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[G.R. No. 128996.

February 15, 2002]


CARMEN LL. INTENGAN, ROARIO LL. NERI, a!" RITA #.
$RA%NER, petitioners, &'. CO(RT OF A##EAL, )E#ARTMENT OF
*(TICE, A+I+ RA*,OT%ALA, %ILLIAM FERG(ON, *O-EN RE.E, a!"
-IC LIM, respondents.
) E C I I O N
)E LEON, *R., J./
Before us is a petition for review on certiorari, seeking the reversal of the
Decision
[1]
dated July 8, 1996 of the forer !ifteenth Division
["]
of the #ourt of $ppeals in
#$%&'(' )* +o' ,-.-- as well as its (esolution
[,]
dated $pril 16, 199- denying petitioners/
otion for reconsideration' 0he appellate court, in its Decision, sustained a resolution of
the Departent of Justice ordering the withdrawal of inforations for violation of (epu1lic
$ct +o' 123. against private respondents'
0he facts are4
5n )epte1er "1, 199,, #iti1ank filed a coplaint for violation of section ,1,
[2]
in
relation to section 122
[.]
of the #orporation #ode against two 6"7 of its officers, Dante 8'
)antos and 9arilou &enuino' $ttached to the coplaint was an affidavit
[6]
e:ecuted 1y
private respondent ;ic 8i, a vice%president of #iti1ank' *ertinent portions of his affidavit
are <uoted hereunder4
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 lobal
Consumer rou! of the bank, namely, "ante #. Santos and the Asst. $ice %resident in the office of
&r. "ante #. Santos, namely &s. &arilou 'also called &alou( enuino. &s. &arilou enuino a!art
from being an Assistant $ice %resident in the office of &r. "ante #. Santos also !erformed the
duties of an Account )fficer. An Account )fficer in the office of &r. "ante #. Santos !ersonally
attends to clients of the bank in the effort to !ersuade clients to !lace and kee! their monies in the
!roducts of Citibank, NA., such as !eso and dollar de!osits, mortgage backed securities and money
!lacements, among others.
*** *** ***
+.1 The investigation in ,hich - ,as asked to !artici!ate ,as undertaken because the bank had
found records/evidence sho,ing that &r. "ante #. Santos and &s. &alou enuino, contrary to
their disclosures and the aforementioned bank !olicy, a!!eared to have been actively engaged in
business endeavors that ,ere in conflict ,ith the business of the bank. -t ,as found that ,ith the
use of t,o '2( com!anies in ,hich they have !ersonal financial interest, namely Torrance
"evelo!ment Cor!oration and lobal %acific Cor!oration, they managed or caused e*isting bank
clients/de!ositors to divert their money from Citibank, N.A., such as those !laced in !eso and
dollar de!osits and money !lacements, to !roducts offered by other com!anies that ,ere
commanding higher rate of yields. This ,as done by first transferring bank clients. monies to
Torrance and lobal ,hich in turn !laced the monies of the bank clients in securities, shares of
stock and other certificates of third !arties. -t also a!!eared that out of these transactions, &r.
"ante #. Santos and &s. &arilou enuino derived substantial financial gains.
/.1 -n the course of the investigation, - ,as able to determine that the bank clients ,hich &r.
Santos and &s. enuino hel!ed/caused to divert their de!osits/money !lacements ,ith Citibank,
NA. to Torrance and lobal 'their family cor!orations( for subse0uent investment in securities,
shares of stocks and debt !a!ers in other com!anies ,ere as follo,s1
***
b( Carmen -ntengan
***
d( 2osario Neri
***
i( 2ita 3ra,ner
All the above !ersons/!arties have long standing accounts ,ith Citibank, N.A. in savings/dollar
de!osits and/or in trust accounts and/or money !lacements.
$s evidence, 8i anne:ed 1ank records purporting to esta1lish the deception
practiced 1y )antos and &enuino' )oe of the docuents pertained to the dollar deposits
of petitioners #aren 8l' =ntengan, (osario 8l' +eri, and (ita *' Brawner, as follows4
a7 $nne: >$%6?
[-]
% an >$pplication for 9oney 0ransfer? in the aount of @) A123,333'33, e:ecuted 1y
=ntengan in favor of #iti1ank A )B$ +o' "2,6--96, to 1e de1ited fro her $ccount +o' "".2,,21C
17 $nne: >$%-?
[8]
% a >9oney 0ransfer )lip? in the aount of @) A2.,996',3, e:ecuted 1y Brawner in
favor of #iti1ank A )B$ +o' "2,6--96, to 1e de1ited fro her $ccount +o' "".2,",6C and
c7 $nne: >$%9?
[9]
% an >$pplication for 9oney 0ransfer? in the aount of @) A133,333'33, e:ecuted 1y
+eri in favor of #iti1ank A )B$ +o' "2,6--96, to 1e de1ited fro her $ccount +o' "2.31318'
=n turn, private respondent Joven (eyes, vice%presidentB1usiness anager of the
&lo1al #onsuer Banking &roup of #iti1ank, adits to having authoriDed 8i to state the
naes of the clients involved and to attach the pertinent 1ank records, including those of
petitioners/'
[13]
Ee states that private respondents $DiD (aFkotwala and Gillia !erguson,
#iti1ank, +'$' &lo1al #onsuer Banking #ountry Business 9anager and #ountry
#orporate 5fficer, respectively, had no hand in the disclosure, and that he did so upon the
advice of counsel'
=n his eorandu, the )olicitor &eneral descri1ed the schee as having 1een
conducted in this anner4
4irst ste!1 Santos and/or enuino ,ould tell the bank client that they kne, of financial !roducts
of other com!anies that ,ere yielding higher rates of interests in ,hich the bank client can !lace
his money. Acting on this information, the bank client ,ould then authori5e the transfer of his
funds from his Citibank account to the Citibank account of either Torrance or lobal.
The transfer of the Citibank client.s de!osits ,as done through the accom!lishment of either an
A!!lication 4or &anager.s Checks or a Term -nvestment A!!lication in favor of lobal
or Torrance that ,as !re!ared/filed by enuino herself.
6!on a!!roval of the A!!lication for &anager.s Checks or Term -nvestment A!!lication, the funds
of the bank client covered thereof ,ere then de!osited in the Citibank accounts of Torrance and/or
lobal.
Second ste!1 )nce the said fund transfers had been effected, lobal and/or Torrance ,ould then
issue its/ their checks dra,n against its/their Citibank accounts in favor of the other com!anies
,hose financial !roducts, such as securities, shares of stocks and other certificates, ,ere offering
higher yields.
Third ste!1 )n maturity date's( of the !lacements made by Torrance and/or lobal in the other
com!anies, using the monies of the Citibank client, the other com!anies ,ould then. return the
!lacements to lobal and/orTorrance ,ith the corres!onding interests earned.
4ourth ste!1 6!on recei!t by lobal and/or Torrance of the remittances from the other com!anies,
lobal and/or Torrance ,ould then issue its/their o,n checks dra,n against their Citibank accounts
in favor of Santos and enuino.
The amounts covered by the checks re!resent the shares of Santos and enuino in the margins
lobal and/or Torrance had reali5ed out of the !lacements 7using the diverted monies of the
Citibank clients8 made ,ith the other com!anies.
4ifth ste!1 At the same time, lobal and/or Torrance ,ould also issue its/their check's( dra,n
against its/their Citibank accounts in favor of the bank client.
The check's( cover the !rinci!al amount 'or !arts thereof( ,hich the Citibank client had !reviously
transferred, ,ith the hel! of Santos and/or enuino, from his Citibank account to the Citibank
account's( of lobal and/or Torrance for !lacement in the other com!anies, !lus the interests or
earnings his !lacements in other com!anies had made less the s!reads made by lobal, Torrance,
Santos and enuino.
0he coplaints which were docketed as =')' +os' 9,%9969, 9,%133.8 and 92%1"1.
were su1se<uently aended to include a charge of estafa under $rticle ,1., paragraph
1617
[11]
of the (evised *enal #ode'
$s an incident to the foregoing, petitioners filed respective otions for the e:clusion
and physical withdrawal of their 1ank records that were attached to 8i/s affidavit'
=n due tie, 8i and (eyes filed their respective counter%affidavits'
[1"]
=n separate
9eoranda dated 9arch 8, 1992 and 9arch 1., 1992 "nd $ssistant *rovincial *rosecutor
Eerino 0' @1ana, )r' recoended the disissal of petitioners/ coplaints' 0he
recoendation was overruled 1y *rovincial *rosecutor 9auro 9' #astro who, in a
(esolution dated $ugust 18, 1992,
[1,]
directed the filing of inforations against private
respondents for alleged violation of (epu1lic $ct +o' 123., otherwise known as the Bank
)ecrecy 8aw'
*rivate respondents/ counsel then filed an appeal 1efore the Departent of Justice
6D5J7' 5n +ove1er 1-, 1992, then D5J )ecretary !ranklin 9' Drilon issued a
(esolution
[12]
ordering,inter alia, the withdrawal of the aforesaid inforations against private
respondents' *etitioners/ otion for reconsideration
[1.]
was denied 1y D5J $cting )ecretary
Deetrio &' Deetria in a (esolution dated 9arch 6, 199.'
[16]
=nitially, petitioners sought the reversal of the D5J resolutions via a petition
for certiorari and mandamus filed with this #ourt, docketed as &'(' +o' 119999%
1"3331' Eowever, the forer !irst Division of this #ourt, in a (esolution dated June .,
199.,
[1-]
referred the atter to the #ourt of the $ppeals, on the 1asis of the latter tri1unal/s
concurrent Furisdiction to issue the e:traordinary writs therein prayed for' 0he petition was
docketed as #$%&'(' )* +o' ,-.-- in the #ourt of $ppeals'
5n July 8, 1996, the #ourt of $ppeals rendered Fudgent disissing the petition in
#$%&'(' )* +o' ,-.-- and declared therein, as follows4
Clearly, the disclosure of !etitioners. de!osits ,as necessary to establish the allegation
that Santos and enuino had violated Section 91 of the Cor!oration Code in ac0uiring :any interest
adverse to the cor!oration in res!ect of any matter ,hich has been re!osed in him in confidence.;
To substantiate the alleged scheme of Santos and enuino, !rivate res!ondents had to !resent the
records of the monies ,hich ,ere mani!ulated by the t,o officers ,hich included the bank records
of herein !etitioners.
Although !etitioners ,ere not the !arties involved in -S. No. <9=>+?<, their accounts ,ere relevant
to the com!lete !rosecution of the case against Santos and enuino and the res!ondent ")@
!ro!erly ruled that the disclosure of the same falls under the last e*ce!tion of 2.A. No. 1+A/. That
ruling is consistent ,ith the !rinci!le laid do,n in the case of &ellon 3ank, N.A. vs. &agsino '1<A
SC2A ?99( ,here the Su!reme Court allo,ed the testimonies on the bank de!osits of someone not
a !arty to the case as it found that said bank de!osits ,ere material or relevant to the allegations in
the com!laint. Significantly, therefore, as long as the bank de!osits are material to the case,
although not necessarily the direct subBect matter thereof, a disclosure of the same is !ro!er and
falls ,ithin the sco!e of the e*ce!tions !rovided for by 2.A. No. 1+A/.
*** *** ***
&oreover, the language of the la, itself is clear and cannot be subBect to different inter!retations. A
reading of the !rovision itself ,ould readily reveal that the e*ce!tion :or in cases ,here the money
de!osited or invested is the subBect matter of the litigation; is not 0ualified by the !hrase :u!on
order of com!etent Court; ,hich refers only to cases of bribery or dereliction of duty of !ublic
officials.
*etitioners/ otion for reconsideration was siilarly denied in a (esolution dated $pril
16, 199-' $ppeal was ade in due tie to this #ourt'
0he instant petition was actually denied 1y the forer 0hird Division of this #ourt in a
(esolution
[18]
dated July 16, 199-, on the ground that petitioners had failed to show that a
reversi1le error had 1een coitted' 5n otion, however, the petition was
reinstated
[19]
and eventually given due course'
["3]
=n assailing the appellate court/s findings, petitioners assert that the disclosure of their
1ank records was unwarranted and illegal for the following reasons4
I.
-N 3#ATANT $-)#AT-)N )4 2.A. N). 1+A/, %2-$ATC 2CS%)N"CNTS -##CA##D
&A"C "-SC#)S62CS )4 %CT-T-)NC2S. C)N4-"CNT-A# 3ANE "C%)S-TS 4)2
TFC-2 SC#4-SF CN"S -N %2)SCC6T-N TFC-2 C)&%#A-NT -N -S. N). <9=>+?<
TFAT "-" N)T -N$)#$C %CT-T-)NC2S.
II.
%2-$ATC 2CS%)N"CNTS. "-SC#)S62CS ") N)T 4A## 6N"C2 TFC 4)62TF
CGCC%T-)N )4 2.A. N). 1+A/ 'i.e., :in cases ,here the money de!osited or invested is the
subBect matter of the litigation;(, N)2 6N"C2 AND )TFC2 CGCC%T-)N1
011
%CT-T-)NC2S. "C%)S-TS A2C N)T -N$)#$C" -N AND #-T-AT-)N 3CTHCCN
%CT-T-)NC2S AN" 2CS%)N"CNTS. TFC2C -S N) #-T-AT-)N 3CTHCCN TFC
%A2T-CS, &6CF #CSS )NC -N$)#$-N %CT-T-)NC2S. "C%)S-TS AS TFC
S63@CCT &ATTC2 TFC2C)4.
021
C$CN ASS6&-N ARGUENDO TFAT TFC2C -S A #-T-AT-)N -N$)#$-N
%CT-T-)NC2S. "C%)S-TS AS TFC S63@CCT &ATTC2 TFC2C)4, %2-$ATC
2CS%)N"CNTS. "-SC#)S62CS )4 %CT-T-)NC2S. "C%)S-TS A2C
NC$C2TFC#CSS -##CA# 4)2 HANT )4 TFC 2CI6-S-TC C)62T )2"C2, -N
$-)#AT-)N )4 2.A. N). 1+A/.
III.
TFC2C4)2C, %CT-T-)NC2S A2C CNT-T#C" T) %2)SCC6TC %2-$ATC
2CS%)N"CNTS 4)2 $-)#AT-)NS )4 2.A. N). 1+A/ 4)2 FA$-N -##CA##D
"-SC#)SC" %CT-T-)NC2S. C)N4-"CNT-A# 3ANE "C%)S-TS AN" 2CC)2"S -N -S.
N). <9=>+?<.
$part fro the reversal of the decision and resolution of the appellate court as well as
the resolutions of the Departent of Justice, petitioners pray that the latter agency 1e
directed to issue a resolution ordering the *rovincial *rosecutor of (iDal to file the
corresponding inforations for violation of (epu1lic $ct +o' 123. against private
respondents'
0he petition is not eritorious'
$ctually, this case should have 1een studied ore carefully 1y all concerned' 0he
finest legal inds in the country % fro the parties/ respective counsel, the *rovincial
*rosecutor, the Departent of Justice, the )olicitor &eneral, and the #ourt of $ppeals % all
appear to have overlooked a single fact which dictates the outcoe of the entire
controversy' $ circuspect review of the record shows us the reason' 0he accounts in
<uestion are @')' dollar depositsC conse<uently, the applica1le law is not Republic Act No.
1405 1ut Republic Act (RA) No. 6426, known as the >!oreign #urrency Deposit $ct of
the *hilippines,? section 8 of which provides4
Sec. 8. Secrecy of Foreign Currency Deposits.- All foreign currency de!osits authori5ed under this
Act, as amended by %residential "ecree No. 1A9/, as ,ell as foreign currency de!osits authori5ed
under %residential "ecree No. 1A9+, are hereby declared as and considered of an absolutely
confidential nature and, except upon the written permission of the epositor! in no inst"nce sh"##
such foreign currency eposits $e ex"mine! in%uire or #oo&e into $y "ny person! go'ernment
offici"# $ure"u or office whether (uici"# or "ministr"ti'e or #egis#"ti'e or "ny other entity
whether pu$#ic or pri'"te) %rovided, ho,ever, that said foreign currency de!osits shall be e*em!t
from attachment, garnishment, or any other order or !rocess of any court, legislative body,
government agency or any administrative body ,hatsoever.
["1]
'italics su!!lied(
0hus, under ('$' +o' 62"6 there is only a sinle e:ception to the secrecy of foreign
currency deposits, that is, disclosure is allowed only upon the written perission of the
depositor' =ncidentally, the acts of private respondents coplained of happened 1efore the
enactent on )epte1er "9, "331 of ('$' +o' 9163 otherwise known as the $nti%9oney
8aundering $ct of "331'
$ case for violation of Republic Act No. 6426 should have 1een the proper case
1rought against private respondents' *rivate respondents 8i and (eyes aditted that
they had disclosed details of petitioners/ dollar deposits !it"out t"e latter#s !ritten
permission. =t does not atter if that such disclosure was necessary to esta1lish #iti1ank/s
case against Dante 8' )antos and 9arilou &enuino' 8i/s act of disclosing details of
petitioners/ 1ank records regarding their foreign currency deposits, with the authority of
(eyes, would appear to 1elong to that species of criinal acts punisha1le 1y special laws,
called malum pro"ibitum. =n this regard, it has 1een held that4
Hhile it is true that, as a rule and on !rinci!les of abstract Bustice, men are not and should not be
held criminally res!onsible for acts committed by them ,ithout guilty kno,ledge and criminal or at
least evil intent ***, the courts have al,ays recogni5ed the !o,er of the legislature, on grounds of
!ublic !olicy and com!elled 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 ,ithout regard to the
intent of the doer. *** -n such cases no Budicial authority has the !o,er to re0uire, in the
enforcement of the la,, such kno,ledge or motive to be sho,n. As ,as said in the case of
State 's. &c3rayer ***1
J-t is a mistaken notion that !ositive, ,illful intent, as distinguished from a mere intent, to violate
the criminal la,, is an essential ingredient in every criminal offense, and that ,here there is the
absence of such intent there is no offenseK this is es!ecially so as to statutory offenses. Hhen the
statute !lainly forbids an act to be done, and it is done by some !erson, the la, im!lies
conclusively the guilty intent, although the offender ,as honestly mistaken as to the meaning of the
la, he violates. Hhen the language is !lain and !ositive, and the offense is not made to de!end
u!on the !ositive, ,illful intent and !ur!ose, nothing is left to inter!retation..
[""]
5rdinarily, the disissal of the instant petition would have 1een without preFudice to
the filing of the proper charges against private respondents' 0he atter would have ended
here were it not for the intervention of tie, specifically the lapse thereof' )o as not to
unduly prolong the settleent of the case, we are constrained to rule on a aterial issue
even though it was not raised 1y the parties' Ge refer to the issue of prescription'
(epu1lic $ct +o' 62"6 1eing a special law, the provisions of $ct +o' ,,"6,
[",]
as
aended 1y $ct +o' ,-6,, are applica1le4
SECTION 1. $iolations !enali5ed by s!ecial acts shall, unless other,ise !rovided in such acts,
!rescribe in accordance ,ith the follo,ing rules1 'a( after a year for offences !unished only by a
fine or by im!risonment for not more than one month, or both1 'b( after four years for those
!unished by im!risonment for more than one month, but less than t,o yearsK 'c( after eight years
for those !unished by im!risonment for t,o years or more, but less than si* yearsK and 'd( after
t,elve years for any other offence !unished by im!risonment for si* years or more, e*ce!t the
crime of treason, ,hich shall !rescribe after t,enty years1 *ro'ie! howe'er! That all offences
against any la, or !art of la, administered by the 3ureau of -nternal 2evenue shall !rescribe after
five years. $iolations !enali5ed by munici!al ordinances shall !rescribe after t,o months.
$iolations of the regulations or conditions of certificates of !ublic convenience issued by the %ublic
Service Commission shall !rescribe after t,o months.
SCC. 2. %rescri!tion shall begin to run from the day of the commission of the violation of the la,,
and if the same be not kno,n at the time, from the discovery thereof and the institution of Budicial
!roceedings for its investigation and !unishment.
The !rescri!tion shall be interru!ted ,hen !roceedings are instituted against the guilty !erson, and
shall begin to run again if the !roceedings are dismissed for reasons not constituting Beo!ardy.
$ violation of (epu1lic $ct +o' 62"6 shall su1Fect the offender to iprisonent of not
less than one year nor ore than five years, or 1y a fine of not less than five thousand
pesos nor ore than twenty%five thousand pesos, or 1oth'
["2]
$pplying $ct +o' ,,"6, the
offense prescri1es in eight years'
[".]
*er availa1le records, private respondents ay no
longer 1e haled 1efore the courts for violation of (epu1lic $ct +o' 62"6' *rivate
respondent ;ic 8i ade the disclosure in )epte1er of 199, in his affidavit su1itted
1efore the *rovincial !iscal'
["6]
=n her coplaint%affidavit,
["-]
=ntengan stated that she learned
of the revelation of the details of her foreign currency 1ank account on 5cto1er 12, 199,'
5n the other hand, +eri asserts that she discovered the disclosure on5cto1er "2, 199,'
["8]
$s to Brawner, the aterial date is January ., 1992'
["9]
Based on any of these dates,
prescription has set in'
[,3]
0he filing of the coplaint or inforation in the case at 1ar for alleged violation of
(epu1lic $ct +o' 123. did not have the effect of tolling the prescriptive period' !or it is the
filing of the coplaint or inforation corresponding to the correct offense which produces
that effect'
[,1]
=t ay well 1e argued that the foregoing dis<uisition would leave petitioners with no
reedy in law' Ge point out, however, that the confidentiality of foreign currency deposits
andated 1y (epu1lic $ct +o' 62"6, as aended 1y *residential Decree +o' 1"26, cae
into effect as far bac$ as 1%&&. Eence, ignorance thereof cannot 1e pretended' 5n one
hand, the e:istence of laws is a atter of andatory Fudicial noticeC
[,"]
on the
other, inorantia leis non e'cusat.
[,,]
Hven during the pendency of this appeal, nothing
prevented the petitioners fro filing a coplaint charging the correct offense against
private respondents' 0his was not done, as everyone involved was content to su1it the
case on the 1asis of an alleged violation of (epu1lic $ct +o' 123. 6Bank )ecrecy 8aw7,
however, incorrectly invoked'
[,2]
%2EREFORE, the petition is here1y DH+=HD' +o pronounceent as to costs'
O OR)ERE).
(ellosillo, ()"airman), *endo+a, ,uisumbin, and (uena, --., concur.
G.R. No. 90023 Mar45 6, 1996
CA AGRO7IN)(TRIAL )E-ELO#MENT COR#., petitioner,
vs'
T2E 2ONORA$LE CO(RT OF A##EAL a!" EC(RIT. $AN, AN) TR(T COM#AN., respondents'
.olorfino / .ominue+ 0a! 1ffices for petitioner.
.anilo (. (anares for private respondent.

)A-I)E, *R., J.:
=s the contractual relation 1etween a coercial 1ank and another party in a contract of rent of a safety deposit 1o:
with respect to its contents placed 1y the latter one of 1ailor and 1ailee or one of lessor and lesseeI
0his is the cru: of the present controversy'
5n , July 19-9, petitioner 6through its *resident, )ergio $guirre7 and the spouses (aon and *aula *ugao entered
into an agreeent where1y the forer purchased fro the latter two 6"7 parcels of land for a consideration of
*,.3,6".'33' 5f this aount, *-.,-".'33 was paid as downpayent while the 1alance was covered 1y three 6,7
postdated checks' $ong the ters and conditions of the agreeent e1odied in a 9eorandu of 0rue and
$ctual $greeent of )ale of 8and were that the titles to the lots shall 1e transferred to the petitioner upon full
payent of the purchase price and that the ownerJs copies of the certificates of titles thereto, 0ransfer #ertificates of
0itle 60#07 +os' "826.. and "9"2,2, shall 1e deposited in a safety deposit 1o: of any 1ank' 0he sae could 1e
withdrawn only upon the Foint signatures of a representative of the petitioner and the *ugaos upon full payent of
the purchase price' *etitioner, through )ergio $guirre, and the *ugaos then rented )afety Deposit Bo: +o' 1228 of
private respondent )ecurity Bank and 0rust #opany, a doestic 1anking corporation hereinafter referred to as the
respondent Bank' !or this purpose, 1oth signed a contract of lease 6H:hi1it K"K7 which contains, inter alia, the
following conditions4
1,' 0he 1ank is not a depositary of the contents of the safe and it has neither the possession nor
control of the sae'
12' 0he 1ank has no interest whatsoever in said contents, e:cept herein e:pressly provided, and it
assues a1solutely no lia1ility in connection therewith'
1
$fter the e:ecution of the contract, two 6"7 renterJs keys were given to the renters L one to $guirre 6for the
petitioner7 and the other to the *ugaos' $ guard key reained in the possession of the respondent Bank' 0he safety
deposit 1o: has two 6"7 keyholes, one for the guard key and the other for the renterJs key, and can 1e opened only
with the use of 1oth keys' *etitioner clais that the certificates of title were placed inside the said 1o:'
0hereafter, a certain 9rs' 9argarita (aos offered to 1uy fro the petitioner the two 6"7 lots at a price of *"".'33
per s<uare eter which, as petitioner alleged in its coplaint, translates to a profit of *133'33 per s<uare eter or a
total of *"83,.33'33 for the entire property' 9rs' (aos deanded the e:ecution of a deed of sale which
necessarily entailed the production of the certificates of title' =n view thereof, $guirre, accopanied 1y the *ugaos,
then proceeded to the respondent Bank on 2 5cto1er 19-9 to open the safety deposit 1o: and get the certificates of
title' Eowever, when opened in the presence of the BankJs representative, the 1o: yielded no such certificates'
Because of the delay in the reconstitution of the title, 9rs' (aos withdrew her earlier offer to purchase the lotsC as
a conse<uence thereof, the petitioner allegedly failed to realiDe the e:pected profit of *"83,.33'33' Eence, the latter
filed on 1 )epte1er 1983 a coplaint
2
for daages against the respondent Bank with the #ourt of !irst =nstance 6now
(egional 0rial #ourt7 of *asig, 9etro 9anila which docketed the sae as #ivil #ase +o' ,8,8"'
=n its $nswer with #ounterclai,
6
respondent Bank alleged that the petitioner has no cause of action 1ecause of
paragraphs 1, and 12 of the contract of lease 6H:hi1it K"K7C corollarily, loss of any of the ites or articles contained in the
1o: could not give rise to an action against it' =t then interposed a counterclai for e:eplary daages as well as
attorneyJs fees in the aount of *"3,333'33' *etitioner su1se<uently filed an answer to the counterclai'
8
=n due course, the trial court, now designated as Branch 161 of the (egional 0rial #ourt 6(0#7 of *asig, 9etro
9anila, rendered a decision
5
adverse to the petitioner on 8 Dece1er 1986, the dispositive portion of which reads4
GEH(H!5(H, preises considered, Fudgent is here1y rendered disissing plaintiffJs coplaint'
5n defendantJs counterclai, Fudgent is here1y rendered ordering plaintiff to pay defendant the
aount of !=;H 0E5@)$+D 6*.,333'337 *H)5) as attorneyJs fees'
Gith costs against plaintiff'
6
0he unfavora1le verdict is 1ased on the trial courtJs conclusion that under paragraphs 1, and 12 of the contract of
lease, the Bank has no lia1ility for the loss of the certificates of title' 0he court declared that the said provisions are
1inding on the parties'
=ts otion for reconsideration
3
having 1een denied, petitioner appealed fro the adverse decision to the respondent
#ourt of $ppeals which docketed the appeal as #$%&'(' #; +o' 1.1.3' *etitioner urged the respondent #ourt to reverse
the challenged decision 1ecause the trial court erred in 6a7 a1solving the respondent Bank fro lia1ility fro the loss, 617
not declaring as null and void, for 1eing contrary to law, pu1lic order and pu1lic policy, the provisions in the contract for
lease of the safety deposit 1o: a1solving the Bank fro any lia1ility for loss, 6c7 not concluding that in this Furisdiction, as
well as under $erican Furisprudence, the lia1ility of the Bank is settled and 6d7 awarding attorneyJs fees to the Bank and
denying the petitionerJs prayer for noinal and e:eplary daages and attorneyJs fees'
8
=n its Decision proulgated on 2 July 1989,
9
respondent #ourt affired the appealed decision principally on the theory
that the contract 6H:hi1it K"K7 e:ecuted 1y the petitioner and respondent Bank is in the nature of a contract of lease 1y
virtue of which the petitioner and its co%renter were given control over the safety deposit 1o: and its contents while the
Bank retained no right to open the said 1o: 1ecause it had neither the possession nor control over it and its contents' $s
such, the contract is governed 1y $rticle 162, of the #ivil #ode
10
which provides4
$rt' 162,' =n the lease of things, one of the parties 1inds hiself to give to another the enFoyent or
use of a thing for a price certain, and for a period which ay 1e definite or indefinite' Eowever, no
lease for ore than ninety%nine years shall 1e valid'
=t invoked 2olentino vs. 3on+ales
11
4 which held that the owner of the property loses his control over the
property leased during the period of the contract L and $rticle 19-. of the #ivil #ode which provides4
$rt' 19-.' 0he depositary holding certificates, 1onds, securities or instruents which earn interest
shall 1e 1ound to collect the latter when it 1ecoes due, and to take such steps as ay 1e
necessary in order that the securities ay preserve their value and the rights corresponding to the
according to law'
0he a1ove provision shall not apply to contracts for the rent of safety deposit 1o:es'
and then concluded that K[c]learly, the defendant%appellee is not under any duty to aintain the contents of
the 1o:' 0he stipulation a1solving the defendant%appellee fro lia1ility is in accordance with the nature of
the contract of lease and cannot 1e regarded as contrary to law, pu1lic order and pu1lic policy'K
12
0he
appellate court was <uick to add, however, that under the contract of lease of the safety deposit 1o:, respondent
Bank is not copletely free fro lia1ility as it ay still 1e ade answera1le in case unauthoriDed persons enter
into the vault area or when the rented 1o: is forced open' 0hus, as e:pressly provided for in stipulation nu1er 8
of the contract in <uestion4
8' 0he Bank shall use due diligence that no unauthoriDed person shall 1e aditted to any rented
safe and 1eyond this, the Bank will not 1e responsi1le for the contents of any safe rented fro it'
16
=ts otion for reconsideration
18
having 1een denied in the respondent #ourtJs (esolution of "8 $ugust 1989,
15
petitioner
took this recourse under (ule 2. of the (ules of #ourt and urges @s to review and set aside the respondent #ourtJs ruling'
*etitioner avers that 1oth the respondent #ourt and the trial court 6a7 did not properly and legally apply the correct law in
this case, 617 acted with grave a1use of discretion or in e:cess of Furisdiction aounting to lack thereof and 6c7 set a
precedent that is contrary to, or is a departure fro precedents adhered to and affired 1y decisions of this #ourt and
precepts in $erican Furisprudence adopted in the *hilippines' =t reiterates the arguents it had raised in its otion to
reconsider the trial courtJs decision, the 1rief su1itted to the respondent #ourt and the otion to reconsider the latterJs
decision' =n a nutshell, petitioner aintains that regardless of noenclature, the contract for the rent of the safety deposit
1o: 6H:hi1it K"K7 is actually a contract of deposit governed 1y 0itle M==, Book =; of the #ivil #ode of the
*hilippines'
16
$ccordingly, it is claied that the respondent Bank is lia1le for the loss of the certificates of title pursuant to
$rticle 19-" of the said #ode which provides4
$rt' 19-"' 0he depositary is o1liged to keep the thing safely and to return it, when re<uired, to the
depositor, or to his heirs and successors, or to the person who ay have 1een designated in the
contract' Eis responsi1ility, with regard to the safekeeping and the loss of the thing, shall 1e
governed 1y the provisions of 0itle = of this Book'
=f the deposit is gratuitous, this fact shall 1e taken into account in deterining the degree of care that
the depositary ust o1serve'
*etitioner then <uotes a passage fro $erican Jurisprudence
13
which is supposed to e:pound on the
prevailing rule in the @nited )tates, to wit4
0he prevailing rule appears to 1e that where a safe%deposit copany leases a safe%deposit 1o: or
safe and the lessee takes possession of the 1o: or safe and places therein his securities or other
valua1les, the relation of 1ailee and 1ail or is created 1etween the parties to the transaction as to
such securities or other valua1lesC the fact that the
safe%deposit copany does not know, and that it is not e:pected that it shall know, the character or
description of the property which is deposited in such safe%deposit 1o: or safe does not change that
relation' 0hat access to the contents of the safe%deposit 1o: can 1e had only 1y the use of a key
retained 1y the lessee 6 whether it is the sole key or one to 1e used in connection with one retained
1y the lessor7 does not operate to alter the foregoing rule' 0he arguent that there is not, in such a
case, a delivery of e:clusive possession and control to the deposit copany, and that therefore the
situation is entirely different fro that of ordinary 1ailent, has 1een generally reFected 1y the courts,
usually on the ground that as possession ust 1e either in the depositor or in the copany, it should
reasona1ly 1e considered as in the latter rather than in the forer, since the copany is, 1y the
nature of the contract, given a1solute control of access to the property, and the depositor cannot
gain access thereto without the consent and active participation of the copany' ' ' ' 6citations
oitted7'
and a segent fro Gords and *hrases
18
which states that a contract for the rental of a 1ank safety deposit
1o: in consideration of a fi:ed aount at stated periods is a 1ailent for hire'
*etitioner further argues that conditions 1, and 12 of the <uestioned contract are contrary to law and pu1lic policy
and should 1e declared null and void' =n support thereof, it cites $rticle 1,36 of the #ivil #ode which provides that
parties to a contract ay esta1lish such stipulations, clauses, ters and conditions as they ay dee convenient,
provided they are not contrary to law, orals, good custos, pu1lic order or pu1lic policy'
$fter the respondent Bank filed its coent, this #ourt gave due course to the petition and re<uired the parties to
siultaneously su1it their respective 9eoranda'
0he petition is partly eritorious'
Ge agree with the petitionerJs contention that the contract for the rent of the safety deposit 1o: is not an ordinary
contract of lease as defined in $rticle 162, of the #ivil #ode' Eowever, Ge do not fully su1scri1e to its view that the
sae is a contract of deposit that is to 1e strictly governed 1y the provisions in the #ivil #ode on depositC
19
the
contract in the case at 1ar is a special kind of deposit' =t cannot 1e characteriDed as an ordinary contract of lease under
$rticle 162, 1ecause the full and a1solute possession and control of the safety deposit 1o: was not given to the Foint
renters L the petitioner and the *ugaos' 0he guard key of the 1o: reained with the respondent BankC without this key,
neither of the renters could open the 1o:' 5n the other hand, the respondent Bank could not likewise open the 1o: without
the renterJs key' =n this case, the said key had a duplicate which was ade so that 1oth renters could have access to the
1o:'
Eence, the authorities cited 1y the respondent #ourt
20
on this point do not apply' +either could $rticle 19-., also relied
upon 1y the respondent #ourt, 1e invoked as an arguent against the deposit theory' 51viously, the first paragraph of
such provision cannot apply to a depositary of certificates, 1onds, securities or instruents which earn interest if such
docuents are kept in a rented safety deposit 1o:' =t is clear that the depositary cannot open the 1o: without the renter
1eing present'
Ge o1serve, however, that the deposit theory itself does not altogether find unanious support even in $erican
Furisprudence' Ge agree with the petitioner that under the latter, the prevailing rule is that the relation 1etween a
1ank renting out safe%deposit 1o:es and its custoer with respect to the contents of the 1o: is that of a 1ail or and
1ailee, the 1ailent 1eing for hire and utual 1enefit'
21
0his is Fust the prevailing view 1ecause4
0here is, however, soe support for the view that the relationship in <uestion ight 1e ore
properly characteriDed as that of landlord and tenant, or lessor and lessee' =t has also 1een
suggested that it should 1e characteriDed as that of licensor and licensee' 0he relation 1etween a
1ank, safe%deposit copany, or storage copany, and the renter of a safe%deposit 1o: therein, is
often descri1ed as contractual, e:press or iplied, oral or written, in whole or in part' But there is
apparently no Furisdiction in which any rule other than that applica1le to 1ailents governs <uestions
of the lia1ility and rights of the parties in respect of loss of the contents of safe%deposit
1o:es'
22
6citations oitted7
=n the conte:t of our laws which authoriDe 1anking institutions to rent out safety deposit 1o:es, it is clear that in this
Furisdiction, the prevailing rule in the @nited )tates has 1een adopted' )ection -" of the &eneral Banking
$ct
26
pertinently provides4
)ec' -"' =n addition to the operations specifically authoriDed elsewhere in this $ct, 1anking
institutions other than 1uilding and loan associations ay perfor the following services4
6a7 (eceive in custody funds, docuents, and valua1le o1Fects, and rent safety
deposit 1o:es for the safeguarding of such effects'
::: ::: :::
0he 1anks shall perfor the services peritted under su1sections 6a7, 617 and 6c7 of this section
asdepositories or as agents' ' ' '
28
6ephasis supplied7
+ote that the priary function is still found within the paraeters of a contract of deposit, i.e', the receiving in
custody of funds, docuents and other valua1le o1Fects for safekeeping' 0he renting out of the safety deposit 1o:es
is not independent fro, 1ut related to or in conFunction with, this principal function' $ contract of deposit ay 1e
entered into orally or in writing
25
and, pursuant to $rticle 1,36 of the #ivil #ode, the parties thereto ay esta1lish such
stipulations, clauses, ters and conditions as they ay dee convenient, provided they are not contrary to law, orals,
good custos, pu1lic order or pu1lic policy' 0he depositaryJs responsi1ility for the safekeeping of the o1Fects deposited in
the case at 1ar is governed 1y 0itle =, Book =; of the #ivil #ode' $ccordingly, the depositary would 1e lia1le if, in
perforing its o1ligation, it is found guilty of fraud, negligence, delay or contravention of the tenor of the agreeent'
26
=n
the a1sence of any stipulation prescri1ing the degree of diligence re<uired, that of a good father of a faily is to 1e
o1served'
23
Eence, any stipulation e:epting the depositary fro any lia1ility arising fro the loss of the thing deposited
on account of fraud, negligence or delay would 1e void for 1eing contrary to law and pu1lic policy' =n the instant case,
petitioner aintains that conditions 1, and 12 of the <uestioned contract of lease of the safety deposit 1o:, which read4
1,' 0he 1ank is not a depositary of the contents of the safe and it has neither the possession nor
control of the sae'
12' 0he 1ank has no interest whatsoever in said contents, e:cept herein e:pressly provided, and it
assues a1solutely no lia1ility in connection therewith'
28
are void as they are contrary to law and pu1lic policy' Ge find 5urselves in agreeent with this proposition
for indeed, said provisions are inconsistent with the respondent BankJs responsi1ility as a depositary under
)ection -"6a7 of the &eneral Banking $ct' Both e:ept the latter fro any lia1ility e:cept as conteplated in
condition 8 thereof which liits its duty to e:ercise reasona1le diligence only with respect to who shall 1e
aditted to any rented safe, to wit4
8' 0he Bank shall use due diligence that no unauthoriDed person shall 1e aditted to any rented
safe and 1eyond this, the Bank will not 1e responsi1le for the contents of any safe rented fro it'
29
!urtherore, condition 1, stands on a wrong preise and is contrary to the actual practice of the Bank' =t is
not correct to assert that the Bank has neither the possession nor control of the contents of the 1o: since in
fact, the safety deposit 1o: itself is located in its preises and is under its a1solute controlC oreover, the
respondent Bank keeps the guard key to the said 1o:' $s stated earlier, renters cannot open their respective
1o:es unless the Bank cooperates 1y presenting and using this guard key' #learly then, to the e:tent a1ove
stated, the foregoing conditions in the contract in <uestion are void and ineffective' =t has 1een said4
Gith respect to property deposited in a safe%deposit 1o: 1y a custoer of a safe%deposit copany,
the parties, since the relation is a contractual one, ay 1y special contract define their respective
duties or provide for increasing or liiting the lia1ility of the deposit copany, provided such contract
is not in violation of law or pu1lic policy' =t ust clearly appear that there actually was such a special
contract, however, in order to vary the ordinary o1ligations iplied 1y law fro the relationship of the
partiesC lia1ility of the deposit copany will not 1e enlarged or restricted 1y words of dou1tful
eaning' 0he copany, in renting
safe%deposit 1o:es, cannot e:ept itself fro lia1ility for loss of the contents 1y its own fraud or
negligence or that of its agents or servants, and if a provision of the contract ay 1e construed as an
attept to do so, it will 1e held ineffective for the purpose' $lthough it has 1een held that the lessor
of a safe%deposit 1o: cannot liit its lia1ility for loss of the contents thereof through its own
negligence, the view has 1een taken that such a lessor ay liits its lia1ility to soe e:tent 1y
agreeent or stipulation'
60
6citations oitted7
0hus, we reach the sae conclusion which the #ourt of $ppeals arrived at, that is, that the petition should 1e
disissed, 1ut on grounds <uite different fro those relied upon 1y the #ourt of $ppeals' =n the instant case, the
respondent BankJs e:oneration cannot, contrary to the holding of the #ourt of $ppeals, 1e 1ased on or proceed fro
a characteriDation of the ipugned contract as a contract of lease, 1ut rather on the fact that no copetent proof
was presented to show that respondent Bank was aware of the agreeent 1etween the petitioner and the *ugaos
to the effect that the certificates of title were withdrawa1le fro the safety deposit 1o: only upon 1oth partiesJ Foint
signatures, and that no evidence was su1itted to reveal that the loss of the certificates of title was due to the fraud
or negligence of the respondent Bank' 0his in turn flows fro this #ourtJs deterination that the contract involved
was one of deposit' )ince 1oth the petitioner and the *ugaos agreed that each should have one 617 renterJs key, it
was o1vious that either of the could ask the Bank for access to the safety deposit 1o: and, with the use of such
key and the BankJs own guard key, could open the said 1o:, without the other renter 1eing present'
)ince, however, the petitioner cannot 1e 1laed for the filing of the coplaint and no 1ad faith on its part had 1een
esta1lished, the trial court erred in condening the petitioner to pay the respondent Bank attorneyJs fees' 0o this
e:tent, the Decision 6dispositive portion7 of pu1lic respondent #ourt of $ppeals ust 1e odified'
GEH(H!5(H, the *etition for (eview is partially &($+0HD 1y deleting the award for attorneyJs fees fro the 2
July 1989 Decision of the respondent #ourt of $ppeals in #$%&'(' #; +o' 1.1.3' $s odified, and su1Fect to the
pronounceent Ge ade a1ove on the nature of the relationship 1etween the parties in a contract of lease of
safety deposit 1o:es, the dispositive portion of the said Decision is here1y $!!=(9HD and the instant *etition for
(eview is otherwise DH+=HD for lack of erit'
+o pronounceent as to costs'
)5 5(DH(HD'
5eliciano, (idin, Romero and *elo, --., concur'
3utierre+, -r., -., is on leave'
G.R. No. 102930 May 16, 1996
L(+AN IA, petitioner,
vs'
CO(RT OF A##EAL a!" EC(RIT. $AN, a!" TR(T COM#AN., respondents'
Asuncion 0a! 1ffices for petitioner.
)auton, (anares, )arpio / Associates for private respondent.

