authorized representative of Equitable-PCI Bank to produce statements of account pertaining to certain accounts in the name of Jose Velarde and to testify thereon. The Sandiganbayan granted both requests by Resolution of January 21, 2003 and subpoenas were accordingly issued. The Special Prosecution Panel filed still another Request for Issuance of Subpoena Duces Tecum/Ad Testificandum dated January 23, 2003 for the President of EIB or his/her authorized representative to produce the same documents subject of the Subpoena Duces Tecum dated January 21, 2003 and to testify thereon on the hearings scheduled on January 27 and 29, 2003 and subsequent dates until completion of the testimony. The request was likewise granted by the Sandiganbayan. A Subpoena Duces Tecum/Ad Testificandum was accordingly issued on January 24, 2003. Petitioner, claiming to have learned from the media that the Special Prosecution Panel had requested for the issuance of subpoenas for the examination of bank accounts belonging to him, attended the hearing of the case on January 27, 2003 and filed before the Sandiganbayan a letter of even date expressing his concerns as follows, quoted verbatim: Your Honors: It is with much respect that I write this court relative to the concern of subpoenaing the undersigneds bank account which I have learned through the media. I am sure the prosecution is aware of our banking secrecy laws everyone supposed to observe. But, instead of prosecuting those who may have breached such laws, it seems it is even going to use 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.

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. 2. Signature Cards; and Statement of Account/Ledger

May I, therefore, ask your Honors, that in the meantime, the issuance of the subpoena be held in abeyance for at least ten (10) days to enable me to take appropriate legal steps in connection with the prosecutions request for the issuance of subpoena concerning my accounts. (Emphasis supplied)

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 Quash[4] he had earlier filed. On the same day, February 7, 2003, the Sandiganbayan issued a Resolution denying petitioners Motion to Quash Subpoenae Duces Tecum/Ad Testificandum dated January 28, 2003. Subsequently or on February 12, 2003, the Sandiganbayan issued a Resolution denying petitioners Urgent Motion to Quash Subpoena Duces Tecum/Ad Testificandum dated February 7, 2003. Petitioners Motion for Reconsideration dated February 24, 2003 seeking a reconsideration of the Resolutions of February 7 and 12, 2003 having been denied by Resolution of March 11, 2003, petitioner filed the present petition. Raised as issues are: 1. Whether petitioners Trust Account No. 858 is covered by the term deposit as used in R.A. 1405; 2. Whether petitioners Trust Account No. 858 and Savings Account No. 0116-17345-9 are excepted from the protection of R.A. 1405; and 3. Whether the extremely-detailed information contained in the Special Prosecution Panels requests for subpoena was obtained through a prior illegal disclosure of petitioners bank accounts, in violation of the fruit of the poisonous tree doctrine. Respondent People posits that Trust Account No. 858[5] may be inquired into, not merely because it falls under the exceptions to the coverage of R.A. 1405, but because it is not even contemplated therein. For, to respondent People, the law applies only to deposits which strictly means the money delivered to the bank by which a creditor-debtor relationship is created between the depositor and the bank. The contention that trust accounts are not covered by the term deposits, as used in R.A. 1405, by the mere fact that they do not entail a creditor-debtor relationship between the trustor and the bank, does not lie. An examination of the law shows that the term deposits used therein is to be understood broadly and not limited only to accounts which give rise to a creditor-debtor relationship between the depositor and the bank. The policy behind the law is laid down in Section 1:

From the present petition, it is gathered that the accounts referred to by petitioner in his abovequoted 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 P2,000,000 as Bank of Commerce MC #0256256 in the amount of P200,000,000 was instead requested. Moreover, the request covered the following additional documents: IV. For Savings Account No. 1701-00646-1: 1. Account Opening Forms; 2. Specimen Signature Card/s; and 3. Statements of Account.

The prosecution also filed a Request for the Issuance of Subpoena Duces Tecum/Ad Testificandum bearing the same date, January 31, 2003, directed to Aurora C. Baldoz, Vice President-CR-II of the PDIC for her to produce the following documents on the scheduled hearings on February 3 and 5, 2003: 1. 2. 3. 4. 5. 6. Letter of authority dated November 23, 1999 re: SPAN [Special Private Account Number] 858; Letter of authority dated January 29, 2000 re: SPAN 858; Letter of authority dated April 24, 2000 re: SPAN 858; Urban Bank check no. 052092 dated April 24, 2000 for the amount of P36, 572, 315.43; Urban Bank check no. 052093 dated April 24, 2000 for the amount of P107,191,780.85; and Signature Card Savings Account No. 0116-17345-9. (Underscoring supplied)

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)

stock derived from the deposit or investment thereof forfeited in favor of the State. (Emphasis and underscoring supplied)

An examination of the overt or criminal acts as described in Section 1(d) of R.A. No. 7080 would make the similarity between plunder and bribery even more pronounced since bribery is essentially included among these criminal acts. Thus Section 1(d) states: d) Ill-gotten wealth means any asset, property, business enterprise or material possession of any person within the purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents, subordinates and or business associates by any combination or series of the following means or similar schemes. 1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public treasury; 2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any other form of pecuniary benefit from any person and/or entity in connection with any government contract or project or by reason of the office or position of the public officer concerned; 3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or any of its subdivisions, agencies or instrumentalities or government-owned or -controlled corporations and their subsidiaries; 4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of interest or participation including promise of future employment in any business enterprise or undertaking; 5) By establishing agricultural, industrial or commercial monopolies or other combinations and/or implementation of decrees and orders intended to benefit particular persons or special interests; or 6) By taking undue advantage of official position, authority, relationship, connection or influence to unjustly enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the Republic of the Philippines. (Emphasis supplied)

The phrase of whatever nature proscribes any restrictive interpretation of deposits. Moreover, it is clear from the immediately quoted provision that, generally, the law applies not only to money which is deposited but also to those which are invested. This further shows that the law was not intended to apply only to deposits in the strict sense of the word. Otherwise, there would have been no need to add the phrase or invested. Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858. The protection afforded by the law is, however, not absolute, there being recognized exceptions thereto, as above-quoted Section 2 provides. In the present case, two exceptions apply, to wit: (1) the examination of bank accounts is upon order of a competent court in cases of bribery or dereliction of duty of public officials, and (2) the money deposited or invested is the subject matter of the litigation. Petitioner contends that since plunder is neither bribery nor dereliction of duty, his accounts are not excepted from the protection of R.A. 1405. Philippine National Bank v. Gancayco[7] holds otherwise: Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as to the other. This policy expresses the notion that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.

Indeed, all the above-enumerated overt acts are similar to bribery such that, in each case, it may be said that no reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential.[8] The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers, and in either case the noble idea that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny applies with equal force. Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must also apply to cases of plunder. Respecting petitioners claim that the money in his bank accounts is not the subject matter of the litigation, the meaning of the phrase subject matter of the litigation as used in R.A. 1405 is explained in Union Bank of the Philippines v. Court of Appeals,[9] thus: Petitioner contends that the Court of Appeals confuses the cause of action with the subject of the action. In Yusingco v. Ong Hing Lian, petitioner points out, this Court distinguished the two concepts.

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 wealththrough a combination or series of overt or criminal acts as described in Section 1(d) hereof, in the aggregate amount or total value of at least Seventy-five million pesos (P75,000,000.00), shall be guilty of the crime of plunder and shall be punished by life imprisonment with perpetual absolute disqualification from holding any public office. Any person who participated with said public officer in the commission of plunder shall likewise be punished. In the imposition of penalties, the degree of participation and the attendance of mitigating and extenuating circumstances shall be considered by the court. The court shall declare any and all illgotten wealth and their interests and other incomes and assets including the properties and shares of

x x x The cause of action is the legal wrong threatened or committed, while the object of the action is to prevent or redress the wrong by obtaining some legal relief; but the subject of the action is neither of these since it is not the wrong or the relief demanded, the subject of the action is the matter or thing with respect to which the controversy has arisen, concerning which the wrong has been done, and this ordinarily is the property or the contract and its subject matter, or the thing in dispute. The argument is well-taken. We note with approval the difference between the subject of the action from the cause of action. We also find petitioners definition of the phrase subject matter of the action is consistent with the term subject matter of the litigation, as the latter is used in the Bank Deposits Secrecy Act. In Mellon Bank, N.A. v. Magsino, where the petitioner bank inadvertently caused the transfer of the amount of US$1,000,000.00 instead of only US$1,000.00, the Court sanctioned the examination of the bank accounts where part of the money was subsequently caused to be deposited: x x x Section 2 of *Republic Act No. 1405+ allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation. Inasmuch as Civil Case No. 26899 is aimed at recovering the amount converted by the Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to whatever is concealed by being held or recorded in the name of persons other than the one responsible for the illegal acquisition. Clearly, Mellon Bank involved a case where the money deposited was the subject matter of the litigation since the money deposited was the very thing in dispute. x x x (Emphasis and underscoring supplied) The plunder case now pending with the Sandiganbayan necessarily involves an inquiry into the whereabouts of the amount purportedly acquired illegally by former President Joseph Estrada. In light then of this Courts pronouncement in Union Bank, the subject matter of the litigation cannot be limited to bank accounts under the name of President Estrada alone, but must include those accounts to which the money purportedly acquired illegally or a portion thereof was alleged to have been transferred. Trust Account No. 858 and Savings Account No. 0116-17345-9 in the name of petitioner fall under this description and must thus be part of the subject matter of the litigation. In a further attempt to show that the subpoenas issued by the Sandiganbayan are invalid and may not be enforced, petitioner contends, as earlier stated, that the information found therein, given their extremely detailed character, could only have been obtained by the Special Prosecution Panel through an illegal disclosure by the bank officials concerned. Petitioner thus claims that, following the fruit of the poisonous tree doctrine, the subpoenas must be quashed. Petitioner further contends that even if, as claimed by respondent People, the extremely-detailed information was obtained by the Ombudsman from the bank officials concerned during a previous investigation of the charges against President Estrada, such inquiry into his bank accounts would itself be illegal. Petitioner relies on Marquez v. Desierto[10] where the Court held: We rule that before an in camera inspection may be allowed there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case. (Underscoring supplied)

information about his bank accounts were acquired illegally, hence, it may not be lawfully used to facilitate a subsequent inquiry into the same bank accounts. Petitioners attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405, it bears noting, nowhere provides that an unlawful examination of bank accounts shall render the evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that *a+ny violation of this law will subject the offender upon conviction, to an imprisonment of not more 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 doctrine[13] presupposes a violation of law. If there was no violation of R.A. 1405 in the instant case, then there would be no poisonous tree to begin with, and, thus, no reason to apply the doctrine. How the Ombudsman conducted his inquiry into the bank accounts of petitioner is recounted by respondent People of thePhilippines, 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)

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

Based on the certification issued by PDIC, the Office of the Ombudsman on February 16, 2001 again issued a Subpoena Duces Tecumdirected 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 mangers checks, detailed in the Subpoena Duces Tecum dated March 7, 2001. (Attachment 5) PDIC again complied with the said Subpoena Duces Tecum dated March 7, 2001 and provided copies of the managers checks thus requested under cover letter dated March 16, 2001. (Attachment 6)[14] (Emphasis in the original) The Sandiganbayan credited the foregoing account of respondent People.[15] The Court finds no reason to disturb this finding of fact by the Sandiganbayan. The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of petitioners bank accounts, conducted before a case was filed with a court of competent jurisdiction, was lawful. For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner about four months before Marquez was promulgated on June 27, 2001. While judicial interpretations of statutes, such as that made in Marquez with respect to R.A. No. 6770 or the Ombudsman Act of 1989, are deemed part of the statute as of the date it was originally passed, the rule is not absolute. Columbia Pictures, Inc. v. Court of Appeals[16] teaches: It is consequently clear that a judicial interpretation becomes a part of the law as of the date that law was originally passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view is adopted, and more so when there is a reversalthereof, 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)

before a court of competent jurisdiction, it was, in fact, reversing an earlier doctrine found in Banco Filipino Savings and Mortgage Bank v. Purisima[17]. Banco Filipino involved subpoenas duces tecum issued by the Office of the Ombudsman, then known as the Tanodbayan,[18] in the course of its preliminary investigation of a charge of violation of the Anti-Graft and Corrupt Practices Act. While the main issue in Banco Filipino was whether R.A. 1405 precluded the Tanodbayans issuance of subpoena duces tecum of bank records in the name of persons other than the one who was charged, this Court, citing P.D. 1630,[19] Section 10, the relevant part of which states: (d) He may issue a subpoena to compel any person to appear, give sworn testimony, or produce documentary or other evidence the Tanodbayan deems relevant to a matter under his inquiry,

held that The power of the Tanodbayan to issue subpoenae ad testificandum and subpoenae duces tecum at the time in question is not disputed, and at any rate does not admit of doubt.[20] As the subpoenas subject of Banco Filipino were issued during a preliminary investigation, in effect this Court upheld the power of the Tandobayan under P.D. 1630 to issue subpoenas duces tecum for bank documents prior to the filing of a case before a court of competent jurisdiction. Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite the fact that the subpoena power of the Ombudsman under R.A. 6770 was essentially the same as that under P.D. 1630. Thus Section 15 of R.A. 6770 empowers the Office of the Ombudsman to (8) Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any investigation or inquiry, including the power to examine and have access to bank accounts and records; A comparison of this provision with its counterpart in Sec. 10(d) of P.D. 1630 clearly shows that it is only more explicit in stating that the power of the Ombudsman includes the power to examine and have access to bank accounts and records which power was recognized with respect to the Tanodbayan through Banco Filipino. The Marquez ruling that there must be a pending case in order for the Ombudsman to validly inspect bank records in camera thus reversed a prevailing doctrine.[21] Hence, it may not be retroactively applied. The Ombudsmans inquiry into the subject bank accounts prior to the filing of any case before a court of competent jurisdiction was therefore valid at the time it was conducted. Likewise, the Marquez ruling that the account holder must be notified to be present during the inspection may not be applied retroactively to the inquiry of the Ombudsman subject of this case. This ruling is not a judicial interpretation either of R.A. 6770 or R.A. 1405, but a judge-made law which, as People v. Luvendino[22] instructs, can only be given prospective application: x x x The doctrine that an uncounselled waiver of the right to counsel is not to be given legal effect was initially a judge-made one and was first announced on 26 April 1983 in Morales v. Enrile and reiterated on 20 March 1985 in People v. Galit. x x x While the Morales-Galit doctrine eventually became part of Section 12(1) of the 1987 Constitution, that doctrine affords no comfort to appellant Luvendino for the requirements and restrictions outlined in Morales and Galit have no retroactive effect and do not reach waivers made prior to 26 April 1983 the date of promulgation of Morales. (Emphasis 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

(2) applies because the money deposited in petitioners bank accounts is said to form part of the subject matter of the same plunder case. In fine, the subpoenas issued by the Ombudsman in this case were legal, hence, invocation of the fruit of the poisonous tree doctrine is misplaced. AT ALL EVENTS, even if the challenged subpoenas are quashed, the Ombudsman is not barred from requiring the production of the same documents based solely on information obtained by it from sources independent of its previous inquiry. In particular, the Ombudsman, even before its inquiry, had already possessed information giving him grounds to believe that (1) there are bank accounts bearing the number 858, (2) that such accounts are in the custody of Urban Bank, and (3) that the same are linked with the bank accounts of former President Joseph Estrada who was then under investigation for plunder. Only with such prior independent information could it have been possible for the Ombudsman to issue the February 8, 2001subpoena 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) 2. The fruit of the poisonous tree principle, which states that once the primary source (the tree) is shown to have been unlawfully obtained, any secondary or derivative evidence (the fruit) derived from it is also inadmissible, does not apply in this case. In the first place, R.A. 1405 does not provide for the application of this rule. Moreover, there is no basis for applying the same in this case since the primary source for the detailed information regarding petitioners bank accounts the investigation previously conducted by the Ombudsman was lawful. 3. At all events, even if the subpoenas issued by the Sandiganbayan were quashed, the Ombudsman may conduct on its own the same inquiry into the subject bank accounts that it earlier conducted last February-March 2001, there being a plunder case already pending against former President Estrada. To quash the challenged subpoenas would, therefore, be pointless since the Ombudsman may obtain the same documents by another route. Upholding the subpoenas avoids an unnecessary delay in the administration of justice. WHEREFORE, the petition is DISMISSED. The Sandiganbayan Resolutions dated February 7 and 12, 2003 and March 11, 2003are upheld. The Sandiganbayan is hereby directed, consistent with this Courts ruling in Marquez v. Desierto, to notify petitioner as to the date the subject bank documents shall be presented in court by the persons subpoenaed. SO ORDERED. G.R. No. 90027 March 3, 1993 CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner, vs. THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents. Dolorfino & Dominguez Law Offices for petitioner. Danilo B. Banares for private respondent. DAVIDE, JR., J.: Is the contractual relation between a commercial bank and another party in a contract of rent of a safety deposit box with respect to its contents placed by the latter one of bailor and bailee or one of lessor and lessee? This is the crux of the present controversy. On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses Ramon and Paula Pugao entered into an agreement whereby the former purchased from the latter two (2) parcels of land for a consideration of P350,625.00. Of this amount, P75,725.00 was paid as downpayment while the balance was covered by three (3) postdated checks. Among the terms and conditions of the agreement embodied in a Memorandum of True and Actual Agreement of Sale of Land were that the titles to the lots shall be transferred to the petitioner upon full payment of the purchase price and that the owner's copies of the certificates of titles thereto, Transfer Certificates of Title (TCT) Nos. 284655 and 292434, shall be deposited in a safety deposit box of any bank. The same could be withdrawn only upon the joint signatures of a representative of the petitioner and the Pugaos upon full payment of the purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then rented Safety Deposit Box No. 1448 of private respondent Security Bank and Trust Company, a domestic banking corporation hereinafter referred to as the respondent Bank. For this purpose, both signed a contract of lease (Exhibit "2") which contains, inter alia, the following conditions: 13. The bank is not 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 herein expressly provided, and it assumes absolutely no liability in connection therewith. 1