)A-I)E, *R., J.:
0he Decision of pu1lic respondent #ourt of $ppeals in #$%&'(' #; +o' "6-,-, proulgated on "1 $ugust
1991,
1
reversing and setting aside the Decision, dated 19 !e1ruary 1993,
2
of Branch 2- of the (egional 0rial #ourt 6(0#7
of 9anila in #ivil #ase +o' 8-%2"631, entitled K8@N$+ )=$ vs. )H#@(=0O B$+P and 0(@)0 #5',K is challenged in this
petition for review on certiorari under (ule 2. of the (ules #ourt'
#ivil #ase +o' 8-%2"631 is an action for daages arising out of the destruction or loss of the stap collection of the
plaintiff 6petitioner herein7 contained in )afety Deposit Bo: +o' .2 which had 1een rented fro the defendant
pursuant to a contract denoinated as a 8ease $greeent'
6
Judgent therein was rendered in favor of the dispositive
portion of which reads4
GEH(H!5(H, preises considered, Fudgent is here1y rendered in favor of the plaintiff and
against the defendant, )ecurity Bank Q 0rust #opany, ordering the defendant 1ank to pay the
plaintiff the su of L
a7 0wenty 0housand *esos 6*"3,333'337, *hilippine #urrency, as actual daagesC
17 5ne Eundred 0housand *esos 6*133,333'337, *hilippine #urrency, as oral daagesC and
c7 !ive 0housand *esos 6*.,333'337, *hilippine #urrency, as attorneyJs fees and legal e:penses'
0he counterclai set up 1y the defendant are here1y disissed for lack of erit'
+o costs'
)5 5(DH(HD'
8
0he antecedent facts of the present controversy are suariDed 1y the pu1lic respondent in its challenged decision as
follows4
0he plaintiff rented on 9arch "", 198. the )afety Deposit Bo: +o' .2 of the defendant 1ank at its
Binondo Branch located at the !ookien 0ies Building, )oler )t', Binondo, 9anila wherein he
placed his collection of staps' 0he said safety deposit 1o: leased 1y the plaintiff was at the 1otto
or at the lowest level of the safety deposit 1o:es of the defendant 1ank at its aforesaid Binondo
Branch'
During the floods that took place in 198. and 1986, floodwater entered into the defendant 1ankJs
preises, seeped into the safety deposit 1o: leased 1y the plaintiff and caused, according to the
plaintiff, daage to his staps collection' 0he defendant 1ank reFected the plaintiffJs clai for
copensation for his daaged staps collection, so, the plaintiff instituted an action for daages
against the defendant 1ank'
0he defendant 1ank denied lia1ility for the daaged staps collection of the plaintiff on the 1asis of
the K(ules and (egulations &overning the 8ease of )afe Deposit Bo:esK 6H:hs' K$%1K, K1%$K7,
particularly paragraphs 9 and 1,, which reads 6sic74
K9' 0he lia1ility of the Bank 1y reason of the lease, is liited to the e:ercise of the diligence to
prevent the opening of the safe 1y any person other than the (enter, his authoriDed agent or legal
representativeC
::: ::: :::
K1,' 0he Bank is not a depository of the contents of the safe and it has neither the possession nor
the control of the sae' 0he Bank has no interest whatsoever in said contents, e:cept as herein
provided, and it assues a1solutely no lia1ility in connection therewith'K
0he defendant 1ank also contended that its contract with the plaintiff over safety deposit 1o: +o' .2
was one of lease and not of deposit and, therefore, governed 1y the lease agreeent 6H:hs' K$K,
K8K7 which should 1e the applica1le lawC that the destruction of the plaintiffJs staps collection was
due to a calaity 1eyond o1ligation on its part to notify the plaintiff a1out the floodwaters that
inundated its preises at Binondo 1ranch which allegedly seeped into the safety deposit 1o: leased
to the plaintiff'
0he trial court then directed that an ocular inspection on 6sic7 the contents of the safety deposit 1o:
1e conducted, which was done on Dece1er 8, 1988 1y its clerk of court in the presence of the
parties and their counsels' $ report thereon was then su1itted on Dece1er 1", 1988 6(ecords, p'
98%$7 and confired in open court 1y 1oth parties thru counsel during the hearing on the sae date
66bid., p' 13"7 stating4
K0hat the )afety Bo: Deposit +o' .2 was opened 1y 1oth plaintiff 8uDan )ia and the
$cting Branch 9anager Jiy B' Onion in the presence of the undersigned,
plaintiffJs and defendantJs counsel' )aid )afety Bo: when opened contains two
al1us of different siDes and thickness, length and width and a tin 1o: with printed
word J0ai *ing )hiang (oast *ork in pieces with #hinese designs and character'K
#ondition of the a1ove%stated =tes L
KBoth al1us are wet, oldy and 1adly daaged'
1' 0he first al1u easures 13 1B8 inches in length, 8 inches in width and ,B2 in thick' 0he leaves of
the al1u are attached to every page and cannot 1e lifted without destroying it, hence the staps
contained therein are no longer visi1le'
"' 0he second al1u easure 1" 1B" inches in length, 9 ,B2 in width 1 inch thick' )oe of its pages
can still 1e lifted' 0he staps therein can still 1e distinguished 1ut 1eyond restoration' 5thers have
lost its original for'
,' 0he tin 1o: is rusty inside' =t contains an al1u with several pieces of papers stuck up to the
cover of the 1o:' 0he condition of the al1u is the second a1oveentioned al1u'K
5
0he )H#@(=0O B$+P $+D 0(@)0 #59*$+O, hereinafter referred to as )B0#, appealed the trial courtJs decision to
the pu1lic respondent #ourt of $ppeals' 0he appeal was docketed as #$%&'(' #; +o' "6-,-'
=n urging the pu1lic respondent to reverse the decision of the trial court, )B0# contended that the latter erred in 6a7
holding that the lease agreeent is a contract of adhesionC 617 finding that the defendant had failed to e:ercise the
re<uired diligence e:pected of a 1ank in aintaining the safety deposit 1o:C 6c7 awarding to the plaintiff actual
daages in the aount of *"3,333'33, oral daages in the aount of *133,333'33 and attorneyJs fees and legal
e:penses in the aount of *.,333'33C and 6d7 disissing the counterclai'
5n "1 $ugust 1991, the respondent proulgated its decision the dispositive portion of which reads4
GEH(H!5(H, the decision appealed fro is here1y (H;H()HD and instead the appelleeJs
coplaint is here1y D=)9=))HD' 0he appellant 1ankJs counterclai is likewise D=)9=))HD' +o
costs'
6
=n reversing the trial courtJs decision and a1solving )B0# fro lia1ility, the pu1lic respondent found and ruled that4
a7 the fine print in the K8ease $greeent K 6H:hi1its K$K and K1K 7 constitutes the ters and conditions of the contract
of lease which the appellee 6now petitioner7 had voluntarily and knowingly e:ecuted with )B0#C
17 the contract entered into 1y the parties regarding )afe Deposit Bo: +o' .2 was not a contract of deposit wherein
the 1ank 1ecae a depositary of the su1Fect stap collectionC hence, as contended 1y )B0#, the provisions of
Book =;, 0itle M== of the #ivil #ode on deposits do not applyC
c7 0he following provisions of the <uestioned lease agreeent of the safety deposit 1o: liiting )B0#Js lia1ility4
9' 0he lia1ility of the 1ank 1y reason of the lease, is liited to the e:ercise of the diligence to prevent
the opening of the )afe 1y any person other than the (enter, his authoriDed agent or legal
representative'
::: ::: :::
1,' 0he 1ank is not a depository of the contents of the )afe and it has neither the possession nor the
control of the sae' 0he Bank has no interest whatsoever in said contents, e:cept as herein
provided, and it assues a1solutely no lia1ility in connection therewith'
are valid since said stipulations are not contrary to law, orals, good custos, pu1lic order or pu1lic policyC and
d7 there is no concrete evidence to show that )B0# failed to e:ercise the re<uired diligence in aintaining the
safety deposit 1o:C what was proven was that the floods of 198. and 1986, which were 1eyond the control of )B0#,
caused the daage to the stap collectionC said floods were fortuitous events which )B0# should not 1e held lia1le
for since it was not shown to have participated in the aggravation of the daage to the stap collectionC on the
contrary, it offered its services to secure the assistance of an e:pert in order to save ost of the staps, 1ut the
appellee refusedC appellee ust then 1ear the lose under the principle of Kres perit domino'K
@nsuccessful in his 1id to have the a1ove decision reconsidered 1y the pu1lic respondent,
3
petitioner filed the instant
petition wherein he contends that4
=
=0 G$) $ &($;H H((5( 5( $+ $B@)H 5! D=)#(H0=5+ 5+ 0EH *$(0 5! 0EH
(H)*5+DH+0 #5@(0 GEH+ =0 (@8HD 0E$0 (H)*5+DH+0 )B0# D=D +50 !$=8 05
HMH(#=)H 0EH (HR@=(HD D=8=&H+#H =+ 9$=+0$=+=+& 0EH )$!H0O DH*5)=0 B5M 5! 0EH
*H0=0=5+H( #5+)=DH(=+& 0E$0 )@B)0$+0=$8 H;=DH+#H HM=)0 6sic7 *(5;=+& 0EH
#5+0($(O'
==
0EH (H)*5+DH+0 #5@(0 )H(=5@)8O H((HD =+ HM#@8*$0=+& *(=;$0H (H)*5+DH+0
!(59 $+O 8=$B=8=0O GE$0)5H;H( BO (H$)5+ 5! 0EH *(5;=)=5+) 5! *$($&($*E) 9
$+D 1, 5! 0EH $&(HH9H+0 6HME)' K$K $+D K$%1K7'
===
0EH (H)*5+DH+0 #5@(0 )H(=5@)8O H((HD =+ +50 @*E58D=+& 0EH $G$(D) 5! 0EH
0(=$8 #5@(0 !5( $#0@$8 $+D 95($8 D$9$&H), =+#8@D=+& $005(+HOJ) !HH) $+D
8H&$8 HM*H+)H), =+ !$;5( 5! 0EH *H0=0=5+H('
8
Ge su1se<uently gave due course the petition and re<uired 1oth parties to su1it their respective eoranda, which
they coplied with'
9
*etitioner insists that the trial court correctly ruled that )B0# had failed Kto e:ercise the re<uired diligence e:pected of a
1ank aintaining such safety deposit 1o: ' ' ' in the light of the environental circustance of said safety deposit 1o:
after the floods of 198. and 1986'K Ee argues that such a conclusion is supported 1y the evidence on record, to wit4 )B0#
was fully cogniDant of the e:act location of the safety deposit 1o: in <uestionC it knew that the preises were inundated 1y
floodwaters in 198. and 1986 and considering that the 1ank is guarded twenty%four 6"27 hours a day , it is safe to
conclude that it was also aware of the inundation of the preises where the safety deposit 1o: was locatedC despite such
knowledge, however, it never 1othered to infor the petitioner of the flooding or take any appropriate easures to insure
the safety and good aintenance of the safety deposit 1o: in <uestion'
)B0# does not s<uarely dispute these factsC rather, it relies on the rule that findings of facts of the #ourt of $ppeals,
when supported 1y su1stantial e:idence, are not reviewa1le on appeal 1y certiorari'
10
0he foregoing rule is, of course, su1Fect to certain e:ceptions such as when there e:ists a disparity 1etween the factual
findings and conclusions of the #ourt of $ppeals and the trial court'
11
)uch a disparity o1tains in the present case'
$s Ge see it, )B0#Js theory, which was upheld 1y the pu1lic respondent, is that the K8ease $greeent K covering
)afe Deposit Bo: +o' .2 6H:hi1it K$ and K1K7 is Fust that L a contract of lease L and not a contract of deposit, and
that paragraphs 9 and 1, thereof, which e:pressly liit the 1ankJs lia1ility as follows4
9' 0he lia1ility of the 1ank 1y reason of the lease, is liited to the e:ercise of the diligence to prevent
the opening of the )afe 1y any person other than the (enter, his autlioriDed agent or legal
representativeC
::: ::: :::
1,' 0he 1ank is not a depository of the contents of the )afe and it has neither the possession nor the
control of the sae' 0he Bank has no interest whatsoever said contents, e:cept as herein provided,
and it assues a1solutely no lia1ility in connection therewith'
12
are valid and 1inding upon the parties' =n the challenged decision, the pu1lic respondent further avers that even without
such a liitation of lia1ility, )B0# should still 1e a1solved fro any responsi1ility for the daage sustained 1y the
petitioner as it appears that such daage was occasioned 1y a fortuitous event and that the respondent 1ank was free
fro any participation in the aggravation of the inFury'
Ge cannot accept this theory and ratiocination' #onse<uently, this #ourt finds the petition to 1e ipressed with
erit'
=n the recent case )A Aro76ndustrial .evelopment )orp. vs. )ourt of Appeals,
16
this #ourt e:plicitly reFected the
contention that a contract for the use of a safety deposit 1o: is a contract of lease governed 1y 0itle ;==, Book =; of the
#ivil #ode' +or did Ge fully su1scri1e to the view that it is a contract of deposit to 1e strictly governed 1y the #ivil #ode
provision on depositC
18
it is, as Ge declared, a special kind of deposit' 0he prevailing rule in $erican Furisprudence L
that the relation 1etween a 1ank renting out safe deposit 1o:es and its custoer with respect to the contents of the 1o: is
that of a 1ailor and 1ailee, the 1ailent for hire and utual 1enefit
15
L has 1een adopted in this Furisdiction, thus4
=n the conte:t of our laws which authoriDe 1anking institutions to rent out safety deposit 1o:es, it is
clear that in this Furisdiction, the prevailing rule in the @nited )tates has 1een adopted' )ection -" of
the &eneral Banking $ct [('$' ,,-, as aended] pertinently provides4
K)ec' -"' =n addition to the operations specifically authoriDed elsewhere in this $ct, 1anking
institutions other than 1uilding and loan associations ay perfor the following services4
6a7 (eceive in custody funds, docuents, and valua1le o1Fects, and rent safety
deposit 1o:es for the safe<uarding of such effects'
::: ::: :::
0he 1anks shall perfor the services peritted under su1sections 6a7, 617 and 6c7 of this section
asdepositories or as agents' ' ' 'K6ephasis supplied7
+ote that the priary function is still found within the paraeters of a contract of deposit, i.e., the
receiving in custody of funds, docuents and other valua1le o1Fects for safekeeping' 0he renting out
of the safety deposit 1o:es is not independent fro, 1ut related to or in conFunction with, this
principal function' $ contract of deposit ay 1e entered into orally or in writing 6$rt' 1969, #ivil #ode]
and, pursuant to $rticle 1,36 of the #ivil #ode, the parties thereto ay esta1lish such stipulations,
clauses, ters and conditions as they ay dee convenient, provided they are not contrary to law,
orals, good custos, pu1lic order or pu1lic policy' 0he depositaryJs responsi1ility for the
safekeeping of the o1Fects deposited in the case at 1ar is governed 1y 0itle =, Book =; of the #ivil
#ode' $ccordingly, the depositary would 1e lia1le if, in perforing its o1ligation, it is found guilty of
fraud, negligence, delay or contravention of the tenor of the agreeent [$rt' 11-3, id.]' =n the
a1sence of any stipulation prescri1ing the degree of diligence re<uired, that of a good father of a
faily is to 1e o1served [$rt' 11-,, id.]' Eence, any stipulation e:epting the depositary fro any
lia1ility arising fro the loss of the thing deposited on account of fraud, negligence or delay would 1e
void for 1eing contrary to law and pu1lic policy' =n the instant case, petitioner aintains that
conditions 1, and l2 of the <uestioned contract of lease of the safety deposit 1o:, which read4
K1,' 0he 1ank is a depositary of the contents of the safe and it has neither the possession nor
control of the sae'
K12' 0he 1ank has no interest whatsoever in said contents, e:cept as herein e:pressly provided, and
it assues a1solutely no lia1ility in connection therewith'K
are void as they are contrary to law and pu1lic policy' Ge find 5urselves in agreeent with this
proposition for indeed, said provisions are inconsistent with the respondent BankJs responsi1ility as a
depositary under )ection -" 6a7 of the &eneral Banking $ct' Both e:ept the latter fro any lia1ility
e:cept as conteplated in condition 8 thereof which liits its duty to e:ercise reasona1le diligence
only with respect to who shall 1e aditted to any rented safe, to wit4
K8' 0he Bank shall use due diligence that no unauthoriDed person shall 1e aditted
to any rented safe and 1eyond this, the Bank will not 1e responsi1le for the contents
of any safe rented fro it'K
!urtherore condition 1, stands on a wrong preise and is contrary to the actual practice of the
Bank' =t is not correct to assert that the Bank has neither the possession nor control of the contents
of the 1o: since in fact, the safety deposit 1o: itself is located in its preises and is under its
a1solute controlC oreover, the respondent Bank keeps the guard key to the said 1o:' $s stated
earlier, renters cannot open their respective 1o:es unless the Bank cooperates 1y presenting and
using this guard key' #learly then, to the e:tent a1ove stated, the foregoing conditions in the
contract in <uestion are void and ineffective' =t has 1een said4
KGith respect to property deposited in a safe%deposit 1o: 1y a custoer of a safe%
deposit copany, the parties, since the relation is a contractual one, ay 1y special
contract define their respective duties or provide for increasing or liiting the lia1ility
of the deposit copany, provided such contract is not in violation of law or pu1lic
policy' =t ust clearly appear that there actually was such a special contract,
however, in order to vary the ordinary o1ligations iplied 1y law fro the relationship
of the partiesC lia1ility of the deposit copany will not 1e enlarged or restricted 1y
words of dou1tful eaning' 0he copany, in renting safe%deposit 1o:es, cannot
e:ept itself fro lia1ility for loss of the contents 1y its own fraud or negligence or
that, of its agents or servants, and if a provision of the contract ay 1e construed as
an attept to do so, it will 1e held ineffective for the purpose' $lthough it has 1een
held that the lessor of a safe%deposit 1o: cannot liit its lia1ility for loss of the
contents thereof through its own negligence, the view has 1een taken that such a
lessor ay liit its lia1ility to soe e:tent 1y agreeent or stipulation 'K[13 $9 J@(
"d', 266]' 6citations oitted7 16
=t ust 1e noted that conditions +o' 1, and +o' 12 in the #ontract of 8ease of )afety Deposit Bo: in )A Aro7
6ndustrial .evelopment )orp. are strikingly siilar to condition +o' 1, in the instant case' 5n the other hand, 1oth
condition +o' 8 in )A Aro76ndustrial .evelopment )orp. and condition +o' 9 in the present case liit the scope of
the e:ercise of due diligence 1y the 1anks involved to erely seeing to it that only the renter, his authoriDed agent
or his legal representative should open or have access to the safety deposit 1o:' =n short, in all other situations, it
would see that )B0# is not 1ound to e:ercise diligence of any kind at all' $ssayed in the light of 5ur
aforeentioned pronounceents in )A Aro7lndustrial .evelopment )orp., it is not at all difficult to conclude that
1oth conditions +o' 9 and +o' 1, of the K8ease $greeentK covering the safety deposit 1o: in <uestion 6H:hi1its K$K
and K1K7 ust 1e stricken down for 1eing contrary to law and pu1lic policy as they are eant to e:ept )B0# fro
any lia1ility for daage, loss or destruction of the contents of the safety deposit 1o: which ay arise fro its own or
its agentsJ fraud, negligence or delay' $ccordingly, )B0# cannot take refuge under the said conditions'
*u1lic respondent further postulates that )B0# cannot 1e held responsi1le for the destruction or loss of the stap
collection 1ecause the flooding was a fortuitous event and there was no showing of )B0#Js participation in the
aggravation of the loss or inFury' =t states4
$rticle 11-2 of the #ivil #ode provides4
KH:cept in cases e:pressly specified 1y the law, or when it is otherwise declared 1y
stipulation, or when the nature of the o1ligation re<uires the assuption of risk, no
person shall 1e responsi1le for those events which could not 1e foreseen, or which,
though foreseen, were inevita1le'J
=n its dissertation of the phrase 8caso fortuito8 the 9nciclopedia -urisdicada 9spa:ola
13
says4 K=n a legal
sense and, conse<uently, also in relation to contracts, a 8caso fortuito8 prevents 6sic7
18
the following essential characteristics4 617 the cause
of the unforeseen ands une:pected occurrence, or of the failure of the de1tor to coply with his o1ligation, ust 1e independent of the
huan willC 6"7 it ust 1e ipossi1le to foresee the event which constitutes the 8caso fortuito,8 or if it can 1e foreseen, it ust 1e ipossi1le
to avoidC 6,7 the occurrence ust 1e such as to render it ipossi1le for one de1tor to fulfill his o1ligation in a noral annerC and 627 the
o1ligor ust 1e free fro any participation in the aggravation of the inFury resulting to the creditor'K 6cited in )ervando vs.*hil', )tea
+avigation #o', supra7'
19
Eere, the unforeseen or une:pected inundating floods were independent of the will of the appellant
1ank and the latter was not shown to have participated in aggravating daage 6sic7 to the staps
collection of the appellee' =n fact, the appellant 1ank offered its services to secure the assistance of
an e:pert to save ost of the then good staps 1ut the appelle refused and let 6sic7 these
recovera1le staps inside the safety deposit 1o: until they were ruined'
20
Both the law and authority cited are clear enough and re<uire no further elucidation' @nfortunately, however, the pu1lic
respondent failed to consider that in the instant case, as correctly held 1y the trial court, )B0# was guilty of negligence'
0he facts constituting negligence are enuerated in the petition and have 1een suariDed in this ponencia. )B0#Js
negligencearavated the inFury or daage to the stap collection' )B0# was aware of the floods of 198. and 1986C it
also knew that the floodwaters inundated the roo where )afe Deposit Bo: +o' .2 was located' =n view thereof, it should
have lost no tie in notifying the petitioner in order that the 1o: could have 1een opened to retrieve the staps, thus
saving the sae fro further deterioration and loss' =n this respect, it failed to e:ercise the reasona1le care and prudence
e:pected of a good father of a faily, there1y 1ecoing a party to the aggravation of the inFury or loss' $ccordingly, the
aforeentioned fourth characteristic of a fortuitous event is a1sent $rticle 11-3 of the #ivil #ode, which reads4
0hose who in the perforance of their o1ligation are guilty of fraud, negligence, or delay, and those
who in any anner contravene the tenor thereof, are lia1le for daages,
thus coes to the succor of the petitioner' 0he destruction or loss of the stap collection which was, in the
language of the trial court, the Kproduct of "- years of patience and diligenceK
21
caused the petitioner pecuniary lossC
hence, he ust 1e copensated therefor'
Ge cannot, however, place 5ur ipriatur on the trial courtJs award of oral daages' )ince the relationship
1etween the petitioner and )B0# is 1ased on a contract, either of the ay 1e held lia1le for oral daages for
1reach thereof only if said party had acted fraudulently or in 1ad faith'
22
0here is here no proof of fraud or 1ad faith on
the part of )B0#'
GEH(H!5(H, the instant petition is here1y &($+0HD' 0he challenged Decision and (esolution of the pu1lic
respondent #ourt of $ppeals of "1 $ugust 1991 and "1 +ove1er 1991, respectively, in #$%&'(' #; +o' "6-,-,
are here1y )H0 $)=DH and the Decision of 19 !e1ruary 1993 of Branch 2- of the (egional 0rial #ourt of 9anila in
#ivil #ase +o' 8-%2"631 is here1y (H=+)0$0HD in full, e:cept as to the award of oral daages which is here1y
set aside'
#osts against the private respondent'
)5 5(DH(HD'
5eliciano, (idin, Romero and *elo, --., concur.
G.R. No. 189206 *u!e 8, 2011
GO-ERNMENT ER-ICE IN(RANCE .TEM, *etitioner,
vs'
T2E 2ONORA$LE 1595 )I-IION OF T2E CO(RT OF A##EAL a!" IN)(TRIAL $AN, OF ,OREA, TONG
.ANG MERC2ANT $AN,, 2ANARE(M $AN,ING COR#., LAN) $AN, OF T2E #2ILI##INE, %ETMONT
$AN, a!" )OMAT 2OL)ING, INC., (espondents'
D H # = ) = 5 +
#ERE+, J.:
0he su1Fect of this petition for certiorari is the Decision
1
of the #ourt of $ppeals in #$%&'(' )* +o' 8"62- allowing
the <uashal 1y the (egional 0rial #ourt 6(0#7 of 9akati of a su1poena for the production of 1ank ledger' 0his case
is incident to #ivil #ase +o' 99%18.,, which is the ain case for collection of su of oney with daages filed 1y
=ndustrial Bank of Porea, 0ong Oang 9erchant Bank, !irst 9erchant Banking #orporation, 8and Bank of the
*hilippines, and Gestont Bank 6now @nited 5verseas Bank7, collectively known as Kthe BanksK against Dosat
Eoldings, =nc' 6Dosat7 and the &overnent )ervice =nsurance )yste 6&)=)7' )aid case steed fro a 8oan
$greeent,
"
where1y the Banks agreed to lend @nited )tates 6@')'7 A11 9illion to Dosat for the purpose of
financing the lease andBor purchase of a &oriDon )atellite fro the =nternational 5rganiDation of )pace
#ounications 6=ntersputnik7'
,
0he controversy originated fro a surety agreeent 1y which Dosat o1tained a surety 1ond fro &)=) to secure
the payent of the loan fro the Banks' Ge <uote the ters of the )urety Bond in its entirety'
2
(epu1lic of the *hilippines
&5;H(+9H+0 )H(;=#H =+)@($+#H )O)0H9
&H+H($8 =+)@($+#H !@+D
&)=) Eead<uarters, !inancial #enter
(o:as Boulevard, *asay #ity
&6167 &=! Bond 3"-261
) @ ( H 0 O B 5 + D
P+5G $88 9H+ BO 0EH)H *(H)H+0)4
0hat we, D59)$0 E58D=+&), =+#', represented 1y its *resident as *(=+#=*$8, and the &5;H(+9H+0
)H(;=#H =+)@($+#H )O)0H9, as $dinistrator of the &H+H($8 =+)@($+#H !@+D, a corporation duly
organiDed and e:isting under and 1y virtue of the laws of the *hilippines, with principal office in the #ity of *asay,
9etro 9anila, *hilippines as )@(H0O, are held and firly 1ound unto the 5B8=&HH)4 8$+D B$+P 5! 0EH
*E=8=**=+H), -th !loor, 8and Bank Bldg' =;' ,1, )en' &il J' *uyat $venue, 9akati #ityC GH)095+0 B$+P, 211
Ruintin *aredes )t', Binondo, 9anila4 05+& O$+& 9H(#E$+0 B$+P, 18., "%Pa, @lchi%ro, #hungk%ku, )eoul,
PoreaC =+D@)0(=$8 B$+P 5! P5(H$, .3, "%&a, @lchi%ro, #hung%gu, )eoul, PoreaC and !=()0 9H(#E$+0
B$+P=+& #5(*5($0=5+, 199%23, "%&a, HuliFi%ro, Jung%gu, )eoul, Porea, in the su, of @) A H8H;H+ 9=88=5+
D588$() 6A11,333,333'337 for the payent of which su, well and truly to 1e ade, we 1ind ourselves, our heirs,
e:ecutors, adinistrators, successors and assigns, Fointly and severally, firly 1y these presents'
0EH #5+D=0=5+) 5! 0EH 5B8=&$0=5+ $(H $) !5885G)4
GEH(H$), the a1ove 1ounden *(=+#=*$8, on the 1"th day of Dece1er, 1996 entered into a contract agreeent
with the aforeentioned 5B8=&HH) to fully and faithfully
&uarantee the repayent of the principal and interest on the loan granted the *(=+#=*$8 to 1e used for the
financing of the two 6"7 year lease of a (ussian )atellite fro =+0H()*@0+=P, in accordance with the ters and
conditions of the credit package entered into 1y the parties'
0his 1ond shall reain valid and effective until the loan including interest has 1een fully paid and li<uidated,
a copy of which contractBagreeent is hereto attached and ade part hereofC
GEH(H$), the aforeentioned 5B8=&HH) re<uire said *(=+#=*$8 to give a good and sufficient 1ond in the
a1ove stated su to secure the full and faithful perforance on his part of said contractBagreeent'
+5G, 0EH(H!5(H, if the *(=+#=*$8 shall well and truly perfor and fulfill all the undertakings, covenants, ters,
conditions, and agreeents stipulated in said contractBagreeents, then this o1ligation shall 1e null and voidC
otherwise, it shall reain in full force and effect'
G=0+H)) 5@( E$+D) $+D )H$8) this 1,th day of Dece1er 1996 at *asay #ity, *hilippines'
D59)$0 E58D=+&), =+#'
*rincipal
&5;H(+9H+0 )H(;=#H =+)@($+#H )O)0H9
&eneral =nsurance !und
By4
#$*0' (5D(=&5 $' )=8;H(=5
*resident
By4
$9$8=5 $' 9$88$(=
)enior ;ice%*resident
&eneral =nsurance &roup
Ghen Dosat failed to pay the loan, &)=) refused to coply with its o1ligation reasoning that Dosat did not use
the loan proceeds for the payent of rental for the satellite' &)=) alleged that Dosat, with Gestont Bank as the
conduit, transferred the @')' A11 9illion loan proceeds fro the =ndustrial Bank of Porea to #iti1ank +ew Oork
account of Gestont Bank and fro there to the Binondo Branch of Gestont Bank'
.
0he Banks filed a coplaint
1efore the (0# of 9akati against Dosat and &)=)'
=n the course of the hearing, &)=) re<uested for the issuance of a su1poena duces tecu to the custodian of
records of Gestont Bank to produce the following docuents4
1' 8edger covering the account of D59)$0 Eoldings, =nc' with Gestont Bank 6now @nited 5verseas
Bank7, any and all docuents, records, files, 1ooks, deeds, papers, notes and other data and aterials
relating to the account or transactions of D59)$0 Eoldings, =nc' with or through the Gestont Bank 6now
@nited 5verseas Bank7 for the period January 199- to Dece1er "33", in hisBher direct or indirect
possession, custody or control 6whether actual or constructive7, whether in hisBher capacity as #ustodian of
(ecords or otherwiseC
"' $ll applications for cashier/sB anager/s checks and 1ank transfers funded 1y the account of D59)$0
Eoldings, =nc' with or through the Gestont Bank 6now @nited 5verseas Bank7 for the period January 199-
to Dece1er "33", and all other data and aterials covering said applications, in hisBher direct or indirect
possession, custody or control 6whether actual or constructive7, whether in hisBher capacity as #ustodian of
(ecords or otherwiseC
,' 8edger covering the account of *hilippine $gila )atellite, =nc' with Gestont Bank 6now @nited 5verseas
Bank7, any and all docuents, records, files, 1ooks, deeds, papers, notes and other data and aterials
relating to the account or transactions of *hilippine $gila )atellite, =nc' with or through the Gestont 1ank
6now @nited 5verseas Bank7 for the period January 199- to Dece1er "33", in hisBher direct or indirect
possession, custody or control 6whether actual or constructive7, whether in hisBher capacity as #ustodian of
(ecords or otherwiseC
2' $ll applications for cashier/sBanager/s checks funded 1y the account of *hilippine $gila )atellite, =nc'
with or through the Gestont Bank 6now @nited 5verseas Bank7 for the period January 199- to Dece1er
"33", and all other data and aterials covering said applications, in hisBher direct or indirect possession,
custody or control 6whether actual or constructive7, whether in hisBher capacity as #ustodian of (ecords or
otherwise'
6
0he (0# issued a su1poena decus tecu on "1 +ove1er "33"'
-
$ otion to <uash was filed 1y the 1anks on
three grounds4 17 the su1poena is unreasona1le, oppressive and does not esta1lish the relevance of the docuents
soughtC "7 re<uest for the docuents will violate the 8aw on )ecrecy of Bank DepositsC and ,7 &)=) failed to
advance the reasona1le cost of production of the docuents'
8
Dosat also Foined the 1anks/ otion to <uash
through its 9anifestationB#oent'
9
5n 9 $pril "33,, the (0# issued an 5rder denying the otion to <uash for lack
of erit' Ge <uote the pertinent portion of the 5rder, thus4
$fter a careful consideration of the arguents of the parties, the #ourt did not find erit in the otion'
0he serious o1Fection appears to 1e that the su1poena is violative of the 8aw on )ecrecy of Bank Deposit, as
aended' 0he law declares 1ank deposits to 1e Ka1solutely confidentialK e:cept4 : : : 667 =n cases where the oney
deposited or invested is the su1Fect atter of the litigation'
0he case at 1ench is for the collection of a su of oney fro defendants that o1tained a loan fro the plaintiff'
0he loan was secured 1y defendant &)=) which was the surety' =t is the contention of defendant &)=) that the
proceeds of the loan was deviated to purposes other than to what the loan was e:tended' 0he <uashal of the
su1poena would deny defendant &)=) its right to prove its defenses'
GEH(H!5(H, for lack of erit the otion is DH+=HD'
13
5n "6 June "33,, another 5rder was issued 1y the (0# denying the otion for reconsideration filed 1y the
1anks'
11
5n 1 )epte1er "33, however, the trial court granted the second otion for reconsideration filed 1y the
1anks' 0he previous su1poenas issued were conse<uently <uashed'
1"
0he trial court invoked the ruling in =ntengan
v' #ourt of $ppeals,
1,
where it was ruled that foreign currency deposits are a1solutely confidential and ay 1e
e:ained only when there is a written perission fro the depositor' 0he otion for reconsideration filed 1y &)=)
was denied on ,3 Dece1er "33,'
Eence, these assailed orders are the su1Fect of the petition for certiorari 1efore the #ourt of $ppeals' &)=) raised
the following arguents in support of its petition4
='
(espondent Judge acted with grave a1use of discretion when it favora1ly considered respondent 1anks/ 6second7
9otion for (econsideration dated July 9, "33, despite the fact that it did not contain a notice of hearing and was
therefore a ere scrap of paper'
=='
(espondent Fudge capriciously and ar1itrarily ignored )ection " of the !oreign #urrency Deposit $ct 6($ 62"67 in
ruling in his 5rders dated )epte1er 1 and Dece1er ,3, "33, that the @)A11,333,333'33 deposit in the account
of respondent Dosat in Gestont Bank is covered 1y the secrecy of 1ank deposit'
==='
)ince 1oth respondent 1anks and respondent Dosat have disclosed during the trial the @)A11,333,333'33
deposit, it is no longer secret and confidential, and petitioner &)=)/ right to in<uire into what happened to such
deposit can not 1e suppressed'
12
0he #ourt of $ppeals addressed these issues in seriati'
0he #ourt of $ppeals resorted to a li1eral interpretation of the rules to avoid iscarriage of Fustice when it allowed
the filing and acceptance of the second otion for reconsideration' 0he appellate court also underscored the fact
that &)=) did not raise the defect of lack of notice in its opposition to the second otion for reconsideration' 0he
appellate court held that failure to tiely o1Fect to the adission of a defective otion is considered a waiver of its
right to do so'
0he #ourt of $ppeals declared that Dosat/s deposit in Gestont Bank is covered 1y (epu1lic $ct +o' 62"6 or the
Bank )ecrecy 8aw' Ge <uote the pertinent portion of the Decision4
=t is our considered opinion that Dosat/s deposit of A11,333,333'33 in Gestont Bank is covered 1y the Bank
)ecrecy 8aw, as such it cannot 1e e:ained, in<uired or looked into without the written consent of its owner' 0he
ruling in ;an 0west vs' #ourt of $ppeals was rendered during the effectivity of #B #ircular +o' 963, )eries of 198,,
under )ec' 13" thereof, transfer to foreign currency deposit account or receipt fro another foreign currency deposit
account, whether for payent of legitiate o1ligation or otherwise, are not eligi1le for deposit under the )yste'
#B #ircular +o' 963 has since 1een superseded 1y #B #ircular 1,18 and later 1y #B #ircular 1,89' )ection 13" of
#ircular 963 has not 1een re%enacted in the later #irculars' Ghat is applica1le now is the decision in =ntengan vs'
#ourt of $ppeals where the )upree #ourt has ruled that the under ('$' 62"6 there is only a single e:ception to
the secrecy of foreign currency deposits, that is, disclosure is allowed only upon the written perission of the
depositor' *etitioner, therefore, had inappropriately invoked the provisions of #entral Bank 6#B7 #ircular +os' ,2,
which has already 1een superseded 1y ore recently issued #B #irculars' #B #ircular ,2, re<uires the surrender
to the 1anking syste of foreign e:change, including proceeds of foreign 1orrowings' 0his re<uireent, however,
can no longer 1e found in later circulars'
=n its (eply to respondent 1anks/ coent, petitioner appears to have conceded that what is applica1le in this case
is #B #ircular 1,89' 51viously, under #B 1,89, proceeds of foreign 1orrowings are no longer re<uired to 1e
surrendered to the 1anking syste'
@ndaunted, petitioner now argues that paragraph ", )ection "- of #B #ircular 1,89 is applica1le 1ecause Dosat/s
A11,333,333'33 loan fro respondent 1anks was intended to 1e paid to a foreign supplier =ntersputnik and,
therefore, should have 1een paid directly to =ntersputnik and not deposited into Gestont Bank' 0he fact that it was
deposited to the local 1ank Gestont Bank, petitioner clais violates the circular and akes the deposit lose its
confidentiality status under ('$' 62"6' Eowever, a reading of the entire )ection "- of #B #ircular 1,89 reveals that
the portion <uoted 1y the petitioner refers only to the procedureBconditions of drawdown for service of de1ts using
foreign e:change' 0he a1ove%said provision relied upon 1y the petitioner does not in any anner prescri1e the
conditions 1efore any foreign currency deposit can 1e entitled to the confidentiality provisions of ('$' 62"6'
1.
$nent the third issue, the #ourt of $ppeals ruled that the testiony of the incu1ent president of Gestont Bank is
not the written consent conteplated 1y (epu1lic $ct +o' 62"6'
0he #ourt of $ppeals however upheld the issuance of su1poena praying for the production of applications for
cashier/s or anager/s checks 1y Dosat through Gestont Bank, as well as a copy of an $greeent andBor
#ontract andBor 9eorandu 1etween Dosat andBor *hilippine $gila )atellite and =ntersputnik for the ac<uisition
andBor lease of a &oriDon )atellite' 0he appellate court 1elieved that the production of these docuents does not
involve the e:aination of Dosat/s account since it will never 1e known how uch oney was deposited into it or
withdrawn therefro and how uch reains therein'
5n "9 !e1ruary "338, the #ourt of $ppeals rendered the assailed Decision, the decretal portion of which reads4
GEH(H!5(H, the petition is partially &($+0HD' $ccordingly, the assailed 5rder dated Dece1er ,3, "33, is
here1y odified in that the <uashal of the su1poena for the production of Dosat/s 1ank ledger in Gestont Bank
is upheld while respondent court is here1y ordered to issue su1poena duces tecu ad testificandu directing the
records custodian of Gestont Bank to 1ring to court the following docuents4
a7 applications for cashier/s or anager/s checks 1y respondent Dosat through Gestont Bank fro
January 199- to Dece1er "33"C
17 1ank transfers 1y respondent Dosat through Gestont Bank fro January 199- to Dece1er "33"C
and
c7 copy of an agreeent andBor contract andBor eorandu 1etween respondent Dosat andBor
*hilippine $gila )atellite and =ntersputnik for the ac<uisition andBor lease of a &oriDon satellite'
+o pronounceent as to costs'
16
&)=) filed a otion for reconsideration which the #ourt of $ppeals denied on 19 June "339' 0hus, the instant
petition ascri1ing grave a1use of discretion on the part of the #ourt of $ppeals in ruling that Dosat/s deposit with
Gestont Bank cannot 1e e:ained and in finding that the 1anks/ second otion for reconsideration in #ivil #ase
+o' 99%18., is procedurally accepta1le'
1-
0his #ourt notes that &)=) filed a petition for certiorari under (ule 6. of the (ules of #ourt to assail the Decision
and (esolution of the #ourt of $ppeals' *etitioner availed of the iproper reedy as the appeal fro a final
disposition of the #ourt of $ppeals is a petition for review under (ule 2. and not a special civil action under (ule
6.'
18
#ertiorari under (ule 6. lies only when there is no appeal, nor plain, speedy and ade<uate reedy in the
ordinary course of law' 0hat action is not a su1stitute for a lost appeal in generalC it is not allowed when a party to a
case fails to appeal a Fudgent to the proper foru'
19
Ghere an appeal is availa1le, certiorari will not prosper even if
the ground therefor is grave a1use of discretion' $ccordingly, when a party adopts an iproper reedy, his petition
ay 1e disissed outright'
"3
lauup"il
Oet, even if this procedural infirity is discarded for the 1roader interest of Fustice, the petition sorely lacks erit'
&)=) insists that Dosat/s deposit with Gestont Bank can 1e e:ained and in<uired into' =t anchored its
arguent on (epu1lic $ct +o' 123. or the K8aw on )ecrecy of Bank Deposits,K which allows the disclosure of 1ank
deposits in cases where the oney deposited is the su1Fect atter of the litigation' &)=) asserts that the su1Fect
atter of the litigation is the @')' A11 9illion o1tained 1y Dosat fro the Banks to supposedly finance the lease of
a (ussian satellite fro =ntersputnik' Ghether or not it should 1e held lia1le as a surety for the principal aount of
@')' A11 9illion, &)=) contends, is contingent upon whether Dosat indeed utiliDed the aount to lease a (ussian
satellite as agreed in the )urety Bond $greeent' Eence, &)=) argues that the wherea1outs of the @')' A11 9illion
is the su1Fect atter of the case and the disclosure of 1ank deposits relating to the @')' A11 9illion should 1e
allowed'
&)=) also contends that the concerted refusal of Dosat and the 1anks to divulge the wherea1outs of the @')' A11
9illion will greatly preFudice and 1urden the &)=) pension fund considering that a su1stantial portion of this fund is
eararked every year to cover the surety 1ond issued'
8astly, &)=) defends the acceptance 1y the trial court of the second otion for reconsideration filed 1y the 1anks
on the grounds that it is pro fora and did not confor to the notice re<uireents of )ection 2, (ule 1. of the (ules
of #ivil *rocedure'
"1
Dosat denies the allegations of &)=) and reiterates that it did not give a categorical or affirative written consent
or perission to &)=) to e:aine its 1ank stateents with Gestont Bank'
0he Banks aintain that (epu1lic $ct +o' 123. is not the applica1le law in the instant case 1ecause the Dosat
deposit is a foreign currency deposit, thus covered 1y (epu1lic $ct +o' 62"6' @nder said law, only the consent of
the depositor shall serve as the e:ception for the disclosure of hisBher deposit'
0he Banks counter the arguents of &)=) as a ere rehash of its previous arguents 1efore the #ourt of $ppeals'
0hey Fustify the issuance of the su1poena as an interlocutory atter which ay 1e reconsidered anytie and that
the pro fora rule has no application to interlocutory orders'
=t appears that only &)=) appealed the ruling of the #ourt of $ppeals pertaining to the <uashal of the su1poena for
the production of Dosat/s 1ank ledger with Gestont Bank' )ince neither Dosat nor the Banks interposed an
appeal fro the other portions of the decision, particularly for the production of applications for cashier/s or
anager/s checks 1y Dosat through Gestont Bank, as well as a copy of an agreeent andBor contract andBor
eorandu 1etween Dosat andBor *hilippine $gila )atellite and =ntersputnik for the ac<uisition andBor lease of a
&oriDon satellite, the latter 1ecae final and e:ecutory'
&)=) invokes (epu1lic $ct +o' 123. to Fustify the issuance of the su1poena while the 1anks cite (epu1lic $ct +o'
62"6 to oppose it' 0he core issue is which of the two laws should apply in the instant case'
(epu1lic $ct +o' 123. was enacted in 19..' )ection " thereof was first aended 1y *residential Decree +o' 1-9"
in 1981 and further aended 1y (epu1lic $ct +o' -6., in 199,' =t now reads4
e49:o! 2. $ll deposits of whatever nature with 1anks or 1anking institutions in the *hilippines including investents
in 1onds issued 1y the &overnent of the *hilippines, its political su1divisions and its instruentalities, are here1y
considered as of an a1solutely confidential nature and ay not 1e e:ained, in<uired or looked into 1y any person,
governent official, 1ureau or office, e:cept upon written perission of the depositor, or in cases of ipeachent,
or upon order of a copetent court in cases of 1ri1ery or dereliction of duty of pu1lic officials, or in cases where the
oney deposited or invested is the su1Fect atter of the litigation'
)ection 8 of (epu1lic $ct +o' 62"6, which was enacted in 19-2, and aended 1y *residential Decree +o' 13,. and
later 1y *residential Decree +o' 1"26, provides4
)ection 8' )ecrecy of !oreign #urrency Deposits' S $ll foreign currency deposits authoriDed under this $ct, as
aended 1y *residential Decree +o' 13,., as well as foreign currency deposits authoriDed under *residential
Decree +o' 13,2, are here1y declared as and considered of an a1solutely confidential nature and, e:cept upon the
written perission of the depositor, in no instance shall foreign currency deposits 1e e:ained, in<uired or looked
into 1y any person, governent official, 1ureau or office whether Fudicial or adinistrative or legislative or any other
entity whether pu1lic or privateC *rovided, however, 0hat said foreign currency deposits shall 1e e:ept fro
attachent, garnishent, or any other order or process of any court, legislative 1ody, governent agency or any
adinistrative 1ody whatsoever' 6$s aended 1y *D +o' 13,., and further aended 1y *D +o' 1"26, pro' +ov'
"1, 19--'7
5n the one hand, (epu1lic $ct +o' 123. provides for four 627 e:ceptions when records of deposits ay 1e
disclosed' 0hese are under any of the following instances4 a7 upon written perission of the depositor, 617 in cases
of ipeachent, 6c7 upon order of a copetent court in the case of 1ri1ery or dereliction of duty of pu1lic officials or,
6d7 when the oney deposited or invested is the su1Fect atter of the litigation, and e7 in cases of violation of the
$nti%9oney 8aundering $ct 6$98$7, the $nti%9oney 8aundering #ouncil 6$98#7 ay in<uire into a 1ank account
upon order of any copetent court'
""
5n the other hand, the lone e:ception to the non%disclosure of foreign currency
deposits, under (epu1lic $ct +o' 62"6, is disclosure upon the written perission of the depositor'
0hese two laws 1oth support the confidentiality of 1ank deposits' 0here is no conflict 1etween the' (epu1lic $ct
+o' 123. was enacted for the purpose of giving encourageent to the people to deposit their oney in 1anking
institutions and to discourage private hoarding so that the sae ay 1e properly utiliDed 1y 1anks in authoriDed
loans to assist in the econoic developent of the country'
",
=t covers all 1ank deposits in the *hilippines and no
distinction was ade 1etween doestic and foreign deposits' 0hus, (epu1lic $ct +o' 123. is considered a law of
general application' 5n the other hand, (epu1lic $ct +o' 62"6 was intended to encourage deposits fro foreign
lenders and investors'
"2
=t is a special law designed especially for foreign currency deposits in the *hilippines' $
general law does not nullify a specific or special law' &eneralia speciali1us non derogant'
".
0herefore, it is 1eyond
cavil that (epu1lic $ct +o' 62"6 applies in this case'
=ntengan v' #ourt of $ppeals affired the a1ove%cited principle and categorically declared that for foreign currency
deposits, such as @')' dollar deposits, the applica1le law is (epu1lic $ct +o' 62"6'
=n said case, #iti1ank filed an action against its officers for persuading their clients to transfer their dollar deposits to
copetitor 1anks' Bank records, including dollar deposits of petitioners, purporting to esta1lish the deception
practiced 1y the officers, were anne:ed to the coplaint' *etitioners now coplained that #iti1ank violated (epu1lic
$ct +o' 123.' 0his #ourt ruled that since the accounts in <uestion are @')' dollar deposits, the applica1le law
therefore is not (epu1lic $ct +o' 123. 1ut (epu1lic $ct +o' 62"6'
0he a1ove pronounceent was reiterated in #hina Banking #orporation v' #ourt of $ppeals,
"6
where respondent
accused his daughter of stealing his dollar deposits with #iti1ank' 0he latter allegedly received the checks fro
#iti1ank and deposited the to her account in #hina Bank' 0he su1Fect checks were presented in evidence' $
su1poena was issued to eployees of #hina Bank to testify on these checks' #hina Bank argued that the #iti1ank
dollar checks with 1oth respondent andBor her daughter as payees, deposited with #hina Bank, ay not 1e looked
into under the law on secrecy of foreign currency deposits' 0his #ourt highlighted the e:ception to the non%
disclosure of foreign currency deposits, i'e', in the case of a written perission of the depositor, and ruled that
respondent, as owner of the funds unlawfully taken and which are undisputa1ly now deposited with #hina Bank, he
has the right to in<uire into the said deposits'
$pplying )ection 8 of (epu1lic $ct +o' 62"6, a1sent the written perission fro Dosat, Gestont Bank cannot
1e legally copelled to disclose the 1ank deposits of Dosat, otherwise, it ight e:pose itself to criinal lia1ility
under the sae act'
"-
0he 1asis for the application of su1poena is to prove that the loan intended for Dosat 1y the Banks and
guaranteed 1y &)=), was diverted to a purpose other than that stated in the surety 1ond' 0he Banks, however,
argue that &)=) is in fact lia1le to the for the proper applications of the loan proceeds and not vice%versa' Ge are
however not prepared to rule on the erits of this case lest we pre%ept the findings of the lower courts on the
atter'
0he third issue raised 1y &)=) was properly addressed 1y the appellate court' 0he appellate court aintained that
the Fudge ay, in the e:ercise of his sound discretion, grant the second otion for reconsideration despite its 1eing
pro fora' 0he appellate court correctly relied on precedents where this #ourt set aside technicality in favor of
su1stantive Fustice' !urtherore, the appellate court accurately pointed out that petitioner did not assail the defect of
lack of notice in its opposition to the second otion of reconsideration, thus it can 1e considered a waiver of the
defect'
GEH(H!5(H, the petition for certiorari is D=)9=))HD' 0he Decision dated "9 !e1ruary "338 and 19 June "339
(esolution of the #ourt of $ppeals are here1y AFFIRME)'
)5 5(DH(HD'
FIRST PLANTERS G.R. No. 174134
PAWNSHOP, INC.,
%etitioner, %resent1