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

After the execution of the contract, two (2) renter's keys were given to the renters one to Aguirre (for the petitioner) and the other to the Pugaos. A guard key remained in the possession of the respondent Bank. The safety deposit box has two (2) keyholes, one for the guard key and the other for the renter's key, and can be opened only with the use of both keys. Petitioner claims that the certificates of title were placed inside the said box. Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the two (2) lots at a price of P225.00 per square meter which, as petitioner alleged in its complaint, translates to a profit of P100.00 per square meter or a total of P280,500.00 for the entire property. Mrs. Ramos demanded the execution of a deed of sale which necessarily entailed the production of the certificates of title. In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the respondent Bank on 4 October 1979 to open the safety deposit box and get the certificates of title. However, when opened in the presence of the Bank's representative, the box yielded no such certificates. Because of the delay in the reconstitution of the title, Mrs. Ramos withdrew her earlier offer to purchase the lots; as a consequence thereof, the petitioner allegedly failed to realize the expected profit of P280,500.00. Hence, the latter filed on 1 September 1980 a complaint 2 for damages against the respondent Bank with the Court of First Instance (now Regional Trial Court) of Pasig, Metro Manila which docketed the same as Civil Case No. 38382. In its Answer with Counterclaim, 3 respondent Bank alleged that the petitioner has no cause of action because of paragraphs 13 and 14 of the contract of lease (Exhibit "2"); corollarily, loss of any of the items or articles contained in the box could not give rise to an action against it. It then interposed a counterclaim for exemplary damages as well as attorney's fees in the amount of P20,000.00. Petitioner subsequently filed an answer to the counterclaim. 4 In due course, the trial court, now designated as Branch 161 of the Regional Trial Court (RTC) of Pasig, Metro Manila, rendered a decision 5 adverse to the petitioner on 8 December 1986, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered dismissing plaintiff's complaint. On defendant's counterclaim, judgment is hereby rendered ordering plaintiff to pay defendant the amount of FIVE THOUSAND (P5,000.00) PESOS as attorney's fees. With costs against plaintiff. 6 The unfavorable verdict is based on the trial court's conclusion that under paragraphs 13 and 14 of the contract of lease, the Bank has no liability for the loss of the certificates of title. The court declared that the said provisions are binding on the parties. Its motion for reconsideration 7 having been denied, petitioner appealed from the adverse decision to the respondent Court of Appeals which docketed the appeal as CA-G.R. CV No. 15150. Petitioner urged the respondent Court to reverse the challenged decision because the trial court erred in (a) absolving the respondent Bank from liability from the loss, (b) not declaring as null and void, for being contrary to law, public order and public policy, the provisions in the contract for lease of the safety deposit box absolving the Bank from any liability for loss, (c) not concluding that in this jurisdiction, as well as under American jurisprudence, the liability of the Bank is settled and (d) awarding attorney's fees to the Bank and denying the petitioner's prayer for nominal and exemplary damages and attorney's fees. 8 In its Decision promulgated on 4 July 1989, 9 respondent Court affirmed the appealed decision principally on the theory that the contract (Exhibit "2") executed by the petitioner and respondent Bank is in the nature of a contract of lease by virtue of which the petitioner and its co-renter were given control over the safety deposit box and its contents while the Bank retained no right to open the said box because it had neither the possession nor control over it and its contents. As such, the contract is governed by Article 1643 of the Civil Code 10 which provides: Art. 1643. In the lease of things, one of the parties binds himself to give to another the enjoyment or use of a thing for a price certain, and for a period which may be definite or indefinite. However, no lease for more than ninety-nine years shall be valid. It invoked Tolentino vs. Gonzales 11 which held that the owner of the property loses his control over the property leased during the period of the contract and Article 1975 of the Civil Code which provides: Art. 1975. The depositary holding certificates, bonds, securities or instruments which earn interest shall be bound to collect the latter when it becomes due, and to take such steps as may be necessary in order that the securities may preserve their value and the rights corresponding to them according to law.

The above provision shall not apply to contracts for the rent of safety deposit boxes. and then concluded that "[c]learly, the defendant-appellee is not under any duty to maintain the contents of the box. The stipulation absolving the defendant-appellee from liability is in accordance with the nature of the contract of lease and cannot be regarded as contrary to law, public order and public policy." 12 The appellate court was quick to add, however, that under the contract of lease of the safety deposit box, respondent Bank is not completely free from liability as it may still be made answerable in case unauthorized persons enter into the vault area or when the rented box is forced open. Thus, as expressly provided for in stipulation number 8 of the contract in question: 8. The Bank shall use due diligence that no unauthorized person shall be admitted to any rented safe and beyond this, the Bank will not be responsible for the contents of any safe rented from it. 13 Its motion for reconsideration 14 having been denied in the respondent Court's Resolution of 28 August 1989, 15 petitioner took this recourse under Rule 45 of the Rules of Court and urges Us to review and set aside the respondent Court's ruling. Petitioner avers that both the respondent Court and the trial court (a) did not properly and legally apply the correct law in this case, (b) acted with grave abuse of discretion or in excess of jurisdiction amounting to lack thereof and (c) set a precedent that is contrary to, or is a departure from precedents adhered to and affirmed by decisions of this Court and precepts in American jurisprudence adopted in the Philippines. It reiterates the arguments it had raised in its motion to reconsider the trial court's decision, the brief submitted to the respondent Court and the motion to reconsider the latter's decision. In a nutshell, petitioner maintains that regardless of nomenclature, the contract for the rent of the safety deposit box (Exhibit "2") is actually a contract of deposit governed by Title XII, Book IV of the Civil Code of the Philippines. 16 Accordingly, it is claimed that the respondent Bank is liable for the loss of the certificates of title pursuant to Article 1972 of the said Code which provides: Art. 1972. The depositary is obliged to keep the thing safely and to return it, when required, to the depositor, or to his heirs and successors, or to the person who may have been designated in the contract. His responsibility, with regard to the safekeeping and the loss of the thing, shall be governed by the provisions of Title I of this Book. If the deposit is gratuitous, this fact shall be taken into account in determining the degree of care that the depositary must observe. Petitioner then quotes a passage from American Jurisprudence 17 which is supposed to expound on the prevailing rule in the United States, to wit: The prevailing rule appears to be that where a safe-deposit company leases a safe-deposit box or safe and the lessee takes possession of the box or safe and places therein his securities or other valuables, the relation of bailee and bail or is created between the parties to the transaction as to such securities or other valuables; the fact that the safe-deposit company does not know, and that it is not expected that it shall know, the character or description of the property which is deposited in such safe-deposit box or safe does not change that relation. That access to the contents of the safe-deposit box can be had only by the use of a key retained by the lessee ( whether it is the sole key or one to be used in connection with one retained by the lessor) does not operate to alter the foregoing rule. The argument that there is not, in such a case, a delivery of exclusive possession and control to the deposit company, and that therefore the situation is entirely different from that of ordinary bailment, has been generally rejected by the courts, usually on the ground that as possession must be either in the depositor or in the company, it should reasonably be considered as in the latter rather than in the former, since the company is, by the nature of the contract, given absolute control of access to the property, and the depositor cannot gain access thereto without the consent and active participation of the company. . . . (citations omitted). and a segment from Words and Phrases 18 which states that a contract for the rental of a bank safety deposit box in consideration of a fixed amount at stated periods is a bailment for hire. Petitioner further argues that conditions 13 and 14 of the questioned contract are contrary to law and public policy and should be declared null and void. In support thereof, it cites Article 1306 of the Civil Code which provides that parties to a contract 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. After the respondent Bank filed its comment, this Court gave due course to the petition and required the parties to simultaneously submit their respective Memoranda.

The petition is partly meritorious. We agree with the petitioner's contention that the contract for the rent of the safety deposit box is not an ordinary contract of lease as defined in Article 1643 of the Civil Code. However, We do not fully subscribe to its view that the same is a contract of deposit that is to be strictly governed by the provisions in the Civil Code on deposit; 19 the contract in the case at bar is a special kind of deposit. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to the joint renters the petitioner and the Pugaos. The guard key of the box remained with the respondent Bank; without this key, neither of the renters could open the box. On the other hand, the respondent Bank could not likewise open the box without the renter's key. In this case, the said key had a duplicate which was made so that both renters could have access to the box. Hence, the authorities cited by the respondent Court 20 on this point do not apply. Neither could Article 1975, also relied upon by the respondent Court, be invoked as an argument against the deposit theory. Obviously, the first paragraph of such provision cannot apply to a depositary of certificates, bonds, securities or instruments which earn interest if such documents are kept in a rented safety deposit box. It is clear that the depositary cannot open the box without the renter being present. We observe, however, that the deposit theory itself does not altogether find unanimous support even in American jurisprudence. We agree with the petitioner that under the latter, the prevailing rule is 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 bail or and bailee, the bailment being for hire and mutual benefit. 21 This is just the prevailing view because: There is, however, some support for the view that the relationship in question might be more properly characterized as that of landlord and tenant, or lessor and lessee. It has also been suggested that it should be characterized as that of licensor and licensee. The relation between a bank, safe-deposit company, or storage company, and the renter of a safe-deposit box therein, is often described as contractual, express or implied, oral or written, in whole or in part. But there is apparently no jurisdiction in which any rule other than that applicable to bailments governs questions of the liability and rights of the parties in respect of loss of the contents of safe-deposit boxes. 22 (citations omitted) 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 23 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 safeguarding of such effects. xxx xxx xxx The banks shall perform the services permitted under subsections (a), (b) and (c) of this section asdepositories or as agents. . . . 24 (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 25 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. 26 In the absence of any stipulation prescribing the degree of diligence required, that of a good father of a family is to be observed. 27 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 14 of the questioned contract of lease of the safety deposit box, which read: 13. The bank is not 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 herein expressly provided, and it assumes absolutely no liability in connection therewith. 28 are void as they are contrary to law and public policy. We find Ourselves in agreement with this proposition for indeed, said provisions are inconsistent with the respondent Bank's responsibility as a depositary under Section 72(a) of the General Banking Act. Both exempt the latter from any liability except as contemplated in condition 8 thereof which limits its duty to exercise reasonable diligence only with respect to who shall be admitted to any rented safe, to wit: 8. The Bank shall use due diligence that no unauthorized person shall be admitted to any rented safe and beyond this, the Bank will not be responsible for the contents of any safe rented from it. 29 Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice of the Bank. It is not correct to assert that the Bank has neither the possession nor control of the contents of the box since in fact, the safety deposit box itself is located in its premises and is under its absolute control; moreover, the respondent Bank keeps the guard key to the said box. As stated earlier, renters cannot open their respective boxes unless the Bank cooperates by presenting and using this guard key. Clearly then, to the extent above stated, the foregoing conditions in the contract in question are void and ineffective. It has been said: With respect to property deposited in a safe-deposit box by a customer of a safe-deposit company, the parties, since the relation is a contractual one, may by special contract define their respective duties or provide for increasing or limiting the liability of the deposit company, provided such contract is not in violation of law or public policy. It must clearly appear that there actually was such a special contract, however, in order to vary the ordinary obligations implied by law from the relationship of the parties; liability of the deposit company will not be enlarged or restricted by words of doubtful meaning. The company, in renting safe-deposit boxes, cannot exempt itself from liability for loss of the contents by its own fraud or negligence or that of its agents or servants, and if a provision of the contract may be construed as an attempt to do so, it will be held ineffective for the purpose. Although it has been held that the lessor of a safe-deposit box cannot limit its liability for loss of the contents thereof through its own negligence, the view has been taken that such a lessor may limits its liability to some extent by agreement or stipulation. 30 (citations omitted) Thus, we reach the same conclusion which the Court of Appeals arrived at, that is, that the petition should be dismissed, but on grounds quite different from those relied upon by the Court of Appeals. In the instant case, the respondent Bank's exoneration cannot, contrary to the holding of the Court of Appeals, be based on or proceed from a characterization of the impugned contract as a contract of lease, but rather on the fact that no competent proof was presented to show that respondent Bank was aware of the agreement between the petitioner and the Pugaos to the effect that the certificates of title were withdrawable from the safety deposit box only upon both parties' joint signatures, and that no evidence was submitted to reveal that the loss of the certificates of title was due to the fraud or negligence of the respondent Bank. This in turn flows from this Court's determination that the contract involved was one of deposit. Since both the petitioner and the Pugaos agreed that each should have one (1) renter's key, it was obvious that either of them could ask the Bank for access to the safety deposit box and, with the use of such key and the Bank's own guard key, could open the said box, without the other renter being present. Since, however, the petitioner cannot be blamed for the filing of the complaint and no bad faith on its part had been established, the trial court erred in condemning the petitioner to pay the respondent Bank attorney's fees. To this extent, the Decision (dispositive portion) of public respondent Court of Appeals must be modified. WHEREFORE, the Petition for Review is partially GRANTED by deleting the award for attorney's fees from the 4 July 1989 Decision of the respondent Court of Appeals in CA-G.R. CV No. 15150. As modified, and subject to the pronouncement We made above on the nature of the relationship between the parties in a contract of lease of safety deposit boxes, the dispositive portion of the said Decision is hereby AFFIRMED and the instant Petition for Review is otherwise DENIED for lack of merit.

G.R. No. 102970 May 13, 1993

LUZAN SIA, petitioner, vs. COURT OF APPEALS and SECURITY BANK and TRUST COMPANY, respondents. Asuncion Law Offices for petitioner. Cauton, Banares, Carpio & Associates for private respondent. DAVIDE, JR., J.: The Decision of public respondent Court of Appeals in CA-G.R. CV No. 26737, promulgated on 21 August 1991, 1 reversing and setting aside the Decision, dated 19 February 1990, 2 of Branch 47 of the Regional Trial Court (RTC) of Manila in Civil Case No. 87-42601, entitled "LUZAN SIA vs. SECURITY BANK and TRUST CO.," is challenged in this petition for review oncertiorari under Rule 45 of the Rules Court. Civil Case No. 87-42601 is an action for damages arising out of the destruction or loss of the stamp collection of the plaintiff (petitioner herein) contained in Safety Deposit Box No. 54 which had been rented from the defendant pursuant to a contract denominated as a Lease Agreement. 3 Judgment therein was rendered in favor of the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant, Security Bank & Trust Company, ordering the defendant bank to pay the plaintiff the sum of a) Twenty Thousand Pesos (P20,000.00), Philippine Currency, as actual damages; b) One Hundred Thousand Pesos (P100,000.00), Philippine Currency, as moral damages; and c) Five Thousand Pesos (P5,000.00), Philippine Currency, as attorney's fees and legal expenses. The counterclaim set up by the defendant are hereby dismissed for lack of merit. No costs. SO ORDERED. 4 The antecedent facts of the present controversy are summarized by the public respondent in its challenged decision as follows: The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the defendant bank at its Binondo Branch located at the Fookien Times Building, Soler St., Binondo, Manila wherein he placed his collection of stamps. The said safety deposit box leased by the plaintiff was at the bottom or at the lowest level of the safety deposit boxes of the defendant bank at its aforesaid Binondo Branch. During the floods that took place in 1985 and 1986, floodwater entered into the defendant bank's premises, seeped into the safety deposit box leased by the plaintiff and caused, according to the plaintiff, damage to his stamps collection. The defendant bank rejected the plaintiff's claim for compensation for his damaged stamps collection, so, the plaintiff instituted an action for damages against the defendant bank. The defendant bank denied liability for the damaged stamps collection of the plaintiff on the basis of the "Rules and Regulations Governing the Lease of Safe Deposit Boxes" (Exhs. "A-1", "1-A"), particularly paragraphs 9 and 13, which reads (sic): "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." The defendant bank also contended that its contract with the plaintiff over safety deposit box No. 54 was one of lease and not of deposit and, therefore, governed by the lease agreement (Exhs. "A", "L") which should be the applicable law; that the destruction of the plaintiff's stamps collection was due to a calamity beyond obligation on its part to notify the plaintiff about the floodwaters that inundated its premises at Binondo branch which allegedly seeped into the safety deposit box leased to the plaintiff. The trial court then directed that an ocular inspection on (sic) the contents of the safety deposit box be conducted, which was done on December 8, 1988 by its clerk of court in the presence of the parties and their counsels. A report thereon was then submitted on December 12, 1988 (Records, p. 98-A) and confirmed in open court by both parties thru counsel during the 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 RESPONDENT SBTC DID NOT FAIL TO EXERCISE THE REQUIRED DILIGENCE IN