DNA2CS=SANT-A), +.!
Ch"irperson!
= versus = A6ST2-A=&A2T-NCL,
CF-C)=NALA2-),
NACF62A, "n
2CDCS, ++.
COMMISSIONER OF
INTERNAL REVENUE, %romulgated1
2es!ondent. @uly 9A, 2AA>
* = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = *

D E C I S I O N

AUSTRIA-MARTINE, J.)

4irst %lanters %a,nsho!, -nc. '!etitioner( contests the deficiency value=added and documentary
stam! ta*es im!osed u!on it by the 3ureau of -nternal 2evenue '3-2( for the year 2AAA. The core of
!etitionerMs argument is that it is not a lending investor ,ithin the !urvie, of Section 1A>'A( of the
National -nternal 2evenue Code 'N-2C(, as amended, and therefore not subBect to value=added ta*
'$AT(. %etitioner also contends that a !a,n ticket is not subBect to documentary stam! ta* '"ST(
because it is not !roof of the !ledge transaction, and even assuming that it is so, still, it is not subBect to
ta* since a documentary stam! ta* is levied on the document issued and not on the transaction.

The facts1

-n a %re=Assessment Notice dated @uly N, 2AA9, !etitioner ,as informed by the 3-2 that it has an
e*isting ta* deficiency on its $AT and "ST liabilities for the year 2AAA. The deficiency assessment ,as
at %/+1,1A2.N< for $AT and %29,?+?.99 for "ST.
718
%etitioner !rotested the assessment for lack of
legal and factual bases.
728

%etitioner subse0uently received a 4ormal Assessment Notice on "ecember 2<, 2AA9, directing
!ayment of $AT deficiency in the amount of %/+1,1A2.N< and "ST deficiency in the amount
of %2+,N+N.19, inclusive of surcharge and interest.
798
%etitioner filed a !rotest,
7+8
,hich ,as denied by
Acting 2egional "irector Anselmo . Adriano !er 4inal "ecision on "is!uted Assessment
dated @anuary 2<, 2AA+.
7/8

%etitioner then filed a !etition for revie, ,ith the Court of Ta* A!!eals 'CTA(.
7?8
-n a "ecision
dated &ay <, 2AA/, the 2
nd
"ivision of the CTA u!held the deficiency assessment.
7N8
%etitioner filed a
motion for reconsideration
7>8
,hich ,as denied in a 2esolution dated )ctober N, 2AA/.
7<8

%etitioner a!!ealed to the CTA En ,"nc ,hich rendered a "ecision dated @une N, 2AA?,
the dis!ositive !ortion of ,hich reads as follo,s1

HFC2C4)2C, !remises considered, the %etition for 2evie, is hereby "CN-C"
for lack of merit. The assailed "ecision dated &ay <, 2AA/ and 2esolution dated )ctober N,
2AA/ are hereby A44-2&C".

S) )2"C2C".
71A8

%etitioner sought reconsideration but this ,as denied by the CTA En ,"nc !er 2esolution
dated August 1+, 2AA?.
7118

Fence, the !resent !etition for revie, under 2ule +/ of the 2ules of Court based on the
follo,ing grounds1

-
TFC F)N)2A3#C C)62T )4 TAG A%%CA#S EN ,ANC 2A$C#D C22C" -N
4-N"-N %CT-T-)NC2 #-A3#C 4)2 $AT.

--
TFC F)N)2A3#C C)62T )4 TAG A%%CA#S EN ,ANC 2A$C#D C22C" -N
26#-N TFAT %CT-T-)NC2 -S #-A3#C 4)2 "ST )N %AHN T-CECTS.
7128

The determination of !etitionerMs ta* liability de!ends on the ta* treatment of a !a,nsho!
business. )ddly, there has not been any definitive declaration in this regard des!ite the fact that
!a,nsho!s have long been in e*istence. All that has been stated is ,hat !a,nsho!s are not, but not ,hat
!a,nsho!s are.

The 3-2 itself has maintained an ambivalent stance on this issue. -nitially, in Re'enue
-emor"num Orer No. ./-0. issued on &arch 11, 1<<1, a !a,nsho! business ,as considered as
:akin to lending investor.s business activity; and subBect to /O !ercentage ta* beginning @anuary 1,
1<<1, under Section 11? of the Ta* Code of 1<NN, as amended by C.). No. 2N9.
7198


Hith the !assage of 2e!ublic Act '2.A.( No. NN1? or the C$AT #a, in 1<<+,
71+8
the 3-2
abandoned its earlier !osition and maintained that !a,nsho!s are subBect to 1AO $AT, as im!lemented
by 2evenue 2egulations No. N=</. This ,as com!lemented by Re'enue -emor"num Circu#"r No.
1/-2. dated )ctober 12, 2AA1, ,hich !rovided that !a,nsho! o!erators are liable to the 1AO $AT
based on gross recei!ts beginning @anuary 1, 1<<?, ,hile !a,nsho!s ,hose gross annual recei!ts do not
e*ceed %//A,AAA.AA are liable for !ercentage ta*, !ursuant to Section 1A<'5( of the Ta* Code of 1<<N.

CTA decisions affirmed the 3-2Ms !osition that !a,nsho!s are subBect to
$AT. -n 3. 4"m$unting *"wnshop! 5nc. '. Commissioner of 5ntern"# Re'enue!
71/8
the CTA ruled that
the !etitioner therein ,as subBect to 1AO $AT under Section 1A> of the Ta* Code of
1<<N. Ant"m *"wnshop Corpor"tion '. Commissioner of 5ntern"# Re'enue
71?8
reiterates said ruling. -t
,as theCTAMs vie, that the services rendered by !a,nsho!s fall under the general definition of :sale or
e*change of services; under Section 1A>'A( of the Ta* Code of 1<<N.

)n @uly 1/, 2AA9, the Court rendered Commissioner of 5ntern"# Re'enue '. -iche#
+. 6hui##ier *"wnshop! 5nc.
71N8
in ,hich it ,as categorically ruled that ,hile !a,nsho!s are engaged in
the business of lending money, they are not considered :lending investors; for the !ur!ose of im!osing
!ercentage ta*es.
71>8
The Court gave the follo,ing reasons1 first, under the 1<<N Ta* Code, !a,nsho!s
and lending investors ,ere subBected to different ta* treatmentsK second, Congress never intended
!a,nsho!s to be treated in the same ,ay as lending investorsK third, Section 11? of the N-2C of 1<NN
subBects to !ercentage ta* dealers in securities and lending investors onlyK and lastly, the 3-2 had ruled
several times !rior to the issuance of 2&) No. 1/=<1 and 2&C +9=<1 that !a,nsho!s ,ere not subBect
to the /O !ercentage ta* on lending investors im!osed by Section 11? of the N-2C of 1<NN, as amended
by C*ecutive )rder No. 2N9.

-n vie, of said ruling, the 3-2 issued Re'enue -emor"num Circu#"r No. 78-9221 dated @une
1?, 2AA+, canceling the !revious lending investorMs ta* assessments on !a,nsho!s. Said Circular
stated, inter "#i"1

-n vie, of the said Su!reme Court decision, all assessments on !a,nsho!s for
!ercentage ta*es as lending investors are hereby cancelled. This Circular is being issued for the
sole !ur!ose of resolving the ta* liability of !a,nsho!s to the /O lending investors ta*
!rovided under the then Section 11? of the N-2C of 1<NN, as amended, and shall not cover
issues relating to their other ta* liabilities. All internal revenue officials are enBoined from
issuing assessments on !a,nsho!s for !ercentage ta*es on lending investors, under the then
Section 11? of the N-2C of 1<NN, as amended.
4or !ur!oses of the gross recei!t ta* !rovided for under 2e!ublic Act No. <2<+, the
!a,nsho!s are no, subBect thereof. This shall ho,ever, be covered by another issuance.
71<8

Re'enue -emor"num Circu#"r No. 7:-9221 ,as issued on the same date ,hereby !a,nsho!
businesses ,ere allo,ed to settle their $AT liabilities for the ta* years 1<<?=2AA2 !ursuant to a
memorandum of agreement entered into by the Commissioner of -nternal 2evenue and the Chambers of
%a,nbrokers of the %hili!!ines, -nc. The Circular like,ise instructed all revenue officers to ensure that
:all $AT due from !a,nsho!s beginning @anuary 1, 2AA9, including increments thereto, if any, are
assessed and collected from !a,nsho!s under its Burisdiction.;

-n the interim, ho,ever, Congress !assed 2e!ublic Act '2.A.( No. <29> on 4ebruary /, 2AA+
entitled, :An Act Amending Certain Sections of the National -nternal 2evenue Code of 1<<N, as
amended, by C*cluding Several Services from the Coverage of the $alue=added Ta* and 2e=im!osing
the ross 2ecei!ts Ta* on 3anks and Non=bank 4inancial -ntermediaries %erforming Iuasi=banking
4unctions and )ther Non=bank 4inancial -ntermediaries beginning @anuary A1, 2AA+.;
72A8


%ending !ublication of 2.A. No. <29>, the 3-2 issued 3ank 3ulletin No. 2AA+=A1 on 4ebruary
1A, 2AA+ advising all banks and non=bank financial intermediaries that they shall remain liable under the
$AT system.

Hhen 2.A. No. <29> took effect on 4ebruary 1?, 2AA+, the "e!artment of 4inance
issued Re'enue Regu#"tions No. .2-9221 dated )ctober 1>, 2AA+, classifying !a,nsho!s as )ther Non=
bank 4inancial -ntermediaries. The 3-2 then issued Re'enue -emor"num Circu#"r No. :7-9221 on
November 2/, 2AA+, !rescribing the guidelines and !olicies on the assessment and collection of 1AO
$AT for gross annual sales/recei!ts e*ceeding %//A,AAA.AA or 9O !ercentage ta* for gross annual
sales/recei!ts not e*ceeding %//A,AAA.AA of !a,nsho!s !rior to @anuary 1, 2AA/.

-n fine, !rior to the C$AT #a,, !a,nsho!s ,ere treated as lending investors subBect to lending
investorMs ta*. Subse0uently, ,ith the CourtMs ruling in 6hui##ier, !a,nsho!s ,ere then treated as $AT=
able enter!rises under the general classification of ;s"#e or exch"nge of ser'ices< under Section 1A>'A(
of the Ta* Code of 1<<N, as amended. 2.A. No. <29> finally classified !a,nsho!s as )ther Non=bank
4inancial -ntermediaries.

The Court finds that !a,nsho!s should have been treated as non=bank financial intermediaries
from the very beginning, subBect to the a!!ro!riate ta*es !rovided by la,, thus P

6nder the National -nternal 2evenue Code of 1<NN,
7218
!a,nsho!s should have been
levied the /O !ercentage ta* on gross recei!ts im!osed on bank and non=bank financial
intermediaries under Section 11< 'no, Section 121 of the Ta* Code of 1<<N(K
Hith the im!osition of the $AT under 2.A. No. NN1? or the C$AT #a,,
7228
!a,nsho!s
should have been subBected to the 1AO $AT im!osed on banks and non=bank financial
intermediaries and financial institutions under Section 1A2 of the Ta* Code of 1<NN 'no,
Section 1A> of the Ta* Code of 1<<N(K
7298
This ,as restated by 2.A. No. >2+1,
72+8
,hich amended 2.A. No. NN1?, although the levy,
collection and assessment of the 1AO $AT on services rendered by banks, non=bank financial
intermediaries, finance com!anies, and other financial intermediaries not !erforming 0uasi=
banking functions, ,ere made effective @anuary 1, 1<<>K
72/8
2.A. No. >+2+ or the Ta* 2eform Act of 1<<N
72?8
like,ise im!osed a 1AO $AT under
Section 1A> but the levy, collection and assessment thereof ,ere again deferred
until "ecember 91, 1<<<K
72N8
The levy, collection and assessment of the 1AO $AT ,as further deferred by 2.A. No.
>N?1 until "ecember 91, 2AAA, and by 2.A. No. <A1A, until "ecember 91, 2AA2K
Hith no further deferments given by la,, the levy, collection and assessment of the 1AO
$AT on banks, non=bank financial intermediaries, finance com!anies, and other financial
intermediaries not !erforming 0uasi=banking functions ,ere finally made effective beginning
@anuary 1, 2AA9K
4inally, ,ith the enactment of 2.A. No. <29>, the services of banks, non=bank financial
intermediaries, finance com!anies, and other financial intermediaries not !erforming 0uasi=
banking functions ,ere s!ecifically e*em!ted from $AT,
72>8
and the AO to /O !ercentage ta*
on gross recei!ts on other non=bank financial intermediaries ,as reim!osed under Section 122
of the Ta* Code of 1<<N.
72<8

At the time of the dis!uted assessment, that is, for the year 2AAA, !a,nsho!s ,ere not subBect to
1AO $AT under the general !rovision on :sale or e*change of services; as defined under Section
1A>'A( of the Ta* Code of 1<<N, ,hich states1 :Ms"#e or exch"nge of ser'icesM means the !erformance of
all kinds of services in the %hili!!ines for others for a fee, remuneration or consideration * * *.; -nstead,
due to the s!ecific nature of its business, !a,nsho!s ,ere then subBect to 1AO $AT under the category
of non=bank financial intermediaries, as !rovided in the same Section 1A>'A(, ,hich reads1

SCC. 1A>. ="#ue-"e 4"x on S"#e of Ser'ices "n Use or 6e"se of *roperties. -
'A( R"te "n ,"se of 4"x. = There shall be levied, assessed and collected, a value=
added ta* e0uivalent to ten !ercent '1AO( of gross recei!ts derived from the sale or e*change
of services, including the use or lease of !ro!erties.
The !hrase >s"#e or exch"nge of ser'ices> means the !erformance of all kinds or
services in the %hili!!ines for others for a fee, remuneration or consideration, including
* * * !e"#$ce! o% &'()!, (o(-&'() %$('(c$'* $(+e",e-$'"$e! '(- %$('(ce co,.'($e!K and
non=life insurance com!anies 'e*ce!t their cro! insurances(, including surety, fidelity,
indemnity and bonding com!aniesK and similar services regardless of ,hether or not the
!erformance thereof calls for the e*ercise or use of the !hysical or mental faculties. The !hrase
Msale or e*change of servicesM shall like,ise include1 * * * 'Cm!hasis and underscoring
su!!lied(

The ta* treatment of !a,nsho!s as non=bank financial intermediaries is not ,ithout basis.

2.A. No. 99N, as amended, or the eneral 3anking Act characteri5es the terms $"n&ing
institution and $"n& as synonymous and interchangeable and s!ecifically include commercial banks,
savings bank, mortgage banks, develo!ment banks, rural banks, stock savings and loan associations, and
branches and agencies in the %hili!!ines of foreign banks.
79A8
2.A. No. >N<1 or the eneral 3anking
#a, of 2AAA, mean,hile, !rovided that $"n&s shall refer to entities engaged in the lending of funds
obtained in the form of de!osits.
7918
2.A. No. >N<1 also included coo!erative banks, -slamic banks and
other banks as determined by the &onetary 3oard of the ,"ng&o Sentr"# ng *i#ipin"s in the
classification of banks.
7928


Fin"nci"# intermei"ries, on the other hand, are defined as :!ersons or entities ,hose !rinci!al
functions include the lending, investing or !lacement of funds or evidences of indebtedness or e0uity
de!osited ,ith them, ac0uired by them, or other,ise coursed through them, either for their o,n account
or for the account of others.;
7998

-t need not be elaborated that !a,nsho!s are non=banks/banking institutions. &oreover, the
nature of their business activities !artakes that of a financial intermediary in that its !rinci!al function is
lending.