MAINTAINING THE SAFETY DEPOSIT BOX OF THE PETITIONER CONSIDERING THAT SUBSTANTIAL EVIDENCE EXIST (sic) PROVING THE CONTRARY. II THE RESPONDENT COURT SERIOUSLY ERRED IN EXCULPATING PRIVATE RESPONDENT FROM ANY LIABILITY WHATSOEVER BY REASON OF THE PROVISIONS OF PARAGRAPHS 9 AND 13 OF THE AGREEMENT (EXHS. "A" AND "A-1"). III THE RESPONDENT COURT SERIOUSLY ERRED IN NOT UPHOLDING THE AWARDS OF THE TRIAL COURT FOR ACTUAL AND MORAL DAMAGES, INCLUDING ATTORNEY'S FEES AND LEGAL EXPENSES, IN FAVOR OF THE PETITIONER. 8 We subsequently gave due course the petition and required both parties to submit their respective memoranda, which they complied with. 9 Petitioner insists that the trial court correctly ruled that SBTC had failed "to exercise the required diligence expected of a bank maintaining such safety deposit box . . . in the light of the environmental circumstance of said safety deposit box after the floods of 1985 and 1986." He argues that such a conclusion is supported by the evidence on record, to wit: SBTC was fully cognizant of the exact location of the safety deposit box in question; it knew that the premises were inundated by floodwaters in 1985 and 1986 and considering that the bank is guarded twenty-four (24) hours a day , it is safe to conclude that it was also aware of the inundation of the premises where the safety deposit box was located; despite such knowledge, however, it never bothered to inform the petitioner of the flooding or take any appropriate measures to insure the safety and good maintenance of the safety deposit box in question. SBTC does not squarely dispute these facts; rather, it relies on the rule that findings of facts of the Court of Appeals, when supported by substantial exidence, are not reviewable on appeal by certiorari. 10 The foregoing rule is, of course, subject to certain exceptions such as when there exists a disparity 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 asdepositories 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. We find Ourselves in agreement with this proposition for indeed, said provisions are inconsistent with the respondent Bank's responsibility as a depositary under Section 72 (a) of the General Banking Act. Both exempt the latter from any liability except as contemplated in condition 8 thereof which limits its duty to exercise reasonable diligence only with respect to who shall be admitted to any rented safe, to wit: "8. The Bank shall use due diligence that no unauthorized person shall be admitted to any rented safe and beyond this, the Bank will not be responsible for the contents of any safe rented from it." Furthermore condition 13 stands on a wrong premise and is contrary to the actual practice of the Bank. It is not correct to assert that the Bank has neither the possession nor control of the contents of the box since in fact, the safety deposit box itself is located in its premises and is under its absolute control; moreover, the respondent Bank keeps the guard key to the said box. As stated earlier, renters cannot open their respective boxes unless the Bank cooperates by presenting and using this guard key. Clearly then, to the extent above stated, the foregoing conditions in the contract in question are void and ineffective. It has been said: "With respect to property deposited in a safe-deposit box by a customer of a safe-deposit company, the parties, since the relation is a contractual one, may by special contract define their respective duties or provide for increasing or limiting the liability of the deposit company, provided such contract is not in violation of law or public policy. It must clearly appear that there actually was such a special contract, however, in order to vary the ordinary obligations implied by law from the relationship of the parties; liability of the deposit company will not be enlarged or restricted by words of doubtful meaning. The company, in renting safe-deposit boxes, cannot exempt itself from liability for loss of the contents by its own fraud or negligence or that, of its agents or servants, and if a provision of the contract may be construed as an attempt to do so, it will be held ineffective for the purpose. Although it has been held that the lessor of a safe-deposit box cannot limit its liability for loss of the contents thereof through its own negligence, the view has been taken that such a lessor may limit its liability to some extent by agreement or stipulation ."[10 AM JUR 2d., 466]. (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 inCA 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 Agrolndustrial 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 Espaola 17 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. 135882. June 27, 2001] LOURDES T. MARQUEZ, in her capacity as Branch Manager, Union Bank of the Philippines, petitioners, vs. HON. ANIANO A. DESIERTO, (in his capacity as OMBUDSMAN, Evaluation and Preliminary Investigation Bureau, Office of the Ombudsman, ANGEL C. MAYOR-ALGO, JR., MARY ANN CORPUZ-MANALAC and JOSE T. DE JESUS, JR., in their capacities as Chairman and Members of the Panel, respectively, respondents. DECISION PARDO, J.: In the petition at bar, petitioner seeks to-a. Annul and set aside, for having been issued without or in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction, respondents order dated September 7, 1998 in OMB-0-970411, In Re: Motion to Cite Lourdes T. Marquez for indirect contempt, received by counsel of September 9, 1998, and their order dated October 14, 1998, denying Marquezs motion for reconsideration dated September 10, 1998, received by counsel on October 20, 1998. b. Prohibit respondents from implementing their order dated October 14, 1998, in proceeding with the hearing of the motion to cite Marquez for indirect contempt, through the issuance by this Court of a temporary restraining order and/or preliminary injunction.[1] The antecedent facts are as follows: Sometime in May 1998, petitioner Marquez received an Order from the Ombudsman Aniano A. Desierto dated April 29, 1998, to produce several bank documents for purposes of inspection in camera relative to various accounts maintained at Union Bank of the Philippines, Julia Vargas Branch, where petitioner is the branch manager. The accounts to be inspected are Account Nos. 011-37270, 240-020718, 24530317-3 and 245-30318-1, involved in a case pending with the Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al. The order further states: It is worth mentioning that the power of the Ombudsman to investigate and to require the production and inspection of records and documents is sanctioned by the 1987 Philippine Constitution, Republic Act No. 6770, otherwise known as the Ombudsman Act of 1989 and under existing jurisprudence on the matter. It must be noted that R. A. 6770 especially Section 15 thereof provides, among others, the following powers, functions and duties of the Ombudsman, to wit: x x x (8) Administer oaths, issue subpoena and subpoena duces tecum and take testimony in any investigation or inquiry, including the power to examine and have access to bank accounts and records; (9) Punish for contempt in accordance with the Rules of Court and under the same procedure and with the same penalties provided therein. Clearly, the specific provision of R.A. 6770, a later legislation, modifies the law on the Secrecy of Bank Deposits (R.A. 1405) and places the office of the Ombudsman in the same footing as the courts of law in this regard.[2] The basis of the Ombudsman in ordering an in camera inspection of the accounts is a trail of managers checks purchased by one George Trivinio, a respondent in OMB-0-97-0411, pending with the office of the Ombudsman. It would appear that Mr. George Trivinio, purchased fifty one (51) Managers Checks (MCs) for a total amount of P272.1 Million at Traders Royal Bank, United Nations Avenue branch, on May 2 and 3, 1995. Out of the 51 MCs, eleven (11) MCs in the amount of P70.6 million, were deposited and credited to an account maintained at the Union Bank, Julia Vargas Branch.[3] On May 26, 1998, the FFIB panel met in conference with petitioner Lourdes T. Marquez and Atty. Fe B. Macalino at the banks main office, Ayala Avenue, Makati City. The meeting was for the purpose of allowing petitioner and Atty. Macalino to view the checks furnished by Traders Royal Bank. After convincing themselves of the veracity of the checks, Atty. Macalino advised Ms. Marquez to comply with the order of the Ombudsman. Petitioner agreed to an in camerainspection set on June 3, 1998.[4] However, on June 4, 1998, petitioner wrote the Ombudsman explaining to him that the accounts in question cannot readily be identified and asked for time to respond to the order. The reason forwarded by petitioner was that despite diligent efforts and from the account numbers presented, we can not

identify these accounts since the checks are issued in cash or bearer. We surmised that these accounts have long been dormant, hence are not covered by the new account number generated by the Union Bank system. We therefore have to verify from the Interbank records archives for the whereabouts of these accounts.[5] The Ombudsman, responding to the request of the petitioner for time to comply with the order, stated: firstly, it must be emphasized that Union Bank, Julia Vargas Branch was the depositary bank of the subject Traders Royal Bank Managers Checks (MCs), as shown at its dorsal portion and as cleared by the Philippine Clearing House, not the International Corporate Bank. Notwithstanding the fact that the checks were payable to cash or bearer, nonetheless, the name of the depositor(s) could easily be identified since the account numbers x x x where said checks were deposited are identified in the order. Even assuming that the accounts xxx were already classified as dormant accounts, the bank is still required to preserve the records pertaining to the accounts within a certain period of time as required by existing banking rules and regulations. And finally, the in camera inspection was already extended twice from May 13, 1998 to June 3, 1998, thereby giving the bank enough time within which to sufficiently comply with the order.[6] Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner to produce the bank documents relative to the accounts in issue. The order states: Viewed from the foregoing, your persistent refusal to comply with Ombudsmans order is unjustified, and is merely intended to delay the investigation of the case. Your act constitutes disobedience of or resistance to a lawful order issued by this office and is punishable as Indirect Contempt under Section 3(b) of R.A. 6770. The same may also constitute obstruction in the lawful exercise of the functions of the Ombudsman which is punishable under Section 36 of R.A. 6770.[7] On July 10, 1998, petitioner together with Union Bank of the Philippines, filed a petition for declaratory relief, prohibition and injunction[8] with the Regional Trial Court, Makati City, against the Ombudsman. The petition was intended to clear the rights and duties of petitioner. Thus, petitioner sought a declaration of her rights from the court due to the clear conflict between R. A. No. 6770, Section 15 and R. A. No. 1405, Sections 2 and 3. Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman and other persons acting under his authority were continuously harassing her to produce the bank documents relative to the accounts in question. Moreover, on June 16, 1998, the Ombudsman issued another order stating that unless petitioner appeared before the FFIB with the documents requested, petitioner manager would be charged with indirect contempt and obstruction of justice. In the meantime,[9] on July 14, 1998, the lower court denied petitioners prayer for a temporary restraining order and stated thus: After hearing the arguments of the parties, the court finds the application for a Temporary Restraining Order to be without merit. Since the application prays for the restraint of the respondent, in the exercise of his contempt powers under Section 15 (9) in relation to paragraph (8) of R.A. 6770, known as The Ombudsman Act of 1989, there is no great or irreparable injury from which petitioners may suffer, if respondent is not so restrained. Respondent should he decide to exercise his contempt powers would still have to apply with the court. x x x Anyone who, without lawful excuse x x x refuses to produce documents for inspection, when thereunto lawfully required shall be subject to discipline as in case of contempt of Court and upon application of the individual or body exercising the power in question shall be dealt with by the Judge of the First Instance (now RTC) having jurisdiction of the case in a manner provided by law (section 580 of the Revised Administrative Code). Under the present Constitution only judges may issue warrants, hence, respondent should apply with the Court for the issuance of the warrant needed for the enforcement of his contempt orders. It is in these proceedings where petitioners may question the propriety of respondents exercise of his contempt powers. Petitioners are not therefore left without any adequate remedy. The questioned orders were issued with the investigation of the case of Fact-Finding and Intelligence Bureau vs. Amado Lagdameo, et. el., OMB-0-97-0411, for violation of R.A. 3019. Since petitioner failed to show prima facie evidence that the subject matter of the investigation is outside the jurisdiction of the Office of the Ombudsman, no writ of injunction may be issued by this Court to delay this investigation pursuant to Section 14 of the Ombudsman Act of 1989.[10]

On July 20, 1998, petitioner filed a motion for reconsideration based on the following grounds: a. Petitioners application for Temporary Restraining Order is not only to restrain the Ombudsm an from exercising his contempt powers, but to stop him from implementing his Orders dated April 29,1998 and June 16,1998; and b. The subject matter of the investigation being conducted by the Ombudsman at petitioners premises is outside his jurisdiction.[11] On July 23, 1998, the Ombudsman filed a motion to dismiss the petition for declaratory relief[12] on the ground that the Regional Trial Court has no jurisdiction to hear a petition for relief from the findings and orders of the Ombudsman, citing R. A. No. 6770, Sections 14 and 27. On August 7, 1998, the Ombudsman filed an opposition to petitioners motion for reconsideration dated July 20, 1998.[13] On August 19, 1998, the lower court denied petitioners motion for reconsideration,[14] and also the Ombudsmans motion to dismiss.[15] On August 21, 1998, petitioner received a copy of the motion to cite her for contempt, filed with the Office of the Ombudsman by Agapito B. Rosales, Director, Fact Finding and Intelligence Bureau (FFIB).[16] On August 31, 1998, petitioner filed with the Ombudsman an opposition to the motion to cite her in contempt on the ground that the filing thereof was premature due to the petition pending in the lower court.[17] Petitioner likewise reiterated that she had no intention to disobey the orders of the Ombudsman. However, she wanted to be clarified as to how she would comply with the orders without her breaking any law, particularly R. A. No. 1405.[18] Respondent Ombudsman panel set the incident for hearing on September 7, 1998.[19] After hearing, the panel issued an order dated September 7, 1998, ordering petitioner and counsel to appear for a continuation of the hearing of the contempt charges against her.[20] On September 10, 1998, petitioner filed with the Ombudsman a motion for reconsideration of the above order.[21] Her motion was premised on the fact that there was a pending case with the Regional Trial Court, Makati City,[22] which would determine whether obeying the orders of the Ombudsman to produce bank documents would not violate any law. The FFIB opposed the motion,[23] and on October 14, 1998, the Ombudsman denied the motion by order the dispositive portion of which reads: Wherefore, respondent Lourdes T. Marquezs motion for reconsideration is hereby DENIED, for lack of merit. Let the hearing of the motion of the Fact Finding Intelligence Bureau (FFIB) to cite her for indirect contempt be intransferrably set to 29 October 1998 at 2:00 oclock p.m. at which date and time she should appear personally to submit her additional evidence. Failure to do so shall be deemed a waiver thereof.[24] Hence, the present petition.[25] The issue is whether petitioner may be cited for indirect contempt for her failure to produce the documents requested by the Ombudsman. And whether the order of the Ombudsman to have an in camera inspection of the questioned account is allowed as an exception to the law on secrecy of bank deposits (R. A. No. 1405). An examination of the secrecy of bank deposits law (R. A. No. 1405) would reveal the following exceptions: 1. Where the depositor consents in writing; 2. Impeachment case; 3. By court order in bribery or dereliction of duty cases against public officials; 4. Deposit is subject of litigation; 5. Sec. 8, R. A. No. 3019, in cases of unexplained wealth as held in the case of PNB vs. Gancayco[26] The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the Ombudsman against Amado Lagdameo, et. al. for violation of R. A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates Authority and AMARI. We rule that before an in camera inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case.

In Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be absolutely confidential except: (1) In an examination made in the course of a special or general examination of a bank that is specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the deposit to establish such fraud or irregularity, (2) In an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank, (3) Upon written permission of the depositor, (4) In cases of impeachment, (5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or (6) In cases where the money deposited or invested is the subject matter of the litigation[27] In the case at bar, there is yet no pending litigation before any court of competent authority. What is existing is an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly, there was no pending case in court which would warrant the opening of the bank account for inspection. Zones of privacy are recognized and protected in our laws. The Civil Code provides that "[e]very person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons" and punishes as actionable torts several acts for meddling and prying into the privacy of another. It also holds a public officer or employee or any private individual liable for damages for any violation of the rights and liberties of another person, and recognizes the privacy of letters and other private communications. The Revised Penal Code makes a crime of the violation of secrets by an officer, the revelation of trade and industrial secrets, and trespass to dwelling. Invasion of privacy is an offense in special laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the Intellectual Property Code.[28] IN VIEW WHEREOF, we GRANT the petition. We order the Ombudsman to cease and desist from requiring Union Bank Manager Lourdes T. Marquez, or anyone in her place to comply with the order dated October 14, 1998, and similar orders. No costs. SO ORDERED.

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,

G.R. No. 189206

Present: CORONA, C.J., Chairperson VELASCO, JR., LEONARDO-DE CASTRO, DEL CASTILLO, and PEREZ, JJ.

-versus-

THE HONORABLE 15TH DIVISION OF THE COURT OF APPEALS and INDUSTRIAL BANK OF KOREA, TONG YANG MERCHANT BANK, HANAREUM BANKING CORP., LAND BANK OF THE PHILIPPINES, WESTMONT BANK and DOMSAT HOLDINGS, INC., Respondents.

Promulgated: June 8, 2011

x -x DECISION PEREZ, J.:

The subject of this petition for certiorari is the Decision1 of the Court of Appeals in CA-G.R. SP No. 82647 allowing the quashal by the Regional Trial Court (RTC) of Makati of a subpoena for the production of bank ledger. This case is incident to Civil Case No. 99-1853, which is the main case for collection of sum of money with damages filed by Industrial Bank of Korea, Tong Yang Merchant Bank, First Merchant Banking Corporation, Land Bank of the Philippines, and Westmont Bank (now United Overseas Bank), collectively known as the Banks against Domsat Holdings, Inc. (Domsat) and the Government Service Insurance System (GSIS). Said case stemmed from a Loan Agreement,2 whereby the Banks agreed to lend United States (U.S.) $11 Million to Domsat for the purpose of financing the lease and/or purchase of a Gorizon Satellite from the International Organization of Space Communications (Intersputnik).3 The controversy originated from a surety agreement by which Domsat obtained a surety bond from GSIS to secure the payment of the loan from the Banks. We quote the terms of the Surety Bond in its entirety.4 Republic of the Philippines GOVERNMENT SERVICE INSURANCE SYSTEM GENERAL INSURANCE FUND GSIS Headquarters, Financial Center Roxas Boulevard, Pasay City G(16) GIF Bond 027461 SURETY BOND KNOW ALL MEN BY THESE PRESENTS: That we, DOMSAT HOLDINGS, INC., represented by its President as PRINCIPAL, and the GOVERNMENT SERVICE INSURANCE SYSTEM, as Administrator of the GENERAL INSURANCE FUND, a corporation duly organized and existing under and by virtue of the laws of the Philippines, with principal office in the City of Pasay, Metro Manila, Philippines as SURETY, are held and firmly bound unto the OBLIGEES: LAND BANK OF THE PHILIPPINES, 7th Floor, Land Bank Bldg. IV. 313 Sen. Gil J. Puyat Avenue, Makati City; WESTMONT BANK, 411 Quintin Paredes St., Binondo, Manila: TONG YANG MERCHANT BANK, 185, 2-Ka, Ulchi-ro, Chungk-ku, Seoul, Korea; INDUSTRIAL BANK OF KOREA, 50, 2-Ga, Ulchi-ro, Chung-gu, Seoul, Korea; and FIRST MERCHANT BANKING CORPORATION, 199-40, 2-Ga, Euliji-ro, Jung-gu, Seoul, Korea, in the sum, of US $ ELEVEN MILLION DOLLARS ($11,000,000.00) for the payment of which sum, well and truly to be made, we bind ourselves, our heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents. THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS: WHEREAS, the above bounden PRINCIPAL, on the 12th day of December, 1996 entered into a contract agreement with the aforementioned OBLIGEES to fully and faithfully Guarantee the repayment of the principal and interest on the loan granted the PRINCIPAL to be used for the financing of the two (2) year lease of a Russian Satellite from INTERSPUTNIK, in accordance with the terms and conditions of the credit package entered into by the parties. This bond shall remain valid and effective until the loan including interest has been fully paid and liquidated, a copy of which contract/agreement is hereto attached and made part hereof; WHEREAS, the aforementioned OBLIGEES require said PRINCIPAL to give a good and sufficient bond in the above stated sum to secure the full and faithful performance on his part of said contract/agreement. NOW, THEREFORE, if the PRINCIPAL shall well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements stipulated in said contract/agreements, then this obligation shall be null and void; otherwise, it shall remain in full force and effect. WITNESS OUR HANDS AND SEALS this 13th day of December 1996 at Pasay City, Philippines. DOMSAT HOLDINGS, INC GOVERNMENT SERVICE INSURANCE Principal SYSTEM General Insurance Fund By: By: CAPT. RODRIGO A. SILVERIO AMALIO A. MALLARI President Senior Vice-President General Insurance Group When Domsat failed to pay the loan, GSIS refused to comply with its obligation reasoning that Domsat did not use the loan proceeds for the payment of rental for the satellite. GSIS alleged that Domsat, with

Westmont Bank as the conduit, transferred the U.S. $11 Million loan proceeds from the Industrial Bank of Korea to Citibank New York account of Westmont Bank and from there to the Binondo Branch of Westmont Bank.5 The Banks filed a complaint before the RTC of Makati against Domsat and GSIS. In the course of the hearing, GSIS requested for the issuance of a subpoena duces tecum to the custodian of records of Westmont Bank to produce the following documents: 1. Ledger covering the account of DOMSAT Holdings, Inc. with Westmont Bank (now United Overseas Bank), any and all documents, records, files, books, deeds, papers, notes and other data and materials relating to the account or transactions of DOMSAT Holdings, Inc. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002, in his/her direct or indirect possession, custody or control (whether actual or constructive), whether in his/her capacity as Custodian of Records or otherwise; 2. All applications for cashiers/ managers checks and bank transfers funded by the account of DOMSAT Holdings, Inc. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002, and all other data and materials covering said applications, in his/her direct or indirect possession, custody or control (whether actual or constructive), whether in his/her capacity as Custodian of Records or otherwise; 3. Ledger covering the account of Philippine Agila Satellite, Inc. with Westmont Bank (now United Overseas Bank), any and all documents, records, files, books, deeds, papers, notes and other data and materials relating to the account or transactions of Philippine Agila Satellite, Inc. with or through the Westmont bank (now United Overseas Bank) for the period January 1997 to December 2002, in his/her direct or indirect possession, custody or control (whether actual or constructive), whether in his/her capacity as Custodian of Records or otherwise; 4. All applications for cashiers/managers checks funded by the account of Philippine Agila Satellite, Inc. with or through the Westmont Bank (now United Overseas Bank) for the period January 1997 to December 2002, and all other data and materials covering said applications, in his/her direct or indirect possession, custody or control (whether actual or constructive), whether in his/her capacity as Custodian of Records or otherwise.6 The RTC issued a subpoena decus tecum on 21 November 2002.7 A motion to quash was filed by the banks on three grounds: 1) the subpoena is unreasonable, oppressive and does not establish the relevance of the documents sought; 2) request for the documents will violate the Law on Secrecy of Bank Deposits; and 3) GSIS failed to advance the reasonable cost of production of the documents.8 Domsat also joined the banks motion to quash through its Manifestation/Comment.9 On 9 April 2003, the RTC issued an Order denying the motion to quash for lack of merit. We quote the pertinent portion of the Order, thus: After a careful consideration of the arguments of the parties, the Court did not find merit in the motion. The serious objection appears to be that the subpoena is violative of the Law on Secrecy of Bank Deposit, as amended. The law declares bank deposits to be absolutely confidential except: x x x (6) In cases where the money deposited or invested is the subject matter of the litigation. The case at bench is for the collection of a sum of money from defendants that obtained a loan from the plaintiff. The loan was secured by defendant GSIS which was the surety. It is the contention of defendant GSIS that the proceeds of the loan was deviated to purposes other than to what the loan was extended. The quashal of the subpoena would deny defendant GSIS its right to prove its defenses. WHEREFORE, for lack of merit the motion is DENIED.10 On 26 June 2003, another Order was issued by the RTC denying the motion for reconsideration filed by the banks.11 On 1 September 2003 however, the trial court granted the second motion for reconsiderationfiled by the banks. The previous subpoenas issued were consequently quashed.12 The trial court invoked the ruling in Intengan v. Court of Appeals,13 where it was ruled that foreign currency deposits are absolutely confidential and may be examined only when there is a written permission from the depositor. The motion for reconsideration filed by GSIS was denied on 30 December 2003. Hence, these assailed orders are the subject of the petition for certioraribefore the Court of Appeals. GSIS raised the following arguments in support of its petition: I. Respondent Judge acted with grave abuse of discretion when it favorably considered respondent banks (second) Motion for Reconsideration dated July 9, 2003 despite the fact that it did not contain a notice of hearing and was therefore a mere scrap of paper.

II. Respondent judge capriciously and arbitrarily ignored Section 2 of the Foreign Currency Deposit Act (RA 6426) in ruling in his Orders dated September 1 and December 30, 2003 that the US$11,000,000.00 deposit in the account of respondent Domsat in Westmont Bank is covered by the secrecy of bank deposit. III. Since both respondent banks and respondent Domsat have disclosed during the trial the US$11,000,000.00 deposit, it is no longer secret and confidential, and petitioner GSIS right to inquire into what happened to such deposit can not be suppressed.14 The Court of Appeals addressed these issues in seriatim. The Court of Appeals resorted to a liberal interpretation of the rules to avoid miscarriage of justice when it allowed the filing and acceptance of the second motion for reconsideration. The appellate court also underscored the fact that GSIS did not raise the defect of lack of notice in its opposition to the second motion for reconsideration. The appellate court held that failure to timely object to the admission of a defective motion is considered a waiver of its right to do so. The Court of Appeals declared that Domsats deposit in Westmont Bank is covered by Republic Act No. 6426 or the Bank Secrecy Law. We quote the pertinent portion of the Decision: It is our considered opinion that Domsats deposit of $11,000,000.00 in Westmont Bank is covered by the Bank Secrecy Law, as such it cannot be examined, inquired or looked into without the written consent of its owner. The ruling in Van Twest vs. Court of Appeals was rendered during the effectivity of CB Circular No. 960, Series of 1983, under Sec. 102 thereof, transfer to foreign currency deposit account or receipt from another foreign currency deposit account, whether for payment of legitimate obligation or otherwise, are not eligible for deposit under the System. CB Circular No. 960 has since been superseded by CB Circular 1318 and later by CB Circular 1389. Section 102 of Circular 960 has not been re-enacted in the later Circulars. What is applicable now is the decision in Intengan vs. Court of Appeals where the Supreme Court has ruled that the under R.A. 6426 there is only a single exception to the secrecy of foreign currency deposits, that is, disclosure is allowed only upon the written permission of the depositor. Petitioner, therefore, had inappropriately invoked the provisions of Central Bank (CB) Circular Nos. 343 which has already been superseded by more recently issued CB Circulars. CB Circular 343 requires the surrender to the banking system of foreign exchange, including proceeds of foreign borrowings. This requirement, however, can no longer be found in later circulars. In its Reply to respondent banks comment, petitioner appears to have conceded that what is applicable in this case is CB Circular 1389. Obviously, under CB 1389, proceeds of foreign borrowings are no longer required to be surrendered to the banking system. Undaunted, petitioner now argues that paragraph 2, Section 27 of CB Circular 1389 is applicable because Domsats $11,000,000.00 loan from respondent banks was intended to be paid to a foreign supplier Intersputnik and, therefore, should have been paid directly to Intersputnik and not deposited into Westmont Bank. The fact that it was deposited to the local bank Westmont Bank, petitioner claims violates the circular and makes the deposit lose its confidentiality status under R.A. 6426. However, a reading of the entire Section 27 of CB Circular 1389 reveals that the portion quoted by the petitioner refers only to the procedure/conditions of drawdown for service of debts using foreign exchange. The above-said provision relied upon by the petitioner does not in any manner prescribe the conditions before any foreign currency deposit can be entitled to the confidentiality provisions of R.A. 6426.15 Anent the third issue, the Court of Appeals ruled that the testimony of the incumbent president of Westmont Bank is not the written consent contemplated by Republic Act No. 6426. The Court of Appeals however upheld the issuance of subpoena praying for the production of applications for cashiers or managers checks by Domsat through Westmont Bank, as well as a copy of an Agreement and/or Contract and/or Memorandum between Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon Satellite. The appellate court believed that the production of these documents does not involve the examination of Domsats account since it will never be known how much money was deposited into it or withdrawn therefrom and how much remains therein. On 29 February 2008, the Court of Appeals rendered the assailed Decision, the decretal portion of which reads:

WHEREFORE, the petition is partially GRANTED. Accordingly, the assailed Order dated December 30, 2003 is hereby modified in that the quashal of the subpoena for the production of Domsats bank ledger in Westmont Bank is upheld while respondent court is hereby ordered to issue subpoena duces tecum ad testificandum directing the records custodian of Westmont Bank to bring to court the following documents: a) applications for cashiers or managers checks by respondent Domsat through Westmont Bank from January 1997 to December 2002; b) bank transfers by respondent Domsat through Westmont Bank from January 1997 to December 2002; and c) copy of an agreement and/or contract and/or memorandum between respondent Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon satellite. No pronouncement as to costs.16 GSIS filed a motion for reconsideration which the Court of Appeals denied on 19 June 2009. Thus, the instant petition ascribing grave abuse of discretion on the part of the Court of Appeals in ruling that Domsats deposit with Westmont Bank cannot be examined and in finding that the banks second motion for reconsideration in Civil Case No. 99-1853 is procedurally acceptable.17 This Court notes that GSIS filed a petition for certiorari under Rule 65 of the Rules of Court to assail the Decision and Resolution of the Court of Appeals. Petitioner availed of the improper remedy as the appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a special civil action under Rule 65.18 Certiorari under Rule 65 lies only when there is no appeal, nor plain, speedy and adequate remedy in the ordinary course of law. That action is not a substitute for a lost appeal in general; it is not allowed when a party to a case fails to appeal a judgment to the proper forum.19 Where an appeal is available, certiorari will not prosper even if the ground therefor is grave abuse of discretion. Accordingly, when a party adopts an improper remedy, his petition may be dismissed outright.20 Yet, even if this procedural infirmity is discarded for the broader interest of justice, the petition sorely lacks merit. GSIS insists that Domsats deposit with Westmont Bank can be examined and inquired into. It anchored its argument on Republic Act No. 1405 or the Law on Secrecy of Bank Deposits, which allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the litigation. GSIS asserts that the subject matter of the litigation is the U.S. $11 Million obtained by Domsat from the Banks to supposedly finance the lease of a Russian satellite from Intersputnik. Whether or not it should be held liable as a surety for the principal amount of U.S. $11 Million, GSIS contends, is contingent upon whether Domsat indeed utilized the amount to lease a Russian satellite as agreed in the Surety Bond Agreement. Hence, GSIS argues that the whereabouts of the U.S. $11 Million is the subject matter of the case and the disclosure of bank deposits relating to the U.S. $11 Million should be allowed. GSIS also contends that the concerted refusal of Domsat and the banks to divulge the whereabouts of the U.S. $11 Million will greatly prejudice and burden the GSIS pension fund considering that a substantial portion of this fund is earmarked every year to cover the surety bond issued. Lastly, GSIS defends the acceptance by the trial court of the second motion for reconsideration filed by the banks on the grounds that it is pro forma and did not conform to the notice requirements of Section 4, Rule 15 of the Rules of Civil Procedure.21 Domsat denies the allegations of GSIS and reiterates that it did not give a categorical or affirmative written consent or permission to GSIS to examine its bank statements with Westmont Bank. The Banks maintain that Republic Act No. 1405 is not the applicable law in the instant case because the Domsat deposit is a foreign currency deposit, thus covered by Republic Act No. 6426. Under said law, only the consent of the depositor shall serve as the exception for the disclosure of his/her deposit. The Banks counter the arguments of GSIS as a mere rehash of its previous arguments before the Court of Appeals. They justify the issuance of thesubpoena as an interlocutory matter which may be reconsidered anytime and that the pro forma rule has no application to interlocutory orders. It appears that only GSIS appealed the ruling of the Court of Appeals pertaining to the quashal of the subpoena for the production of Domsats bank ledger with Westmont Bank. Since neither Domsat nor the Banks interposed an appeal from the other portions of the decision, particularly for the production of applications for cashiers or managers checks by Domsat through Westmont Bank, as well as a copy of an agreement and/or contract and/or memorandum between Domsat and/or Philippine

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

payees, deposited with China Bank, may not be looked into under the law on secrecy of foreign currency deposits. This Court highlighted the exception to the non-disclosure of foreign currency deposits, i.e., in the case of a written permission of the depositor, and ruled that respondent, as owner of the funds unlawfully taken and which are undisputably now deposited with China Bank, he has the right to inquire into the said deposits. Applying Section 8 of Republic Act No. 6426, absent the written permission from Domsat, Westmont Bank cannot be legally compelled to disclose the bank deposits of Domsat, otherwise, it might expose itself to criminal liability under the same act.27 The basis for the application of subpoena is to prove that the loan intended for Domsat by the Banks and guaranteed by GSIS, was diverted to a purpose other than that stated in the surety bond. The Banks, however, argue that GSIS is in fact liable to them for the proper applications of the loan proceeds and not vice-versa. We are however not prepared to rule on the merits of this case lest we pre-empt the findings of the lower courts on the matter. The third issue raised by GSIS was properly addressed by the appellate court. The appellate court maintained that the judge may, in the exercise of his sound discretion, grant the second motion for reconsideration despite its being pro forma. The appellate court correctly relied on precedents where this Court set aside technicality in favor of substantive justice. Furthermore, the appellate court accurately pointed out that petitioner did not assail the defect of lack of notice in its opposition to the second motion of reconsideration, thus it can be considered a waiver of the defect. WHEREFORE, the petition for certiorari is DISMISSED. The Decision dated 29 February 2008 and 19 June 2009 Resolution of the Court of Appeals are hereby AFFIRMED. SO ORDERED. 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 latters 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 sign and verify an application to inquire into and/or examine the [deposits] or investments of Pantaleon Alvarez, Wilfredo Trinidad, Alfredo Liongson, and Cheng Yong, and their related web of accounts wherever these may be found, as defined under Rule 10.4 of the Revised Implementing Rules and Regulations;" and to authorize the AMLC Secretariat "to conduct an inquiry into subject accounts once the Regional Trial Court grants the application to inquire into

and/or examine the bank accounts" of those four individuals.9 The resolution enumerated the particular bank accounts of Alvarez, Wilfredo Trinidad (Trinidad), Alfredo Liongson (Liongson) and Cheng Yong which were to be the subject of the inquiry.10 The rationale for the said resolution was founded on the cited findings of the CIS that amounts were transferred from a Hong Kong bank account owned by Jetstream Pacific Ltd. Account to bank accounts in the Philippines maintained by Liongson and Cheng Yong.11 The Resolution also noted that "[b]y awarding the contract to PIATCO despite its lack of financial capacity, Pantaleon Alvarez caused undue injury to the government by giving PIATCO unwarranted benefits, advantage, or preference in the discharge of his official administrative functions through manifest partiality, evident bad faith, or gross inexcusable negligence, in violation of Section 3(e) of Republic Act No. 3019."12 Under the authority granted by the Resolution, the AMLC filed an application to inquire into or examine the deposits or investments of Alvarez, Trinidad, Liongson and Cheng Yong before the RTC of Makati, Branch 138, presided by Judge (now Court of Appeals Justice) Sixto Marella, Jr. The application was docketed as AMLC No. 05-005.13 The Makati RTC heard the testimony of the Deputy Director of the AMLC, Richard David C. Funk II, and received the documentary evidence of the AMLC.14 Thereafter, on 4 July 2005, the Makati RTC rendered an Order (Makati RTC bank inquiry order) granting the AMLC the authority to inquire and examine the subject bank accounts of Alvarez, Trinidad, Liongson and Cheng Yong, the trial court being satisfied that there existed "[p]robable cause [to] believe that the deposits in various bank accounts, details of which appear in paragraph 1 of the Application, are related to the offense of violation of Anti-Graft and Corrupt Practices Act now the subject of criminal prosecution before the Sandiganbayan as attested to by the Informations, Exhibits C, D, E, F, and G."15 Pursuant to the Makati RTC bank inquiry order, the CIS 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.17Attached 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 Prosecutors 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 application21 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 AntiMoney 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 Alvarezs motion.