A !a,nsho!Ms business and o!erations are governed by %residential "ecree '%.".( No. 11+ or the
%a,nsho! 2egulation Act and Central 3ank Circular No. 9N+ '2ules and 2egulations for
%a,nsho!s(. Section 9 of %.". No. 11+ defines p"wnshop as :a !erson or entity engaged in the business
of lending money on !ersonal !ro!erty delivered as security for loans and shall be synonymous, and may
be used interchangeably, ,ith !a,nbroker or !a,n brokerage.;

That !a,nsho!s are to be treated as non=bank financial intermediaries is further bolstered by the
fact that !a,nsho!s are under the regulatory su!ervision of the ,"ng&o Sentr"# ng*i#ipin"s and covered
by its &anual of 2egulations for Non=3ank 4inancial -nstitutions. The &anual includes !a,nsho!s in
the list of non=bank financial intermediaries, 'i?.1

Q +1A1I.1 Fin"nci"# 5ntermei"ries
* * *
Non=bank financial intermediaries shall include the follo,ing1
'1( A !erson or entity licensed and/or registered ,ith any government regulatory
body as a non=bank financial intermediary, such as investment house, investment com!any,
financing com!any, securities dealer/broker, lending investor, .'/(!0o., money broker
* * *. 'Cm!hasis su!!lied(

Re'enue Regu#"tions No. .2-9221, in fact, recogni5ed these bases, to ,it1

SCC. 2. 3ASCS )4 I6A#-4D-N %AHNSF)%S AS N)N=3ANE
4-NANC-A# -NTC2&C"-A2-CS. = Hhereas, in relation to Sec. 2.9 of 2ev. 2egs No. <=
2AA+ defining :Non=bank 4inancial -ntermediaries, the term :!a,nsho!; as defined under
%residential "ecree No. 11+ ,hich authori5ed its creation, to $e " person or entity eng"ge in
the $usiness of #ening money, all fall ,ithin the classification of Non=bank 4inancial
-ntermediaries and therefore, covered by Sec. + of 2.A. No. <29>.
This classification is e0ually su!!orted by Subsection +1A1I.1 of the 3S% &anual
of 2egulations for Non=3ank 4inancial -ntermediaries and reiterated in 3S% Circular No. 2A+=
<<, classifying !a,nsho!s as one of Non=bank 4inancial -ntermediaries ,ithin the su!ervision
of the 3angko Sentral ng %ili!inas.

6ltimately, 2.A. No. <29> categorically confirmed the classification of !a,nsho!s as non=bank
financial intermediaries.

Coming no, to the issue at hand = Since !etitioner is a non=bank financial intermediary, it is
subBect to 1AO $AT for the ta* years 1<<? to 2AA2K 0o/e#e", /$+0 +0e *e#1, '!!e!!,e(+ '(- co**ec+$o(
o% VAT %"o, (o(-&'() %$('(c$'* $(+e",e-$'"$e! &e$(2 !.ec$%$c'**1 -e%e""e- &1 *'/,
79+8
+0e(
.e+$+$o(e" $! (o+ *$'&*e %o" VAT -3"$(2 +0e!e +'4 1e'"!. 3ut ,ith the full im!lementation of the $AT
system on non=bank financial intermediaries starting @anuary 1, 2AA9, !etitioner is liable for 1AO $AT
for said ta* year. And beginning 2AA+ u! to the !resent, by virtue of 2.A. No. <29>, !etitioner is no
longer liable for $AT but it is subBect to !ercentage ta* on gross recei!ts from AO to / O, as the case
may be.

#astly, !etitioner is liable for documentary stam! ta*es.

The Court has settled this issue in -iche# +. 6hui##ier *"wnshop! 5nc. '. Commissioner of
5ntern"# Re'enue!
79/8
in ,hich it ,as ruled that the subBect of "ST is not limited to the document
alone. %ledge, ,hich is an e*ercise of a !rivilege to transfer obligations, rights or !ro!erties incident
thereto, is also subBect to "ST, thus P
* * * the subBect of a "ST is not limited to the document embodying the
enumerated transactions. A "ST is an e*cise ta* on the e*ercise of a right or !rivilege to
transfer obligations, rights or !ro!erties incident thereto. -n*hi#ippine 3ome Assur"nce
Corpor"tion '. Court of Appe"#s, it ,as held that1
* * * *
%ledge is among the !rivileges, the e*ercise of ,hich is subBect to "ST. A !ledge
may be defined as an accessory, real and unilateral contract by virtue of ,hich the debtor or a
third !erson delivers to the creditor or to a third !erson movable !ro!erty as security for the
!erformance of the !rinci!al obligation, u!on the fulfillment of ,hich the thing !ledged, ,ith
all its accessions and accessories, shall be returned to the debtor or to the third !erson. This is
essentially the business of !a,nsho!s ,hich are defined under Section 9 of %residential
"ecree No. 11+, or the %a,nsho! 2egulation Act, as !ersons or entities engaged in lending
money on !ersonal !ro!erty delivered as security for loans.
Section 12 of the %a,nsho! 2egulation Act and Section 21 of the 2ules and
2egulations 4or %a,nsho!s issued by the Central 3ank to im!lement the Act, re0uire
every !a,nsho! or !a,nbroker to issue, at the time of every such loan or !ledge, a
memorandum or ticket signed by the !a,nbroker and containing the follo,ing details1 '1(
name and residence of the !a,nerK '2( date the loan is grantedK '9( amount of !rinci!al loanK
'+( interest rate in !ercentK '/( !eriod of maturityK '?( descri!tion of !a,nK 'N( signature of
!a,nbroker or his authori5ed agentK '>( signature or thumb mark of !a,ner or his authori5ed
agentK and '<( such other terms and conditions as may be agreed u!on bet,een the
!a,nbroker and the !a,ner. -n addition, Central 3ank Circular No. ++/, !rescribed a
standard form of !a,n tickets ,ith entries for the re0uired details on its face and the mandated
terms and conditions of the !ledge at the dorsal !ortion thereof.
Section 9 of the %a,nsho! 2egulation Act defines a !a,n ticket as follo,s1
* * * *
True, the la, does not consider said ticket as an evidence of security or
indebtedness. Fo,ever, for !ur!oses of ta*ation, the same !a,n ticket is !roof of an e*ercise
of a ta*able !rivilege of concluding a contract of !ledge. At any rate, it is not said ticket that
creates the !a,nsho!.s obligation to !ay "ST but the e*ercise of the !rivilege to enter into a
contract of !ledge. There is therefore no basis in !etitioner.s assertion that a "ST is literally a
ta* on a document and that no ta* may be im!osed on a !a,n ticket.
The settled rule is that ta* la,s must be construed in favor of the ta*!ayer and
strictly against the governmentK and that a ta* cannot be im!osed ,ithout clear and e*!ress
,ords for that !ur!ose. Taking our bearing from the foregoing doctrines, ,e scrutini5ed
Section 1</ of the N-2C, but there is no ,ay that said !rovision may be inter!reted in favor of
!etitioner. Section 1</ 3(53'*$%$e-*1 !3&6ec+! '** .*e-2e! to "ST. -t states that :7o8n e'ery
xx x p#ege x x x there sh"## $e co##ecte " ocument"ry st"mp t"x x x x.; -t is clear,
categorical, and needs no further inter!retation or construction. The e*!licit tenor thereof
re0uires hardly anything than a sim!le a!!lication.
* * * *
-n the instant case, there is no la, s!ecifically and e*!ressly e*em!ting !ledges
entered into by !a,nsho!s from the !ayment of "ST. Section 1<< of the N-2C enumerated
certain documents ,hich are not subBect to stam! ta*K but a !a,nsho! ticket is not one of
them. Fence, !etitioner.s nebulous claim that it is not subBect to "ST is ,ithout merit. -t
cannot be over=em!hasi5ed that ta* e*em!tion re!resents a loss of revenue to the government
and must, therefore, not rest on vague inference. C*em!tion from ta*ation is never !resumed.
4or ta* e*em!tion to be recogni5ed, the grant must be clear and e*!ressK it cannot be made to
rest on doubtful im!lications.

6nder the !rinci!le of st"re ecisis et non %uiet" mo'ere 'follo, !ast !recedents and do not
disturb ,hat has been settled(, once a case has been decided one ,ay, any other case involving e*actly
the same !oint at issue, as in the case at bar, should be decided in the same manner.
79?8

WHEREFORE, the !etition is PARTIALL7 GRANTED. The "ecision dated @une N, 2AA?
and 2esolution dated August 1+, 2AA? of the Court of Ta* A!!eals En ,"nc isMODIFIED to the effect
that the 3ureau of -nternal 2evenue assessment for $AT deficiency in the amount of %/+1,1A2.N< for
the year 2AAA is REVERSED '(- SET ASIDE, ,hile its assessment for "ST deficiency in the amount
of %2+,N+N.19, inclusive of surcharge and interest, is UPHELD.

SO ORDERED.
G.R. No. L756198 Mar45 18, 1988
#2ILI##INE NATIONAL $AN, petitioner,
vs'
2ON. ROM(LO . ;(IM#O, #re':":!< *u"<e, Cour9 o= F:r'9 I!'9a!4e o= R:>a?, $ra!45 @I-, a!" FRANCICO
. GO+ON II, respondents'

GANCA.CO, J.:
5n July ,, 19-,, !rancisco )' &oDon ==, who was a depositor of the #aloocan #ity Branch of the *hilippine +ational
Bank, went to the 1ank in his car accopanied 1y his friend Hrnesto )antos who he left in the car while he
transacted 1usiness in the 1ank' Ghen )antos saw that &oDon left his check 1ook he took a check therefro, filled
it up for the aount of *.,333'33, forged the signature of &oDon, and thereafter he encashed the check in the 1ank
on the sae day' 0he account of &oDon was de1ited the said aount' @pon receipt of the stateent of account
fro the 1ank, &oDon asked that the said aount of *.,333'33 should 1e returned to his account as his signature
on the check was forged 1ut the 1ank refused'
@pon coplaint of private respondent on !e1ruary 1, 19-2 Hrnesto )antos was apprehended 1y the police
authorities and upon investigation he aditted that he stole the check of &oDon, forged his signature and encashed
the sae with the Bank'
Eence &oDon filed the coplaint for recovery of the aount of *.,333'33, plus interest, daages, attorneyJs fees
and costs against the 1ank in the #ourt of !irst =nstance of (iDal' $fter the issues were Foined and the trial on the
erits ensued, a decision was rendered on !e1ruary 2, 1983, the dispositive part of which reads as follows4
GEH(H!5(H, Fudgent is here1y rendered in favor of the plaintiff' 0he defendant is here1y
condened to return to plaintiff the aount of *.,333'33 which it had unlawfully withheld fro the
latter, with interest at the legal rate fro )epte1er "", 19-" until the aount is fully delivered' 0he
defendant is further condened to pay plaintiff the su of *",333'33 as attorneyJs fees and to pay
the costs of this suit'
+ot satisfied therewith, the 1ank now filed this petition for review on certiorari in this #ourt raising the sole legal
issue that L
0EH $#0 5! (H)*5+DH+0 !($+#=)#5 &5N5+, == =+ *@00=+& E=) #EH#P B55P
#5+0$=+=+& 0EH #EH#P =+ R@H)0=5+ =+05 0EH E$+D) 5! H(+H)05 )$+05) G$)
=+DHHD 0EH *(5M=9$0H #$@)H 5! 0EH 85)), 0EH(HBO *(H#8@D=+& E=9 !(59
)H00=+& @* 0EH DH!H+)H 5! !5(&H(O 5( G$+0 3! $@0E5(=0O @+DH( )H#0=5+ ", 5!
0EH +H&50=$B8H =+)0(@9H+0) 8$G, $#0 +5' ,"31
0he petition is devoid of erit'
0his #ourt reproduces with approval the dis<uisition of the court a ;uo as follows4
$ 1ank is 1ound to know the signatures of its custoersC and if it pays a forged check, it ust 1e
considered as aking the payent out of its own funds, and cannot ordinarily change the aount so
paid to the account of the depositor whose nae was forgedJ 6)an #arlos 9illing #o' vs' Bank of the
*'=', .9 *hil' .97'
0his rule is a1solutely necessary to the circulation of drafts and checks, and is 1ased upon the
presued negligence of the drawee in failing to eet its o1ligation to know the signature of its
correspondent' ''' 0here is nothing ine<uita1le in such a rule' =f the paper coes to the drawee in the
regular course of 1usiness, and he, having the opportunity ascertaining its character, pronounces it
to 1e valid and pays it, it is not only a <uestion of payent under istake, 1ut payent in neglect of
duty which the coercial law places upon hi, and the result of his negligence ust rest upon hi
61" $8( 1931, citing any cases found in = $g1ayani, supra7'
Defendant, however, interposed the defense that it e:ercised diligence in accordance with the
accepted nors of 1anking practice when it accepted and paid H:hi1it K$K' =t presented evidence
that the check had to pass scrutiny 1y a signature verifier as well as an officer of the 1ank'
$ coparison of the signature 6H:hi1it K$%lK7 on the forged check 6H:hi1it K$K7 with plaintiffs e:eplar
signatures 6H:hi1its K.%+K and K.%BK7 found in the *+B !or ,.%$ would iediately show the
negligence of the eployees of the defendant 1ank' Hven a not too careful coparison would
iediately arrest oneJs attention and direct it to the graceful lines of plaintiffs e:eplar signatures
found in H:hi1its K.%$K and K.%BK' 0he foration of the first letter K!K in the e:eplars, which could
1e regarded as artistic, is copletely different fro the way the sae letter is fored in H:hi1it K$%lK'
0hat alone should have alerted a ore careful and prudent signature verifier'
0he prie duty of a 1ank is to ascertain the genuineness of the signature of the drawer or the depositor on the
check 1eing encashed'
1
=t is e:pected to use reasona1le 1usiness prudence in accepting and cashing a check
presented to it'
=n this case the findings of facts of the court a ;uo are conclusive' 0he trial court found that a coparison of the
signature on the forged check and the saple signatures of private respondent show arked differences as the
graceful lines in the saple signature which is copletely different fro those of the signature on the forged check'
=ndeed the +B= handwriting e:pert Hstelita )antiago $gnes who the trial court considered to 1e an Kun1iased
scientific e:pertK indicated the arked differences 1etween the signature of private respondent on the saple
signatures and the <uestioned signature' +otwithstanding the testiony of #ol' !ernandeD, witness for petitioner,
advancing the opinion that the <uestioned signature appears to 1e genuine, the trial court 1y erely e:aining the
pictorial report presented 1y said witness, found a arked difference in the second KcK in !rancisco as written on the
<uestioned signature as copared to the saple signatures, and the separation 1etween the KsK and the KcK in the
<uestioned signature while they are connected in the saple signatures'
2
51viously, petitioner was negligent in encashing said forged check without carefully e:aining the signature which
shows arked variation fro the genuine signature of private respondent'
=n reference to the allegation of the petitioner that it is the negligence of private respondent that is the cause of the
loss which he suffered, the trial court held4
0he act of plaintiff in leaving his check1ook in the car while he went out for a short while can not 1e
considered negligence sufficient to e:cuse the defendant 1ank fro its own negligence' =t should 1e
hoe in ind that when defendant left his car, Hrnesto )antos, a long tie classate and friend
reained in the sae' Defendant could not have 1een e:pected to know that the said Hrnesto
)antos would reove a check fro his check1ook' .efendant "ad trust in "is classmate and friend'
Ee had no reason to suspect that the latter would 1reach that trust '
Ge agree'
*rivate respondent trustee Hrnesto )antos as a classate and a friend' Ee 1rought hi along in his car to the 1ank
and he left his personal 1elongings in the car' )antos however reoved and stole a check fro his cheek 1ook
without the knowledge and consent of private respondent' +o dou1t private respondent cannot 1e considered
negligent under the circustances of the case'
GEH(H!5(H, the petition is D=)9=))HD for lack of erit with costs against petitioner'
)5 5(DH(HD'
2ee"an$ee, ).-., Narvasa, )ru+ and 3ri:o7A;uino, --., concur.
8PI FAMIL7 8AN9, G.R. No. 1481:;
%etitioner,

= versus =

EDGARDO 8UENAVENTURA,
M7RNA LIARDO '(- 7OLANDA
TICA,

2es!ondents.

* = = = = = = = = = = = = = = = = = = = = = = = = = = *

EDGARDO 8UENAVENTURA,
M7RNA LIARDO '(- 7OLANDA
TICA,
G.R. No. 148<=:
%etitioners, %resent1

%6N), Ch"irm"n,
A6ST2-A=&A2T-NCL,
= versus = CA##C@), S2.,
T-NA, "n
CF-C)=NALA2-), JJ.

%romulgated1
8PI FAMIL7 8AN9,
2es!ondent. Se!tember 9A, 2AA/

* = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = *

D E C I S I O N

AUSTRIA-MARTINE, J.>

3efore us are t,o consolidated !etitions for revie, on certior"ri under 2ule +/ of the
2ules of Court assailing the "ecision
718
of the Court of A!!eals 'CA( dated November 2N, 2AAA
in CA=.2. C$ No. /9<?2, ,hich affirmed ,ith modification the "ecision dated August 11,
1<</ of the 2egional Trial Court, 3ranch 2/, &anila '&anila 2TC(K and the CA 2esolution
dated &ay 9, 2AA1, ,hich denied the !arties. se!arate motions for reconsideration.


The factual background of the case is as follo,s1


)n &ay 29, 1<<A, Cdgardo 3uenaventura, &yrna #i5ardo and Dolanda Tica
'3uenaventura, et "#.(, all officers of the -nternational 3a!tist Church and -nternational 3a!tist
Academy in &alabon, &etro &anila, filed a com!laint for :2einstatement of Current
Account/2elease of &oney !lus "amages; against 3%- 4amily 3ank '3%-=43( before the
&anila 2TC, docketed as Civil Case No. <A=/91/+.
728



They alleged that1 on August 9A, 1<><, they acce!ted from Amado 4ranco 3%-=43 Check
No. 12<AA+ dated August 2<, 1<>< in the amount of %/AA,AAA.AA, Bointly issued by Cladio
Teves and @ose!h TevesK
798
they o!ened Current Account No. >AN=A?/91+=A ,ith the 3%-=43
3ranch at 3onifacio &arket, Cdsa, Caloocan City and de!osited the check as initial de!ositK the
check ,as subse0uently cleared and the amount ,as credited to their Current
AccountK on Se!tember 9, 1<><, they dre, a check in the amount of %1A,1N1./A and !ursuant to
normal banking !rocedure the check ,as honored and debited from their Current Account,
leaving a balance of %+<A,92>./AK on Se!tember +, 1<><, they dre, another check in the
amount of %+?,1><.?AK instead of debiting the said amount against their Current
Account, it ,as debited, ,ithout their kno,ledge and consent, against their Savings Account
No. A>=</992=/ ,ith the same branchK on Se!tember <, 1<><, they dre, a check for%<1,2NA.AA
,hich, u!on !resentment for !ayment, ,as dishonored for the reason :account closed,; in s!ite
of the balance in the Current Account of %+<A,92>./AK they thereafter learned from 3%-=43 that
their Current Account had been fro5en u!on instruction of Severino %. Coronacion, $ice=
%resident of 3%-=43 on the ground that the source of fund ,as illegal or unauthori5edK they
demanded the reinstatement of the account, but 3%-=43 refused.


)n @une 2A, 1<<A, 3%-=43 filed a motion to dismiss on the ground of #itis penenti",
alleging that there is a !ending case for recovery of sum of money arising from the 3%-=43
Check No. 12<AA+ dated August 2<, 1<>< before the 2egional Trial Court '2TC(, 3ranch 1+?,
&akati
7+8
and 3uenaventura is one of the defendants therein.
7/8
3uenaventura, et "#. o!!osed the
motion to dismiss on the ground that there is no identity of !arties, rights asserted and reliefs
!rayed bet,een the t,o cases.
7?8


)n )ctober 1A, 1<<A, the &anila 2TC denied the motion to dismiss, ruling that there can
be no res (uic"t" bet,een the t,o cases since the !arties are different and the causes of action
are not the same.
7N8


)n "ecember 1A, 1<<A, 3%-=43 filed its ans,er alleging that1 the check received by
3uenaventura, et "#. from Amado 4ranco ,as dra,n by Cladio Teves and @ose!h Teves against
the Current Account of the Tevesteco Arrastre Stevedoring Co., -nc. 'Tevesteco(K the funds in
the said Tevesteco account allegedly consisted mainly of funds in the amount
of %>A,AAA,AAA.AA transferred to it from another account belonging to the 4irst &etro
-nvestment Cor!oration '4&-C(K such transfer of funds ,as effected on the basis of an
Authority to "ebit bearing the signatures of certain officers of 4&-CK u!on its investigation,
3%-=43 found that the signatures in the Authority to "ebit ,ere forgedK before this, ho,ever,
Tevesteco had already issued several checks against its Current Account, one of ,hich is the
3%-=43 Check No. 12<AA+ received by 3uenaventura, et "#.from Amado 4ranco, after a
series of indorsementsK it has the right to consider the Current Account of 3uenaventura, et "#.,
,hich is funded from 3%-=43 Check No. 12<AA+, as closed and to refuse any further
,ithdra,al from the sameK assuming that the forgery claim of 4&-C is untrue and incorrect, it
is the right of the 3%-=43, as a matter of !rotecting its interests, to free5e their account or to
hold it in sus!ense and not to allo, any ,ithdra,als therefrom in the meantime that the issue of
forgery remains unsettledK 4&-C has instituted another civil action, !resently !ending a!!eal,
against 3%-=43 and several other defendants for the recovery of the %>A,AAA,AAA.AA transferred
from the former.s account to Tevesteco.s account.
7>8


4ollo,ing trial on the merits, on August 11, 1<</, the &anila 2TC rendered its decision,
finding that1 3%-=43 had no right to unilaterally free5e the de!osits of 3uenaventura, et
"#. since the latter had no !artici!ation in any fraud that may have attended the !rior fund
transfers from 4&-C to TevestecoK as holders in good faith and for value of the 3%-=43 Check
No. 12<AA+, their rights to the sum embodied in the said check should have been res!ectedK
3%-=43.s unilateral action of free5ing the Current Account amounted to an unla,ful
confiscation of their !ro!erty ,ithout due !rocess. The dis!ositive !ortion of the 2TC decision
reads as follo,s1


HFC2C4)2C, in vie, of the foregoing Budgment is rendered in favor of the !laintiff
and against the defendant bank and the latter is ordered as follo,s1

1. To !ay the !laintiff the sum of %+<A,92>./A re!resenting the balance of the !laintiff.s
de!osit under Account No. >AN=A?/=919=A ,hich ,as unla,fully fro5en by the bank and finally
debited against said account ,ith legal rate of interest from date of closureK

2. To !ay the sum of %2AA,AAA.AA as moral damagesK

9. To !ay the amount of %2AA,AAA.AA as e*em!lary damages to serve as an e*am!le and
lesson to serve as a deterrent for similar action ,hich the bank may take against its de!ositors in
the futureK

+. To !ay the sum of %/A,AAA.AA as attorney.s fees.

S) )2"C2C".
7<8


"issatisfied, 3%-=43 a!!ealed to the CA. -t alleged that1 the case should have been
dismissed for lack of cause of action because it is the -nternational 3a!tist Academy ,hich is
the o,ner of the funds de!osited ,ith 3%-=43 and therefore the real !arty=in=interest, although
the account is in the name of 3uenaventura, et "#.K the 2TC should not have ordered the
!ayment of the balance of the Current Account of 3uenaventura, et "#. because the latter ,ere
interested only in the reinstatement of their Current AccountK the !rovisions of the Negotiable
-nstruments #a, should not have been a!!lied by the 2TC to su!!ort its !osition that
3uenaventura, et "#. are the o,ners of the funds in their Current AccountK 3%-=43 is entitled to
free5e the account of 3uenaventura, et "#. and to disallo, any ,ithdra,als therefrom as a
measure to !rotect its interestK 3%-=43, not 3uenaventura, et "#., is entitled to damages.
)n November 2N, 2AAA, the CA affirmed the decision of the &anila 2TC, holding that
3%-=43 did not act in accordance ,ith la,.
71A8
-t ruled that the relationshi! bet,een the bank
and the de!ositor is that of debtor and creditor and, as such, 3%-=43 could not la,fully refuse to
make !ayments on the checks dra,n and issued by 3uenaventura, et "#., !rovided only that
there are funds available in the latter.s de!osit. -t further declared that 3%-=43 is not Bustified in
free5ing the amounts de!osited by 3uenaventura, et "#. for sus!icion of being :illegal; or
:unauthori5ed; as a result of the claimed fraud !er!etuated against 4&-C because1 'a( it has not
been sufficiently sho,n that the funds in the account of 3uenaventura, et "#. ,ere derived
e*clusively from the alleged %>A,AAA,AAA.AA unla,fully transferred from the funds of 4&-C or
that the de!osit under the name of Tevesteco consisted e*clusively of the
said %>A,AAA,AAA.AA debited from 4&-C.s accountK and 'b( there is no clear !roof of any
involvement of 3uenaventura, et "#., the -nternational 3a!tist Church or -nternational 3a!tist
Academy in the alleged irregularities attending the fund transfer from 4&-C to Tevesteco.


The CA also found unmeritorious 3%-=43.s claim that 3uenaventura, et "#. have no cause
of action since the -nternational 3a!tist Academy is the real !arty=in=interest. -t held that since
it is undis!uted that it is the Current Account of 3uenaventura, et "#. ,hich ,as fro5en and
closed by 3%-=43, then the former are the !arties=in=interest in the reo!ening of the said
account. -t found no error in the &anila 2TC.s order that 3%-=43 !ay the amount
of %+<A,92>./A !lus interest directly to 3uenaventura, et "#. since the reinstatement of the
Current Account ,ould mean the same thing as the !ayment of the balanceK 3uenaventura, et
"#. ,ould necessarily have the right to ,ithdra, their de!osit if and ,hen they see it fit.
4urthermore, the CA held that the 2TC.s dis!osition falls under the general !rayer of
3uenaventura, et "#. for such other reliefs as may be Bust and e0uitable under the attendant
circumstances.


Hith regard to a,ard of damages, the CA sustained the a,ard of moral damages and
attorney.s fees, holding that 3%-=43.s actuations ,ere established to have caused
3uenaventura, et "#. to incur the distrust of their 3a!tist brethren, besides suffering mental
anguish, serious an*iety, ,ounded feelings, and moral shock but found no basis for the a,ard
of e*em!lary damages of %2AA,AAA.AA for lack of sho,ing that 3%-=43 ,as not animated by
any ,anton, fraudulent, reckless, o!!ressive or malevolent intent.


3oth !arties filed se!arate motions for reconsideration. 3uenaventura, et "#. sought
reconsideration of the deletion of the a,ard of e*em!lary damages.
7118
)n the other hand, 3%-=
43 reiterated its argument that the -nternational 3a!tist Academy is the real !arty=in=interest. -t
also assailed the findings and conclusions of the CA.
7128


)n &ay 9, 2AA1, the CA denied both motions for reconsideration.
7198


Fence, the !resent t,o consolidated !etitions for revie, on certior"ri.


-n .2 No. 1+>1<?, 3%-=43 ascribes si* errors u!on the CA, to ,it1



-. The Fonorable Court of A!!eals committed a reversible error in holding that the
res!ondents are the real !arties=in=interest in this case contrary to the admissions of res!ondents
themselves that it is the -nternational 3a!tist Academy ,ho is the o,ner of the funds in 0uestion
and hence it is and out to be the real !arty in interest in this case.

--. The Fonorable Court of A!!eals committed a grave abuse of discretion in not
dismissing res!ondent.s com!laint for lack of cause of action.
---. The Fonorable Court of A!!eals committed a reversible error in N)T holding,
based on a misa!!rehension of facts that 3%-=43 is entitled to free5e res!ondents. account and to
disallo, any ,ithdra,al therefrom as a measure to !rotect its interest.

-$. The Fonorable Court of A!!eals committed a reversible error in holding, based
on a misa!!rehension of facts, that it has not been sufficiently sho,n that the funds in de!osit
,ith 3%-=43 under the name of the res!ondents ,ere derived e*clusively from the alleged >A
million !esos unla,fully transferred from the funds of 4&-C or that the de!osit under the name
of Tevesteco consisted e*clusively of the said >A million !esos debited from 4&-C.s account.

$. The Fonorable Court of A!!eals committed a grave abuse of discretion in N)T
u!holding the !osition of 3%-=43 on the free5ing of res!ondents. current account ,hen it held
that there ,as no clear !roof of any involvement by the res!ondents ,ith the alleged
irregularities attending the fund transfer from 4&-C to Tevesteco.

$-. The Fonorable Court of A!!eals committed a grave abuse of discretion, in
holding, in effect, that there is nothing ,rong ,ith the #o,er Court.s order directing 3%-=43 to
!ay to res!ondents directly the balance of their account !lus interest although their !rayer in their
com!laint ,as only to reinstate their current account.
71+8


Anent the first and second grounds, 3%-=43 maintains that the com!laint should have
been dismissed for lack of cause of action because 3uenaventura et "#. admit that the
-nternational 3a!tist Academy is the o,ner of the funds in 0uestion and therefore the real !arty=
in=interest to !rosecute the action.


)n the third ground, 3%-=43 asserts that it has the right to consider the account of
3uenaventura, et "#. as fro5en and to refuse any ,ithdra,als
from the same because of the forgery claim of 4&-C. Assuming the forgery claim of 4&-C is
true and correct, the amount transferred from 4&-C.s account to Tevesteco.s account is the
money of 3%-=43 under the !rinci!le that a bank is deemed to have disbursed its o,n funds. -t
submits that as an original o,ner ,ho is restored in !ossession of stolen !ro!erty, it has a better
right over such !ro!erty than a mere transferee no matter ho, innocent the latter may be.


Concerning the fourth ground, 3%-=43 submits that am!le !roof ,as !resented by it that
the de!osit under the name of Tevesteco consisted e*clusively of the%>A,AAA,AAA.AA debited
from 4&-C.s account and the funds in de!osit ,ith 3%-=43 under the name of 3uenaventura, et
"#. ,ere derived e*clusively from the %>A,AAA,AAA.AA unla,fully transferred from the funds of
4&-C.


Hith regard to the fifth ground, 3%-=43 concedes that there is no clear !roof of any
involvement by 3uenaventura, et "#. in the alleged irregularities attending the fund transfer
from 4&-C to Tevesteco. -t insists, ho,ever, that the free5ing of the account ,as triggered by
the forgery claim of 4&-C and the unauthori5ed fund transfer to Tevesteco based on the
!rinci!le that a bank is deemed to have disbursed its o,n funds, and not its de!ositors, ,here
the authority for such disbursement is a forgery and null and void. -t had the right to set u! its
o,nershi! of the money as against that of 3uenaventura, et "#. and to refuse to return the same
to them.


As to the si*th ground, 3%-=43 !oints out that 3uenaventura, et "#. originally !rayed in
the alternative for the reinstatement of their Current Account or for !ayment of the balance
remaining in said account but they subse0uently chose to delete that !ortion !raying for the
!ayment of the balance of their account. -t submits that 3uenaventura, et "#.deliberately did this
to sideste! the other !ending case filed against the sus!ected !er!etrators of the fraud, including
Amado 4ranco and 3uenaventura, before 2TC, 3ranch 1+?, &akati.


-n .2. No. 1+>2/<, 3uenaventura, et "#. anchor their !etition on a sole ground, to ,it1


The Fonorable Court of A!!eals has decided the case in a ,ay not in accord ,ith la,
and a!!licable Buris!rudence in the deletion of the a,ard of e*em!lary damages granted by the
court a 0uo.
71/8


They submit that 3%-=43 acted in a ,anton, reckless, o!!ressive and malevolent manner
in free5ing, and subse0uently closing, their account ,ithout !rior notification. They insist that
3%-=43 failed in its obligation, as an entity engaged in business affected ,ith !ublic interest, to
treat the accounts of its de!ositors ,ith meticulous care, having in mind the fiduciary nature of
their relationshi!. &oreover, as if to com!ound its reckless conduct, 3%-=43 declared itself the
o,ner of the money ,hich the de!ositors have !laced in its care, free5ing and later closing the
de!ositors. account, all before due notice and ,ithout first giving the latter the o!!ortunity to
!ro!erly !resent their side or at least sufficient time to direct their course of action, like
refraining from issuing any check, to eventually save themselves from any embarrassment
and/or !ossible criminal !rosecution for estafa or violation of 3atas %ambansa 3lg. 22.


He rule in favor of 3uenaventura, et "#.


-t is elementary that it is only in the name of a real !arty=in=interest that a civil suit may
be !rosecuted. 6nder Section 2, 2ule 9 of the 2ules of Civil %rocedure, a real !arty=in=interest
is the !arty ,ho stands to be benefited or inBured by the Budgment in the suit, or the !arty
entitled to the avails of the suit. R-nterestR ,ithin the meaning of the rule means material
interest, an interest in issue and to be affected by the decree, as distinguished from mere interest
in the 0uestion involved, or a mere incidental interest.
71?8
)ne having no right or interest to
!rotect cannot invoke the Burisdiction of the court as a !arty !laintiff in an action.
71N8
To 0ualify
a !erson to be a real !arty=in=interest in ,hose name an action must be !rosecuted, he must
a!!ear to be the !resent real o,ner of the right sought to be enforced.
71>8
Since a contract may
be violated only by the !arties thereto as against each other, in an action u!on that contract, the
real !arties=in=interest, either as !laintiff or as defendant, must be !arties to the said contract.
71<8


-n the !resent case, 3uenaventura, et "#. are the real !arties=in=interest. They are the
!arties ,ho contracted ,ith 3%-=43 ,ith regard to the Current Account. Hhile the funds ,ere
used for !ur!oses of the -nternational 3a!tist Church and the -nternational 3a!tist Academy, it
must be noted that the Current Account is in the name of 3uenaventura,et "#. They are the
signatories of the check ,hich ,as dishonored by 3%-=43 u!on !resentment and the ones ,ho
,ill be held accountable for the non!ayment or dishonor of any check they issued. Thus, they
are the real !arties=in=interest to enforce the terms of the contract of de!osit ,ith 3%-=43.


4urthermore, 3%-=43 has no unilateral right to free5e the current account of
3uenaventura, et "#. based on the sus!icion that the funds in the latter.s account are illegal or
unauthori5ed having been sourced from the
unla,ful transfer of funds from the account of 4&-C to Tevesteco and disallo, any ,ithdra,al
therefrom to allegedly !rotect its interest.


Needless to stress, the contract bet,een a bank and its de!ositor is governed by the
!rovisions of the Civil Code on sim!le loan.
72A8
Thus, there is a debtor=creditor relationshi!
bet,een a bank and its de!ositor. The bank is the debtor and the de!ositor is the creditor. The
de!ositor lends the bank money and the bank agrees to !ay the de!ositor on demand. The
savings or current de!osit agreement bet,een the bank and the de!ositor is the contract that
determines the rights and obligations of the !arties.