The Republic filed an Omnibus Motion for Reconsideration27 of the 26 January 2006 Manila RTC Order and likewise sought to strike out Alvarezs 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 Republics Motion for Reconsideration, denying Alvarezs 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 Alvarezs 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 AMLCs 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 "theEx 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 AMLCs application were not served with the courts 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 Alvarezs 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 AMLCsex 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 Chengs petition, issued a Temporary Restraining Order48enjoining 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 Chengs 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 until the appeal therefrom was finally resolved and that any enforcement thereof would be unauthorized.54 The present Consolidated Petition55 for certiorari and prohibition under Rule 65 was filed on 2 October 2006, assailing the two Orders of the Manila RTC dated 25 July and 15 August 2006 and the Temporary Restraining Order dated 1 August 2006 of the Court of Appeals. Through an Urgent Manifestation and Motion56 dated 9 October 2006, petitioner informed the Court that on 22 September 2006, the Court of Appeals hearing Lilia Chengs petition had granted a writ of preliminary injunction in her favor.57 Thereafter, petitioner sought as well the nullification of the 22 September 2006 Resolution of the Court of Appeals, thereby constituting the fourth ruling assailed in the instant petition.58 The Court had initially granted a Temporary Restraining Order59 dated 6 October 2006 and later on a Supplemental Temporary Restraining Order60 dated 13 October 2006 in petitioners favor, enjoining the implementation of the assailed rulings of the Manila RTC and the Court of Appeals. However, on respondents motion, the Court, through a Resolution61dated 11 December 2006, suspended the implementation of the restraining orders it had earlier issued. Oral arguments were held on 17 January 2007. The Court consolidated the issues for argument as follows: 1. Did the RTC-Manila, in issuing the Orders dated 25 July 2006 and 15 August 2006 which deferred the implementation of its Order dated 12 January 2006, and the Court of Appeals, in issuing its Resolution dated 1 August 2006, which ordered the status quo in relation to the 1 July 2005 Order of the RTCMakati and the 12 January 2006 Order of the RTC-Manila, both of which authorized the examination of bank accounts under Section 11 of Rep. Act No. 9160 (AMLA), commit grave abuse of discretion? (a) Is an application for an order authorizing inquiry into or examination of bank accounts or investments under Section 11 of the AMLA ex-parte in nature or one which requires notice and hearing? (b) What legal procedures and standards should be observed in the conduct of the proceedings for the issuance of said order? (c) Is such order susceptible to legal challenges and judicial review? 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. Petitioners 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 Chengs 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 petitioners 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 Forces 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 under Section 11. Respondents posit that a bank inquiry order under Section 11 may be obtained only upon the preexistence of a money laundering offense case already filed before the courts.68 The conclusion is based on the phrase "upon order of any competent court in cases of violation of this Act," the word "cases" generally understood as referring to actual cases pending with the courts. We are unconvinced by this proposition, and agree instead with the then Solicitor General who conceded that the use of the phrase "in cases of" was unfortunate, yet submitted that it should be interpreted to mean "in the event there are violations" of the AMLA, and not that there are already cases pending in court concerning such violations.69 If the contrary position is adopted, then the bank inquiry order would be limited in purpose as a tool in aid of litigation of live cases, and wholly inutile as a means for the government to ascertain whether there is sufficient evidence to sustain an intended prosecution of the

account holder for violation of the AMLA. Should 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 circumspect in filing complaints against suspect account holders. After all, under such set-up the preferred strategy would be to allow or even encourage the indiscriminate filing of complaints under the AMLA with the hope or expectation that the evidence of money laundering would somehow surface during the trial. Since the AMLC could not make use of the bank inquiry order to determine whether there is evidentiary basis to prosecute the suspected malefactors, not filing any case at all would not be an alternative. Such unwholesome set-up should not come to pass. Thus Section 11 cannot be interpreted in a way that would emasculate the remedy it has established and encourage the unfounded initiation of complaints for money laundering. Still, even if the bank inquiry order may be availed of without need of a pre-existing case under the AMLA, it does not follow that such order may be availed of ex parte. There are several reasons why the AMLA does not generally sanction ex parteapplications and issuances of the bank inquiry order. IV. 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 2002,72 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 filedex 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 holders 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, petitioners 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 legislatures 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 AMLCs 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 Courts construction of Section 11 of the AMLA is undoubtedly influenced by right to privacy considerations. If sustained, petitioners argument that a bank account may be inspected by the government following an ex parteproceeding 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.87Subsequent 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 2002,95 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 remedy. As earlier stated, the application for such does not entail a full-blown trial. Nevertheless, just because the AMLA establishes additional exceptions to the Bank Secrecy Act it does not mean that the later law has dispensed with the general principle established in the older law that "[a]ll deposits of whatever nature with banks or banking institutions in the Philippines x x x are hereby considered as of an absolutely confidential nature."96Indeed, by force of statute, all bank deposits are absolutely confidential, and that nature is unaltered even by the legislated exceptions referred to above. There is disfavor towards construing these exceptions in such a manner that would authorize unlimited discretion on the part of the government or of any party seeking to enforce those exceptions and inquire into bank deposits. If there are doubts in upholding the absolutely confidential nature of bank deposits against affirming the authority to inquire into such accounts, then such doubts must be resolved in favor of the former. Such a stance would persist unless Congress passes a law reversing the general state policy of preserving the absolutely confidential nature of Philippine bank accounts. The presence of this statutory right to privacy addresses at least one of the arguments raised by petitioner, that Lilia Cheng had no personality to assail the inquiry orders before the Court of Appeals because she was not the subject of said orders. AMLC Resolution No. 75, which served as the basis in the successful application for the Makati inquiry order, expressly adverts to Citibank Account No. 88576248

"owned by Cheng Yong and/or Lilia G. Cheng with Citibank N.A.,"97whereas Lilia Chengs petition before the Court of Appeals is accompanied by a certification from Metrobank that Account Nos. 300852436-0 and 700149801-7, both of which are among the subjects of the Manila inquiry order, are accounts in the name of "Yong Cheng or Lilia Cheng."98 Petitioner does not specifically deny that Lilia Cheng holds rights of ownership over the three said accounts, laying focus instead on the fact that she was not named as a subject of either the Makati or Manila RTC inquiry orders. We are reasonably convinced that Lilia Cheng has sufficiently demonstrated her joint ownership of the three accounts, and such conclusion leads us to acknowledge that she has the standing to assail via certiorari the inquiry orders authorizing the 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 Chengs 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 prior to 2001. Lilia Cheng admits that "actual money launderers could utilize the ex post facto provision of the Constitution as a shield" but that the remedy lay with Congress to amend the law. We can hardly presume that Congress intended to enact a self-defeating law in the first place, and the courts are inhibited from such a construction by the cardinal rule that "a law should be interpreted with a view to upholding rather than destroying it."101 Besides, nowhere in the legislative record cited by Lilia Cheng does it appear that there was an unequivocal intent to exempt from the bank inquiry order all bank accounts opened prior to the passage of the AMLA. There is a cited exchange between Representatives Ronaldo Zamora and Jaime Lopez where the latter confirmed to the former that "deposits are supposed to be exempted from scrutiny or monitoring if they are already in place as of the time the law is enacted."102That statement does indicate 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 legislative record that unqualifiedly supports respondent Lilia Chengs thesis, there is no cause for us to sustain her interpretation of the AMLA, fatal as it is to the anima of that law. IX. We are well aware that Lilia Chengs petition presently pending before the Court of Appeals likewise assails the validity of the subject bank inquiry orders and precisely seeks the annulment of said orders. Our current declarations may indeed have the effect of preempting that0 petition. Still, in order for this Court to rule on the petition at bar which insists on the enforceability of the said bank inquiry orders, it is necessary for us to consider and rule on the same question which after all is a pure question of law. WHEREFORE, the PETITION is DISMISSED. No pronouncement as to costs. SO ORDERED. [G.R. No. 128996. February 15, 2002] CARMEN LL. INTENGAN, ROSARIO LL. NERI, and RITA P. BRAWNER, petitioners, vs. COURT OF APPEALS, DEPARTMENT OF JUSTICE, AZIZ RAJKOTWALA, WILLIAM FERGUSON, JOVEN REYES, and VIC LIM,respondents. DECISION DE LEON, JR., J.: Before us is a petition for review on certiorari, seeking the reversal of the Decision[1] dated July 8, 1996 of the former Fifteenth Division[2] of the Court of Appeals in CA-G.R. SP No. 37577 as well as its Resolution[3] dated April 16, 1997 denying petitioners motion for reconsideration. The appellate court, in its Decision, sustained a resolution of the Department of Justice ordering the withdrawal of informations for violation of Republic Act No. 1405 against private respondents. The facts are: On September 21, 1993, Citibank filed a complaint for violation of section 31,[4] in relation to section 144[5] of the Corporation Code against two (2) of its officers, Dante L. Santos and Marilou Genuino. Attached to the complaint was an affidavit[6] executed by private respondent Vic Lim, a vice-president of Citibank. Pertinent portions of his affidavit are quoted hereunder: 2.1 Sometime this year, the higher management of Citibank, N.A. assigned me to assist in the investigation of certain anomalous/highly irregular activities of the Treasurer of the Global Consumer Group of the bank, namely, Dante L. Santos and the Asst. Vice President in the office of Mr. Dante L. Santos, namely Ms. Marilou (also called Malou) Genuino. Ms. Marilou Genuino apart from being an Assistant Vice President in the office of Mr. Dante L. Santos also performed the duties of an Account Officer. An Account Officer in the office of Mr. Dante L. Santos personally attends to clients of the bank in

the effort to persuade clients to place and keep their monies in the products of Citibank, NA., such as peso and dollar deposits, mortgage backed securities and money placements, among others. xxx xxx xxx 4.1 The investigation in which I was asked to participate was undertaken because the bank had found records/evidence showing that Mr. Dante L. Santos and Ms. Malou Genuino, contrary to their disclosures and the aforementioned bank policy, appeared to have been actively engaged in business endeavors that were in conflict with the business of the bank. It was found that with the use of two (2) companies in which they have personal financial interest, namely Torrance Development Corporation and Global Pacific Corporation, they managed or caused existing bank clients/depositors to divert their money from Citibank, N.A., such as those placed in peso and dollar deposits and money placements, to products offered by other companies that were commanding higher rate of yields. This was done by first transferring bank clients monies to Torrance and Global which in turn placed the monies of the bank clients in securities, shares of stock and other certificates of third parties. It also appeared that out of these transactions, Mr. Dante L. Santos and Ms. Marilou Genuino derived substantial financial gains. 5.1 In the course of the investigation, I was able to determine that the bank clients which Mr. Santos and Ms. Genuino helped/caused to divert their deposits/money placements with Citibank, NA. to Torrance and Global (their family corporations) for subsequent investment in securities, shares of stocks and debt papers in other companies were as follows: xxx b) Carmen Intengan xxx d) Rosario Neri xxx i) Rita Brawner All the above persons/parties have long standing accounts with Citibank, N.A. in savings/dollar deposits and/or in trust accounts and/or money placements. As evidence, Lim annexed bank records purporting to establish the deception practiced by Santos and Genuino. Some of the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P. Brawner, as follows: a) Annex A-6[7] - an Application for Money Transfer in the amount of US $140,000.00, executed by Intengan in favor of Citibank $ S/A No. 24367796, to be debited from her Account No. 22543341; b) Annex A-7[8] - a Money Transfer Slip in the amount of US $45,996.30, executed by Brawner in favor of Citibank $ S/A No. 24367796, to be debited from her Account No. 22543236; and c) Annex A-9[9] - an Application for Money Transfer in the amount of US $100,000.00, executed by Neri in favor of Citibank $ S/A No. 24367796, to be debited from her Account No. 24501018. In turn, private respondent Joven Reyes, vice-president/business manager of the Global Consumer Banking Group of Citibank, admits to having authorized Lim to state the names of the clients involved and to attach the pertinent bank records, including those of petitioners.[10] He states that private respondents Aziz Rajkotwala and William Ferguson, Citibank, N.A. Global Consumer Banking Country Business Manager and Country Corporate Officer, respectively, had no hand in the disclosure, and that he did so upon the advice of counsel. In his memorandum, the Solicitor General described the scheme as having been conducted in this manner: First step: Santos and/or Genuino would tell the bank client that they knew of financial products of other companies that were yielding higher rates of interests in which the bank client can place his money. Acting on this information, the bank client would then authorize the transfer of his funds from his Citibank account to the Citibank account of either Torrance or Global. The transfer of the Citibank clients deposits was done through the accomplishment of either an Application For Managers Checks or a Term Investment Application in favor of Global or Torrance that was prepared/filed by Genuino herself. Upon approval of the Application for Managers Checks or Term Investment Application, the funds of the bank client covered thereof were then deposited in the Citibank accounts of Torrance and/or Global. Second step: Once the said fund transfers had been effected, Global and/or Torrance would then issue its/ their checks drawn against its/their Citibank accounts in favor of the other companies whose financial products, such as securities, shares of stocks and other certificates, were offering higher yields.

Third step: On maturity date(s) of the placements made by Torrance and/or Global in the other companies, using the monies of the Citibank client, the other companies would then. return the placements to Global and/or Torrance with the corresponding interests earned. Fourth step: Upon receipt by Global and/or Torrance of the remittances from the other companies, Global and/or Torrance would then issue its/their own checks drawn against their Citibank accounts in favor of Santos and Genuino. The amounts covered by the checks represent the shares of Santos and Genuino in the margins Global and/or Torrance had realized out of the placements [using the diverted monies of the Citibank clients] made with the other companies. Fifth step: At the same time, Global and/or Torrance would also issue its/their check(s) drawn against its/their Citibank accounts in favor of the bank client. The check(s) cover the principal amount (or parts thereof) which the Citibank client had previously transferred, with the help of Santos and/or Genuino, from his Citibank account to the Citibank account(s) of Global and/or Torrance for placement in the other companies, plus the interests or earnings his placements in other companies had made less the spreads made by Global, Torrance, Santos and Genuino. The complaints which were docketed as I.S. Nos. 93-9969, 93-10058 and 94-1215 were subsequently amended to include a charge of estafaunder Article 315, paragraph 1(b)[11] of the Revised Penal Code. As an incident to the foregoing, petitioners filed respective motions for the exclusion and physical withdrawal of their bank records that were attached to Lims affidavit. In due time, Lim and Reyes filed their respective counter-affidavits.[12] In separate Memoranda dated March 8, 1994 and March 15, 1994 2nd Assistant Provincial Prosecutor Hermino T. Ubana, Sr. recommended the dismissal of petitioners complaints. The recommendation was overruled by Provincial Prosecutor Mauro M. Castro who, in a Resolution dated August 18, 1994,[13] directed the filing of informations against private respondents for alleged violation of Republic Act No. 1405, otherwise known as the Bank Secrecy Law. Private respondents counsel then filed an appeal before the Department of Justice (DOJ). On November 17, 1994, then DOJ Secretary Franklin M. Drilon issued a Resolution[14] ordering, inter alia, the withdrawal of the aforesaid informations against private respondents. Petitioners motion for reconsideration[15] was denied by DOJ Acting Secretary Demetrio G. Demetria in a Resolution dated March 6, 1995.[16] Initially, petitioners sought the reversal of the DOJ resolutions via a petition for certiorari and mandamus filed with this Court, docketed as G.R. No. 119999-120001. However, the former First Division of this Court, in a Resolution dated June 5, 1995,[17] referred the matter to the Court of the Appeals, on the basis of the latter tribunals concurrent jurisdiction to issue the extraordinary writs therein prayed for. The petition was docketed as CA-G.R. SP No. 37577 in the Court of Appeals. On July 8, 1996, the Court of Appeals rendered judgment dismissing the petition in CA-G.R. SP No. 37577 and declared therein, as follows: Clearly, the disclosure of petitioners deposits was necessary to establish the allegation that Santos and Genuino had violated Section 31 of the Corporation Code in acquiring any interest adverse to the corporation in respect of any matter which has been reposed in him in confidence. To substantiate the alleged scheme ofSantos and Genuino, private respondents had to present the records of the monies which were manipulated by the two officers which included the bank records of herein petitioners. Although petitioners were not the parties involved in IS. No. 93-8469, their accounts were relevant to the complete prosecution of the case against Santos and Genuino and the respondent DOJ properly ruled that the disclosure of the same falls under the last exception of R.A. No. 1405. That ruling is consistent with the principle laid down in the case of Mellon Bank, N.A. vs. Magsino (190 SCRA 633) where the Supreme Court allowed the testimonies on the bank deposits of someone not a party to the case as it found that said bank deposits were material or relevant to the allegations in the complaint. Significantly, therefore, as long as the bank deposits are material to the case, although not necessarily the direct subject matter thereof, a disclosure of the same is proper and falls within the scope of the exceptions provided for by R.A. No. 1405. xxx xxx xxx Moreover, the language of the law itself is clear and cannot be subject to different interpretations. A reading of the provision itself would readily reveal that the exception or in cases where the money

deposited or invested is the subject matter of the litigation is not qualified by the phrase upon order of competent Court which refers only to cases of bribery or dereliction of duty of public officials. Petitioners motion for reconsideration was similarly denied in a Resolution dated April 16, 1997. Appeal was made in due time to this Court. The instant petition was actually denied by the former Third Division of this Court in a Resolution[18] dated July 16, 1997, on the ground that petitioners had failed to show that a reversible error had been committed. On motion, however, the petition was reinstated[19] and eventually given due course.[20] In assailing the appellate courts findings, petitioners assert that the disclosure of their bank records was unwarranted and illegal for the following reasons: I. IN BLATANT VIOLATION OF R.A. NO. 1405, PRIVATE RESPONDENTS ILLEGALLY MADE DISCLOSURES OF PETITIONERS CONFIDENTIAL BANK DEPOSITS FOR THEIR SELFISH ENDS IN PROSECUTING THEIR COMPLAINT IN IS. NO. 93-8469 THAT DID NOT INVOLVE PETITIONERS. II. PRIVATE RESPONDENTS DISCLOSURES DO NOT FALL UNDER THE FOURTH EXCEPTION OF R.A. NO. 1405 (i.e., in cases where the money deposited or invested is the subject matter of the litigation), NOR UNDER ANY OTHER EXCEPTION: (1) PETITIONERS DEPOSITS ARE NOT INVOLVED IN ANY LITIGATION BETWEEN PETITIONERS AND RESPONDENTS. THERE IS NO LITIGATION BETWEEN THE PARTIES, MUCH LESS ONE INVOLVING PETITIONERS DEPOSITS AS THE SUBJECT MATTER THEREOF. (2) EVEN ASSUMING ARGUENDO THAT THERE IS A LITIGATION INVOLVING PETITIONERS DEPOSITS AS THE SUBJECT MATTER THEREOF, PRIVATE RESPONDENTS DISCLOSURES OF PETITIONERS DEPOSITS ARE NEVERTHELESS ILLEGAL FOR WANT OF THE REQUISITE COURT ORDER, IN VIOLATION OF R.A. NO. 1405. III. THEREFORE, PETITIONERS ARE ENTITLED TO PROSECUTE PRIVATE RESPONDENTS FOR VIOLATIONS OF R.A. NO. 1405 FOR HAVING ILLEGALLY DISCLOSED PETITIONERS CONFIDENTIAL BANK DEPOSITS AND RECORDS IN IS. NO. 93-8469. Apart from the reversal of the decision and resolution of the appellate court as well as the resolutions of the Department of Justice, petitioners pray that the latter agency be directed to issue a resolution ordering the Provincial Prosecutor of Rizal to file the corresponding informations for violation of Republic Act No. 1405 against private respondents. The petition is not meritorious. Actually, this case should have been studied more carefully by all concerned. The finest legal minds in the country - from the parties respective counsel, the Provincial Prosecutor, the Department of Justice, the Solicitor General, and the Court of Appeals - all appear to have overlooked asingle fact which dictates the outcome of the entire controversy. A circumspect review of the record shows us the reason. The accounts in question are U.S. dollar deposits; consequently, the applicable law is not Republic Act No. 1405 but Republic Act (RA) No. 6426, known as the Foreign Currency Deposit Act of the Philippines, section 8 of which provides: Sec. 8. Secrecy of Foreign Currency Deposits.- All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.[21] (italics supplied) Thus, under R.A. No. 6426 there is only a single exception to the secrecy of foreign currency deposits, that is, disclosure is allowed only upon the written permission of the depositor. Incidentally, the acts of private respondents complained of happened before the enactment on September 29, 2001 of R.A. No. 9160 otherwise known as the Anti-Money Laundering Act of 2001.