Cvery bank that issues checks for the use of its customers should kno, ,hether or not the
dra,erMs signature thereon is genuine, ,hether there are sufficient funds in the dra,ers account
to cover checks issued, and it should be able to detect alterations, erasures, su!erim!ositions or
intercalations thereon, for these instruments are !re!ared, !rinted and issued by itself, it has
control of the dra,erMs account, and it is su!!osed to be familiar ,ith the dra,erMs signature. -t
should !ossess a!!ro!riate detecting devices for uncovering forgeries and/or alterations on
these instruments. 6nless a forgery or alteration is attributable to the fault or negligence of the
dra,er himself, the remedy of the dra,ee bank that negligently clears a forged and/or altered
check for !ayment is against the !arty res!onsible for the forgery or alteration, other,ise, it
bears the loss.
7218


There is nothing ine0uitable in such a rule for if in the regular course of business the
check comes to the dra,ee bank ,hich, having the o!!ortunity to ascertain its character,
!ronounces it to be valid and !ays it, as in this case, it is not only a 0uestion of !ayment under
mistake, but !ayment in neglect of duty ,hich the commercial la, !laces u!on it, and the result
of its negligence must rest u!on it.
7228



Faving been negligent in detecting the forgery !rior to clearing the check, 3%-=43 should
bear the loss and can.t shift the blame to 3uenaventura, et "#. having failed to sho, any
!artici!ation on their !art in the forgery. 3%-=43 fails to !oint any circumstance ,hich should
have !ut 3uenaventura, et "#. on in0uiry as to the ,hy and ,herefore of the !ossession of the
check by Amado 4ranco. 3uenaventura, et "#. ,ere not !rivies to any transaction involving
4&-C, Tevesteco or 4ranco. They thus had no obligation to ascertain from 4ranco ,hat the
nature of the latter.s title to the checks ,as, if any, or the nature of his !ossession. They cannot
be guilty of gross neglect amounting to legal absence of good faith, absent any sho,ing that
there ,as something amiss about 4ranco.s ac0uisition or !ossession of the check, ,hich ,as
!ayable to bearer.
7298


Thus, the fact that the funds in de!osit ,ith 3%-=43 under the name of 3uenaventura, et
"#. ,ere allegedly derived e*clusively from the alleged %>A,AAA,AAA.AA unla,fully transferred
from the funds of 4&-C or that the de!osit under the name of Tevesteco consisted allegedly
e*clusively of the said %>A,AAA,AAA.AA debited from 4&-C.s account is immaterial. These
circumstances cannot be used against a !arty not !rivy to the forgery.

There is no merit to the claim that the CA erred in affirming the 2TC.s order directing
3%-=43 to !ay the balance of their account !lus interest although the !rayer ,as only to
reinstate their Current Account. The com!laint does contain a general !rayer :for such other
relief as may be Bust and e0uitable in the !remises.; And this general !rayer is broad enough :to
Bustify e*tension of a remedy different from or together ,ith the s!ecific remedy
sought.;
72+8
-ndeed, a court may grant relief to a !arty, even if the !arty a,arded did not !ray for
it in his !leadings.
72/8


As to the !rayer of 3uenaventura, et "#. for e*em!lary damages, the Court finds that the
CA erred in deleting the a,ard of e*em!lary damages. The la, allo,s the grant of e*em!lary
damages to set an e*am!le for the !ublic good.
72?8
The business of a bank is affected ,ith !ublic
interestK thus, it makes a s,orn !rofession of diligence and meticulousness in giving
irre!roachable service.
72N8
4or this reason, the bank should guard against inBury attributable to
negligence or bad faith on its !art.
72>8
The a,ard of e*em!lary damages is !ro!er as a ,arning to
3%-=43 and all concerned not to recklessly disregard their obligation to e*ercise the highest and
strictest diligence in serving their de!ositors. Fo,ever, the a,ard should be in a reduced
amount of %/A,AAA.AA since e*em!lary damages are im!osed not to enrich one !arty or
im!overish another but to serve as a deterrent against or as a negative incentive to curb socially
deleterious actions.
72<8

-n summation, the Court reminds 3%-=43 that the banking sector must at all times
maintain a high level of meticulousness, al,ays having in mind the fiduciary nature of its
relationshi! ,ith its de!ositors.
79A8
This fiduciary relationshi! means that the bank.s obligation
to observe :high standards of integrity and !erformance; is deemed ,ritten into every de!osit
agreement bet,een a bank and its de!ositor. 4ailure to com!ly ,ith this standard shall render a
bank liable to its de!ositors for damages.


HFC2C4)2C, the !etition in .2. No. 1+>1<? is DENIED and the !etition in .2. No.
1+>2/< is GRANTED. The assailed "ecision dated November 2N, 2AAA and 2esolution dated
&ay 9, 2AA1 of the Court of A!!eals in CA=.2. C$ No. /9<?2, ,hich affirmed ,ith
modification the "ecision rendered by the 2egional Trial Court, 3ranch 2/, &anila, dated
August 11, 1<</ in Civil Case No. <A=/91/+, are hereby AFFIRMED ,ith
the MODIFICATION that 3%- 4amily 3ank is directed to !ay 3uenaventura, et "#.the amount
of %/A,AAA.AA as e*em!lary damages. Costs against 3%- 4amily 3ank.


S) )2"C2C".
[G.R. No. 113816. )e4eAber 8, 2000]
A&e?:!a G. RaAo'o, Re!a9o $. a?&a9:erra, $e!e=r:"o M. Cru>, Le9:4:a L. Me":!a,
#e?a<:o #a'4ua?, )oA:!<o #. a!9:a<o, AAa"o . -e?o:ra, Co!4eB4:o! F.
$?ay?o4C, :! 95e:r oD! be5a?= a!" :! be5a?= o= !uAerou' o95er Ber'o!'
':A:?ar?y ':9ua9e", CoAAer4:a? Cre":9 CorB. o= Nor95 Ma!:?a, CoAAer4:a?
Cre":9 CorB. o= Ca<aya! -a??ey, CoAAer4:a? Cre":9 CorB. o= O?o!<aBo C:9y,
a!" CoAAer4:a? Cre":9 CorB. o= ;ue>o! C:9y, petitioners, vs. Cour9 o=
ABBea?', Ge!era? Cre":9 CorB. 0ForAer?y CoAAer4:a? Cre":9 CorB.1, CCC
EEu:9y CorB., Re'our4e a!" F:!a!4e CorB., Ge!ero'o G. -:??a!ue&a a!"
Leo!ar"o $. A?eFa!"r:!o, a!" e4ur:9:e' a!" EG45a!<e
CoAA:'':o!, respondents.
) E C I I O N
;(I(M$ING, J./
0his petition for review on certiorari assails the decision
[1]
of the #ourt of $ppeals dated 5cto1er 8,
199,, and its resolution
["]
dated )epte1er "", 1992 in #$ &'(' )* +o' "9""., which affired the
)ecurities and H:change #oission/s decision stating thus4
>GEH(H!5(H, the appealed decision of the hearing officer in )H# #ase +o' ".81 is
here1y MO)IFIE) as follows4
1' *iercing the veil of corporate fiction aong &##, ### H<uity and the franchise copanies %
#oercial #redit #orporation of +orth 9anila, #oercial #redit #orporation of #agayan
;alley, #oercial #redit #orporation of 5longapo #ity, and #oercial #redit #orporation of
RueDon #ity % is not proper for 1eing without eritC and
"' 0he declaration that petitioning franchise corporations and individual petitioners are not lia1le for
the payent of 1ad accounts assigned to, and discounted 1y &## is )H0 $)=DH for 1eing in
e:cess of Furisdiction'?
[,]
0he facts of this case as gleaned fro the records are as follows4
5n 9arch 11, 19.-, #oercial #redit #orporation was registered with )H# as a general
financing and investent corporation' ### ade proposals to several investors for the organiDation
of franchise copanies in different localities' 0he proposed trade naes and indicated areas
were4 6a7 #oercial #redit #orporation % #agayan ;alleyC 617 #oercial #redit #orporation %
5longapo #ityC and 6c7 #oercial #redit #orporation % RueDon #ity'
*etitioners herein invested and 1ought aFority shares of stocks, while ### retained inority
holdings' 9anageent contracts were e:ecuted 1etween each franchise copany and ###, under
the following ters and conditions4 617 0he franchise copany shall 1e anaged 1y ###/s resident
anager' 6"7 9anageent fee e<uivalent to 13T of net profit 1efore ta:es shall 1e paid to ###' 6,7
$ll e:penses shall 1e 1orne 1y the franchise copany, e:cept the salary of the resident anager and
the cost of credit investigation' 627 ### shall set prie rates for discounting or rediscounting of
receiva1les' $part fro these, each investor was re<uired to sign a continuing guarantee for 1ad
accounts that ight 1e incurred 1y ### due to discounting activities'
=n 19-2, ### attepted to o1tain a <uasi%1anking license fro #entral Bank of the
*hilippines' But there was a hindrance 1ecause )ection 1,"6 of #B/s >9anual of (egulations for
Banks and 5ther !inancial =nterediaries,? states4
)ec' 1,"6' 3eneral <olic=. Dealings of a 1ank with any of its directors, officers or
stockholders and t"eir related interests should 1e in the regular course of 1usiness and
upon ters not less favora1le to the 1ank than those offered to others' 6Hphasis
supplied7
0he a1ove D5)(= regulation and set guidelines are entitled to ake sure that lendings 1y 1anks
or other financial institutions to its own directors, officers, stockholders or related interests are a1ove
1oard' =n view of said hindrance, what ### did was divest itself of its shareholdings in the franchise
copanies' =t incorporated ### H<uity to take over the adinistration of the franchise copanies
under new anageent contracts' =n the eantie, ### continued providing a discounting line for
receiva1les of the franchise copanies through ### H<uity' 0hereafter, ### changed its nae to
&eneral #redit #orporation 6&##7'
0he copanies/ operations were on course until 1981, when adverse edia reports unraveled
anoalies in the 1usiness of &##' @pon investigation, petitioners allegedly discovered the
dissipation of the assets of their respective franchise copanies' $ong the alleged fraudulent
schees 1y &## involved transfer or assignent of its uncollecti1le notes and accountsC utiliDation of
spurious coercial papers to generate paper revenuesC and release of collateral in connivance with
unauthoriDed loans' !urtherore, &## allegedly divested itself of its assets through a <uestiona1le
offset of receiva1les arrangeent with one of its creditors, (esource and !inance #orporation'
5n !e1ruary "2, 1982, petitioners filed a suit against &##, ### H<uity and (!#' *etitioners
prayed for 617 receivership, 6"7 an order directing &## and ### H<uity solidarily to pay petitioners
and depositors for the losses they sustained, and 6,7 nullification of the agreeent 1etween &## and
(!#'
5n June 6, 1982, all respondents, e:cept ### H<uity, filed a otion to disiss asserting that
)H# lacked Furisdiction, and that petitioners were not the real parties in interest' Both otions, for
receivership and for disissal, were su1se<uently denied 1y the hearing officer'
5n !e1ruary ",, 1993, the hearing officer ordered >piercing the corporate veil? of &##, ###
H<uity, and the franchise copanies' Ee later declared that &## was not lia1le to individual
petitioners for the losses, since as investors they assued the risk of their respective
investents' 0he franchise copanies and the individual petitioners were held not lia1le to &## for
the 1ad accounts incurred 1y the latter through the discounting process' 0he decretal portion of his
order reads4
>GEH(H!5(H, Fudgent is here1y rendered, as follows4
1' Declaring &##, ###%H<uity and the franchised copanies % #oercial #redit #orporation of
+orth 9anila, #oercial #redit #orporation of #agayan ;alley, #oercial #redit #orporation
of 5longapo #ity and #oercial #redit #orporation of RueDon #ity % as one corporationC
"' Declaring that the petitioning franchised copanies are not lia1le for the payent of 1ad accounts
assigned to, and discounted 1y &##C
,' Declaring the individual petitioners who e:ecuted continuing guaranties to secure the o1ligation of
the franchised copanies to &## arising fro the discounting accounts should not 1e held lia1le
thereonC
2' Declaring that &## is not lia1le to individual petitioners for the investents they ade in the
franchised copaniesC
.' Disissing the petition with respect to respondent (esource !inance #orporation, &eneroso
;illanueva and 8eonardo $leFandrino'?
[2]
=n an en banc decision, dated 5cto1er 6, 199", the )H# reversed the ruling of its hearing
officer' *etitioners appealed to the #ourt of $ppeals' 5n 5cto1er 8, 199,, the appellate court
affired respondent )H#/s decision' *etitioners oved for a reconsideration, 1ut it was denied on
)epte1er "", 1992'
Eence, the instant petition raising the following issues4
=' GEH0EH( 0EH #5@(0 5! $**H$8) H((HD &($;H8O =+ !$=8=+& 05 (@8H 0E$0 &##/)
!($@D @*5+ *H0=0=5+H() $+D 9=)9$+$&H9H+0 5! 0EH !($+#E=)H #59*$+=H)
G$(($+0 0EH *=H(#=+& 5! =0) ;H=8 5! #5(*5($0H !=#0=5+'
==' GEH0EH( 0EH #5@(0 5! $**H$8) H((HD &($;H8O =+ !$=8=+& 05 (@8H 0E$0 5+8O
0EH )H# E$) J@(=)D=#0=5+ 5;H( 0EH =))@H 5! GEH0EH( =+D=;=D@$8 *H0=0=5+H()
9$O BH EH8D 8=$B8H 5+ 0EH )@(H0O $&(HH9H+0) !5( B$D $##5@+0) =+#@((HD BO
&## 0E(5@&E 0EH D=)#5@+0=+& *(5#H))'
==='GEH0EH( 0EH #5@(0 5! $**H$8) H((HD &($;H8O =+ !$=8=+& 05 (H;H()H $+D )H0
$)=DH 0EH 36, 5#05BH( 199" )H# DH#=)=5+'
*etitioners pray for the piercing of the corporate fiction of &##, ### H<uity, (!# and the
franchise copanies' 0hey allege that 617 &## was the alter%ego of ### H<uity and the franchise
copaniesC 6"7 &## created ### H<uity to circuvent #B/s D5)(= (egulationC and 6,7 &##
isanaged the franchise copanies' @ltiately, petitioners pray that the )H# en bancreinstate the
decision of the hearing officer a1solving individual investors of their respective lia1ilities attached to
the continuing guaranty of 1ad de1ts' 0hey pray that should the afore%stated copanies 1e
considered as one, then petitioners/ lia1ilities should 1e nullified'
)H# en banc decided against the petitioners, saying4
>Ghere one corporation is so organiDed and controlled and its affairs are conducted so
that it is, in fact, a ere instruentality or adFunct of the other, the fiction of the corporate
entity of the instruentality ay 1e disregarded''' [0]he control and 1reach of duty ust
pro:iately cause the inFury or unFust loss for which the coplaint is ade'
0he test ay 1e stated as follows4
=n any given case, e:cept e:press agency, estoppel, or direct tort, three eleents ust 1e
proved4
1' #ontrol, not ere aFority or coplete stock control, 1ut coplete doination, not only of finances
1ut of policy and 1usiness practice in respect to the transaction attacked so that the corporate
entity as to this transaction had at the tie no separate ind, will or e:istence of its ownC
"' )uch control ust have 1een used 1y the defendant to coit fraud or wrong, to perpetrate the
violation of the statutory or other positive legal duty, or dishonest and unFust act in contravention of
plaintiff/s legal rightsC and
,' the aforesaid control and 1reach of duty ust pro:iately cause the inFury or unFust loss
coplained of'
0he a1sence of any one of these eleents prevents Upiercing the corporate veil'?
[.]
0he )H# stated further that4
>0he second eleent re<uired for the application of the instruentality rule is not present
in this case' @pon close scrutiny of the various testaentary and docuentary evidence
presented during trial, it ay 1e o1served that petitioner/s clai of dissipation of assets
and resources 1elonging to the franchise copanies has not 1een reasona1ly supported
1y said evidence at hand with the #oission' =n fact, the disputed decision of the
hearing officer dealt ainly with the aspect of control e:ercised 1y &## over the franchise
copanies without a concrete finding of fraud on the part of the forer to the preFudice of
individual petitioners/ interests' $s previously discussed, ere control on the part of &##
through ### H<uity over the operations and 1usiness policies of the franchise copanies
does not necessarily warrant piercing the veil of corporate fiction without proof of fraud' =n
order to deterine whether or not the control e:ercised 1y &## through ### H<uity over
the franchise copanies was used to coit fraud or wrong, to violate a statutory or other
positive legal duty, or dishonest and unFust act in contravention of petitioners/ legal rights,
the circustances that caused the 1ankruptcy of the franchise copanies ust 1e taken
into consideration'?
[6]
$s a general rule, a corporation will 1e looked upon as a legal entity, unless and until sufficient
reason to the contrary appears' Ghen the notion of legal entity is used to defeat pu1lic convenience,
Fustify wrong, protect fraud, or defend crie, the law will regard the corporation as an association of
persons'
[-]
$lso, the corporate entity ay 1e disregarded in the interest of Fustice in such cases as
fraud that ay work ine<uities aong e1ers of the corporation internally, involving no rights of
the pu1lic or third persons' =n 1oth instances, there ust have 1een fraud, and proof of it' !or the
separate Furidical personality of a corporation to 1e disregarded, the wrongdoing ust 1e clearly and
convincingly esta1lished'
[8]
=t cannot 1e presued'
[9]
Ge agree with the findings of the )H# concurred in 1y the appellate court that there was no fraud
nor isanageent in the control e:ercised 1y &## and 1y ### H<uity, over the franchise
copanies' Ghether the e:istence of the corporation should 1e pierced depends on <uestions of
facts, appropriately pleaded' 9ere allegation that a corporation is the alter ego of the individual
stockholders is insufficient' 0he presuption is that the stockholders or officers and the corporation
are distinct entities' 0he 1urden of proving otherwise is on the party seeking to have the court pierce
the veil of the corporate entity'
[13]
=n this, petitioner failed'
*etitioners contend that the issue of whether the investors ay 1e held lia1le on the surety
agreeents for 1ad accounts incurred 1y &## through the discounting process cannot 1e isolated
fro the fundaental issue of validly piercing &##/s corporate veil' 0hey argue that since these
surety agreeents are intra%corporate atters, only the )H# has the specialiDed knowledge to
evaluate whether fraud was perpetrated'
Ge note, however, that petitioners signed the continuing guaranty of the franchise copanies/
1ad de1ts in their own personal capacities' #onse<uently, they are responsi1le for their individual
acts' 0he lia1ilities of petitioners as investors arose out of the regular financing venture of the
franchise copanies' 0here is no evidence that these 1ad de1ts were fraudulently incurred' $ny
taint of 1ad faith on the part of &## in enticing investors ay 1e resolved in ordinary courts,
inasuch as this is in the nature of a contractual relationship' #hanging petitioners/ su1sidiary
lia1ilities 1y converting the to guarantors of 1ad de1ts cannot 1e done 1y piercing the veil of
corporate identity'
*rivate respondents clai they had actually filed collection cases against ost, if not all, of the
petitioners to enforce the suretyship lia1ility on accounts discounted with then ### 6now &##7'
[11]
=n
such cases, the trial court ay deterine the validity of the proissory notes and the corresponding
guarantee contracts' 0he e:istence of the corporate entities need not 1e disregarded'
5n the atter of Furisdiction, we agree with the #ourt of $ppeals when it held that4
>' ' ' [0]he ruling of the hearing officer in relation to the lia1ilities of the franchise
copanies and individual petitioners for the 1ad accounts incurred 1y &## through the
discounting process would necessary entail a prior interpretation of the discounting
agreeents entered into 1etween &## and the various franchise copanies as well as
the continuing guaranties e:ecuted to secure the sae' $ Fudgent on the
aforeentioned lia1ilities incurred through the discounting process ust likewise involve a
deterination of the validity of the said discounting agreeents and continuing guaranties
in order to properly pass upon the enforceent or ipleentation of the sae' =t is
crystal clear fro the aforecited authorities and Furisprudence
[1"]
that there is no need to
apply the specialiDed knowledge and skill of the )H# to interpret the said discounting
agreeents and continuing guaranties e:ecuted to secure the sae 1ecause the regular
courts possess the utost copetence to do so 1y erely applying the general principles
laid down under civil law on contracts'
: : :
0he atter of whether the petitioners ust 1e held lia1le on their separate suretyship is
one that 1elongs to the regular courts' $s the respondent )H# notes in its coent, Uthe
franchised copanies accounts discounted 1y &## would arise even if there is no intra%
corporate relationship 1etween the parties' =n other words, the controversy did not arise
out of the parties/ relationships as stockholders' 0he #ourt agrees' 0his atter is 1etter
left to the regular courts in which the private respondents have filed suits to enforce the
suretyship agreeents allegedly e:ecuted 1y the petitioners'?
[1,]
+ot every conflict 1etween a corporation and its stockholders involves corporate atters that only
the )H# can resolve' =n >ira= vs. )ourt of Appeals, 191 )#($ ,38, ,", 619937, we stressed that a
contrary interpretation would dissipate the powers of the regular courts and distort the eaning and
intent of *D +o' 93"%$'
>=t is true that the trend is toward vesting adinistrative 1odies like the )H# with the power
to adFudicate atters coing under their particular specialiDation, to insure a ore
knowledgea1le solution of the pro1les su1itted to the' 0his would also relieve the
regular courts of a su1stantial nu1er of cases that would otherwise swell their already
clogged dockets' But as e:pedient as this policy ay 1e, it should not deprive the courts
of Fustice of their power to decide ordinary cases in accordance with the general laws that
do not re<uire any particular e:pertise or training to interpret and apply' 5therwise, the
creeping take%over 1y the adinistrative agencies of the Fudicial power vested in the
courts would render the Judiciary virtually ipotent in the discharge of the duties assigned
to it 1y the #onstitution'?
!inally, we note that petitioners were given aple opportunity to present evidence in support of
their clais' But ere allegations do not constitute convincing evidence' Ge find no sufficient
reason to overturn the decisions of 1oth the )H# and the appellate court'
%2EREFORE, the instant petition is DH+=HD for lack of erit' 0he assailed decision and
resolution of the #ourt of $ppeals dated 5cto1er 8, 199, and )epte1er "", 1992, respectively, are
$!!=(9HD' #osts against petitioners'
O OR)ERE).
(ellosillo, ()"airman), *endo+a, (uena, and .e 0eon, -r., --., concur.
G.R. No. 166859 *u!e 26, 2006
RE#($LIC OF T2E #2ILI##INE, *etitioner,
vs'
AN)IGAN$A.AN 0FIRT )I-IION1, E)(AR)O M. CO*(ANGCO, *R., AGRIC(LT(RAL CON(LTANC.
ER-ICE, INC., ARC2I#ELAGO REALT. COR#., $ALENTE RANC2, INC., $LAC, TALLON RANC2, INC.,
C2RITENEN #LANTATION COM#AN., )ICO-ER. REALT. COR#., )REAM #AT(RE, INC., EC2O
RANC2, INC., FAR EAT RANC2, INC., FILO- 2I##ING COM#AN., INC., FIRT (NITE) TRAN#ORT,
INC., 2A$AGAT REALT. )E-ELO#MENT, INC., ,ALA%A,AN REORT, INC., ,A(NLARAN
AGRIC(LT(RAL COR#., LA$A.(G AIR TERMINAL, INC., LAN)AIR INTERNATIONAL MAR,ETING COR#.,
L2L CATTLE COR#ORATION, L(CENA OIL FACTOR., INC., MEA)O% LAR, #LANTATION, INC.,
METRO#LE@ COMMO)ITIE, INC., MIT. MO(NTAIN AGRIC(LT(RAL COR#., NORT2EAT CONTRACT
TRA)ER, INC., NORT2ERN CARRIER COR#ORATION, OCEANI)E MARITIME ENTER#RIE, INC., ORO
-ER)E ER-ICE, INC., #ATORAL FARM, INC., #C. OIL MAN(FACT(RING COR#., #2ILI##INE
TEC2NOLOGIE, INC., #RIMA-ERA FARM, INC., #(NONG7$A.AN 2O(ING )E-ELO#MENT COR#.,
#(RA ELECTRIC COM#AN. INC., RA)IO A()IENCE )E-ELO#ER INTEGRATE) ORGANI+ATION, INC.,
RA).O #ILI#INO COR#ORATION, RANC2O GRAN)E, INC., RE))EE )E-ELO#ER, INC., AN ETE$AN
)E-ELO#MENT COR#., IL-ER LEAF #LANTATION, INC., O(T2ERN ER-ICE TRA)ER, INC.,
O(T2ERN TAR CATTLE COR#., #A)E ONE REORT COR#., (NE@#LORE) LAN) )E-ELO#ER,
INC., -ER)ANT #LANTATATION, INC., -ETA AGRIC(LT(RAL COR#. AN) %ING REORT
COR#ORATION, (espondents'
( H ) 5 8 @ 0 = 5 +
CAR#IO MORALE, J.:
!or resolution is the @rgent 9otion for =ssuance of 0eporary (estraining 5rder andBor Grit of *reliinary
=nFunction which was filed 1y petitioner, (epu1lic of the *hilippines, during the pendency of its *etition for #ertiorari
1efore this #ourt challenging the denial 1y pu1lic respondent, the )andigan1ayan, of its 9otion for *artial )uary
Judgent in #ivil #ase +o' 33,,%! 6the civil case7'
=n support of its present urgent otion, petitioner pleads that the issue it raised in its *etition for #ertiorari L
whether pu1lic respondent coitted grave a1use of discretion in denying its 9otion for *artial )uary Judgent
L ust first 1e resolved, as a continuation of the proceedings in the civil case 1y pu1lic respondent ight 1e
rendered unnecessary in the event that its *etition 1efore this #ourt is resolved in its favor'
0he ere elevation of an interlocutory atter to this #ourt through a petition for #ertiorari under (ule 6. of the
(ules of #ourt, like in the present case, does not 1y itself erit a suspension of the proceedings 1efore a pu1lic
respondent, unless a teporary restraining order or a writ of preliinary inFunction has 1een issued against the
pu1lic respondent' (ule 6., )ection - of the (ules of #ourt so provides4
)H#0=5+ -' H:pediting proceedingsC inFunctive relief' L 0he court in which the petition [for #ertiorari, *rohi1ition
and 9andaus] is filed ay issue orders e:pediting the proceedings, and it ay also grant a teporary restraining
order or a writ of preliinary inFunction for the preservation of the rights of the parties pending such
proceedings' 0he petition shall !o9 interrupt the course of the principal case u!?e'' a teporary restraining order or
a writ of preliinary inFunction has 1een issued against the pu1lic respondent fro further proceeding in the
case' 6Hphasis and underscoring supplied7
0he 1urden is thus on the petitioner in a petition for #ertiorari, *rohi1ition and 9andaus to show that there is a
eritorious ground for the issuance of a teporary restraining order or writ of preliinary inFunction for the purpose
of suspending the proceedings 1efore the pu1lic respondent'
1
Hssential for granting inFunctive relief is the e:istence
of an urgent necessity for the writ in order to prevent serious daage'
"
0he #ourt finds that petitioner has failed to discharge the 1urden' 0he ground on which it 1ases its urgent otion is
the alleged futility of proceeding with the trial of the case' 0his assertion, however, is speculative, anchored on the
ere supposition that the petition would 1e decided in its favor'
0here is thus, in this case, a arked a1sence of any urgent necessity for the issuance of a teporary restraining
order or writ of preliinary inFunction'
=t is gathered though that even prior to the filing of the instant otion, pu1lic respondent suspended the proceedings
in the civil case, the a1sence of any teporary restraining order or writ of preliinary inFunction fro this #ourt
notwithstanding' 0hus, petitioner 1rought to this #ourt/s attention private respondents/ insistence to have the civil
case set for trial 1y pu1lic respondent, citing private respondents/ filing of a K9otion (eiterating 9otion to )et #ase
for 0rialK dated June "-, "33., K)econd 9otion (eiterating 9otion to )et #ase for 0rialK dated 5cto1er "6, "33.,
and K9anifestation and 9otion (eiterating 9otion to )et #ase for 0rialK dated Dece1er 8, "33.'
,
0he earlier <uoted )ection - of (ule 6. provides the general rule that the ere pendency of a special civil action for
#ertiorari coenced in relation to a case pending 1efore a lower court or court of origin does not stay the
proceedings therein in the a1sence of a writ of preliinary inFunction or teporary restraining order'
2
0here are of course instances where even if there is no writ of preliinary inFunction or teporary restraining order
issued 1y a higher court, it would 1e proper for a lower court or court of origin to suspend its proceedings on the
precept of Fudicial courtesy' $s this #ourt e:plained in 9ternal 3ardens *emorial <ar$ v. )ourt of Appeals4
.
$lthough this #ourt did not issue any restraining order against the =nterediate $ppellate #ourt to prevent it fro
taking any action with regard to its resolutions respectively granting respondentsJ otion to e:punge fro the
records the petitionerJs otion to disiss and denying the latterJs otion to reconsider such order, upon learning of
the petition, the appellate court should have refrained fro ruling thereon 1ecause its Furisdiction was necessarily
liited upon the filing of a petition for certiorari with this #ourt <uestioning the propriety of the issuance of the
a1ove%entioned resolutions' Due respect for the )upree #ourt and Bra49:4a? a!" e95:4a? 4o!':"era9:o!' should
have propted the appellate court to wait for the final deterination of the petition 1efore taking cogniDance of the
case and trying to render oot e:actly what was 1efore this court : : : 6Hphasis and underscoring supplied7
$ reading of 9ternal 3ardens *emorial <ar$ shows that the appellate court/s failure to o1serve Fudicial courtesy
which was frowned upon 1y this #ourt lay in its recall of its 6the appellate court/s7 5rders e:punging fro the
records the 9otion to Disiss filed 1y the therein petitioner, which 5rders were 95e orders 1eing <uestioned 1efore
this #ourt via a petition for #ertiorari and 9andaus' )uch act of the appellate court tended to render oot and
acadeic the said petition' +o parity of circustances o1tains in the present case, however, where erely setting
the case for trial would not have the effect of rendering the present petition oot'
0his #ourt e:plained, however, that the rule on KFudicial courtesyK applies where Kthere is a strong pro1a1ility that
the issues 1efore the higher court would 1e rendered oot and ori1und as a result of the continuation of the
proceedings in the lower court [or court of origin]K'
6
$ final word' 0his #ourt takes notice that in ost cases where its interlocutory orders are challenged 1efore this
#ourt, pu1lic respondent, )andigan1ayan, suspends proceedings in the cases in which these assailed interlocutory
orders are issued despite the non%issuance 1y this #ourt of a teporary restraining order or writ of preliinary
inFunction and the a1sence of a strong pro1a1ility that the issues raised 1efore this #ourt would 1e rendered oot
1y a continuation of the proceedings 1efore it 6)andigan1ayan7'
%2EREFORE, the @(&H+0 950=5+ !5( =))@$+#H 5! 0H9*5($(O (H)0($=+=+& 5(DH( $+DB5( G(=0
5! *(H8=9=+$(O =+J@+#0=5+ filed 1y petitioner (H*@B8=# 5! 0EH *E=8=**=+H) is )ENIE)'
0he )$+D=&$+B$O$+ is, however, OR)ERE),in light of the foregoing discussion, to continue the proceedings in
#ivil #ase +o' 33,,%!, as well as in all other cases where its interlocutory orders are on challenge 1efore this #ourt
1ut no 0eporary (estraining 5rder or Grit of *reliinary =nFunction has 1een issued and there is no strong
pro1a1ility that the issues raised 1efore this #ourt would 1e rendered oot and ori1und'
O OR)ERE).
HILARIO P. SORIANO, G.R. No. 1;<33;
*etitioner,

= versus = %resent1

PEOPLE OF THE PHILIPPINES, CA2%-), +.! Ch"irperson!
8ANG9O SENTRAL NG
C)2)NA,

PILIPINAS ?8SP@, PHILIPPINE 32-)N,
DEPOSIT INSURANCE "C# CAST-##), "n
CORPORATION ?PDIC@, PU8LIC %C2CL, ++.
PROSECUTOR ANTONIO C.
8UAN, '(- STATE
PROSECUTOR AL8ERTO R. %romulgated1
FONACIER,
Responents.
718
4ebruary 1, 2A1A
* = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = *


D E C I S I O N

DEL CASTILLO, J.:


A bank officer violates the ")S2-
728
la, ,hen he ac0uires bank funds for his !ersonal benefit,
even if such ac0uisition ,as facilitated by a fraudulent loan a!!lication. "irectors, officers,
stockholders, and their related interests cannot be allo,ed to inter!ose the fraudulent nature of the loan
as a defense to esca!e cul!ability for their circumvention of Section >9 of 2e!ublic Act '2A( No. 99N.
798
3efore us is a %etition for 2evie, on Certior"ri
7+8
under 2ule +/ of the 2ules of Court, assailing
the Se!tember 2?, 2AA9 "ecision
7/8
and the 4ebruary /, 2AA+ 2esolution
7?8
of the Court of A!!eals
'CA( in CA=.2. S% No. ?N?/N. The challenged "ecision dis!osed as follo,s1

WHEREFORE, !remises considered, the instant !etition for certiorari is
hereby DENIED.
7N8

Factual Antecedents

Sometime in 2AAA, the )ffice of S!ecial -nvestigation ')S-( of the ,"ng&o Sentr"# ng
*i#ipin"s '3S%(, through its officers,
7>8
transmitted a letter
7<8
dated &arch 2N, 2AAA to @ovencito LuSo,
Chief State %rosecutor of the "e!artment of @ustice '")@(. The letter attached as anne*es five
affidavits,
71A8
,hich ,ould allegedly serve as bases for filing criminal charges for Cstafa thru
4alsification of Commercial "ocuments, in relation to %residential "ecree '%"( No. 1?><,
7118
and for
$iolation of Section >9 of 2A 99N, as amended by %" 1N</,
7128
against, inter "#i"!!etitioner herein
Filario %. Soriano. These five affidavits, along ,ith other documents, stated that s!ouses Cnrico and
Amalia Carlos a!!eared to have an outstanding loan of %> million ,ith the 2ural 3ank of San &iguel
'3ulacan(, -nc. '23S&(, but had never a!!lied for nor received such loanK that it ,as !etitioner, ,ho
,as then !resident of 23S&, ,ho had ordered, facilitated, and received the !roceeds of the loanK and
that the %> million loan had never been authori5ed by 23S&Ms 3oard of "irectors and no re!ort
thereof had ever been submitted to the "e!artment of 2ural 3anks, Su!ervision and C*amination
Sector of the 3S%. The letter of the )S-, ,hich ,as not subscribed under oath, ended ,ith a re0uest
that a !reliminary investigation be conducted and the corres!onding criminal charges be filed against
!etitioner at his last kno,n address.

Acting on the letter=re0uest and its anne*es, State %rosecutor Albert 2. 4onacier !roceeded
,ith the !reliminary investigation. Fe issued a sub!oena ,ith the ,itnesses. affidavits and su!!orting
documents attached, and re0uired !etitioner to file his counter=affidavit. -n due course, the investigating
officer issued a 2esolution finding !robable cause and corres!ondingly filed t,o se!arate informations
against !etitioner before the 2egional Trial Court '2TC( of &alolos, 3ulacan.
7198


The first -nformation,
71+8
dated November 1+, 2AAA and docketed as Criminal Case No. 29N=
&=2AA1, ,as for estafa through falsification of commercial documents, under Article 91/, !aragra!h
1'b(, of the 2evised %enal Code '2%C(, in relation to Article 1N2 of the 2%C and %" 1?><. -t basically
alleged that !etitioner and his co=accused, in abuse of the confidence re!osed in them as 23S&
officers, caused the falsification of a number of loan documents, making it a!!ear that one Cnrico
Carlos filled u! the same, and thereby succeeded in securing a loan and converting the loan !roceeds
for their !ersonal gain and benefit.
71/8
The information reads1

That in or about the month of A!ril, 1<<N, and thereafter, in San &iguel, 3ulacan,
and ,ithin the Burisdiction of this Fonorable Court, the said accused HILARIO P.
SORIANO and ROSALINDA ILAGAN, as !rinci!als by direct !artici!ation, ,ith
unfaithfulness or abuse of confidence and taking advantage of their !osition as %resident of
the 2ural 3ank of San &iguel '3ulacan(, -nc. and 3ranch &anager of the 2ural 3ank of San
&iguel P San &iguel 3ranch 7sic8, a duly organi5ed banking institution under %hili!!ine
#a,s, cons!iring, confederating and mutually hel!ing one another, did then and there,
,illfully and feloniously falsify loan documents consisting of undated loan
a!!lication/information sheet, credit !ro!osal dated A!ril 1+, 1<<N, credit !ro!osal dated
A!ril 22, 1<<N, credit investigation re!ort dated A!ril 1/, 1<<N, !romissory note dated A!ril
29, 1<<N, disclosure statement on loan/credit transaction dated A!ril 29, 1<<N, and other
related documents, by making it a!!ear that one Cnrico Carlos filled u! the
a!!lication/information sheet and filed the aforementioned loan documents ,hen in truth
and in fact Cnrico Carlos did not !artici!ate in the e*ecution of said loan documents and that
by virtue of said falsification and ,ith deceit and intent to cause damage, the accused
succeeded in securing a loan in the amount of eight million !esos '%h%>,AAA,AAA.AA( from
the 2ural 3ank of San &iguel P San -ldefonso branch in the name of Cnrico Carlos ,hich
amount of %h%> million re!resenting the loan !roceeds the accused thereafter converted the
same amount to their o,n !ersonal gain and benefit, to the damage and !reBudice of the
2ural 3ank of San &iguel P San -ldefonso branch, its creditors, the 3angko Sentral ng
%ili!inas, and the %hili!!ine "e!osit -nsurance Cor!oration.