A case for violation of Republic Act No. 6426 should have been the proper case brought against private respondents. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners dollar deposits without the latters written permission. It does not matter if that such disclosure was necessary to establish Citibanks case against Dante L. Santos and Marilou Genuino. Lims act of disclosing details of petitioners bank records regarding their foreign currency deposits, with the authority of Reyes, would appear to belong to that species of criminal acts punishable by special laws, called malum prohibitum. In this regard, it has been held that: While it is true that, as a rule and on principles of abstract justice, men are not and should not be held criminally responsible for acts committed by them without guilty knowledge and criminal or at least evil intent xxx, the courts have always recognized the power of the legislature, on grounds of public policy and compelled by necessity, the great master of things, to forbid in a limited class of cases the doing of certain acts, and to make their commission criminal without regard to the intent of the doer. xxx In such cases no judicial authority has the power to require, in the enforcement of the law, such knowledge or motive to be shown. As was said in the case of State vs. McBrayer xxx: It is a mistaken notion that positive, willful intent, as distinguished from a mere intent, to violate the criminal law, is an essential ingredient in every criminal offense, and that where there is the absence of such intent there is no offense; this is especially so as to statutory offenses. When the statute plainly forbids an act to be done, and it is done by some person, the law implies conclusively the guilty intent, although the offender was honestly mistaken as to the meaning of the law he violates. When the language is plain and positive, and the offense is not made to depend upon the positive, willful intent and purpose, nothing is left to interpretation.[22] Ordinarily, the dismissal of the instant petition would have been without prejudice to the filing of the proper charges against private respondents. The matter would have ended here were it not for the intervention of time, specifically the lapse thereof. So as not to unduly prolong the settlement of the case, we are constrained to rule on a material issue even though it was not raised by the parties. We refer to the issue of prescription. Republic Act No. 6426 being a special law, the provisions of Act No. 3326,[23] as amended by Act No. 3763, are applicable: SECTION 1. Violations penalized by special acts shall, unless otherwise provided in such acts, prescribe in accordance with the following rules: (a) after a year for offences punished only by a fine or by imprisonment for not more than one month, or both: (b) after four years for those punished by imprisonment for more than one month, but less than two years; (c) after eight years for those punished by imprisonment for two years or more, but less than six years; and (d) after twelve years for any other offence punished by imprisonment for six years or more, except the crime of treason, which shall prescribe after twenty years: Provided, however, That all offences against any law or part of law administered by the Bureau of Internal Revenue shall prescribe after five years. Violations penalized by municipal ordinances shall prescribe after two months. Violations of the regulations or conditions of certificates of public convenience issued by the Public Service Commission shall prescribe after two months. SEC. 2. Prescription shall begin to run from the day of the commission of the violation of the law, and if the same be not known at the time, from the discovery thereof and the institution of judicial proceedings for its investigation and punishment. The prescription shall be interrupted when proceedings are instituted against the guilty person, and shall begin to run again if the proceedings are dismissed for reasons not constituting jeopardy. A violation of Republic Act No. 6426 shall subject the offender to imprisonment of not less than one year nor more than five years, or by a fine of not less than five thousand pesos nor more than twenty-five thousand pesos, or both.[24] Applying Act No. 3326, the offense prescribes in eight years.[25] Per available records, private respondents may no longer be haled before the courts for violation of Republic Act No. 6426. Private respondent Vic Lim made the disclosure in September of 1993 in his affidavit submitted before the Provincial Fiscal.[26] In her complaint-affidavit,[27] Intengan stated that she learned of the revelation of the details of her foreign currency bank account on October 14, 1993. On the other hand, Neri asserts that she discovered the disclosure on October 24, 1993.[28] As to Brawner, the material date is January 5, 1994.[29] Based on any of these dates, prescription has set in.[30]

The filing of the complaint or information in the case at bar for alleged violation of Republic Act No. 1405 did not have the effect of tolling the prescriptive period. For it is the filing of the complaint or information corresponding to the correct offense which produces that effect.[31] It may well be argued that the foregoing disquisition would leave petitioners with no remedy in law. We point out, however, that the confidentiality of foreign currency deposits mandated by Republic Act No. 6426, as amended by Presidential Decree No. 1246, came into effect as far back as 1977.Hence, ignorance thereof cannot be pretended. On one hand, the existence of laws is a matter of mandatory judicial notice;[32] on the other, ignorantia legis non excusat.[33] Even during the pendency of this appeal, nothing prevented the petitioners from filing a complaint charging the correct offense against private respondents. This was not done, as everyone involved was content to submit the case on the basis of an alleged violation of Republic Act No. 1405 (Bank Secrecy Law), however, incorrectly invoked.[34] WHEREFORE, the petition is hereby DENIED. No pronouncement as to costs. SO ORDERED.

G.R. No. 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 Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform the court whether or not the defendant B & B Forest Development Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold the same intact and not allow any withdrawal until further order. It will be noted from the discussion of the conference committee report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Act 1405, that it was not the intention of the lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. Thus: Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the Committee on Ways and Means to clarify this further. Suppose an individual has a tax case. He is being held liable by the Bureau of Internal Revenue for, say, P1,000.00 worth of tax liability, and because of this the deposit of this individual is attached by the Bureau of Internal Revenue. Mr. RAMOS. The attachment will only apply after the court has pronounced sentence declaring the liability of such person. But where the primary aim is to determine whether he has a bank deposit in order to bring about a proper assessment by the Bureau of Internal Revenue, such inquiry is not authorized by this proposed law. Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment or garnishment of money deposited is allowed. Let us assume, for instance, that there is a preliminary attachment which is for garnishment or for holding liable all moneys deposited belonging to a certain individual, but such attachment or garnishment will bring out into the open the value of such deposit. Is that prohibited by this amendment or by this law? Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the inquiry is made only for the purpose of satisfying a tax liability already declared for the protection of the right in favor of the government; but when the object is merely to inquire whether he has a deposit or not for purposes of taxation, then this is fully covered by the law. Mr. MARCOS. And it protects the depositor, does it not? Mr. RAMOS. Yes, it protects the depositor. Mr. MARCOS. The law prohibits a mere investigation into the existence and the amount of the deposit. 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. L-34548 November 29, 1988 RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. THE HONORABLE PACIFICO P. DE CASTRO and PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION,respondents Meer, Meer & Meer for petitioner. The Solicitor General for respondents. CORTES, J.: The crux of the instant controversy dwells on the liability of a bank for releasing its depositor's funds upon orders of the court, pursuant to a writ of garnishment. If in compliance with the court order, the bank delivered the garnished amount to the sheriff, who in turn delivered it to the judgment creditor, but subsequently, the order of the court directing payment was set aside by the same judge, should the bank be held solidarily liable with the judgment creditor to its depositor for reimbursement of the garnished funds? The Court does not think so. In Civil Case No. Q-12785 of the Court of First Instance of Rizal, Quezon City Branch IX entitled "Badoc Planters, Inc. versus Philippine Virginia Tobacco Administration, et al.," which was an action for recovery of unpaid tobacco deliveries, an Order (Partial Judgment) was issued on January 15, 1970 by the Hon. Lourdes P. San Diego, then Presiding Judge, ordering the defendants therein to pay jointly and severally, the plaintiff Badoc Planters, Inc. (hereinafter referred to as "BADOC") within 48 hours the aggregate amount of P206,916.76, with legal interests thereon. On January 26,1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of Execution of the said Partial Judgment which was granted on the same day by the herein respondent judge who acted in place of the Hon. Judge San Diego who had just been elevated as a Justice of the Court of Appeals. Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of Execution addressed to Special Sheriff Faustino Rigor, who then issued a Notice of Garnishment addressed to the General Manager and/or Cashier of Rizal Commercial Banking Corporation (hereinafter referred to as RCBC), the petitioner in this case, requesting a reply within five (5) days to said garnishment as to any property which the Philippine Virginia Tobacco Administration (hereinafter referred to as "PVTA") might have in the possession or control of petitioner or of any debts owing by the petitioner to said defendant. Upon receipt of such Notice, RCBC notified PVTA thereof to enable the PVTA to take the necessary steps for the protection of its own interest [Record on Appeal, p. 36]

Upon an Urgent Ex-Parte Motion dated January 27, 1970 filed by BADOC, the respondent Judge issued an Order granting the Ex-Parte Motion and directing the herein petitioner "to deliver in check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor in turn is ordered to cash the check and deliver the amount to the plaintiff's representative and/or counsel on record." [Record on Appeal, p. 20; Rollo, p. 5.] In compliance with said Order, petitioner delivered to Sheriff Rigor a certified check in the sum of P 206,916.76. Respondent PVTA filed a Motion for Reconsideration dated February 26,1970 which was granted in an Order dated April 6,1970, setting aside the Orders of Execution and of Payment and the Writ of Execution and ordering petitioner and BADOC "to restore, jointly and severally, the account of PVTA with the said bank in the same condition and state it was before the issuance of the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with interests at the legal rate from January 27, 1970 until fully paid to the account of the PVTA This is without prejudice to the right of plaintiff to move for the execution of the partial judgment pending appeal in case the motion for reconsideration is denied and appeal is taken from the said partial judgment." [Record on Appeal, p. 58] The Motion for Reconsideration of the said Order of April 6, 1970 filed by herein petitioner was denied in the Order of respondent judge dated June 10, 1970 and on June 19, 1970, which was within the period for perfecting an appeal, the herein petitioner filed a Notice of Appeal to the Court of Appeals from the said Orders. This case was then certified by the Court of Appeals to this Honorable Court, involving as it does purely questions of law. The petitioner raises two principal queries in the instant case: 1) Whether or not PVTA funds are public funds not subject to garnishment; and 2) Whether or not the respondent Judge correctly ordered the herein petitioner to reimburse the amount paid to the Special Sheriff by virtue of the execution issued pursuant to the Order/Partial Judgment dated January 15, 1970. The record reveals that on February 2, 1970, private respondent PVTA filed a Motion for Reconsideration of the Order/ Partial Judgment of January 15, 1970. This was granted and the aforementioned Partial Judgment was set aside. The case was set for hearings on November 4, 9 and 11, 1970 [Rollo, pp. 205207.] However, in view of the failure of plaintiff BADOC to appear on the said dates, the lower court ordered the dismissal of the case against PVTA for failure to prosecute [Rollo, p. 208.] It must be noted that the Order of respondent Judge dated April 6, 1970 directing the plaintiff to reimburse PVTA t e amount of P206,916.76 with interests became final as to said plaintiff who failed to even file a motion for reconsideration, much less to appeal from the said Order. Consequently, the order to restore the account of PVTA with RCBC in the same condition and state it was before the issuance of the questioned orders must be upheld as to the plaintiff, BADOC. However, the questioned Order of April 6, 1970 must be set aside insofar as it ordered the petitioner RCBC, jointly and severally with BADOC, to reimburse PVTA. The petitioner merely obeyed a mandatory directive from the respondent Judge dated January 27, 1970, ordering petitioner 94 "to deliver in check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor is in turn ordered to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record." [Record on Appeal, p. 20.] PVTA however claims that the manner in which the bank complied with the Sheriffs Notice of Garnishment indicated breach of trust and dereliction of duty on the part of the bank as custodian of government funds. It insistently urges that the premature delivery of the garnished amount by RCBC to the special sheriff even in the absence of a demand to deliver made by the latter, before the expiration of the five-day period given to reply to the Notice of Garnishment, without any reply having been given thereto nor any prior authorization from its depositor, PVTA and even if the court's order of January 27, 1970 did not require the bank to immediately deliver the garnished amount constitutes such lack of prudence as to make it answerable jointly and severally with the plaintiff for the wrongful release of the money from the deposit of the PVTA. The respondent Judge in his controverted Order sustained such contention and blamed RCBC for the supposed "hasty release of the amount from the deposit of the PVTA without giving PVTA a chance to take proper steps by informing it of the action being taken against its deposit, thereby observing with prudence the five-day period given to it by the sheriff." [Rollo, p. 81.] Such allegations must be rejected for lack of merit. In the first place, it should be pointed out that RCBC did not deliver the amount on the strength solely of a Notice of Garnishment; rather, the release of the funds was made pursuant to the aforesaid Order of January 27, 1970. While the Notice of Garnishment

dated January 26, 1970 contained no demand of payment as it was a mere request for petitioner to withold any funds of the PVTA then in its possession, the Order of January 27, 1970 categorically required the delivery in check of the amount garnished to the special sheriff, Faustino Rigor. In the second place, the bank had already filed a reply to the Notice of Garnishment stating that it had in its custody funds belonging to the PVTA, which, in fact was the basis of the plaintiff in filing a motion to secure delivery of the garnished amount to the sheriff. [See Rollo, p. 93.] Lastly, the bank, upon the receipt of the Notice of Garnishment, duly informed PVTA thereof to enable the latter to take the necessary steps for the protection of its own interest [Record on Appeal, p. 36] It is important to stress, at this juncture, that there was nothing irregular in the delivery of the funds of PVTA by check to the sheriff, whose custody is equivalent to the custody of the court, he being a court officer. The order of the court dated January 27, 1970 was composed of two parts, requiring: 1) RCBC to deliver in check the amount garnished to the designated sheriff and 2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs representative and/or counsel on record. It must be noted that in delivering the garnished amount in check to the sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a check does not produce the effect of payment until it has been cashed. [Article 1249, Civil Code.] Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can be attributed to RCBC in delivering its depositor's funds pursuant to a court order which was merely in the exercise of its power of control over such funds. ... The garnishment of property to satisfy a writ of execution operates as an attachment and fastens upon the property a lien by which the property is brought under the jurisdiction of the court issuing the writ. It is brought into custodia legis, under the sole control of such court [De Leon v. Salvador, G.R. Nos. L30871 and L-31603, December 28,1970, 36 SCRA 567, 574.] The respondent judge however, censured the petitioner for having released the funds "simply on the strength of the Order of the court which. far from ordering an immediate release of the amount involved, merely serves as a standing authority to make the release at the proper time as prescribed by the rules." [Rollo, p. 81.] This argument deserves no serious consideration. As stated earlier, the order directing the bank to deliver the amount to the sheriff was distinct and separate from the order directing the sheriff to encash the said check. The bank had no choice but to comply with the order demanding delivery of the garnished amount in check. The very tenor of the order called for immediate compliance therewith. On the other hand, the bank cannot be held liable for the subsequent encashment of the check as this was upon order of the court in the exercise of its power of control over the funds placed in custodia legis by virtue of the garnishment. In a recent decision [Engineering Construction Inc., v. National Power Corporation, G.R. No. L-34589, June 29, 1988] penned by the now Chief Justice Marcelo Fernan, this Court absolved a garnishee from any liability for prompt compliance with its order for the delivery of the garnished funds. The rationale behind such ruling deserves emphasis in the present case: But while partial restitution is warranted in favor of NPC, we find that the Appellate Court erred in not absolving MERALCO, the garnishee, from its obligations to NPC with respect to the payment of ECI of P 1,114,543.23, thus in effect subjecting MERALCO to double liability. MERALCO should not have been faulted for its prompt obedience to a writ of garnishment. Unless there are compelling reasons such as: a defect on the face of the writ or actual knowledge on the part of the garnishee of lack of entitlement on the part of the garnisher, it is not incumbent upon the garnishee to inquire or to judge for itself whether or not the order for the advance execution of a judgment is valid. Section 8, Rule 57 of the Rules of Court provides: Effect of attachment of debts and credits.All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued, or owing any debts to the same, all the time of service upon them of a copy of the order of attachment and notice as provided in the last preceding section, shall be liable to the applicant for the amount of such credits, debts or other property, until the attachment be discharged, or any judgment recovered by

him be satisfied, unless such property be delivered or transferred, or such debts be paid, to the clerk, sheriff or other proper officer of the court issuing the attachment. Garnishment is considered as a specie of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation. Under the above-cited rule, the garnishee [the third person] is obliged to deliver the credits, etc. to the proper officer issuing the writ and "the law exempts from liability the person having in his possession or under his control any credits or other personal property belonging to the defendant, ..., if such property be delivered or transferred, ..., to the clerk, sheriff, or other officer of the court in which the action is pending. [3 Moran, Comments on the Rules of Court 34 (1970 ed.)] Applying the foregoing to the case at bar, MERALCO, as garnishee, after having been judicially compelled to pay the amount of the judgment represented by funds in its possession belonging to the judgment debtor or NPC, should be released from all responsibilities over such amount after delivery thereof to the sheriff. The reason for the rule is self-evident. To expose garnishees to risks for obeying court orders and processes would only undermine the administration of justice. [Emphasis supplied.] The aforequoted ruling thus bolsters RCBC's stand that its immediate compliance with the lower court's order should not have been met with the harsh penalty of joint and several liability. Nor can its liability to reimburse PVTA of the amount delivered in check be premised upon the subsequent declaration of nullity of the order of delivery. As correctly pointed out by the petitioner: xxx xxx xxx That the respondent Judge, after his Order was enforced, saw fit to recall said Order and decree its nullity, should not prejudice one who dutifully abided by it, the presumption being that judicial orders are valid and issued in the regular performance of the duties of the Court" [Section 5(m) Rule 131, Revised Rules of Court]. This should operate with greater force in relation to the herein petitioner which, not being a party in the case, was just called upon to perform an act in accordance with a judicial flat. A contrary view will invite disrespect for the majesty of the law and induce reluctance in complying with judicial orders out of fear that said orders might be subsequently invalidated and thereby expose one to suffer some penalty or prejudice for obeying the same. And this is what will happen were the controversial orders to be sustained. We need not underscore the danger of this as a precedent. xxx xxx xxx [ Brief for the Petitioner, Rollo, p. 212; Emphasis supplied.] From the foregoing, it may be concluded that the charge of breach of trust and/or dereliction of duty as well as lack of prudence in effecting the immediate payment of the garnished amount is totally unfounded. Upon receipt of the Notice of Garnishment, RCBC duly informed PVTA thereof to enable the latter to take the necessary steps for its protection. However, right on the very next day after its receipt of such notice, RCBC was already served with the Order requiring delivery of the garnished amount. Confronted as it was with a mandatory directive, disobedience to which exposed it to a contempt order, it had no choice but to comply. The respondent Judge nevertheless held that the liability of RCBC for the reimbursement of the garnished amount is predicated on the ruling of the Supreme Court in the case of Commissioner of Public Highways v. Hon. San Diego [G.R. No. L-30098, February 18, 1970, 31 SCRA 616] which he found practically on all fours with the case at bar. The Court disagrees. The said case which reiterated the rule in Republic v. Palacio [G.R. No. L-20322, May 29, 1968, 23 SCRA 899] that government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgment is definitely distinguishable from the case at bar. In the Commissioner of Public Highways case [supra], the bank which precipitately allowed the garnishment and delivery of the funds failed to inform its depositor thereof, charged as it was with knowledge of the nullity of the writ of execution and notice of garnishment against government funds. In the aforementioned case, the funds involved belonged to the Bureau of Public Highways, which being an arm of the executive branch of the government, has no personality of its own separate from the National Government. The funds involved were government funds covered by the rule on exemption from execution. This brings us to the first issue raised by the petitioner: Are the PVTA funds public funds exempt from garnishment? The Court holds that they are not.

Republic Act No. 2265 created the PVTA as an ordinary corporation with all the attributes of a corporate entity subject to the provisions of the Corporation Law. Hence, it possesses the power "to sue and be sued" and "to acquire and hold such assets and incur such liabilities resulting directly from operations authorized by the provisions of this Act or as essential to the proper conduct of such operations." [Section 3, Republic Act No. 2265.] Among the specific powers vested in the PVTA are: 1) to buy Virginia tobacco grown in the Philippines for resale to local bona fide tobacco manufacturers and leaf tobacco dealers [Section 4(b), R.A. No. 2265]; 2) to contracts of any kind as may be necessary or incidental to the attainment of its purpose with any person, firm or corporation, with the Government of the Philippines or with any foreign government, subject to existing laws [Section 4(h), R.A. No. 22651; and 3) generally, to exercise all the powers of a corporation under the Corporation Law, insofar as they are not inconsistent with the provisions of this Act [Section 4(k), R.A. No. 2265.] From the foregoing, it is clear that PVTA has been endowed with a personality distinct and separate from the government which owns and controls it. Accordingly, this Court has heretofore declared that the funds of the PVTA can be garnished since "funds of public corporation which can sue and be sued were not exempt from garnishment" [Philippine National Bank v. Pabalan, G.R. No. L-33112, June 15, 1978, 83 SCRA 595, 598.] In National Shipyards and Steel Corp. v. CIR [G.R. No. L-17874, August 31, 1964, 8 SCRA 781], this Court held that the allegation to the effect that the funds of the NASSCO are public funds of the government and that as such, the same may not be garnished, attached or levied upon is untenable for, as a government-owned or controlled corporation, it has a personality of its own, distinct and separate from that of the government. This court has likewise ruled that other govemment-owned and controlled corporations like National Coal Company, the National Waterworks and Sewerage Authority (NAWASA), the National Coconut Corporation (NACOCO) the National Rice and Corn Corporation (NARIC) and the Price Stabilization Council (PRISCO) which possess attributes similar to those of the PVTA are clothed with personalities of their own, separate and distinct from that of the government [National Coal Company v. Collector of Internal Revenue, 46 Phil. 583 (1924); Bacani and Matoto v. National Coconut Corporation et al., 100 Phil. 471 (1956); Reotan v. National Rice & Corn Corporation, G.R. No. L-16223, February 27, 1962, 4 SCRA 418.] The rationale in vesting it with a separate personality is not difficult to find. It is well-settled that when the government enters into commercial business, it abandons its sovereign capacity and is to be treated like any other corporation [Manila Hotel Employees' Association v. Manila Hotel Co. and CIR, 73 Phil. 734 (1941).] Accordingly, as emphatically expressed by this Court in a 1978 decision, "garnishment was the appropriate remedy for the prevailing party which could proceed against the funds of a corporate entity even if owned or controlled by the government" inasmuch as "by engaging in a particular business thru the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations" [Philippine National Bank v. CIR, G.R No. L-32667, January 31, 1978, 81 SCRA 314, 319.] Furthermore, in the case of PVTA, the law has expressly allowed it funds to answer for various obligations, including the one sought to be enforced by plaintiff BADOC in this case (i.e. for unpaid deliveries of tobacco). Republic Act No. 4155, which discounted the erstwhile support given by the Central Bank to PVTA, established in lieu thereof a "Tobacco Fund" to be collected from the proceeds of fifty per centum of the tariff or taxes of imported leaf tobacco and also fifty per centum of the specific taxes on locally manufactured Virginia type cigarettes. Section 5 of Republic Act No. 4155 provides that this fund shall be expended for the support or payment of: 1. Indebtedness of the Philippine Virginia Tobacco Administration and the former Agricultural Credit and Cooperative Financing Administration to FACOMAS and farmers and planters regarding Virginia tobacco transactions in previous years; 2. Indebtedness of the Philippine Virginia Tobacco Administration and the former Agricultural Credit and Cooperative Financing Administration to the Central Bank in gradual amounts regarding Virginia tobacco transactions in previous years; 3. Continuation of the Philippine Virginia Tobacco Administration support and subsidy operations including the purchase of locally grown and produced Virginia leaf tobacco, at the present

support and subsidy prices, its procurement, redrying, handling, warehousing and disposal thereof, and the redrying plants trading within the purview of their contracts; 4. Operational, office and field expenses, and the establishment of the Tobacco Research and Grading Institute. [Emphasis supplied.] Inasmuch as the Tobacco Fund, a special fund, was by law, earmarked specifically to answer obligations incurred by PVTA in connection with its proprietary and commercial operations authorized under the law, it follows that said funds may be proceeded against by ordinary judicial processes such as execution and garnishment. If such funds cannot be executed upon or garnished pursuant to a judgment sustaining the liability of the PVTA to answer for its obligations, then the purpose of the law in creating the PVTA would be defeated. For it was declared to be a national policy, with respect to the local Virginia tobacco industry, to encourage the production of local Virginia tobacco of the qualities needed and in quantities marketable in both domestic and foreign markets, to establish this industry on an efficient and economic basis, and to create a climate conducive to local cigarette manufacture of the qualities desired by the consuming public, blending imported and native Virginia leaf tobacco to improve the quality of locally manufactured cigarettes [Section 1, Republic Act No. 4155.] The Commissioner of Public Highways case is thus distinguishable from the case at bar. In said case, the Philippine National Bank (PNB) as custodian of funds belonging to the Bureau of Public Highways, an agency of the government, was chargeable with knowledge of the exemption of such government funds from execution and garnishment pursuant to the elementary precept that public funds cannot be disbursed without the appropriation required by law. On the other hand, the same cannot hold true for RCBC as the funds entrusted to its custody, which belong to a public corporation, are in the nature of private funds insofar as their susceptibility to garnishment is concerned. Hence, RCBC cannot be charged with lack of prudence for immediately complying with the order to deliver the garnished amount. Since the funds in its custody are precisely meant for the payment of lawfully-incurred obligations, RCBC cannot rightfully resist a court order to enforce payment of such obligations. That such court order subsequently turned out to have been erroneously issued should not operate to the detriment of one who complied with its clear order. Finally, it is contended that RCBC was bound to inquire into the legality and propriety of the Writ of Execution and Notice of Garnishment issued against the funds of the PVTA deposited with said bank. But the bank was in no position to question the legality of the garnishment since it was not even a party to the case. As correctly pointed out by the petitioner, it had neither the personality nor the interest to assail or controvert the orders of respondent Judge. It had no choice but to obey the same inasmuch as it had no standing at all to impugn the validity of the partial judgment rendered in favor of the plaintiff or of the processes issued in execution of such judgment. RCBC cannot therefore be compelled to make restitution solidarily with the plaintiff BADOC. Plaintiff BADOC alone was responsible for the issuance of the Writ of Execution and Order of Payment and so, the plaintiff alone should bear the consequences of a subsequent annulment of such court orders; hence, only the plaintiff can be ordered to restore the account of the PVTA. WHEREFORE, the petition is hereby granted and the petitioner is ABSOLVED from any liability to respondent PVTA for reimbursement of the funds garnished. The questioned Order of the respondent Judge ordering the petitioner, jointly and severally with BADOC, to restore the account of PVTA are modified accordingly. SO ORDERED.

G.R. No. 138967 April 24, 2007 LEIDEN E. FERNANDEZ, GLORIA B. ADRIANO, EMELDA A. NEGAPATAN, JESUS P. TOMONGHA, ELEONOR A. QUIANOLA, ASTEMA C. CAMPO, FLORIDA VILLACERAN, FLORIDA B. TALLEDO AND BRENDA GADIANO,Petitioners, vs. NICASIO C. ANION, the Labor Arbiter of the Regional Arbitration Branch VII-Cebu City; MARGUERITE LHUILLIER; and ALVAREZ CAETE 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. Anion 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 attorneys 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 P748,411.34. 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 NLRCs denial of their motion for reconsideration, petitioners went to this Court on a petition for certiorari in G.R. 105892.1awphi1.nt 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 the assailed Decision and Resolution are REVERSED and SET ASIDE. The labor arbiters decision is REINSTATED with MODIFICATIONS, such that the award of separation pay is deleted and the service incentive leave pay is computed from December 16, 1975 up to the petitioners actual reinstatement. Full back wages, including the accrued thirteenth month pay, are also awarded to the nine petitioners - - Leiden Fernandez, Brenda Gadiano, Gloria Adriano, Emelia Negapatan, Jesus Tomongha, Eleonor Quianola, Asteria Campo, Florida Villaceran and Florida Talledo - from the date of their illegal dismissal to the time of their actual reinstatement. Petitioners Lim and Canonigo, whom we find to have voluntarily resigned, are not entitled to any benefit. SO ORDERED. On April 28, 1998, the Decision became final and executory and an Entry of Judgment was made thereon in the Book of Entries of Judgment. What transpired next lies at the core of the instant petition for contempt. On April 8, 1999, herein public respondent Labor Arbiter Nicasio C. Anion, by way enforcing this Courts Decision in G.R. No. 105892, issued a writ of execution4 commanding the Deputy Sheriff to: x x x REINSTATE the complainants [petitioners] at the respondent Agencia Cebuana and to proceed to the premises of the respondent located at Calderon St., Cebu City or wherever the same could be found and collect from the respondent the sum of P3,505,092.33 representing complainants award plus execution fee of P34,550.92 and the deposit fee of P17,535.46 or a total sum of P3,556,178.71 and thereafter turn over the said sum to this Office for appropriate disposition. Should you fail to collect said

sum in cash, you are hereby authorized to cause the satisfaction of the same on the movable or immovable properties of the respondent not exempt from execution. On April 15 and 16, 1999, the Deputy Sheriff, garnished the Citibank and Metrobank accounts of respondent Marguerite Lhuillier and levied on a parcel of land belonging to her located in Mandaue City. On April 20, 1999, petitioners filed with the same Regional Arbitration Branch VII, Cebu City, a motion for the release to them of respondents cash bond earlier posted by her in connection with her appeal to the NLRC from the adverse decision of Labor Arbiter Velasquez, Jr. On the very same day, respondent Labor Arbiter Anion issued an Order directing the release of the cash bond to the petitioners. Petitioners received the amount of P748,411.34. Then, on May 14, 1999, respondents Alvarez Caete Lopez Pangandoyon Ahat & Paredes Law Offices, through respondent Atty. Wilfredo S. Pangandoyon, Jr., filed with Labor Arbiter Nicasio C. Anion, 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 Caete 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. Anion granted the motion to lift or set aside the writ of garnishment and directed the Deputy Sheriff to enforce this Courts 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 Ainon 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.6As sole proprietor of Agencia Cebuana, from whose employment the petitioners were unlawfully removed, Marguerite Lhuillier is the party against whom the Courts 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 Courts Decision in question, respondent Labor Arbiter Nicasio Anion 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 Courts 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 Caete 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 Caete 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 respondents 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. Anion issued an order directing such release that very same day and petitioners did receive the amount of P748,411.34. 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 Anion 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. Ainon is DIRECTED to IMMEDIATELY IMPLEMENT this Courts Decision in G.R. No. 105892.

[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. DECISION TORRES, JR., J.: In our predisposition to discover the original intent of a statute, courts become the unfeeling pillars of the status quo. Little 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 provision of the Constitution, hence void; because its provision that Foreign currency deposits shall be exempt from attachment, garnishment, or any other order to 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 antecedents facts: On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account China Banking Corp., US $/A#54105028-2; 4.) ID-122-308877; 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 Bartellis petition for bail the latter escaped from jail. On February 28, 1989, the court granted the fiscals Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989. Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the application of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amountP100,000.00, a Writ of Preliminary Attachment was issued by the trial court on February 28, 1989. On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order which has placed the subject deposits in custodia legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits of defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body, whatsoever. This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank responded as follows: May 26, 1989 Ms. Erlinda S. Carolino 12 Pres. Osmea Avenue

South Admiral Village Paranaque, Metro Manila Dear Ms. Carolino: This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular No. 960 (1983). The cited provision is absolute in application. It does not admit of any exception, nor has the same been repealed nor amended. The purpose of the law is to encourage dollar accounts within the countrys banking system which would help in the development of the economy. There is no intention to render futile the basic rights of a person as was suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law. Compliance is, therefore, enjoined. Very truly yours, (SGD) AGAPITO S. FAJARDO Director[1] Meanwhile, on April 10, 1989, the trial court granted petitioners motion for leave to serve summons by publication in the Civil Case No. 89-3214 entitled Karen Salvacion. et al. vs. Greg Bartelli y Northcott. Summons with the complaint was 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 attorneys 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 respondents 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 witness the minor Karen E. Salvacion, her father, Federico N. Salacion, Jr., a certain Joseph Aguilar and a certain Liberato Mandulio, who gave the following testimony: Karen took her first year high school in St. Marys 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 Karens 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 its 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 defendants house along Kalayaan Avenue. (Id., p.6) When they reached the apartment house, Karen notices that defendants 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 Karens 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 Johnsons 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 oclock the following morning. (Id., pp. 9-10) The following day, February 5, 1989, a Sunday, after 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 those 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 a 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 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 na po

kayo sa akin. Tulungan nyo 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 oclock 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. 1617) 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 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 bacause the latter washed her dress. (Id., p. 16) Afterwards, defendant arrived and 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 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 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. Marys 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 Bartellis 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? She 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 n 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 criminal could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its delegated quasi- legislative power when it took away: a.) the plaintiffs substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way of the writ of execution out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so. On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants exemption from attachment or garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class. Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment, garnishment or any other order process of any court, is to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country; that the subject section is being enforced according to the regular methods of procedure; and that it applies to all currency deposits made by any person and therefore does not violate the equal protection clause of the Constitution. Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and the general welfare; that the State cannot just stand idly by while a considerable segment of the society suffers from economic distress; that the State had to take some measures to encourage economic development; and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some properties are exempted from execution/attachment especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides, among others, that foreign currency deposits shall be exempted from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central Bank, also stated that respondent China Bank is not unmindful of the inhuman

sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is not 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 to 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. The Court has no original and exclusive jurisdiction over a petition for declatory 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 thanP1,000,000.00, 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 indoubtedly 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 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 heinous crime. Being only 12 years old when that unfortunate incident happened, she has never heard of an old Filipino adage that in every forest there is a snake, xxx.[4] If Karens sad fate had happened to anybodys own kin, it would be difficult for him to fathom how the incentive for foreign currency deposit could be more important than his childs right to said award of damages; in this case, the victims claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is 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 countrys economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the inquitous effects producing outright injustice and inequality such as as the case before us. It has thus been said thatBut I also know,[5] that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths are disclosed and manners and opinions change with the change of circumstances, institutions must advance also, and keep pace with the times We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors. In his comment, the Solicitor General correctly opined, thus:

"The present petition has far-reaching implications on the right of a national to obtain redress for a wrong committed by an alien who takes refuge under a law and regulation promulgated for a purpose which does not contemplate the application thereof envisaged by the allien. More specifically, the petition raises the question whether the protection against attachment, garnishment or other court process accorded to foreign currency deposits PD No. 1246 and CB Circular No. 960 applies when the deposit does not come from a lender or investor but from a mere transient who is not expected to maintain the deposit in the bank for long. The resolution of this question is important for the protection of nationals who are victimized in the forum by foreigners who are merely passing through. xxx xxx Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the following provision of Central Bank Circular No. 960: Sec. 113 Exemption from attachment. Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426: Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such rules and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the publication of such rules and regulations in the Official Gazette and in a newspaper of national circulation for at least once a week for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing the rights of depositors, the rules and regulations at the time the deposit was made shall govern. The aforecited Section 113 was copied from Section 8 of Republic Act No. 6426. As amended by P.D. 1246, thus: Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. The purpose of PD 1246 in according protection against attachment, garnishment and other court process to foreign currency deposits is stated in its whereases, viz.: WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035, certain Philippine banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency; WHEREAS, under 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 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 right 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 purpose 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 depositors 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 encourage 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 tortizerzmente con damo de otro. Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377) It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent. Call it what it may but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime? This situation calls for fairness 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. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. 89-3214, Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment. SO ORDERED.