C)NT2A2D T) #AH.
71?8

The other -nformation
71N8
dated November 1A, 2AAA and docketed as Criminal Case No. 29>=
&=2AA1, ,as for violation of Section >9 of 2A 99N, as amended by %" 1N</. The said !rovision
refers to the !rohibition against the so=called ")S2- loans. The information alleged that, in his
ca!acity as %resident of 23S&, !etitioner indirectly secured an %> million loan ,ith 23S&, for his
!ersonal use and benefit, ,ithout the ,ritten consent and a!!roval of the bankMs 3oard of "irectors,
,ithout entering the said transaction in the bankMs records, and ,ithout transmitting a co!y of the
transaction to the su!ervising de!artment of the bank. Fis ruse ,as facilitated by !lacing the loan in the
name of an unsus!ecting 23S& de!ositor, one Cnrico Carlos.
71>8
The information reads1

That in or about the month of A!ril, 1<<N, and thereafter, and ,ithin the Burisdiction of this
Fonorable Court, the said accused, in his ca!acity as %resident of the 2ural 3ank of San &iguel
'3ulacan(, -nc., did then and there, ,illfully and feloniously indirectly borro, or secure a loan ,ith the
2ural 3ank of San &iguel P San -ldefonso branch, a domestic rural banking institution created, organi5ed
and e*isting under %hili!!ine la,s, amounting to eight million !esos '%h%>,AAA,AAA.AA(, kno,ing fully
,ell that the same has been done by him ,ithout the ,ritten consent and a!!roval of the maBority of the
board of directors of the said bank, and ,hich consent and a!!roval the said accused deliberately failed to
obtain and enter the same u!on the records of said banking institution and to transmit a co!y thereof to
the su!ervising de!artment of the said bank, as re0uired by the eneral 3anking Act, by using the name
of one de!ositor Cnrico Carlos of San &iguel, 3ulacan, the latter having no kno,ledge of the said loan,
and one in !ossession of the said amount of eight million !esos '%h%>,AAA,AAA.AA(, accused converted the
same to his o,n !ersonal use and benefit, in flagrant violation of the said la,.

C)NT2A2D T) #AH.
71<8

3oth cases ,ere raffled to 3ranch N< of the 2TC of &alolos, 3ulacan.
72A8


)n @une >, 2AA1, !etitioner moved to 0uash
7218
these informations on t,o grounds1 that the
court had no Burisdiction over the offense charged, and that the facts charged do not constitute an
offense.

)n the first ground, !etitioner argued that the letter transmitted by the 3S% to the ")@
constituted the com!laint and hence ,as defective for failure to com!ly ,ith the mandatory
re0uirements of Section 9'a(, 2ule 112 of the 2ules of Court, such as the statement of address of
!etitioner and oath and subscri!tion.
7228
&oreover, !etitioner argued that the officers of )S-!,ho ,ere
the signatories to the :letter=com!laint,; ,ere not authori5ed by the 3S% overnor, much less by the
&onetary 3oard, to file the com!laint. According to !etitioner, this alleged fatal oversight violated
Section 1>, !ars. 'c( and 'd( of the Ne, Central 3ank Act '2A N?/9(.

)n the second ground, !etitioner contended that the commission of estafa under !aragra!h 1'b(
of Article 91/ of the 2%C is inherently incom!atible ,ith the violation of ")S2- la, 'as set out in
Section >9
7298
of 2A 99N, as amended by %" 1N</(,
72+8
hence a !erson cannot be charged for both
offenses. Fe argued that a violation of ")S2- la, re0uires the offender too&+'$( ' *o'( from his
bank, ,ithout com!lying ,ith !rocedural, re!ortorial, or ceiling re0uirements. )n the other hand,
estafa under !ar. 1'b(, Article 91/ of the 2%C re0uires the offender to misa!!ro!riate or convert
something that he 0o*-! $( +"3!+, o" o( co,,$!!$o(, o" %o" '-,$($!+"'+$o(, or under any other
obligation involving the duty to return the same.
72/8


Cssentially, the !etitioner theori5ed that the characteri5ation of !ossession is different in the t,o
offenses. -f !etitioner ac0uired the loan as ")S2-, he o,ned the loaned money and therefore, cannot
misa!!ro!riate or convert it as contem!lated in the offense of estafa. Conversely, if !etitioner
committed estafa, then he merely held the money in trust for someone else and therefore, did not
ac0uire a loan in violation of ")S2- rules.

Ruling of the Regional Trial Court

-n an )rder
72?8
dated August >, 2AA1, the trial court denied !etitionerMs &otion to Iuash for lack
of merit. The lo,er court agreed ,ith the !rosecution that the assailed )S- letter ,asnot the
com!laint=affidavit itselfK thus, it need not com!ly ,ith the re0uirements under the 2ules of
Court. The trial court held that the affidavits, ,hich ,ere attached to the )S- letter, com!rised the
com!laint=affidavit in the case. Since these affidavits ,ere duly subscribed and s,orn to before a
notary !ublic, there ,as ade0uate com!liance ,ith the 2ules. The trial court further held that the t,o
offenses ,ere se!arate and distinct violations, hence the !rosecution of one did not !ose a bar to the
other.
72N8


%etitioner.s &otion for 2econsideration ,as like,ise denied in an )rder dated Se!tember /,
2AA1.
72>8


Aggrieved, !etitioner filed a %etition for Certior"ri
72<8
,ith the CA, reiterating his arguments
before the trial court.

Ruling of the Court of Appeals

The CA denied the !etition on both issues !resented by !etitioner.

)n the first issue, the CA determined that the 3S% letter, ,hich !etitioner characteri5ed to be a
fatally infirm com!laint, ,as not actually a com!laint, but a transmittal or cover letter only. This
transmittal letter merely contained a summary of the affidavits ,hich ,ere attached to it. -t did not
contain any averment of !ersonal kno,ledge of the events and transactions that constitute the elements
of the offenses charged. 3eing a mere transmittal letter, it need not com!ly ,ith the re0uirements of
Section 9'a( of 2ule 112 of the 2ules of Court.
79A8


The CA further determined that the five affidavits attached to the transmittal letter should be
considered as the com!laint=affidavits that charged !etitioner ,ith violation of Section >9 of 2A 99N
and for Cstafa thru 4alsification of Commercial "ocuments. These com!laint=affidavits com!lied ,ith
the mandatory re0uirements set out in the 2ules of Court P they ,ere subscribed and s,orn to before a
notary !ublic and subse0uently certified by State %rosecutor 4onacier, ,ho !ersonally e*amined the
affiants and ,as convinced that the affiants fully understood their s,orn statements.
7918


Anent the second ground, the CA found no merit in !etitionerMs argument that the violation of
the ")S2- la, and the commission of estafa thru falsification of commercial documents are inherently
inconsistent ,ith each other. -t e*!lained that the test in considering a motion to 0uash on the ground
that the facts charged do not constitute an offense, is ,hether the facts alleged, ,hen hy!othetically
admitted, constitute the elements of the offense charged. The a!!ellate court held that this test ,as
sufficiently met because the allegations in the assailed informations, when hypothetic"##y "mitte,
clearly constitute the elements of Cstafa thru 4alsification of Commercial "ocuments and $iolation of
")S2- la,.
7928


%etitioner.s &otion for 2econsideration
7998
,as like,ise denied for lack of merit.

Fence, this !etition.

I!!3e!

2estated, !etitioner raises the follo,ing issues
79+8
for our consideration1

-
Hhether the com!laint com!lied ,ith the mandatory re0uirements !rovided under
Section 9'a(, 2ule 112 of the 2ules of Court and Section 1>, !aragra!hs 'c( and 'd( of 2A
N?/9.

--
Hhether a loan transaction ,ithin the ambit of the ")S2- la, 'violation of
Section >9 of 2A 99N, as amended( could also be the subBect of Cstafa under Article 91/ '1(
'b( of the 2evised %enal Code.

---
-s a !etition for certiorari under 2ule ?/ the !ro!er remedy against an )rder
denying a &otion to IuashT

-$
Hhether !etitioner is entitled to a ,rit of inBunction.


O3" R3*$(2

The !etition lacks merit.

F$"!+ I!!3e>

W0e+0e" +0e co,.*'$(+ co,.*$e- /$+0 +0e ,'(-'+o"1 "e53$"e,e(+! ."o#$-e- 3(-e"
Sec+$o( 3?'@, R3*e 11< o% +0e R3*e! o% Co3"+ '(- Sec+$o( 18, .'"'2"'.0! ?c@ '(- ?-@
o%
Re.3&*$c Ac+ No. 7;=3


*etitioner mo'e to withr"w the first issue from the
inst"nt petition


)n &arch /, 2AAN, the Court noted
79/8
!etitionerMs &anifestation and &otion for %artial
Hithdra,al of the %etition
79?8
dated 4ebruary N, 2AAN. -n the said motion, !etitioner informed the
Court of the !romulgation of a "ecision entitled Sori"no '. 3on. C"s"no'"!
79N8
,hich also involved
!etitioner and similar 3S% letters to the ")@. According to !etitioner, the said "ecision allegedly
ruled s0uarely on the nature of the 3S% letters and the validity of the s,orn affidavits attached
thereto. 4or this reason, !etitioner moved for the !artial ,ithdra,al of the instant !etition insofar as it
involved the issue of :,hether or not a court can legally ac0uire Burisdiction over a com!laint ,hich
failed to com!ly ,ith the mandatory re0uirements !rovided under Section 9'a(, 2ule 112 of the 2ules
of Court and Section 1>, !aragra!hs 'c( and 'd( of 2A N?/9;.
79>8

iven that the case had already been submitted for resolution of the Court ,hen !etitioner filed
his latest motion, and that all res!ondents had !resented their !ositions and arguments on the first issue,
the Court deems it !ro!er to rule on the same.

5n Sori"no '. 3on. C"s"no'"! the Court he# th"t
the "ffi"'its "tt"che to the ,S* tr"nsmitt"# #etter
comp#ie with the m"n"tory re%uirements uner the
Ru#es of Court.


To be sure, the 3S% letters involved in Sori"no '. 3on. C"s"no'"
79<8
are not the same as the
3S% letter involved in the instant case. Fo,ever, the 3S% letters in Sori"no '. 3on. C"s"no'" and the
3S% letter subBect of this case are similar in the sense that they are all signed by the )S- officers of the
3S%, they ,ere not s,orn to by the said officers, they all contained summaries of their attached
affidavits, and they all re0uested the conduct of a !reliminary investigation and the filing of
corres!onding criminal charges against !etitioner Soriano. Thus, the !rinci!le of st"re ecisis dictates
that the ruling in Sori"no '. 3on. C"s"no'" be a!!lied in the instant case P once a 0uestion of la, has
been e*amined and decided, it should be deemed settled and closed to further argument.
7+A8


He held in Sori"no '. 3on. C"s"no'", after a close scrutiny of the letters transmitted by the
3S% to the ")@, that these ,ere not intended to be the com!laint, as envisioned under the 2ules. They
did not contain averments of !ersonal kno,ledge of the events and transactions constitutive of any
offense. The letters merely transmitted for !reliminary investigation the affidavits of !eo!le ,ho had
!ersonal kno,ledge of the acts of !etitioner. He ruled that these affidavits, not the letters transmitting
them, initiated the !reliminary investigation. Since these affidavits ,ere subscribed under oath by the
,itnesses ,ho e*ecuted them before a notary !ublic, then there ,as substantial com!liance ,ith
Section 9'a(, 2ule 112 of the 2ules of Court.

Anent the contention that there ,as no authority from the 3S% overnor or the &onetary
3oard to file a criminal case against Soriano, ,e held that the re0uirements of Section 1>, !aragra!hs
'c( and 'd( of 2A N?/9 did not a!!ly because the 3S% did not institute the com!laint but merely
transmitted the affidavits of the com!lainants to the ")@.

He further held that since the offenses for ,hich Soriano ,as charged ,ere !ublic crimes,
authority holds that it can be initiated by :any com!etent !erson; ,ith !ersonal kno,ledge of the acts
committed by the offender. Thus, the ,itnesses ,ho e*ecuted the affidavits clearly fell ,ithin the
!urvie, of :any com!etent !erson; ,ho may institute the com!laint for a !ublic crime.

The ruling in Sori"no '. 3on. C"s"no'" has been ado!ted and elaborated u!on in the recent
case of S"ntos-Concio '. Dep"rtment of +ustice.
7+18
-nstead of a transmittal letter from the 3S%, the
Court in S"ntos-Concio ,as faced ,ith an N3-=NC2 2e!ort, like,ise ,ith affidavits of ,itnesses as
attachments. 2uling on the validity of the ,itnesses. s,orn affidavits as bases for a !reliminary
investigation, ,e held1

The Court is not una,are of the !ractice of incor!orating all allegations in one
document denominated as :com!laint=affidavit.; -t does not !ronounce strict adherence to
only one a!!roach, ho,ever, for there are cases ,here the e*tent of one.s !ersonal
kno,ledge may not cover the entire gamut of details material to the alleged offense. The
!rivate offended !arty or relative of the deceased may not even have ,itnessed the
fatality, in ,hich case the !eace officer or la, enforcer has to rely chiefly on affidavits of
,itnesses. The 2ules do not in fact !reclude the attachment of a referral or transmittal letter
similar to that of the N3-=NC2. Thus, in Sori"no '. C"s"no'", the Court held1

A close scrutiny of the #etters tr"nsmitte by the 3S% and %"-C to the ")@ sho,s that
these were not intene to $e the comp#"int en'isione uner the Ru#es. -t may be clearly
inferred from the tenor of the letters that the officers merely intended to transmit the affidavits of
the bank em!loyees to the ")@. No,here in the transmittal letters is there any averment on the
!art of the 3S% and %"-C officers of !ersonal kno,ledge of the events and transactions
constitutive of the criminal violations alleged to have been made by the accused. -n fact, the
letters clearly stated that ,hat the )S- of the 3S% and the #-S of the %"-C did ,as to res!ectfully
transmit to the ")@ for !reliminary investigation the affidavits and !ersonal kno,ledge of the acts
of the !etitioner. These affidavits ,ere subscribed under oath by the ,itnesses ,ho e*ecuted them
before a notary !ublic. Since the affidavits! not the #etters tr"nsmitting them! were intene
to initiate the pre#imin"ry in'estig"tion! we ho# th"t Section 7@"A! Ru#e ..9 of the Ru#es of Court
w"s su$st"nti"##y comp#ie with.

Citing the ruling of this Court in E$"r#e '. Suc"#ito, the Court of A!!eals correctly held
that " comp#"int for purposes of pre#imin"ry in'estig"tion $y the fisc"# nee not $e fi#e $y the
offene p"rty. 4he ru#e h"s $een th"t! unless the offense subject thereof is one that cannot be
prosecuted de oficio, the s"me m"y $e fi#e! for pre#imin"ry in'estig"tion purposes! $y any
competent person. The crime of estafa is a !ublic crime ,hich can be initiated by :any
com!etent !erson.; The ,itnesses ,ho e*ecuted the affidavits based on their !ersonal kno,ledge
of the acts committed by the !etitioner fall ,ithin the !urvie, of :any com!etent !erson; ,ho
may institute the com!laint for a !ublic crime. * * * 'Cm!hasis and italics su!!lied(

A !reliminary investigation can thus validly !roceed on the basis of an affidavit of
any com!etent !erson, ,ithout the referral document, like the N3-=NC2 2e!ort, having
been s,orn to by the la, enforcer as the nominal com!lainant. To re0uire other,ise is a
needless e*ercise. The cited case of Oporto! +r. '. +uge -onser"te does not a!!ear to dent
this !ro!osition. After all, ,hat is re0uired is to "e-3ce +0e e#$-e(ce $(+o '%%$-'#$+!, for
,hile re!orts and even ra, information may Bustify the initiation of an investigation, the
!reliminary investigation stage can be held only after sufficient evidence has been gathered
and evaluated ,hich may ,arrant the eventual !rosecution of the case in court.
7+28

4ollo,ing the foregoing rulings in Sori"no '. 3on. C"s"no'" and S"ntos-Concio '.
Dep"rtment of +ustice! ,e hold that the 3S% letter, taken together ,ith the affidavits attached thereto,
com!ly ,ith the re0uirements !rovided under Section 9'a(, 2ule 112 of the 2ules of Court and Section
1>, !aragra!hs 'c( and 'd( of 2A N?/9.

Seco(- I!!3e>

W0e+0e" ' *o'( +"'(!'c+$o( /$+0$( +0e ',&$+ o% +0e DOSRI *'/ ?#$o*'+$o( o% Sec+$o(
83 o% RA 337, '! ',e(-e-@ co3*- &e +0e !3&6ec+ o% E!+'%' 3(-e" A"+$c*e 31= ?1@ ?&@
o% +0e
Re#$!e- Pe('* Co-e

The second issue ,as raised by !etitioner in the conte*t of his &otion to Iuash -nformation on
the ground that the facts charged do not constitute an offense.
7+98
-t is settled that in considering a
motion to 0uash on such ground, the test is :,hether the facts alleged, if hy!othetically admitted,
,ould establish the essential elements of the offense charged as defined by la,. The trial court may not
consider a situation contrary to that set forth in the criminal com!laint or information. 4acts that
constitute the defense of the !etitioner7s8 against the charge under the information must be !roved by
7him8 during trial. Such facts or circumstances do not constitute !ro!er grounds for a motion to 0uash
the information on the ground that the material averments do not constitute the offense;.
7++8

He have e*amined the t,o informations against !etitioner and ,e find that they contain
allegations ,hich, if hy!othetically admitted, ,ould establish the essential elements of the crime of
")S2- violation and estafa thru falsification of commercial documents.

-n Criminal Case No. 29>=&=2AA1 for violation of ")S2- rules, the information alleged that
!etitioner Soriano ,as the !resident of 23S&K that he ,as able to indirectly obtain a loan from 23S&
by !utting the loan in the name of de!ositor Cnrico CarlosK and that he did this ,ithout com!lying ,ith
the re0uisite board a!!roval, re!ortorial, and ceiling re0uirements.

-n Criminal Case No. 29N=&=2AA1 for estafa thru falsification of commercial documents, the
information alleged that !etitioner, by taking advantage of his !osition as !resident of 23S&, falsified
various loan documents to make it a!!ear that an Cnrico Carlos secured a loan of %> million from
23S&K that !etitioner succeeded in obtaining the loan !roceedsK that he later converted the loan
!roceeds to his o,n !ersonal gain and benefitK and that his action caused damage and !reBudice to
23S&, its creditors, the 3S%, and the %"-C.

Significantly, this is not the first occasion that ,e adBudge the sufficiency of similarly ,orded
informations. -n Sori"no '. *eop#e,
7+/8
involving the same !etitioner in this case 'but different
transactions(, ,e also revie,ed the sufficiency of informations for ")S2- violation and estafa thru
falsification of commercial documents, ,hich ,ere almost identical, mut"tis mut"nis, ,ith the subBect
informations herein. He held in Sori"no '. *eop#e that there is no basis for the 0uashal of the
informations as :they contain material allegations charging Soriano ,ith violation of ")S2- rules and
estafa thru falsification of commercial documents;.

%etitioner raises the theory that he could not !ossibly be held liable for estafa in concurrence
,ith the charge for ")S2- violation. According to him, the ")S2- charge !resu!!oses that he
ac0uired a loan, ,hich ,ould make the loan !roceeds his on money and ,hich he could neither
!ossibly misa!!ro!riate nor convert to the !reBudice of another, as re0uired by the statutory definition
of estafa.
7+?8
)n the other hand, if !etitioner did not ac0uire any loan, there can be no ")S2- violation
to s!eak of. Thus, !etitioner !osits that the t,o offenses cannot co=e*ist. This theory does not
!ersuade us.

%etitioner.s theory is based on the false !remises that the loan ,as e*tended to him by the bank
in his o,n name, and that he became the o,ner of the loan !roceeds. 3oth !remises are ,rong.

The bank money 'amounting to %> million( ,hich came to the !ossession of !etitioner ,as
money held in trust or administration by him for the bank, in his

fiduciary ca!acity as the %resident of said bank.
7+N8
-t is not accurate to say that !etitioner became the
o,ner of the %> million because it ,as the !roceeds of a loan. That ,ould have been correct if the
bank &nowing#y e*tended the loan to !etitioner himself. 3ut that is not the case here. According to the
information for estafa, the loan ,as su!!osed to be for another !erson, a certain :Cnrico Carlos;K
!etitioner, through falsification, made it a!!ear that said :Cnrico Carlos; a!!lied for the loan ,hen in
fact he ':Cnrico Carlos;( did not. Through such fraudulent device, !etitioner obtained the loan
!roceeds and converted the same. 6nder these circumstances, it cannot be said that !etitioner became
the #eg"# o,ner of the %> million. Thus, !etitioner remained the bank.s fiduciary ,ith res!ect to that
money, ,hich makes it ca!able of misa!!ro!riation or conversion in his hands.

The ne*t 0uestion is ,hether there can also be, at the same time, a charge for ")S2- violation
in such a situation ,herein the accused bank officer did not secure a loan in his o,n name, but ,as
alleged to have used the name of another !erson in order to indirectly secure a loan from the bank. He
ans,er this in the affirmative. Section >9 of 2A 99N reads1

Section B7. No director or officer of any banking institution shall, either directly or
inirect#y, for himself or as the re!resentative or agent of others, borro, any of the de!osits
of funds of such bank, nor sh"## he $ecome " gu"r"ntor! inorser! or surety for #o"ns from
such $"n& to others, or in any manner be an obligor for moneys borro,ed from the bank or
loaned by it, e*ce!t ,ith the ,ritten a!!roval of the maBority of the directors of the bank,
e*cluding the director concerned. Any such a!!roval shall be entered u!on the records of
the cor!oration and a co!y of such entry shall be transmitted forth,ith to the Su!erintendent
of 3anks. The office of any director or officer of a bank ,ho violates the !rovisions of this
section shall immediately become vacant and the director or officer shall be !unished by
im!risonment of not less than one year nor more than ten years and by a fine of not less than
one thousand nor more than ten thousand !esos. * * *

The !rohibition in Section >9 is broad enough to cover various modes of borro,ing.
7+>8
-t
covers loans by a bank director or officer 'like herein !etitioner( ,hich are made either1 '1( directly, '2(
inirect#y, '9( for himself, '+( or as the re!resentative or agent of others. -t a!!lies even if the director
or officer is a mere guarantor, indorser or surety for someone e#seCs loan or is in any manner an
obligor for money borro,ed from the bank or loaned by it. The covered transactions are !rohibited
unless the "ppro'"#, reportori"# and cei#ing re0uirements under Section >9 are com!lied ,ith. The
!rohibition is intended to !rotect the !ublic, es!ecially the de!ositors,
7+<8
from the overborro,ing of
bank funds by bank officers, directors, stockholders and related interests, as such overborro,ing may
lead to bank failures.
7/A8
-t has been said that :banking institutions are not created for the benefit of the
directors 7or officers8. Hhile directors have great !o,ers as directors, they have no s!ecial !rivileges as
individuals. They cannot use the assets of the bank for their o,n benefit e*ce!t as !ermitted by la,.
Stringent restrictions are !laced about them so that ,hen acting both for the bank and for one of
themselves at the same time, they must kee! ,ithin certain !rescribed lines regarded by the legislature
as essential to safety in the banking business;.
7/18

A irect borro,ing is obviously one that is made in the name of the ")S2- himself or ,here
the ")S2- is a named !arty, ,hile an inirect borro,ing includes one that is made by a third !arty,
but the ")S2- has a stake in the transaction.
7/28
The latter ty!e P indirect borro,ing P a!!lies here.
The information in Criminal Case 29>=&=2AA1 alleges that !etitioner :in his c"p"city "s *resient of
Rur"# ,"n& of S"n -igue# D S"n 5#efonso $r"nch x x x inirect#y borro,7ed8 or secure7d8 a loan ,ith
723S&8 * * * kno,ing fully ,ell that the same has been done by him ,ithout the ,ritten consent
and a!!roval of the maBority of the board of directors * * *, and ,hich consent and a!!roval the said
accused deliberately failed to obtain and enter the same u!on the records of said banking institution and
to transmit a co!y thereof to the su!ervising de!artment of the said bank * * * $y using the n"me of
one epositor Enrico C"r#os * * *, the latter having no kno,ledge of the said loan, and once in
possession of the said amount of eight million !esos '%> million(, 7!etitioner8 converted the same to
his own person"# use "n $enefit;.
7/98


The foregoing information describes the manner of securing the loan as inirectK names
!etitioner as the benefactor of the indirect loanK and states that the re0uirements of the la, ,ere not
com!lied ,ith. -t contains all the re0uired elements
7/+8
for a violation of Section >9, even if !etitioner
did not secure the loan in his o,n name.

The broad inter!retation of the !rohibition in Section >9 is Bustified by the fact that it
even express#y covers loans to third !arties ,here the third !arties are a,are of the transaction 'such as
!rinci!als re!resented by the ")S2-(, and ,here the ")S2-.s interest does not a!!ear to be beneficial
but even burdensome 'such as in cases ,hen the ")S2- acts as a mere guarantor or surety(. -f the la,
finds it necessary to !rotect the bank and the banking system in such situations, it ,ill surely be
illogical for it to e*clude a case like this ,here the ")S2- acted for his own $enefit, using the n"me of
"n unsuspecting person. A contrary inter!retation ,ill effectively allo, a ")S2- to use dummies to
circumvent the re0uirements of the la,.
-n sum, the informations filed against !etitioner do not negate each other.

T0$"- I!!3e>

I! ' R3*e ;= .e+$+$o( %o" certiorari +0e ."o.e" "e,e-1 '2'$(!+
'( O"-e" -e(1$(2 ' Mo+$o( +o A3'!0B

This issue may be s!eedily resolved by ado!ting our ruling in Sori"no '. *eop#e!
7//8
,here ,e
held1

-n fine, the Court has consistently held that a s!ecial civil action for certior"ri is not
the !ro!er remedy to assail the denial of a motion to 0uash an information. The !ro!er
!rocedure in such a case is for the accused to enter a !lea, go to trial ,ithout !reBudice on his
!art to !resent the s!ecial defenses he had invoked in his motion to 0uash and if after trial on
the merits, an adverse decision is rendered, to a!!eal therefrom in the manner authori5ed by
la,. Thus, !etitioners should not have forth,ith filed a s!ecial civil action for certior"ri ,ith
the CA and instead, they should have gone to trial and reiterated the s!ecial defenses
contained in their motion to 0uash. There are no s!ecial or e*ce!tional circumstances in the
!resent case that ,ould Bustify immediate resort to a filing of a !etition for certior"ri.
Clearly, the CA did not commit any reversible error, much less, grave abuse of discretion in
dismissing the !etition.
7/?8

Fo3"+0 I!!3e>

W0e+0e" .e+$+$o(e" $! e(+$+*e- +o ' /"$+ o% $(63(c+$o(

The re0uisites to Bustify an inBunctive relief are1 '1( the right of the com!lainant is clear and
unmistakableK '2( the invasion of the right sought to be !rotected is material and substantialK and '9(
there is an urgent and !aramount necessity for the ,rit to !revent serious damage. A clear legal right
means one clearly founded in or granted by la, or is :enforceable as a matter of la,.; Absent any clear
and un0uestioned legal right, the issuance of an inBunctive ,rit ,ould constitute grave abuse of
discretion.
7/N8
Caution and !rudence must, at all times, attend the issuance of an inBunctive ,rit because
it effectively dis!oses of the main case ,ithout trial and/or due !rocess.
7/>8
-n O#"#i" '. 3i?on!
7/<8
the
Court held as follo,s1

-t has been consistently held that there is no !o,er the e*ercise of ,hich is more
delicate, ,hich re0uires greater caution, deliberation and sound discretion, or more
dangerous in a doubtful case, than the issuance of an inBunction. -t is the strong arm of
e0uity that should never be e*tended unless to cases of great inBury, ,here courts of la,
cannot afford an ade0uate or commensurate remedy in damages.
Cvery court should remember that an inBunction is a limitation u!on the freedom of
action of the 7com!lainant8 and should not be granted lightly or !reci!itately. -t should be
granted only ,hen the court is fully satisfied that the la, !ermits it and the emergency
demands it.

iven this CourtMs findings in the earlier issues of the instant case, ,e find no com!elling
reason to grant the inBunctive relief sought by !etitioner.

WHEREFORE, the !etition is DENIED. The assailed Se!tember 2?, 2AA9 "ecision as
,ell as the 4ebruary /, 2AA+ 2esolution of the Court of A!!eals in CA=.2. S% No. ?N?/N
are AFFIRMED. Costs against !etitioner.

SO ORDERED.
RE: REQUEST OF POLICE
DIRECTOR
GENERALAVELINO I. RAZON
FOR AUTHORITY TO
DELEGATE THE
ENDORSEMENT OF
APPLICATION FOR SEARCH
WARRANT.
A.M. No. 08-4-4-SC

Present:

PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
CARPIO,
CORONA,
CARPIO MORALES,
CHICO-NAZARIO,
VELASCO, JR.,
NACHURA,
LEONARO-E CASTRO,
BRION,
PERALTA, !n"
BERSAMIN, JJ.

Pr#$%&'!te":

J%&( ), *++,
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -


R E S O L U T I O N


CHICO-NAZARIO, J.:

Be.#re Us !re t/# 0#$$%n10!t1#ns2 t3e .1rst &etter,
456
"!te" 5, M!r03 *++7,
/!s sent 8( t3en P#&10e 1re0t#r Gener!& A9e&1n# I. R!:#n, Jr. ;P<1r. Gen. R!:#n=,
C31e., P31&1>>1ne N!t1#n!& P#&10e ;PNP=2 !n" t3e se0#n" #ne,
4*6
"!te" *? N#9e$8er
*++7, .r#$ P#&10e 1re0t#r Gener!& Jes%s A. Ver:#s! ;P<1r. Gen. Ver:#s!=, t3e
s%00ee"1n' C31e. #. t3e PNP. B#t3 &etters /ere !""resse" t# t3en C#%rt
A"$1n1str!t#r Zen!1"! N. E&e>!@#, !n" 1n9#&9e" t3e >r#0e"%r!& reA%1re$ent t3!t
!>>&10!t1#ns .#r se!r03 /!rr!nt .1&e" 8e.#re Re'1#n!& Tr1!& C#%rts ;RTCs=
#. M!n1&! !n" Q%e:#n C1t( s3#%&" 8e >ers#n!&&( en"#rse" 8( 3e!"s #. t3e PNP,
N!t1#n!& B%re!% #. In9est1'!t1#n ;NBI=, !n" t3e Ant1-Cr1$e T!sB C#r0e ;ACTAC= #.
t3e Ar$e" C#r0es #. t3e P31&1>>1nes ;ACP=.

T3e 5, M!r03 *++7 &etter #. t3en P<1r. Gen. R!:#n $!n1.este" 31s
!>>re3ens1#n t3!t D

4R6e0ent&( t3!t t3e 0#n0erne" E-e0%t19e Re'1#n!& Tr1!& C#%rt J%"'es 3!9e reA%1re" t3!t t3e
!>>&10!t1#ns .#r se!r03 /!rr!nts 1n !00#r"!n0e /1t3 t3e 4Se0t1#n 5*, C3!>ter V #. t3e G%1"e&1nes
#n t3e Se&e0t1#n !n" A>>#1nt$ent #. E-e0%t19e J%"'es6 nee" t# 8e en"#rse" >ers#n!&&( 8( t3e
%n"ers1'ne" #t3er/1se t3e !>>&10!t1#n /#%&" n#t 8e !0te" %>#n.