Case Digest onSalvacion v. Central Bank of the Philippines 278 SCRA 27 FACTS: Greg Bartelli, an American tourist, was arrested for committing four counts of rape and serious illegal detention against Karen Salvacion. Police recovered from him several dollar checks and a dollar account in the China Banking Corp. He was, however, able to escape from prison. In a civil case filed against him, the trial court awarded Salvacion moral, exemplary and attorneys fees amounting to almost P1,000,000.00. Salvacion tried to execute the judgment on the dollar deposit of Bartelli with the China Banking Corp. but the latter refused arguing that Section 11 of Central Bank Circular No. 960 exempts foreign currency deposits from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. Salvacion therefore filed this action for declaratory relief in the Supreme Court. ISSUE: Should Section 113 of Central Bank Circular No. 960 and Section 8 of Republic Act No. 6426, as amended by PD 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient? HELD: The provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246, insofar as it amends Section 8 of Republic Act 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 the civil case and to release to petitioners the dollar deposit of Bartelli in such amount as would satisfy the judgment. RATIO: Supreme Court ruled that the questioned law makes futile the favorable judgment and award of damages that Salvacion and her parents fully deserve. It then proceeded to show that the economic basis for the enactment of RA No. 6426 is not anymore present; and even if it still exists, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the law may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us. The SC adopted the comment of the Solicitor General who argued that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors and, subsequently, to give the latter protection. However, 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. Considering that Bartelli is just a tourist or a transient, he 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. Further, the SC said: 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.

day of detention, Karen was finally found by the policemen after a neighbor heard her crying and screaming for help. The accused was immediately arrested within the premises of the building, and eventually brought to Makati Municipal Jail. After thorough investigation and medical examination, the victim, as represented by her parents, together with the Fiscal filed criminal cases against Greg Bartelli y Northcott for Serious Illegal Detention and for Four (4) counts of Rape. The petitioners also filed a separate civil action for damages with preliminary attachment against the accused that had several dollar accounts in COCOBANK and China Banking Corporation. On February 24, 1989, the day there was a hearing for Bartellis petition for bail the latter escaped from jail. The deputy sheriff served Notice of Garnishment on China Banking Corporation but the latter declined to furnish a copy as it invoked R.A. No. 1405. The sheriff again sent a letter stating that the garnishment did not violate the bank secrecy law as it was legally made by virtue of a court order but China Banking Corporation invoked Section 113 of Central Bank Circular No. 960, that dollar accounts are exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body, whatsoever. The Central Bank sent a reply after a demand from the court asking if the Section 113 of Central Bank Circular No.960 is absolute in nature of which it replied in affirmative. After the accused was declared in default, the court rendered a judgment in favor of the petitioners based on the heinous acts of the accused and the grave effects on social, moral and psychological aspects on the part of the petitioners. China Banking Corporation refused the Writ of Execution of the court. Thus; Petitioners file a Petition for Relief in the Supreme Court. Issues: Whether the dollar accounts of the Accused is absolutely exempt from attachment, garnishment or any other order or process of any court? Held: While it is true that the protective cloak of confidentiality over foreign deposit accounts would better encourage the inflow of foreign currency deposits, lending capacity of the government and would help financial stability and the national development, what would be the relief of someone claiming damages against a person with foreign deposit accounts? More so against a person who heinously and feloniously committed an offense in the territory of the Philippines? As in this case, the accused deemed liable for the damages based of the heinous acts according to the testimonies of the victim and the witnesses. It is the duty of the government to encourage foreign currency deposits and to comply by giving confidentiality but in the correct argument of the Solicitor General, foreign currency deposits of a tourist or transient is not the one encouraged by PD Nos. 1034 and 1305 on the ground that said accounts is temporary and only for a short period of time. The application of the law depends on the extent of its justice. If we rule 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 foreign transient , injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. Article 10 of the New Civil Code 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. Simply stated, when the statute is ambiguous, this is one of those fundamental solutions that would respond to vehement urge of conscience. It would be unthinkable that Section 113 of CB circular 960 would be used as a device by the accused for wrongdoing, and in so doing, acquitting the guilty as the expense of the innocent. The 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 RA 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 RTC Makati, and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Nothcott in such amount as would satisfy the judgment.

On February 4-7, 1989, Greg Bartelli y Northcott, an American tourist, detained and repeatedly raped Karen Salvacion, a 12-year old the victim, in the apartment of the accused in Makati City. That, on the 4th

G.R. No. 106253 February 10, 1994

ALEXANDER VAN TWEST and THE HON. SALVADOR P. DE GUZMAN, in his capacity as Presiding Judge of the Regional Trial Court of Makati, Branch 142, petitioners, vs. THE HON. COURT OF APPEALS and GLORIA ANACLETO, respondents. Martinez and Perez Law Offices for petitioner Alexander Van Twest. Salonga, Hernandez & Allado for private respondent. FELICIANO, J.: On March 1990, petitioner Alexander Van Twest filed a complaint against private respondent Gloria Anacleto and International Corporate Bank ("Interbank") for recovery of a sum of money with prayer for a writ of preliminary injunction, before Branch 142 of the Regional Trial Court of Makati, where the action was docketed as Civil Case No. 90-659. 1 Petitioner alleged in his complaint that in 1989, he and private respondent opened a joint foreign currency savings account with Interbank to hold funds which "belonged entirely and exclusively" to petitioner, to "facilitate the funding of certain business undertakings" of both of them and which funds were to be "temporarily (held) in trust" by private respondent, who "shall turnover the same to plaintiff upon demand." Petitioner further alleged that withdrawals from the account were always made through their joint signatures; that when his business relationship with private respondent turned sour, the latter unilaterally closed their joint account, withdrew the remaining balance of Deutschmark (DM) 269,777.37 and placed the money in her own personal account with the same bank. 2 Petitioner thus sought an injunctive writ to prevent private respondent from withdrawing the money at any time and thereby defeat petitioner's main and pending action in Civil Case No. 90-659. 3 After issuing a temporary restraining order upon the filing of the complaint, the trial court conducted hearings on four (4) successive session dates on the application for a writ of preliminary injunction, examining petitioner and his two (2) witnesses, as well as private respondent. The hearings culminated in the issuance of an order dated 28 March 1990, enjoining private respondent and Interbank from effecting and allowing withdrawals from the foreign currency deposit account until further orders from the trial court. 4 The preliminary injunction order of the Regional Trial Court was, however, annulled on petition for certiorari filed by private respondent before the Court of Appeals in a Decision dated 19 July 1991. 5 Petitioner's motion for reconsideration having been denied by the Court of Appeals, he is now before this Court on Petition for Review, seeking reinstatement of the writ of preliminary injunction issued by the trial court. 6 In a Resolution dated 12 August 1992, the Court motu proprio issued an indefinite temporary restraining order enjoining the Court of Appeals from enforcing its questioned Decision and Resolution. 7 The parties subsequently complied with the requirement of the Court to submit responsive pleadings in amplification of their respective positions regarding the soundness of the Court of Appeals' Decision under review. 8 The Court then resolved to give due course to the Petition and required the parties to submit their memoranda. The parties did. 9 Deliberating on the present Petition for Review, the Court considers that the Court of Appeals was in reversible Deliberating on the present Petition for Review, the Court considers that the Court of Appeals was in reversible error in annulling the writ of preliminary injunction issued in petitioner's favor by the Regional Trial Court. In ruling that petitioner was not entitled to the provisional remedy of preliminary injunction during the pendency of Civil Case No. 90-659, the Court of Appeals said: Upon the facts of the complaint filed, we ruled that the writ of preliminary injunction issued by the lower court is improper and without basis. It is clear from the complaint that the subject foreign currency was deposited in a savings account under the name of private respondent (herein petitioner) "and/or" herein petitioner (now private respondent). By virtue of this "and/or" agreement, petitioner is authorized to withdraw from the account on the strength of her signature alone. The allegation of private respondent that the said foreign currency solely belonged to him loses its meaning in the face of the fact that the amount was deposited in a joint fund and had become, under the eyes of the law, property jointly owned by petitioner and private respondent. Furthermore, by private respondent's own admission, said

foreign currency deposit was to be used to fund the business venture of private respondent and petitioner. The evidence on record shows that petitioner was going to withdraw the subject foreign currency deposit so that it may be used as collateral for peso loan, which, in turn, would be used to payoff the obligations incurred by both petitioner and private respondent in the course of their business venture. In fact, an action to collect the amount of P2,998,500.00 representing the unpaid obligation of private respondent and petitioner to one of their creditors, had been filed in the Regional Trial Court of Makati on 29 March 1990. In short, private respondent had failed to show that he has a right to stop petitioner from withdrawing the foreign currency deposit under their joint "and/or" account. And it was error for respondent Judge to have issued the Order dated 29 injunction. 10 (Emphasis supplied) Petitioner's principal contention is that the public respondent misappreciated the facts of the case; he did not seek injunction to restrain private respondent from withdrawing the funds from their joint account, since private respondent indeed enjoyed a semblance of right to do so and the withdrawal had already become a fait accompli. Rather, petitioner seeks to restrain private respondent from effecting withdrawals from her personal account, into which she had transferred the foreign currency, in order not to defeat his main action seeking recovery of said fund. 11 The Court must agree with petitioner. The Court of Appeals evidently misapprehended the facts of this case, a relatively exceptional situation warranting the Court to rule of factual issues in a petition for review, preparatory to the resolution of the legal issues posed in this proceeding. 12 It would be untenable for petitioner to try and restrain private respondent from withdrawing money from their joint account, an accomplished fact which can no longer be enjoined. 13 Petitioner, and the trial court, correctly directed the writ applied for against private respondent's personal savings account because the object of the writ is to preserve the status quo, the last, actual, peaceable and uncontested status that preceded the pending controversy. 14 An injunctive writ would prevent private respondent from withdrawing from her personal account at will, or at least without the prior knowledge and consent of the trial court and petitioner, thereby approximating the situation obtaining when the money subject of the main action was previously deposited in a joint savings account, as well as ensuring that the continuation of petitioner's main suit for recovery of the sum of money would be worthwhile. There is also a more fundamental reason why issuance of an injunctive writ was warranted in this case. The record of the preliminary hearings conducted by the trial court on the application for a writ of injunction indicates that petitioner had shown a clear legal right over the fund, notwithstanding the circumstance that the foreign currency was initially placed in a joint savings account, such that petitioner's right must be protected from the prospective acts of the private respondent, following the fund's transfer to her personal account. 15 First, as found by the Court of Appeals, private respondent intended to use the Deutschmark as collateral for a peso loan which she would use to pay-off the debts incurred by her faltering joint venture with petitioner. It should be noted that private respondent's declared object does not articulate a claim of ownership over the foreign exchange funds. Second, although private respondent specifically denied in her answer petitioner's averment in his complaint that the money is owned by him, 16 she did make an affirmative allegation in her answer that petitioner "agreed to finance the project." 17 One cannot finance a project without owning the funds with which the financing is to be undertaken. She also declared, in her testimony during the preliminary hearings on petitioner's application for a writ of preliminary injunction, that petitioner undertook to remit his cash investment in her name and that she was the industrial partner in he joint venture: xxx xxx xxx (Atty. Racela; private respondent's counsel) Q: How about your finances, the proposed investment share of Mr. Alexander Van Twest? A: We agreed that Alexander Van Twest would remit his cash investment in my name and that he will open an "and/or" savings account and placed (sic) there my name. xxx xxx xxx (Court:) Q: Now, Madam witness, may we ask what was your agreement insofar as this plan of yours with Mr. Alexander Van Twest to undertake (a) leather industry project? A: As far as the professional services is concerned, I am the industrial partner of Mr. Alexander Van Twest.

xxx xxx xxx 18 (Emphasis supplied) Petitioner submitted, during the same hearings, documentary evidence indicating he had directed the transfer to the Philippines of large amounts of Deutschmark, enough to account for the funds subject of this controversy, from foreign banks to Interbank between November 1989 and February 1990. 19 And third, private respondent's own counsel admitted that the money subject of the inward remittances above-noted belonged to petitioner: xxx xxx xxx Atty. Racela: A: Insofar as the holdings (sic) of the plaintiff, under the custody of the NBI, your Honor, those are matters extraneous to the proceedings. Now, insofar as the injunction is concerned, your Honor, the evidence presented by the plaintiff clearly resolve only on the issue of the savings account, your Honor, opened by the plaintiff and the defendant, your Honor and there is no need for him to prove the ownership of the account. Insofar as we are concerned, whether or not defendant can withdraw on the savings account which they opened jointly, your Honor. A: Will the defendant stipulate that all the inward remittances from abroad and the money belong to the plaintiff? Atty. Racela: A: We are willing to stipulate, your Honor. Atty. Racela: (counsel of petitioner) A: May we make of record that the defense counsel the all the money (which) came in the same savings account, subject of the complaint came from the plaintiff. Atty. Racela: A: Inward remittances came from abroad in pursuit of the joint agreement between [plaintiff and] defendant, your Honor. Atty. Racela: A: He would also prove the agreement between the plaintiff and the defendant with respect to the deposit and withdrawal of the same account, your Honor. Court: A: Is there a written agreement? Atty. Reyes: A: There is none, your Honor. The agreement was based on trust. We need to present the plaintiff himself to testify on the trust agreement. Atty. Racela: A: We admit that the proceeds came from foreign sources, from the plaintiff, your Honor, by way of investment in pursuit of a joint venture agreement with the defendant, your Honor. xxx xxx xxx 20 (Emphasis supplied) To the mind of the Court, the evidence of record sufficiently rebut the perception of the Court of Appeals that the foreign funds previously deposited in the joint savings account were in effect owned in common by the petitioner and private respondent, such that petitioner could validly oppose private respondent's attempt to dispose of such funds by obtaining a writ of preliminary injunction. It does not appear indubitable that private respondent was a co-owner of the funds who could unilaterally control the application thereof in payment of partnership debts. Indeed, petitioner has affirmatively shown that the Deutschmark originated from him alone and that he alone was owner thereof. By depositing those funds in a joint 'and/or' account, petitioner did not convey ownership thereof to private respondent and private respondent could not convert those funds to her personal and exclusive ownership and use. We believe and so hold that the trial court did not act with grave abuse of discretion in issuing the injunctive writ and that the Court of Appeals committed reversible error in concluding otherwise; private respondent was heard and had exhaustively presented all her arguments in opposition to the writ of preliminary injunction. 21 In a bid to buttress the Decision of the Court of Appeals, private respondent contends for the first time in this proceeding that the personal foreign currency deposit account she is maintaining is exempt from processes issued by the courts, pursuant to Section 8 of R.A. 6426 as amended by P. D. 1246, the statute in force on 26 February 1990, the date she withdrew the foreign exchange fund from her joint account

with petitioner and transferred the same to her personal account. 22 Private respondent adds that the Court has plenary authority to disregard the procedural defect attending private respondent's new contention; since this case cannot be resolved adequately without a ruling on the nature of the exemption from court processes granted by the statute. 23 Private respondent's contentions do not persuade. Her belated invocation of the provisions of R.A. No. 6426 as amended violates basic procedural due process by interposing a new matter before this Court the consideration of which would further delay a final disposition on the propriety of petitioner of petitioner's application for an injunctive writ. 24 On a substantive, the Court holds that the privileges extended by the statute cited by private respondent are actually enjoyed, and are invocable only, by the petitioner, both because private respondent's transactions fall outside the ambit of the statute, and because petitioner is the owner of the foreign exchange fund subject of this case. This conclusion is anchored on the consistent and contemporaneous administrative construction by the Central Bank of the basic statute, as manifested in the relevant circulars issued by it in implementation of that law, which are entitled to great respect by the courts. 25 Section 8 of R.A. No. 6426 (the Foreign Currency Deposit Act), as amended by P.D. No. 1246, which is still in force, provides: Sec. 8. Secretary of Foreign Currency Deposits All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office, whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said foreign currency shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. 26 (Emphasis supplied) Section one hundred-two of Circular No. 960, Series of 1983, provides in relevant part: xxx xxx xxx Sec. 102. Foreign currency funds ineligible for deposits. a. Foreign exchange purchased from authorized agent banks in accordance with existing regulations such as excess travel funds; unspent financial assistance of dependents abroad of Philippine residents; foreign exchange acquired from any resident persons, firm, association and corporation; and transfers to foreign currency deposit account or receipt from another foreign currency deposit account, whether for payment of legitimate obligation or otherwise, are not eligible for deposit under the System. xxx xxx xxx 27 (Emphasis supplied) This Circular was in force at the time private respondent undertook her questioned transactions; thus, such local transfer from the original joint foreign currency account to another (personal) foreign currency account, was not an eligible foreign currency deposit within the coverage of R.A. No. 6426 and not entitled to the benefit of the confidentiality provisions of R.A. No. 6426. Circular No. 960 was superseded by Circular No. 1318, Series of 1992, which did not reenact and continue the administrative provision above-mentioned (Section 102). Nevertheless, Section seventyfour, Chapter seven of Circular No. 1318, which deals with the foreign currency deposit system, provides in relevant part; Section 74. Definition of Terms. As used in this Chapter, the following terms shall have the meaning indicated unless the context clearly indicates otherwise: xxx xxx xxx The definition of such other terms used in this Chapter shall be consistent with the definition of terms used under the Chapter on Offshore Banking System. 28 (Emphasis supplied) Section forty-nine, Chapter five of the same Circular, dealing with the Offshore Banking System, stated in part: Section 49. Definition of Terms. . . . xxx xxx xxx d. "Deposit" shall refer to funds in foreign currencies which are accepted and held by an OBU business, with the obligation to return an equivalent amount to the owner thereof, with or without interest;

xxx xxx xxx 29 (Emphasis supplied) In other words, although transfers from one foreign currency deposit account to another foreign currency deposit account in the Philippines are now eligible deposits under the Central Bank's Foreign Currency Deposit System, private respondent is still not entitled to the confidentiality provisions of the relevant circulars. For, as noted earlier, private respondent is notthe owner of such foreign currency funds and her personal deposit account is not, under Section 49 of Circular No. 1318, protected by this Circular. Circular No. 1318 was superseded for a brief period by Circular No. 1353, Series of 1992, which in turn was superseded by Circular No. 1389, Series of 1993. Circular No. 1389 is the current implementing issuance for R.A. No. 6426; the relevant provisions (Sections 74 and 49) of Circular No. 1318 have been incorporated en toto in the current Circular. 30 ACCORDINGLY, the Petition for Review is hereby GRANTED. The Decision and Resolution of the Court of Appeals dated 19 July 1991 and 9 July 1992, respectively, are hereby REVERSED and SET ASIDE. The temporary restraining order issued by the Court dated 12 August 1992, enjoining the public respondent from dissolving the writ of preliminary injunction issued by the Regional Trial Court through its case is hereby REMANDED to the trial court for continuation of the main proceeding in Civil Case No. 90-659. No pronouncement as to costs. SO ORDERED.