T3e %n"ers1'ne" ;P<1r. Gen. R!:#n=, "%e t# t3e n%$er#%s "e$!n"s #. 31s #..10e, $!(
n#t 8e !8&e t# !0t e->e"1t1#%s&( #n t3e reA%1re" en"#rse$ents #. !>>&10!t1#n .#r se!r03 /!rr!nt.
An( %nne0ess!r( "e&!( 1n t3e !>>&10!t1#n, es>e01!&&( #n 0!ses /3103 reA%1re 1$$e"1!te se!r03
!n" se1:%re #. !n( 0#ntr!8!n", /#%&" n#t ser9e t3e >%r>#se .#r /3103 t3e se!r03 /!rr!nt /!s
!>>&1e" .#r !n" ren"er t3e en"s #. E%st10e n%'!t#r(.
4F6


In 0#nne0t1#n t3eret#, P<1r. Gen. R!:#n reA%este" t3!t D

4He6 8e !&&#/e" t# "e&e'!te t3e en"#rse$ent #. t3e !>>&10!t1#n .#r se!r03 /!rr!nt t# t3e
1re0t#r #. t3e 1re0t#r!te .#r In9est1'!t1#n !n" ete0t19e M!n!'e$ent ;PIR JECCERSON P.
SORIANO=, 1n 91e/ #. 31s 1n3erent 1n9est1'!t19e .%n0t1#ns !n" !s C#$$!n"er #. t3e T!sB C#r0e
USIG !n" Ant1-I&&e'!& r%'s S>e01!& O>er!t1#ns T!sB C#r0e.
4G6


A0t1n' %>#n t3e .#re'#1n' &etter, C#%rt A"$1n1str!t#r E&e>!n# re0#$$en"e"
t# C31e. J%st10e Re(n!t# S. P%n#, t3r#%'3 ! Me$#r!n"%$ "!te" *7 M!r03 *++7,
t3!t &e!9e 8e 'r!nte" !&&#/1n' P<1r. Gen. R!:#n t# "e&e'!te t3e !%t3#r1t( t#
en"#rse t3e !>>&10!t1#ns .#r se!r03 /!rr!nt, 8!se" #n t3e .#&&#/1n' 0#ns1"er!t1#ns D

Be1n' t3e 031e. #. t3e PNP, Gener!& R!:#n #9ersees t3e #>er!t1#ns #. t3e ent1re >#&10e .#r0e !&&
#9er t3e P31&1>>1nes, !n" 1n t3e "1s03!r'e #. 31s "%t1es !n" res>#ns181&1t1es, 3e 1s e->e0te" t# 8e
9er( $#81&e. H1s 0#nst!nt #..101!& !n" 0ere$#n1!& .%n0t1#ns 0#$>e& 31$ t# 8e #%t #. 31s #..10e
$#st #. t3e t1$e. S%03 s1t%!t1#n >#ses ! >r#8&e$ 1n ter$s #. e->e"1t1n' t3e .1&1n' #. !>>&10!t1#n
.#r se!r03 /!rr!nt 8( t3e PNP 1n t3e Re'1#n!& Tr1!& C#%rts #. M!n1&! !n" Q%e:#n C1t( 8e0!%se
#. t3e reA%1re$ent %n"er Se0t1#n 5* #. A.M. N#. +F-7-+*, t3e 0#$>&1!n0e #. /3103 1s "e>en"ent
%>#n t3e >resen0e #. Gener!& R!:#n 1n 31s #..10e. e&e'!t1n' t3e !%t3#r1t( t# en"#rse 1s ! &e'!&
!n" 91!8&e #>t1#n t# !""ress t31s >r#8&e$ !n" t# ens%re t3e s>ee"( .1&1n' #. !>>&10!t1#ns .#r
se!r03 /!rr!nt 8( t3e PNP.
4?6


C#%rt A"$1n1str!t#r E&e>!n#Hs !8#9e-A%#te" re0#$$en"!t1#n, 3#/e9er,
0!rr1e" ! A%!&1.10!t1#n, i.e., t3!t It3e $!tter #. /3et3er t31s reA%1re$ent $!( 8e
re&!-e" s%03 t3!t t3e en"#rse$ent #. !>>&10!t1#ns .#r se!r03 /!rr!nt $!( 8e
"e&e'!te" t# ! s%8#r"1n!te #..10er s3#%&" 8e res#&9e" 1ns#.!r !s 1t !>>&1es #n&( t#
Gener!& R!:#n2J >re0e"1n' .r#$ t3e !ss%$>t1#n t3!t It3e 0#n0ern #. Gener!& R!:#n
4/!s6 >e0%&1!r t# 31$ !&#ne s1n0e t3e 3e!"s #. t3e #t3er !'en01es 3!9e n# >r#8&e$
1n 0#$>&(1n' /1t3 t3e reA%1re$ent 1n A%est1#n.J

In ! Res#&%t1#n "!te" 5? A>r1& *++7, t3e C#%rt 'r!nte" t3e reA%est #. P<1r.
Gen. R!:#n, t# /1t:

T3e C#%rt Res#&9e", %>#n t3e re0#$$en"!t1#n #. C#%rt A"$1n1str!t#r Zen!1"! N.
E&e>!@#, t# GRANT t3e reA%est #. P#&10e 1re0t#r Gener!& A9e&1n# I. R!:#n, C31e., P31&1>>1ne
N!t1#n!& P#&10e ;PNP=, t# "e&e'!te t3e !%t3#r1t( t# en"#rse t3e !>>&10!t1#ns .#r se!r03 /!rr!nt
t# 8e .1&e" 1n t3e Re'1#n!& tr1!& C#%rts #. M!n1&! !n" Q%e:#n C1t( t# t3e 1re0t#r #. t3e
1re0t#r!te .#r In9est1'!t1#n !n" ete0t19e M!n!'e$ent #. t3e PNP 1n 0#nne0t1#n /1t3 Se0t1#n
5* #. t3e G%1"e&1nes #n t3e Se&e0t1#n !n" A>>#1nt$ent #. E-e0%t19e J%"'es ;A.M. N#. +F-7-+*-
SC=.
4K6

T3ere!.ter, #n *? N#9e$8er *++7, t3e PNP, t31s t1$e %n"er t3e 3e!"s31>
P<1r. Gen. Ver:#s!, !sBe" t3e C#%rt .#r I0&!r1.10!t1#n - - - re'!r"1n' t3e
0#nstr%0t1#n #n t3e "%r!t1#n #r e..e0t191t(J
4)6
#. t3e 5? A>r1& *++7 Resolution #. t3e
C#%rt. T3e ne0ess1t( .#r 0&!r1.10!t1#n res%&te" .r#$ !n 1n01"ent t3!t #00%rre" #n 55
N#9e$8er *++7, /3ere1n t3e !>>&10!t1#n .#r se!r03 /!rr!nt .1&e" 8( t3e Ant1-I&&e'!&
r%'s S>e01!& O>er!t1#ns T!sB C#r0e ;AISOTC=, !s en"#rse" 8( t3e 1re0t#r .#r
In9est1'!t1#n !n" ete0t19e M!n!'e$ent ;IM=, P#&10e C31e. S%>er1nten"ent R!%&
M. B!0!&:#,
476
/!s "en1e" 8( E-e0%t19e J%"'e Re(n!&"# R#s #. t3e M!n1&! RTC, #n
t3e 'r#%n" t3!t t3e !%t3#r1t( t# "e&e'!te /!s I!&re!"( 1n#>er!t19e .#r 1t #n&( !>>&1es
t# t3e 1n0%$8en0( #. PG AVELINO I. RAZON, JR. 8e1n' t3e reA%est1n'
>!rt(.J
4,6
P<1r. Gen. Ver:#s!, t3%s, !sBe" #. t3e C#%rt t3!t D

S3#%&" t3e 45? A>r1& *++7 Res#&%t1#n #. t3e C#%rt6 8e ren"ere" $##t 8( $ere 03!n'e #.
PNP &e!"ers31>, t3e %n"ers1'ne" .#r$!&&( reA%ests .#r t3e 1ss%!n0e #. ! Res#&%t1#n 'r!nt1n'
0#nt1n%1n' !%t3#r1t( "e&e'!t1n' t# t3e 1re0t#r, IM t3e en"#rse$ent #. SL !>>&10!t1#n 1n
8e3!&. #. t3e C31e., PNP 8e.#re t3e s!1" 0#%rts t# /1t3st!n" .%t%re 03!n'es #. #..10ers.
45+6


T3e C#%rt "1re0te" t3e C#%rt A"$1n1str!t#r !n" t3e C31e. Att#rne( t# 0#$$ent
#n P<1r. Gen. Ver:#s!Hs reA%est.

In ! Me$#r!n"%$ "!te" 5, e0e$8er *++7, t3e O..10e #. t3e C#%rt
A"$1n1str!t#r ;OCA=, t3r#%'3 1n0%$8ent C#%rt A"$1n1str!t#r, J#se P. Pere:,
re0#$$en"e" t3!t t3e 0%rrent C31e. #. t3e PNP, !s /e&& !s !&& 31s s%00ess#rs
t3ere!.ter, s3#%&" 8e !&&#/e" t# "e&e'!te t# t3e 1re0t#r #. t3e IM, PNP, t3e
!%t3#r1t( t# en"#rse !>>&10!t1#ns .#r se!r03 /!rr!nt /3103 !re t# 8e .1&e" 8e.#re t3e
RTCs #. M!n1&! !n" Q%e:#n C1t(.

T3e O..10e #. t3e C31e. Att#rne( ;OCAT=, #n t3e #t3er 3!n", #8ser9e" 1n 1ts
C#$$ent, s%8$1tte" #n 5F M!r03 *++,, t3!t D

S1n0e Se0t1#n 5*, C3!>ter V #. t3e Guidelines for Executive Judges !>>e!r t# 8e t3e
31n"r!n0e t# 1$$e"1!te !0t1#n #n !>>&10!t1#ns .#r se!r03 /!rr!nt 1n t3e 0!ses $ent1#ne"
t3ere1n, !n" t# $!Be t3e "e&e'!t1#n !>>&10!8&e t# !&& 3e!"s #. &!/ en.#r0e$ent !'en01es
re'!r"&ess #. t3e 3#&"er #. t3#se >#s1t1#ns, 1t $!( 8e 8est .#r t3e C#%rt t# !$en" t3!t '%1"e&1ne.
T3ere8(, ! 03!n'e 1n &e!"ers31> 1n t3e PNP /#%&" n#t reA%1re t3e 1n0%$8ent PNP C31e. t# seeB
t3e !%t3#r1t( #. t3e C#%rt t# "e&e'!te 31s .%n0t1#n t# en"#rse !n !>>&10!t1#n .#r se!r03 /!rr!nt.
T3e !$en"$ent $!( !&s# !031e9e t3e re!s#n .#r !n" >%r>#se #. t3e reA%este" M0#nt1n%1n'
!%t3#r1t(,H es>e01!&&( 8e0!%se t3e !%t3#r1t( #. t3e PNP C31e. t# "e&e'!te .%n0t1#ns 1s e->ress&(
re0#'n1:e" 8( Se0t1#n *K #. Re>%8&10 A0t N#. K,)?.


T3e C#%rt .1n"s t3e #8ser9!t1#ns !n" re0#$$en"!t1#ns #. t3e OCA !n"
OCAT t# 8e /e&& t!Ben.

At >resent, Se0. 5*, C3!>ter V #. A.M. N#. +F-7-+*-SC, ent1t&e" IG%1"e&1nes
#n t3e Se&e0t1#n !n" A>>#1nt$ent #. E-e0%t19e J%"'es !n" e.1n1n' t3e1r P#/ers,
Prer#'!t19es !n" %t1es,J "10t!tes t3!t D

SEC. 5*. Issuance of search warrants in special criminal cases by the
Regional rial Courts of !anila and "ue#on City. D T3e E-e0%t19e J%"'es
!n", /3ene9er t3e( !re #n #..101!& &e!9e #. !8sen0e #r !re n#t >3(s10!&&(
>resent 1n t3e st!t1#n, t3e V10e-E-e0%t19e J%"'es #. t3e RTCs #. M!n1&! !n"
Q%e:#n C1t( s3!&& 3!9e !%t3#r1t( t# !0t #n !>>&10!t1#ns .1&e" 8( t3e N!t1#n!&
B%re!% #. In9est1'!t1#n ;NBI=, t3e P31&1>>1ne N!t1#n!& P#&10e ;PNP= !n" t3e
Ant1-Cr1$e T!sB C#r0e ;ACTAC=, .#r se!r03 /!rr!nts 1n9#&91n' 3e1n#%s
0r1$es, 1&&e'!& '!$8&1n', 1&&e'!& >#ssess1#n #. .1re!r$s !n" !$$%n1t1#ns !s
/e&& !s 91#&!t1#ns #. t3e C#$>re3ens19e !n'er#%s r%'s A0t #. *++*, 3e
Inte&&e0t%!& Pr#>ert( C#"e, t3e Ant1-M#ne( L!%n"er1n' A0t #. *++5, t3e T!r1..
!n" C%st#$s C#"e, !s !$en"e", !n" #t3er re&e9!nt &!/s t3!t $!( 3ere!.ter
8e en!0te" 8( C#n'ress, !n" 1n0&%"e" 3ere1n 8( t3e S%>re$e C#%rt.
T3e !>>&10!t1#ns s3!&& 8e p!"o#$%%& en"#rse" 8( t3e 3e!"s #. s%03
!'en01es !n" s3!&& >!rt10%&!r&( "es0r18e t3ere1n t3e >&!0es t# 8e se!r03e"
!n"<#r t3e >r#>ert( #r t31n's t# 8e se1:e" !s >res0r18e" 1n t3e R%&es #.
C#%rt. T3e E-e0%t19e J%"'es !n" V10e-E-e0%t19e J%"'es 0#n0erne" s3!&&
1ss%e t3e /!rr!nts, 1. E%st1.1e", /3103 $!( 8e ser9e" 1n >&!0es #%ts1"e t3e
terr1t#r1!& E%r1s"10t1#n #. t3e s!1" 0#%rts.
T3e E-e0%t19e J%"'es !n" t3e !%t3#r1:e" J%"'es s3!&& Bee> ! s>e01!&
"#0Bet 8##B &1st1n' n!$es #. J%"'es t# /3#$ t3e !>>&10!t1#ns !re !ss1'ne",
t3e "et!1&s #. t3e !>>&10!t1#ns !n" t3e res%&ts #. t3e se!r03es !n" se1:%res
$!"e >%rs%!nt t# t3e /!rr!nts 1ss%e".
T31s Se0t1#n s3!&& 8e !n e-0e>t1#n t# Se0t1#n * #. R%&e 5*K #. t3e
R%&es #. C#%rt.
4556
;E$>3!s1s s%>>&1e".=
Cr#$ ! 0%rs#r( re!"1n' #. t3e !.#re$ent1#ne" >r#91s1#n #. A.M. N#. +F-7-+*-
SC, 1t 1s 0r(st!& t3!t !>>&10!t1#ns .#r se!r03 /!rr!nt t# 8e .1&e" 8e.#re t3e RTCs #.
M!n1&! !n" Q%e:#n C1t( $%st 8e essent1!&&( !>>r#9e" 1n >ers#n 8( t3e 3e!"s #. t3e
.#&&#/1n' !'en01es: t3e PNP, NBI, !n" ACTAC #. t3e ACP. A00#r"1n'&(, 1n t3e
1n01"ent re0#%nte" 1n t3e *? N#9e$8er *++7 &etter #. P<1r. Gen. Ver:#s!, J%"'e
R#s 0#rre0t&( "en1e" t3e !>>&10!t1#n .#r se!r03 /!rr!nt #. t3e PNP .#r 8e1n'
"e.e0t19e. T3e !%t3#r1t( 'r!nte" 8( t3e C#%rt t# P<1r. Gen. R!:#n t# "e&e'!te t#
t3e 1re0t#r #. IM, PNP, t3e en"#rse$ent #. !>>&10!t1#ns .#r se!r03 /!rr!nt t#
8e .1&e" 8e.#re t3e RTCs #. M!n1&! !n" Q%e:#n C1t(, /!s >ers#n!& t# P<1r. Gen.
R!:#n. It 0!nn#t 8e 1n9#Be" 8( P<1r. Gen. R!:#nHs s%00ess#r.

Ne9ert3e&ess, t3e C#%rt !0Bn#/&e"'es t3!t, t# 8e e..101ent 1n t3e 0!$>!1'n t#
.1'3t 0r1$e, t3e PNP C31e. $%st n#t 8e t1e" t# 31s "esB. Re0ent "e9e&#>$ents !n"
tren"s 1n 0r1$1n!&1t( reA%1re t3e PNP C31e. t# 8e $#81&e, s# t3!t 3e /1&& 8e e..e0t19e
1n t3e >er.#r$!n0e #. se9er!& .%n0t1#ns !n" res>#ns181&1t1es !tten"!nt t# 31s >#s1t1#n.
T3!t 8e1n' t3e 0!se, t3ere /1&& 8e 1nst!n0es /3en "#0%$ents "e$!n"1n' t3e PNP
C31e.Hs 1$$e"1!te !ttent1#n !n" s1'n!t%re /1&& n#t 8e !0te" %>#n r1'3t !/!(. One
s%03 "#0%$ent $!( 8e !n !>>&10!t1#n .#r ! se!r03 /!rr!nt, t3e 1$$e"1!te
en"#rse$ent #. /3103 1s ! $%st 1n #r"er .#r t3e PNP t# 8e e..e0t19e !n" res>#ns19e
1n t3e 0#n"%0t #. 1ts 0r1$1n!& 1n9est1'!t1#n. It 1s, t3ere.#re, e91"ent t3!t .#r t3e PNP
t# .%n0t1#n $#re e..e0t19e&( !n" e..101ent&( 1n 1ts 0!$>!1'n !'!1nst 0r1$1n!&1t(, t3e
s!.e'%!r" 1n Se0. 5*, C3!>ter V #. A.M. N#. +F-7-+*-SC,i.e., reA%1r1n' t3e PNP
C31e.Hs >ers#n!& en"#rse$ent #. !n !>>&10!t1#n .#r se!r03 /!rr!nt, 0!&&s .#r !
re91e/.

As 0#rre0t&( #8ser9e" 8( t3e OCAT, t3e 9er( s>e01.10 reA%1re$ent %n"er Se0.
5*, C3!>. V #. A.M. N#. +F-7-+*-SC D t3!t t3e 3e!"s #. t3e PNP, NBI, !n" ACTAC
#. t3e ACP, >ers#n!&&( en"#rse !>>&10!t1#ns #. se!r03 /!rr!nts t# 8e .1&e" 8e.#re t3e
RTCs #. M!n1&! !n" Q%e:#n C1t( D "eters t3e "e&e'!t1#n #. s!1" "%t( e9en t# t3e1r
!%t3#r1:e" re>resent!t19es. Hen0e, !s s%''este",
45*6
A.M. N#. +F-7-+*-SC $%st 8e
!$en"e" t# '%( () *o!' +p!"o#$%%&, 1n t3e se0#n" >!r!'r!>3 #. Se0. 5*,
C3!>. V t3ere#.. H#/e9er, !s t# t3e >r#>#s!& #. t3e OCAT t# -#"!( t3e >3r!se I#r
t3e1r res>e0t19e "%&( !%t3#r1:e" #..101!&s !s >r#91"e" 8( &!/,J t3e C#%rt 1s #. t3e 91e/
t3!t t3e $.!-'/' p)!$" +o! ()-! !"p0(-1 '2%& $2()o!-3' o44-0-$%", 1s $#re
t3!n s%..101ent t# ser9e t3e 1nten"e" >%r>#se. T3e >3r!se I!s >r#91"e" 8( &!/J 1s !
$ere s%r>&%s s1n0e, !s 0#rre0t&( >#1nte" #%t 8( t3e OCAT, 1t $!( 8e >res%$e" t3!t
t3e "e&e'!t1#n #. !%t3#r1t( 8( t3e 3e!" #. t3e !'en0( 0#n0erne" 1s 1n !00#r"!n0e
/1t3 &!/.
45F6

T3e !.#re$ent1#ne" !$en"$ents #. Se0. 5*, C3!>. V #. A.M. N#. +F-7-+*-
SC, /1&& n#t #n&( en!8&e t3e C31e. #. t3e PNP, 8%t t3e 3e!"s #. t3e NBI !n" ACTAC
#. t3e ACP, !s /e&&, t# "e&e'!te t# t3e1r "%&( !%t3#r1:e" re>resent!t19es t3e "%t( t#
en"#rse !>>&10!t1#ns .#r se!r03 /!rr!nt t# 8e .1&e" 8e.#re t3e RTCs #. M!n1&! !n"
Q%e:#n C1t(.

NOW5 THEREFORE5 6E IT RESOLVED, !s 1t 1s 3ere8( Res#&9e", 1n
!00#r"!n0e /1t3 t3e .#&&#/1n' "1s0%ss1#n, t3!t:

;5= T3e reA%est #. P<1r. Gen. Jes%s A. Ver:#s! .#r &e!9e t# "e&e'!te t# t3e
1re0t#r #. t3e IM, PNP, t3e !%t3#r1t( t# en"#rse !>>&10!t1#ns .#r se!r03 /!rr!nts
t# 8e .1&e" 8e.#re t3e RTCs #. M!n1&! !n" Q%e:#n C1t(, 1s 3ere8( GRANTED 1n
!00#r"!n0e /1t3 Se0. 5*, C3!>ter V #. A.M. N#. +F-7-+*-SC, !s 1t 1s 3ere1n!.ter
!$en"e"2 !n"

;*= Se0. 5*, C3!>ter V #. t3e Guidelines on the $election and %ppointment of
Executive Judges and &efining their 'owers, 'rerogatives and &uties, !s e$8#"1e"
1n A.M. N#. +F-7-+*-SC, !s !>>r#9e" 8( t3e C#%rt 1n 1ts Res#&%t1#n #. *) J!n%!r(
*++G, 1s 3ere8( AMENDED t# re!" !s .#&&#/s:

SEC. 5*. Issuance of search warrants in special criminal cases by the
Regional rial Courts of !anila and "ue#on City. D T3e E-e0%t19e J%"'es
!n", /3ene9er t3e( !re #n #..101!& &e!9e #. !8sen0e #r !re n#t >3(s10!&&(
>resent 1n t3e st!t1#n, t3e V10e-E-e0%t19e J%"'es #. t3e RTCs #. M!n1&! !n"
Q%e:#n C1t( s3!&& 3!9e !%t3#r1t( t# !0t #n !>>&10!t1#ns .1&e" 8( t3e N!t1#n!&
B%re!% #. In9est1'!t1#n ;NBI=, t3e P31&1>>1ne N!t1#n!& P#&10e ;PNP= !n" t3e
Ant1-Cr1$e T!sB C#r0e ;ACTAC=, .#r se!r03 /!rr!nts 1n9#&91n' 3e1n#%s
0r1$es, 1&&e'!& '!$8&1n', 1&&e'!& >#ssess1#n #. .1re!r$s !n" !$$%n1t1#ns !s
/e&& !s 91#&!t1#ns #. t3e C#$>re3ens19e !n'er#%s r%'s A0t #. *++*, t3e
Inte&&e0t%!& Pr#>ert( C#"e, t3e Ant1-M#ne( L!%n"er1n' A0t #. *++5, t3e T!r1..
!n" C%st#$s C#"e, !s !$en"e", !n" #t3er re&e9!nt &!/s t3!t $!( 3ere!.ter
8e en!0te" 8( C#n'ress, !n" 1n0&%"e" 3ere1n 8( t3e S%>re$e C#%rt.
T3e !>>&10!t1#ns s3!&& 8e en"#rse" 8( t3e 3e!"s #. s%03 !'en01es or
their respective duly authori#ed officials !n" s3!&& >!rt10%&!r&( "es0r18e t3ere1n
t3e >&!0es t# 8e se!r03e" !n"<#r t3e >r#>ert( #r t31n's t# 8e se1:e" !s
>res0r18e" 1n t3e R%&es #. C#%rt. T3e E-e0%t19e J%"'es !n" V10e-E-e0%t19e
J%"'es 0#n0erne" s3!&& 1ss%e t3e /!rr!nts, 1. E%st1.1e", /3103 $!( 8e ser9e"
#%ts1"e t3e terr1t#r1!& E%r1s"10t1#n #. t3e s!1" 0#%rts.
T3e E-e0%t19e J%"'es !n" t3e !%t3#r1:e" J%"'es s3!&& Bee> ! s>e01!&
"#0Bet 8##B &1st1n' n!$es #. J%"'es t# /3#$ t3e !>>&10!t1#ns !re !ss1'ne",
t3e "et!1&s #. t3e !>>&10!t1#ns !n" t3e res%&ts #. t3e se!r03es !n" se1:%res
$!"e >%rs%!nt t# t3e /!rr!nts 1ss%e".
T31s Se0t1#n s3!&& 8e !n e-0e>t1#n t# Se0t1#n * #. R%&e 5*K #.
t3e R%&es #. C#%rt. ;E$>3!s1s s%>>&1e".=
T31s !$en"$ent s3!&& !>>&( t# !&& 0%rrent, !s /e&& !s s%00ee"1n' 3e!"s #. t3e
PNP, NBI, !n" ACTAC #. t3e ACP. It s3!&& t!Be e..e0t #n *+ J%&( *++, !n" s3!&& 8e
>%8&1s3e" 1n ! ne/s>!>er #. 'ener!& 01r0%&!t1#n 1n t3e P31&1>>1nes n#t &!ter t3!n ?
J%&( *++,.

SO ORDERED.
REPU8LIC OF THE PHILIPPINES, .2. No. 1/+/22
Re."e!e(+e- &1 +0e ANTI-MONE7
LAUNDERING COUNCIL,
Pe+$+$o(e",

- #e"!3! -

CA8RINI GREEN C ROSS, INC.,
MICHAEL D. FINDLA7 '(- DANE
GEL8ERG,
Re!.o(-e(+!,

*============================================*


REPU8LIC OF THE PHILIPPINES, .2. No. 1/+?<+
Re."e!e(+e- &1 +0e ANTI-MONE7
LAUNDERING COUNCIL,
Pe+$+$o(e",

- #e"!3! -

R.A.8. REALT7, INC., MULTINATIONAL
TELECOM INVESTORS CORPORATION,
ROSARIO A. 8ALADDA7 '(- SATURNINO
M. 8ALADDA7,
Re!.o(-e(+!,

*============================================*


REPU8LIC OF THE PHILIPPINES, .2. No. 1////+
Re."e!e(+e- &1 +0e ANTI-MONE7
LAUNDERING COUNCIL,
Pe+$+$o(e",

- #e"!3! -

MARIO N. MISA, MICHAEL .
LAFUENTE, DESUS SILVERIO,
RE7NALDO NICHOLAS '(-
REE D. DAO,
Re!.o(-e(+!,

*============================================*

REPU8LIC OF THE PHILIPPINES, .2. No. 1//N11
Re."e!e(+e- &1 +0e ANTI-MONE7
LAUNDERING COUNCIL, %resent1
Pe+$+$o(e",
%6N), +., Ch"irperson,
N
SAN")$A#=6T-C22CL,
NN
- #e"!3! - C)2)NA,
ALC6NA and
A2C-A, ++.

AL8ERTO DE LOS RE7ES,
LORENO CASTRO, HERMIE
DE VERA, EDUARDO LAO '(-
DANILO LIWAG,
Re!.o(-e(+!. %romulgated1

&ay /, 2AA?
4 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4

R E S O L U T I O N

CORONA, J.>


-n the e*ercise of its !o,er under Section 1A of 2A <1?A,
718
the Anti=&oney #aundering
Council 'A&#C( issued free5e orders against various bank accounts of res!ondents. The fro5en
bank accounts ,ere !reviously found prim" f"cie to be related to the unla,ful activities of
res!ondents.

6nder 2A <1?A, a free5e order issued by the A&#C is effective for a !eriod not e*ceeding
1/ days unless e*tended :upon orer of the court.; Accordingly, before the la!se of the !eriod
of effectivity of its free5e orders, the A&#C
728
filed ,ith the Court of A!!eals 'CA(
798
various
!etitions for e*tension of effectivity of its free5e orders.

The A&#C invoked the Burisdiction of the CA in the belief that the !o,er given to the
CA to issue a tem!orary restraining order 'T2)( or ,rit of inBunction against any free5e order
issued by the A&#C carried ,ith it the !o,er to e*tend the effectivity of a free5e order. -n
other ,ords, the A&#C inter!reted the !hrase :u!on order of the court; to refer to the CA.

Fo,ever, the CA disagreed ,ith the A&#C and dismissed the !etitions. -t uniformly
ruled that it ,as not vested by 2A <1?A ,ith the !o,er to e*tend a free5e order issued by the
A&#C.
7+8

Fence, these consolidated !etitions
7/8
,hich !resent a common issue1 ,hich court has
Burisdiction to e*tend the effectivity of a free5e orderT

"uring the .e(-e(c1 of these !etitions, or on &arch 9, 2AA9, Congress enacted 2A <1<+
'An Act Amending 2e!ublic Act No. <1?A, )ther,ise Eno,n as the :Anti=&oney #aundering
Act of 2AA1;(.
F;G
-t amended Section 1A of 2A <1?A as follo,s1

EC. 3. )ection 13 of [($ 9163] is here1y aended to read as follows4

)H#' 13' 5ree+in of *onetar= 6nstrument or <ropert=' S
0he Cour9 o= ABBea?', upon application e' parte 1y the $98#
and after deterination that pro1a1le cause e:ists that any
onetary instruent or property is in any way related to an
unlawful activity as defined in )ec' ,6i7 hereof, ay issue a
freeDe order which shall 1e effective iediately' 0he freeDe
order shall 1e for a period of twenty 6"37 days u!?e'' eG9e!"e"
by 95e 4our9'
[-]
6ephasis supplied7


Section 12 of 2A <1<+ further !rovides1

)H# 1"' 2ransitor= <rovision' S H:isting freeDe orders issued 1y the $98#
shall reain in force for a period of thirty 6,37 days after the effectivity of this
$ct, unless e:tended 1y the Cour9 o= ABBea?'' 6ephasis supplied7


)n A!ril 9, 2AA9, the )ffice of the Solicitor eneral ')S( filed a :$ery 6rgent &otion
to 2emand Cases to the Fonorable Court of A!!eals ',ith %rayer for -ssuance of Tem!orary
2estraining )rder and/or Hrit of %reliminary -nBunction(.;
7>8
The )S !rayed for the remand of
these cases to the CA !ursuant to 2A <1<+. -t also asked for the issuance of a T2) on the
ground that the free5e orders ,ould be automatically lifted on A!ril 22, 2AA9 by o!eration of
la, and the money or de!osits in the concerned bank accounts may be taken out of the reach of
la, enforcement authorities. The )S further manifested that !ending in the CA ,ere 2< other
cases involving the same issue. -t re0uested that these cases be included in the coverage of the
T2) !rayed for.

)n A!ril 21, 2AA9, the Court issued a T2) in these cases and in all other similar cases
!ending before all courts in the %hili!!ines. 2es!ondents, the concerned banks, and all
!ersons acting in their behalf ,ere directed to give full force and effect to e*isting free5e
orders until further orders from this Court.

)n &ay /, 2AA9, the )S informed the Court that on A!ril 22, 2AA9 the CA issued a
resolution in CA=.2. S% No. ?<9N1 'the subBect of .2. No. 1/+?<+( granting the !etition
for e*tension of free5e orders.
7<8
Fence, the )S !rayed for the dismissal of .2. No.
1/+?<+ for being moot. -t also reiterated its earlier !rayer for the remand of .2. Nos.
1/+/22, 1////+ and 1//N11 to the CA.

The amendment by 2A <1<+ of 2A <1?A erased any doubt on the Burisdiction of the
CA over the e*tension of free5e orders. As the la, no, stands, it is solely the CA ,hich has
the authority to issue a free5e order as ,ell as to e*tend its effectivity. -t also has the
e*clusive Burisdiction to e*tend e*isting free5e orders !reviously issued by the A&#C 'is-E-
'is accounts and de!osits related to money=laundering activities.

WHEREFORE, .2. No. 1/+?<+ is hereby DISMISSED for being moot ,hile .2.
Nos. 1/+/22, 1////+ and 1//N11 are REMANDED to the Court of A!!eals for a!!ro!riate
action. %ending resolution by the Court of A!!eals of these cases, the A!ril 21, 2AA9 tem!orary
restraining order is hereby MAINTAINED.

No costs.

SO ORDERED.
G.R. No. 130281 *a!uary 18, 2008
RE#($LIC OF T2E #2ILI##INE, reBre'e!9e" by 95e ANTI7MONE. LA(N)ERING CO(NCIL, petitioner,
vs'
GLAGO% CRE)IT AN) COLLECTION ER-ICE, INC. a!" CIT.TATE A-ING $AN,, INC., respondents'
) E C I I O N
CORONA, J./
0his is a petition for review
1
of the order
"
dated 5cto1er "-, "33. of the (egional 0rial #ourt 6(0#7 of 9anila,
Branch 2-, disissing the coplaint for forfeiture
,
filed 1y the (epu1lic of the *hilippines, represented 1y the $nti%
9oney 8aundering #ouncil 6$98#7 against respondents &lasgow #redit and #ollection )ervices, =nc' 6&lasgow7
and #itystate )avings Bank, =nc' 6#)B=7'
5n July 18, "33,, the (epu1lic filed a coplaint in the (0# 9anila for civil forfeiture of assets 6with urgent plea for
issuance of teporary restraining order [0(5] andBor writ of preliinary inFunction7 against the 1ank deposits in
account nu1er #$%33.%13%3331"1%. aintained 1y &lasgow in #)B=' 0he case, filed pursuant to ($ 9163 6the
$nti%9oney 8aundering $ct of "3317, as aended, was docketed as #ivil #ase +o' 3,%13-,19'
$cting on the (epu1lic/s urgent plea for the issuance of a 0(5, the e:ecutive Fudge
2
of (0# 9anila issued a -"%
hour 0(5 dated July "1, "33,' 0he case was thereafter raffled to Branch 2- and the hearing on the application for
issuance of a writ of preliinary inFunction was set on $ugust 2, "33,'
$fter hearing, the trial court 6through then *residing Judge 9arivic 0' Balisi%@ali7 issued an order granting the
issuance of a writ of preliinary inFunction' 0he inFunctive writ was issued on $ugust 8, "33,'
9eanwhile, suons to &lasgow was returned KunservedK as it could no longer 1e found at its last known address'
5n 5cto1er 8, "33,, the (epu1lic filed a verified oni1us otion for 6a7 issuance of alias suons and 617 leave of
court to serve suons 1y pu1lication' =n an order dated 5cto1er 1., "33,, the trial court directed the issuance
of alias suons' Eowever, no ention was ade of the otion for leave of court to serve suons 1y
pu1lication'
=n an order dated January ,3, "332, the trial court archived the case allegedly for failure of the (epu1lic to serve
the alias suons' 0he (epu1lic filed an e' parte oni1us otion to 6a7 reinstate the case and 617 resolve its
pending otion for leave of court to serve suons 1y pu1lication'
=n an order dated 9ay ,1, "332, the trial court ordered the reinstateent of the case and directed the (epu1lic to
serve the alias suons on &lasgow and #)B= within 1. days' Eowever, it did not resolve the (epu1lic/s otion for
leave of court to serve suons 1y pu1lication declaring4
@ntil and unless a return is ade on the alias suons, any action on [the (epu1lic/s] otion for leave of
court to serve suons 1y pu1lication would 1e untena1le if not preature'
5n July 1", "332, the (epu1lic 6through the 5ffice of the )olicitor &eneral [5)&]7 received a copy of the sheriff/s
return dated June ,3, "332 stating that the alias suons was returned KunservedK as &lasgow was no longer
holding office at the given address since July "33" and left no forwarding address'
9eanwhile, the (epu1lic/s otion for leave of court to serve suons 1y pu1lication reained unresolved' 0hus,
on $ugust 11, "33., the (epu1lic filed a anifestation and e' parte otion to resolve its otion for leave of court to
serve suons 1y pu1lication'
5n $ugust 1", "33., the 5)& received a copy of &lasgow/s K9otion to Disiss 6By Gay of )pecial $ppearance7K
dated $ugust 11, "33.' =t alleged that 617 the court had no Furisdiction over its person as suons had not yet 1een
served on itC 6"7 the coplaint was preature and stated no cause of action as there was still no conviction for
estafa or other criinal violations iplicating &lasgow and 6,7 there was failure to prosecute on the part of the
(epu1lic'
0he (epu1lic opposed &lasgow/s otion to disiss' =t contended that its suit was an action ;uasi in rem where
Furisdiction over the person of the defendant was not a prere<uisite to confer Furisdiction on the court' =t asserted
that prior conviction for unlawful activity was not a precondition to the filing of a civil forfeiture case and that its
coplaint alleged ultiate facts sufficient to esta1lish a cause of action' =t denied that it failed to prosecute the case'
5n 5cto1er "-, "33., the trial court issued the assailed order' =t disissed the case on the following grounds4 617
iproper venue as it should have 1een filed in the (0# of *asig where #)B=, the depository 1ank of the account
sought to 1e forfeited, was locatedC 6"7 insufficiency of the coplaint in for and su1stance and 6,7 failure to
prosecute' =t lifted the writ of preliinary inFunction and directed #)B= to release to &lasgow or its authoriDed
representative the funds in #$%33.%13%3331"1%.'
(aising <uestions of law, the (epu1lic filed this petition'
5n +ove1er ",, "33., this #ourt issued a 0(5 restraining &lasgow and #)B=, their agents, representatives
andBor persons acting upon their orders fro ipleenting the assailed 5cto1er "-, "33. order' =t restrained
&lasgow fro reoving, dissipating or disposing of the funds in account no' #$%33.%13%3331"1%. and #)B= fro
allowing any transaction on the said account'
0he petition essentially presents the following issue4 whether the coplaint for civil forfeiture was correctly
disissed on grounds of iproper venue, insufficiency in for and su1stance and failure to prosecute'
0he #ourt agrees with the (epu1lic'
T5e CoAB?a:!9 %a' F:?e"
I! T5e #roBer -e!ue
=n its assailed order, the trial court cited the grounds raised 1y &lasgow in support of its otion to disiss4
1' 0hat this [c]ourt has no Furisdiction over the person of &lasgow considering that no [s]uons has 1een
served upon it, and it has not entered its appearance voluntarilyC
"' 0hat the [c]oplaint for forfeiture is preature 1ecause of the a1sence of a prior finding 1y any tri1unal
that &lasgow was engaged in unlawful activity4 [i]n connection therewith[,] &lasgow argues that the
[c]oplaint states no cause of actionC and
,' 0hat there is failure to prosecute, in that, up to now, suons has yet to 1e served upon &lasgow'
.
But inasuch as &lasgow never <uestioned the venue of the (epu1lic/s coplaint for civil forfeiture against it, how
could the trial court have disissed the coplaint for iproper venueI =n .aco=co= v. 6ntermediate Appellate
)ourt
6
6reiterated in Rudolf 0iet+ ?oldins, 6nc. v. Reistr= of .eeds of <ara:a;ue )it=7,
-
this #ourt ruled4
0he motu proprio ":'A:''a? of petitioner/s coplaint 1y [the] trial court o! 95e <rou!" o= :ABroBer &e!ue
:' B?a:! errorV' 6ephasis supplied7
$t any rate, the trial court was a proper venue'
5n +ove1er 1., "33., this #ourt issued $'9' +o' 3.%11%32%)#, the (ule of *rocedure in #ases of #ivil !orfeiture,
$sset *reservation, and !reeDing of 9onetary =nstruent, *roperty, or *roceeds (epresenting, =nvolving, or
(elating to an @nlawful $ctivity or 9oney 8aundering 5ffense under ($ 9163, as aended 6(ule of *rocedure in
#ases of #ivil !orfeiture7' 0he order disissing the (epu1lic/s coplaint for civil forfeiture of &lasgow/s account in
#)B= has not yet attained finality on account of the pendency of this appeal' 0hus, the (ule of *rocedure in #ases
of #ivil !orfeiture applies to the (epu1lic/s coplaint'
8
9oreover, &lasgow itself Fudicially aditted that the (ule of
*rocedure in #ases of #ivil !orfeiture is Kapplica1le to the instant case'K
9
)ection ,, 0itle == 6#ivil !orfeiture in the (egional 0rial #ourt7 of the (ule of *rocedure in #ases of #ivil !orfeiture
provides4
)ec' ,' >enue of cases coni+able b= t"e reional trial court' S $ petition for civil forfeiture shall 1e filed :!
a!y re<:o!a? 9r:a? 4our9 o= 95e Fu":4:a? re<:o! D5ere 95e Ao!e9ary :!'9ruAe!9, BroBer9y or Bro4ee"'
reBre'e!9:!<, :!&o?&:!<, or re?a9:!< 9o a! u!?aD=u? a49:&:9y or 9o a Ao!ey ?au!"er:!< o==e!'e are
?o4a9e"C provided, "o!ever, that where all or any portion of the onetary instruent, property or proceeds
is located outside the *hilippines, the petition ay 1e filed in the regional trial court in 9anila or of the
Fudicial region where any portion of the onetary instruent, property, or proceeds is located, at the option
of the petitioner' 6ephasis supplied7
@nder )ection ,, 0itle == of the (ule of *rocedure in #ases of #ivil !orfeiture, therefore, the venue of civil forfeiture
cases is any (0# of the Fudicial region where the onetary instruent, property or proceeds representing,
involving, or relating to an unlawful activity or to a oney laundering offense are located' *asig #ity, where the
account sought to 1e forfeited in this case is situated, is within the +ational #apital Judicial (egion 6+#J(7' #learly,
the coplaint for civil forfeiture of the account ay 1e filed in any (0# of the +#J(' )ince the (0# 9anila is one of
the (0#s of the +#J(,
13
it was a proper venue of the (epu1lic/s coplaint for civil forfeiture of &lasgow/s account'
T5e CoAB?a:!9 %a' u==:4:e!9 I! ForA A!" ub'9a!4e
=n the assailed order, the trial court evaluated the (epu1lic/s coplaint to deterine its sufficiency in for and
su1stance4
$t the outset, this [c]ourt, 1efore it proceeds, takes the opportunity to e:aine the [c]oplaint and deterine
whether it is sufficient in for and su1stance'
Before this [c]ourt is a [c]oplaint for #ivil !orfeiture of $ssets filed 1y the [$98#], represented 1y the 5ffice
of the )olicitor &eneral[,] against &lasgow and [#)B=] as necessary party' 0he [c]oplaint principally
alleges the following4
6a7 &lasgow is a corporation e:isting under the laws of the *hilippines, with principal office address at @nit
-3,, -
th
!loor, #itystate #enter [Building], +o' -39 )haw Boulevard[,] *asig #ityC
617 [#)B=] is a corporation e:isting under the laws of the *hilippines, with principal office at #itystate #enter
Building, +o' -39 )haw Boulevard, *asig #ityC
6c7 &lasgow has funds in the aount of *"1,,31,2,3'"8 deposited with [#)B=], under #$ 33.%13%3331"1%.C
6d7 $s events have proved, aforestated 1ank account is related to the unlawful activities of Hstafa and
violation of )ecurities (egulation #odeC
6e7 0he deposit has 1een su1Fect of )uspicious 0ransaction (eportsC
6f7 $fter appropriate investigation, the $98# issued (esolutions +o' 392 6dated July 13, "33"7, 396 6dated
July 1", "33"7, 131 6dated July ",, "33"7, and 138 6dated $ugust ", "33"7, directing the issuance of freeDe
orders against the 1ank accounts of &lasgowC
6g7 *ursuant to said $98# (esolutions, !reeDe 5rders +os' 338%313, 311 and 31, were issued on different
dates, addressed to the concerned 1anksC
6h7 0he facts and circustances plainly showing that defendant &lasgow/s 1ank account and deposit are
related to the unlawful activities of Hstafa and violation of )ecurities (egulation #ode, as well as to a oney
laundering offense [which] [has] 1een suariDed 1y the $98# in its (esolution +o' 392C and
6i7 Because defendant &lasgow/s 1ank account and deposits are related to the unlawful activities of Hstafa
and violation of )ecurities (egulation #ode, as well as [to] oney laundering offense as aforestated, and
1eing the su1Fect of covered transaction reports and eventual freeDe orders, the sae should properly 1e
forfeited in favor of the governent in accordance with )ection 1", ('$' 9163, as aended'
11
=n a otion to disiss for failure to state a cause of action, the focus is on the sufficiency, not the veracity, of the
aterial allegations'
1"
0he deterination is confined to the four corners of the coplaint and nowhere else'
1,
=n a otion to disiss a coplaint 1ased on lack of cause of action, the <uestion su1itted to the court for
deterination is the sufficiency of the allegations ade in the coplaint to constitute a cause of action and
not whether those allegations of fact are true, for said otion ust hypothetically adit the truth of the facts
alleged in the coplaint'
T5e 9e'9 o= 95e 'u==:4:e!4y o= 95e =a49' a??e<e" :! 95e 4oAB?a:!9 :' D5e95er or !o9, a"A:99:!< 95e =a49'
a??e<e", 95e 4our9 4ou?" re!"er a &a?:" Fu"<Ae!9 uBo! 95e 'aAe :! a44or"a!4e D:95 95e Brayer o= 95e
4oAB?a:!9.
12
6ephasis ours7
=n this connection, )ection 2, 0itle == of the (ule of *rocedure in #ases of #ivil !orfeiture provides4
)ec' 2' )ontents of t"e petition for civil forfeiture. % 0he petition for civil forfeiture shall 1e verified and contain
the following allegations4
6a7 0he nae and address of the respondentC
617 $ description with reasona1le particularity of the onetary instruent, property, or proceeds, and
their locationC and
6c7 0he acts or oissions prohi1ited 1y and the specific provisions of the $nti%9oney 8aundering
$ct, as aended, which are alleged to 1e the grounds relied upon for the forfeiture of the onetary
instruent, property, or proceedsC and
[6d7] 0he reliefs prayed for'
Eere, the verified coplaint of the (epu1lic contained the following allegations4
6a7 the nae and address of the priary defendant therein, &lasgowC
1.
617 a description of the proceeds of &lasgow/s unlawful activities with particularity, as well as the location
thereof, account no' #$%33.%13%3331"1%. in the aount of *"1,,31,2,3'"8 aintained with #)B=C
6c7 the acts prohi1ited 1y and the specific provisions of ($ 9163, as aended, constituting the grounds for
the forfeiture of the said proceeds' =n particular, suspicious transaction reports showed that &lasgow
engaged in unlawful activities of estafa and violation of the )ecurities (egulation #ode 6under )ection ,6i7697
and 61,7, ($ 9163, as aended7C the proceeds of the unlawful activities were transacted and deposited with
#)B= in account no' #$%33.%13%3331"1%. there1y aking the appear to have originated fro legitiate
sourcesC as such, &lasgow engaged in oney laundering 6under )ection 2, ($ 9163, as aended7C and the
$98# su1Fected the account to freeDe order and
6d7 the reliefs prayed for, naely, the issuance of a 0(5 or writ of preliinary inFunction and the forfeiture of
the account in favor of the governent as well as other reliefs Fust and e<uita1le under the preises'
0he for and su1stance of the (epu1lic/s coplaint su1stantially confored with )ection 2, 0itle == of the (ule of
*rocedure in #ases of #ivil !orfeiture'
9oreover, )ection 1"6a7 of ($ 9163, as aended, provides4
)H#' 1"' 5orfeiture <rovisions. S
6a7 )ivil 5orfeiture. S Ghen there is a covered transaction report ade, and the court has, in a petition filed
for the purpose ordered seiDure of any onetary instruent or property, in whole or in part, directly or
indirectly, related to said report, the (evised (ules of #ourt on civil forfeiture shall apply'
=n relation thereto, (ule 1"'" of the (evised =pleenting (ules and (egulations of ($ 9163, as aended, states4
(@8H 1"
!orfeiture *rovisions
::: ::: :::
(ule 1"'"' @"en )ivil 5orfeiture *a= be Applied' S Ghen there is a )@)*=#=5@) 0($+)$#0=5+
(H*5(0 5( $ #5;H(HD 0($+)$#0=5+ (H*5(0 DHH9HD )@)*=#=5@) $!0H( =+;H)0=&$0=5+
BO 0EH $98#, and the court has, in a petition filed for the purpose, ordered the seiDure of any onetary
instruent or property, in whole or in part, directly or indirectly, related to said report, the (evised (ules of
#ourt on civil forfeiture shall apply'
($ 9163, as aended, and its ipleenting rules and regulations lay down two conditions when applying for civil
forfeiture4
617 when there is a suspicious transaction report or a covered transaction report deeed suspicious after
investigation 1y the $98# and
6"7 the court has, in a petition filed for the purpose, ordered the seiDure of any onetary instruent or
property, in whole or in part, directly or indirectly, related to said report'
=t is the preliinary seiDure of the property in <uestion which 1rings it within the reach of the Fudicial process'
16
=t is
actually within the court/s possession when it is su1itted to the process of the court'
1-
0he inFunctive writ issued on
$ugust 8, "33, reoved account no' #$%33.%13%3331"1%. fro the effective control of either &lasgow or #)B= or
their representatives or agents and su1Fected it to the process of the court'
)ince account no' #$%33.%13%3331"1%. of &lasgow in #)B= was 617 covered 1y several suspicious transaction
reports and 6"7 placed under the control of the trial court upon the issuance of the writ of preliinary inFunction, the
conditions provided in )ection 1"6a7 of ($ 9163, as aended, were satisfied' Eence, the (epu1lic, represented 1y
the $98#, properly instituted the coplaint for civil forfeiture'
Ghether or not there is truth in the allegation that account no' #$%33.%13%3331"1%. contains the proceeds of
unlawful activities is an evidentiary atter that ay 1e proven during trial' 0he coplaint, however, did not even
have to show or allege that &lasgow had 1een iplicated in a conviction for, or the coission of, the unlawful
activities of estafa and violation of the )ecurities (egulation #ode'
$ criinal conviction for an unlawful activity is not a prere<uisite for the institution of a civil forfeiture proceeding'
)tated otherwise, a finding of guilt for an unlawful activity is not an essential eleent of civil forfeiture'
)ection 6 of ($ 9163, as aended, provides4
)H#' 6' <rosecution of *one= 0aunderin. S
6a7 $ny person ay 1e charged with and convicted of 1oth the offense of oney laundering and the unlawful
activity as herein defined'
617 $ny proceeding relating to the unlawful activity shall 1e given precedence over the prosecution of any
offense or violation under this $ct D:95ou9 BreFu":4e 9o 95e freeDing and o95er reAe":e' Bro&:"e"'
6ephasis supplied7
(ule 6'1 of the (evised =pleenting (ules and (egulations of ($ 9163, as aended, states4
(ule 6'1' <rosecution of *one= 0aunderin S
6a7 $ny person ay 1e charged with and convicted of 1oth the offense of oney laundering and the unlawful
activity as defined under (ule ,6i7 of the $98$'
617 $ny proceeding relating to the unlawful activity shall 1e given precedence over the prosecution of any
offense or violation under the $98$ D:95ou9 BreFu":4e 9o 95e application e'7parte 1y the $98# to the
#ourt of $ppeals for a freeDe order with respect to the onetary instruent or property involved therein
andre'or9 9o o95er reAe":e' Bro&:"e" u!"er 95e AMLA, 95e Ru?e' o= Cour9 a!" o95er Ber9:!e!9 ?aD'
a!" ru?e'' 6ephasis supplied7
!inally, )ection "- of the (ule of *rocedure in #ases of #ivil !orfeiture provides4
)ec' "-' No prior c"are, pendenc= or conviction necessar=' S No Br:or 4r:A:!a? 45ar<e, Be!"e!4y o= or
4o!&:49:o! =or a! u!?aD=u? a49:&:9y or oney laundering offense :' !e4e''ary =or 95e 4oAAe!4eAe!9or
the resolution of a petition for civil forfeiture' 6ephasis supplied7
0hus, regardless of the a1sence, pendency or outcoe of a criinal prosecution for the unlawful activity or for
oney laundering, an action for civil forfeiture ay 1e separately and independently prosecuted and resolved'
T5ere %a' No Fa:?ure
To #ro'e4u9e
0he trial court faulted the (epu1lic for its alleged failure to prosecute the case' +othing could 1e ore erroneous'
=ediately after the coplaint was filed, the trial court ordered its deputy sheriffBprocess server to serve suons
and notice of the hearing on the application for issuance of 0(5 andBor writ of preliinary inFunction' 0he su1poena
to &lasgow was, however, returned unserved as &lasgow Kcould no longer 1e found at its given addressK and had
oved out of the 1uilding since $ugust 1, "33"'
9eanwhile, after due hearing, the trial court issued a writ of preliinary inFunction enFoining &lasgow fro reoving,
dissipating or disposing of the su1Fect 1ank deposits and #)B= fro allowing any transaction on, withdrawal,
transfer, reoval, dissipation or disposition thereof'
$s the suons on &lasgow was returned Kunserved,K and considering that its wherea1outs could not 1e
ascertained despite diligent in<uiry, the (epu1lic filed a verified oni1us otion for 6a7 issuance of alias suons
and 617 leave of court to serve suons 1y pu1lication on 5cto1er 8, "33,' Ghile the trial court issued
an aliassuons in its order dated 5cto1er 1., "33,, it kept <uiet on the prayer for leave of court to serve
suons 1y pu1lication'
)u1se<uently, in an order dated January ,3, "332, the trial court archived the case for failure of the (epu1lic to
cause the service of alias suons' 0he (epu1lic filed an e' parte oni1us otion to 6a7 reinstate the case and 617
resolve its pending otion for leave of court to serve suons 1y pu1lication'
=n an order dated 9ay ,1, "332, the trial court ordered the reinstateent of the case and directed the (epu1lic to
cause the service of the alias suons on &lasgow and #)B= within 1. days' Eowever, it deferred its action on the
(epu1lic/s otion for leave of court to serve suons 1y pu1lication until a return was ade on the aliassuons'
9eanwhile, the (epu1lic continued to e:ert efforts to o1tain inforation fro other governent agencies on the
wherea1outs or current status of respondent &lasgow if only to save on e:penses of pu1lication of suons' =ts
efforts, however, proved futile' 0he records on file with the )ecurities and H:change #oission provided no
inforation' 5ther in<uiries yielded negative results'
5n July 1", "332, the (epu1lic received a copy of the sheriff/s return dated June ,3, "332 stating that
the aliassuons had 1een returned KunservedK as &lasgow was no longer holding office at the given address
since July "33" and left no forwarding address' )till, no action was taken 1y the trial court on the (epu1lic/s otion
for leave of court to serve suons 1y pu1lication' 0hus, on $ugust 11, "33., the (epu1lic filed a anifestation
and e' parte otion to resolve its otion for leave of court to serve suons 1y pu1lication'
=t was at that point that &lasgow filed a otion to disiss 1y way of special appearance which the (epu1lic
vigorously opposed' )trangely, to say the least, the trial court issued the assailed order granting &lasgow/s otion'
&iven these circustances, how could the (epu1lic 1e faulted for failure to prosecute the coplaint for civil
forfeitureI Ghile there was adittedly a delay in the proceeding, it could not 1e entirely or priarily ascri1ed to the
(epu1lic' 0hat &lasgow/s wherea1outs could not 1e ascertained was not only 1eyond the (epu1lic/s control, it was
also attri1uta1le to &lasgow which left its principal office address without inforing the )ecurities and H:change
#oission or any official regulatory 1ody 6like the Bureau of =nternal (evenue or the Departent of 0rade and
=ndustry7 of its new address' 9oreover, as early as 5cto1er 8, "33,, the (epu1lic was already seeking leave of
court to serve suons 1y pu1lication'
=n *ara"a= v. *elicor,
18
this #ourt ruled4
Ghile a court can disiss a case on the ground of non prose;uitur, the real test for the e:ercise of such
power is whether, under the circustances, plaintiff is chargea1le with want of due diligence in failing to
proceed with reasona1le proptitude' I! 95e ab'e!4e o= a Ba99er! or '45eAe 9o "e?ay 95e ":'Bo':9:o! o=
95e 4a'e or a Da!9o! =a:?ure 9o ob'er&e 95e Aa!"a9ory reEu:reAe!9 o= 95e ru?e' o! 95e Bar9 o= 95e
B?a:!9:==, a' :! 95e 4a'e a9 bar, 4our9' '5ou?" "e4:"e 9o ":'Be!'e D:95 ra95er 95a! D:e?" 95e:r au95or:9y
9o ":'A:''' 6ephasis supplied7
Ge see no pattern or schee on the part of the (epu1lic to delay the disposition of the case or a wanton failure to
o1serve the andatory re<uireent of the rules' 0he trial court should not have so eagerly wielded its power to
disiss the (epu1lic/s coplaint'
er&:4e O= uAAo!'
May $e $y #ub?:4a9:o!
=n Republic v. Aandianba=an,
19
this #ourt declared that the rule is settled that forfeiture proceedings are actionsin
rem' Ghile that case involved forfeiture proceedings under ($ 1,-9, the sae principle applies in cases for civil
forfeiture under ($ 9163, as aended, since 1oth cases do not terinate in the iposition of a penalty 1ut erely
in the forfeiture of the properties either ac<uired illegally or related to unlawful activities in favor of the )tate'
$s an action in rem, it is a proceeding against the thing itself instead of against the person'
"3
=n actions in
rem or;uasi in rem, Furisdiction over the person of the defendant is not a prere<uisite to conferring Furisdiction on the
court, provided that the court ac<uires Furisdiction over the res'
"1
+onetheless, suons ust 1e served upon the
defendant in order to satisfy the re<uireents of due process'
""
!or this purpose, service ay 1e ade 1y
pu1lication as such ode of service is allowed in actions in rem and ;uasi in rem'
",
=n this connection, )ection 8, 0itle == of the (ule of *rocedure in #ases of #ivil !orfeiture provides4
)ec' 8' Notice and manner of service. % 6a7 0he respondent shall 1e given notice of the petition in the sae anner
as service of suons under (ule 12 of the (ules of #ourt and the following rules4
1' 0he notice shall 1e served on respondent personally, or 1y any other eans prescri1ed in (ule 12 of the
(ules of #ourtC
"' 0he notice shall contain4 6i7 the title of the caseC 6ii7 the docket nu1erC 6iii7 the cause of actionC and 6iv7
the relief prayed forC and
,' 0he notice shall likewise contain a proviso that, if no coent or opposition is filed within the
regleentary period, the court shall hear the case e' parte and render such Fudgent as ay 1e warranted
1y the facts alleged in the petition and its supporting evidence'
617 Ghere the respondent is designated as an unknown owner or D5e!e&er 5:' D5ereabou9' are
u!C!oD! a!" 4a!!o9 be a'4er9a:!e" by ":?:<e!9 :!Eu:ry, 'er&:4e Aay, by ?ea&e o= 4our9, be
e==e49e" uBo! 5:A by Bub?:4a9:o! o= 95e !o9:4e o= 95e Be9:9:o! :! a !eD'BaBer o= <e!era?
4:r4u?a9:o! :! 'u45 B?a4e' a!" =or 'u45 9:Ae a' 95e 4our9 Aay or"er' =n the event that the cost of
pu1lication e:ceeds the value or aount of the property to 1e forfeited 1y ten percent, pu1lication
shall not 1e re<uired' 6ephasis supplied7
%2EREFORE, the petition is here1y GRANTE)' 0he 5cto1er "-, "33. order of the (egional 0rial #ourt of 9anila,
Branch 2-, in #ivil #ase +o' 3,%13-,19 is ET AI)E. 0he $ugust 11, "33. otion to disiss of &lasgow #redit
and #ollection )ervices, =nc' is )ENIE). $nd the coplaint for forfeiture of the (epu1lic of the *hilippines,
represented 1y the $nti%9oney 8aundering #ouncil, is REINTATE)'
0he case is here1y REMAN)E) to the (egional 0rial #ourt of 9anila, Branch 2- which shall forthwith proceed with
the case pursuant to the provisions of $'9' +o' 3.%11%32%)#' *ending final deterination of the case, the
+ove1er ",, "33. teporary restraining order issued 1y this #ourt is here1y MAINTAINE)'
O OR)ERE).
<uno, ).-., )"airperson, Aandoval73utierre+, A+cuna, 0eonardo7de )astro, --., concur'
6AN7 OF THE PHILIPPINE G.R. No. 884899
ISLANDS5 INC.5
Pet1t1#ner, Present:

C!r>1#, J., C3!1r>ers#n,
- 9ers%s - Br1#n,
e& C!st1&&#,
A8!", !n"
Pere:, JJ.
SPS. NORMAN AND ANGELINA YU
$#' TUANSON 6UILDERS
CORPORATION !p!"#(' .& Pr#$%&'!te":
PRES. NORMAN YU5
Res>#n"ents. J!n%!r( *+, *+5+

- ---------------------------------------------------------------------------------------- -

DECISION

A6AD5 J.:


T31s 0!se 1s !8#%t t3e >r#>r1et( #. ! s%$$!r( E%"'$ent 1n res#&91n' !
"#0%$ente" 0&!1$ #. !&&e'e" e-0ess19e >en!&t( 03!r'es, 1nterest, !tt#rne(Hs .ees, !n"
.#re0&#s%re e->enses 1$>#se" 1n !n e-tr!E%"101!& .#re0&#s%re #. $#rt'!'e.

T) F$0(" $#' () C$"

Res>#n"ents N#r$!n !n" An'e&1n! Y% ;t3e Y%s=, "#1n' 8%s1ness !s T%!ns#n
Tr!"1n', !n" T%!ns#n B%1&"ers C#r>#r!t1#n ;T%!ns#n B%1&"ers= 8#rr#/e" 9!r1#%s s%$s
t#t!&1n' P)? $1&&1#n .r#$ C!r E!st B!nB !n" Tr%st C#$>!n(. C#r 0#&&!ter!&, t3e(
e-e0%te" re!& est!te $#rt'!'es #9er se9er!& #. t3e1r >r#>ert1es,
456
1n0&%"1n' 0ert!1n
&!n"s 1nLe'!:>1 C1t( #/ne" 8( T%!ns#n Tr!"1n'.
4*6
In 5,,,, %n!8&e t# >!( t3e1r &#!ns,
t3e Y%s !n" T%!ns#n B%1&"ers reA%este" ! &#!n restr%0t%r1n',
4F6
/3103 t3e 8!nB, n#/
$er'e" /1t3 B!nB #. t3e P31&1>>1ne Is&!n"s ;BPI=, 'r!nte".
4G6
B( t31s t1$e, t3e Y%sH &#!n
8!&!n0e st##" !t PFF,G++,+++.++. T3e restr%0t%re" &#!n %se" t3e s!$e 0#&&!ter!&s,
/1t3 t3e e-0e>t1#n #. Tr!ns.er Cert1.10!te #. T1t&e G+*G) t3!t se0%re" ! &#!n
#. P5,K++,+++.
4?6


es>1te t3e restr%0t%r1n', 3#/e9er, t3e Y%s st1&& 3!" "1..10%&t1es >!(1n' t3e1r
&#!n. T3e( !sBe" BPI t# re&e!se s#$e #. t3e $#rt'!'e" &!n"s s1n0e t3e1r t#t!&
!>>r!1se" 9!&%e .!r e-0ee"e" t3e !$#%nt #. t3e re$!1n1n' "e8t. L3en BPI 1'n#re"
t3e1r reA%est, t3e Y%s /1t33e&" >!($ents #n t3e1r !$#rt1:!t1#ns. T3%s, BPI
e-tr!E%"101!&&( .#re0&#se"
4K6
t3e $#rt'!'e" >r#>ert1es 1n Le'!:>1 C1t( !n" 1n P1&1,
C!$!r1nes S%r. B%t t3e Y%s s#%'3t 8( 0#%rt !0t1#n !'!1nst BPI !n" t3e /1nn1n'
81""er, M!'n!0r!.t e9e&#>$ent C#r>#r!t1#n ;M!'n!0r!.t=, t3e !nn%&$ent #. t3e
.#re0&#s%re s!&e.

In t3e 0#%rse #. t3e >r#0ee"1n's, 3#/e9er, t3e Y%s !n" M!'n!0r!.t entere" 1nt#
! 0#$>r#$1se !'ree$ent
4)6
t3!t !..1r$e" t3e &!tterHs #/ners31> #. t3ree #%t #. t3e 5+
>!r0e&s #. &!n" t3!t /ere !%0t1#ne". B( 91rt%e #. t31s !'ree$ent, t3e 0#%rt "1s$1sse"
t3e 0#$>&!1nt !'!1nst M!'n!0r!.t,
476
/1t3#%t >reE%"10e t# t3e Y%s .1&1n' ! ne/ #ne
!'!1nst BPI.

On O0t#8er *G, *++F t3e Y%s .1&e" t3e1r ne/ 0#$>&!1nt 8e.#re t3e Re'1#n!& Tr1!&
C#%rt ;RTC= #. Le'!:>1 C1t(, Br!n03 5, 1n C191& C!se 5+*7K !'!1nst BPI .#r re0#9er( #.
!&&e'e" e-0ess19e >en!&t( 03!r'es, !tt#rne(Hs .ees, !n" .#re0&#s%re e->enses t3!t t3e
8!nB 0!%se" t# 8e 1n0#r>#r!te" 1n t3e >r10e #. t3e !%0t1#ne" >r#>ert1es.
4,6


In 1ts !ns/er,
45+6
BPI essent1!&&( !"$1tte" t3e .#re0&#s%re #. t3e $#rt'!'e"
>r#>ert1es .#r PF,,+??,*?G.,?, 8r#Ben "#/n !s .#&&#/s: PFF,*7F,)?7.)F !s >r1n01>!&
"e8t2P*,55+,*7*.)7 !s 1nterest2 !n" PF,KK5,*5F.GK !s >en!&t( 03!r'es.
4556
BPI
A%!&1.1e" t3!t t3e t#t!& #. PF,,+??,*?G.,? 0#rres>#n"e" #n&( t# t3e Y%sH "e8t !s #. "!te
#. .1&1n' #. t3e >et1t1#n.
45*6
T3e n#t10e #. t3e !%0t1#n s!&e s!1" t3!t t3e t#t!& /!s
I1n0&%s19e #. 1nterest, >en!&t( 03!r'es, !tt#rne(Hs .ee !n" e->enses #. t31s
.#re0&#s%re.J
45F6

BPI .%rt3er !"$1tte" t3!t 1ts 81" #. PG?,+,+,?KK.G5 .#r !&& t3e !%0t1#ne" >r#>ert1es
/!s 8r#Ben "#/n !s .#&&#/s:
45G6

Pr1n01>!& P F*,577,)*F.+)
Interest *,)KF,+77.,F
Pen!&t( C3!r'es ?,?K7.KG,.+,

S%8-t#t!&OOOOO P 405:9054;8.0<
A"": 5+P Att#rne(Hs Cees G,+?*,+GK.55
L1t1'!t1#n E->enses Q Interest GGK,)*K.)G
C#st #. P%8&10!t1#n Q Interest )5,FF*.G)

TOTALOOOOO. P 4:50<05:;;.48

BPI !&s# !"$1tte" t3!t M!'n!0r!.t s%8$1tte" t3e 31'3est !n" /1nn1n' 81"
#. PG?,?++,+++.++.
45?6
T3e s3er1.. t%rne" #9er t31s !$#%nt t# BPI.
45K6
A00#r"1n' t#
BPI, 1t 1n t%rn re$1tte" t# t3e C&erB #. C#%rt t3e PG+,,GFF.?, "1..eren0e 8et/een 1ts
81" >r10e !n" t3!t #. M!'n!0r!.tHs.
45)6
A&t3#%'3 t3e >r#0ee"s #. t3e s!&e e-0ee"e"
t3ePF,,+??,*?G.,? st!te" 1n t3e n#t10e #. s!&e 8( PK,+F?,F55.GK,
4576
t3e 81" !$#%nt
1n0re!se" 8e0!%se 1t n#/ 1n0&%"e" &1t1'!t1#n e->enses !n" !tt#rne(Hs .ees !s /e&&
!s 1nterests !n" >en!&t1es !s re0#$>%te".
45,6

BPI !"$1tte" t3!t 1t !&s# >%s3e" t3r#%'3 /1t3 t3e se0#n" !%0t1#n .#r t3e s!&e
#. ! &#t 1n P1&1, C!$!r1nes S%r t3!t se0%re" ! re$!1n1n' "e8t #. P?,?K*,+++.
4*+6
BPI
$!"e t3e &#ne 81"
4*56
#. P5,)+5,,FG.+,.
4**6

T3e Y%s 3!" t3ree 0!%ses #. !0t1#n !'!1nst BPI.

(irst. T3e 8!nB 1$>#se" e-0ess19e >en!&t( 03!r'es !n" 1nterests: #9er P?
$1&&1#n 1n >en!&t( 03!r'es 0#$>%te" !t FKP >er !nn%$ 0#$>!re" t# t3e 5*P >er
!nn%$ t3!t t3e C#%rt .1-e" 1n t3e 0!ses #. $tate Investment )ouse, Inc. v. Court of
%ppeals
4*F6
!n" Rui# v. Court of %ppeals.
4*G6
In !""1t1#n, BPI 0#&&e0te" ! 5GP (e!r&(
1nterest #n t3e >r1n01>!&, 8r1n'1n' t3e 0#$81ne" >en!&t( 03!r'es !n" 1nterest t# ?+P #.
t3e >r1n01>!& >er !nn%$.

$econd. BPI !&s# 1$>#se" ! 03!r'e #. PG,+?*,+GK.55 1n !tt#rne(Hs .ees, t3e
eA%19!&ent #. 5+P #. t3e >r1n01>!&, 1nterest, !n" >en!&t( 03!r'es.

hird. BPI "1" n#t >r#91"e "#0%$ents t# s%>>#rt 1ts 0&!1$ .#r .#re0&#s%re
e->enses #. PGGK,)*K.)G !n" 0#st #. >%8&10!t1#n #. P?57,+?,.*5.

As !n !&tern!t19e t# t3e1r t3ree 0!%ses #. !0t1#n, t3e Y%s 0&!1$e" t3!t BPI /!s 1n
est#>>e& t# 0&!1$ $#re t3!n t3e !$#%nt st!te" 1n 1ts >%8&1s3e" n#t10es. C#nseA%ent&(,
1t $%st t%rn #9er t3e e-0ess 81" #. PK,+F?,F55.GK.

A.ter >re-tr1!&, t3e Y%s $#9e" .#r s%$$!r( E%"'$ent,
4*?6
>#1nt1n' #%t t3!t 8!se"
#n t3e !ns/er,
4*K6
t3e 0#$$#n e-3181ts #. t3e >!rt1es,
4*)6
!n" t3e !ns/er t# t3e /r1tten
1nterr#'!t#r1es t# t3e s3er1..,
4*76
n# 'en%1ne 1ss%es #. .!0t e-1st 1n t3e 0!se. T3e Y%s
/!19e" t3e1r 0&!1$ .#r $#r!& "!$!'es s# t3e RTC 0!n "1s>#se #. t3e 0!se t3r#%'3 !
s%$$!r( E%"'$ent.
4*,6

In1t1!&&(, t3e RTC 'r!nte" #n&( ! >!rt1!& s%$$!r( E%"'$ent. It re"%0e" t3e
>en!&t( 03!r'e #. FKP >er !nn%$
4F+6
t# 5*P >er !nn%$ %nt1& t3e "e8t /#%&" 3!9e 8een
.%&&( >!1" 8%t $!1nt!1ne" t3e !tt#rne(Hs .ees !s re!s#n!8&e 0#ns1"er1n' t3!t BPI
!&re!"( /!19e" t3e P5,)K5,?55.FK t3!t .#r$e" >!rt #. t3e !tt#rne(Hs .ees !n" re"%0e"
t3e r!te #. !tt#rne(Hs .ees 1t 0#&&e0te" .r#$ *?P t# 5+P #. t3e !$#%nt "%e. T3e RTC
r%&e" t3!t .!0ts ne0ess!r( t# res#&9e t3e 1ss%es #n >en!&t1es !n" .ees 3!" 8een
!"$1tte" 8( t3e >!rt1es t3%s "1s>ens1n' /1t3 t3e nee" t# re0e19e e91"en0e.
4F56


St1&&, t3e RTC 3e&" t3!t 1t nee"e" t# re0e19e e91"en0e .#r t3e res#&%t1#n #. t3e
1ss%es #. ;5= /3et3er #r n#t t3e .#re0&#s%re !n" >%8&10!t1#n e->enses /ere E%st1.1e"2 ;*=
/3et3er #r n#t t3e .#re0&#s%re #. t3e &#t 1n P1&1, C!$!r1nes S%r, /!s 9!&1" '19en t3!t t3e
>r#0ee"s #. t3e .#re0&#s%re #. t3e >r#>ert1es 1n Le'!:>1 C1t( s%..101ent&( 0#9ere" t3e
"e8t2 !n" ;F= /3et3er #r n#t BPI /!s ent1t&e" t# 1ts 0#%nter0&!1$ .#r !tt#rne(Hs .ees,
$#r!& "!$!'es, !n" e-e$>&!r( "!$!'es.
4F*6

T3e Y%s $#9e" .#r >!rt1!& re0#ns1"er!t1#n.
4FF6
T3e( !r'%e" t3!t, s1n0e BPI "1" n#t
$!rB 1n e91"en0e !n( "#0%$ent 1n s%>>#rt #. t3e .#re0&#s%re e->enses 1t 0&!1$e", 1t
$!( 8e !ss%$e" t3!t t3e 8!nB 3!" n# e91"en0e t# >r#9e s%03 e->enses. As re'!r"s
t3e1r r1'3t t# t3e >r#-r!t1n' #. t3e1r "e8t !$#n' t3e $#rt'!'e" >r#>ert1es, t3e Y%s
>#1nte" #%t t3!t BPI "1" n#t "1s>%te t3e .!0t t3!t t3e >r#0ee"s #. t3e s!&e #. t3e
>r#>ert1es 1n Le'!:>1 C1t( .%&&( s!t1s.1e" t3e "e8t. T3%s, t3e 0#%rt 0#%&" !&re!"( res#&9e
/1t3#%t tr1!& t3e 1ss%e #. /3et3er #r n#t t3e .#re0&#s%re #. t3e P1&1 >r#>ert( /!s 9!&1".

C%rt3er, t3e Y%s s#%'3t re0#ns1"er!t1#n #. t3e re"%0t1#n #. >en!&t( 03!r'es !n"
t3e !&&#/!n0e #. t3e !tt#rne(Hs .ees. T3e( 0&!1$e" t3!t t3e >en!&t( 03!r'es s3#%&" 8e
"e&ete" .#r 91#&!t1#n #. Re>%8&10 A0t ;R.A.= F)K? #r t3e Tr%t3 1n Len"1n' A0t. BPIHs
"1s0&#s%re "1" n#t st!te t3e r!te #. >en!&t1es #n &!te !$#rt1:!t1#ns. A&s#, t3e Y%s !sBe"
t3e 0#%rt t# re"%0e t3e !tt#rne(Hs .ees .r#$ 5+P t# 5P #. t3e !$#%nt "%e. On J!n%!r(
F, *++K t3e RTC re0#ns1"ere" 1ts e!r&1er "e01s1#n !n" ren"ere" ! s%$$!r( E%"'$ent:
4FG6

5. e&et1n' t3e >en!&t( 03!r'es 1$>#se" 8( BPI .#r n#n-
0#$>&1!n0e /1t3 t3e Tr%t3 1n Len"1n' A0t2
*. Re"%01n' t3e !tt#rne(Hs .ees t# 5P #. t3e >r1n01>!& !n" 1nterest2
F. U>3#&"1n' t3e re!s#n!8&eness #. t3e .#re0&#s%re e->enses !n"
0#st #. >%8&10!t1#n, 8#t3 /1t3 1nterests2
G. Re1ter!t1n' t3e t%rn#9er 8( t3e C&erB #. C#%rt t# t3e Y%s #. t3e
e-0ess 1n t3e 81" >r10e2
?. e&et1n' t3e Y%sH 0&!1$ .#r $#r!& "!$!'es t3e( 3!91n' /!19e"
1t2
K. en(1n' t3e Y%sH 0&!1$ .#r !tt#rne(Hs .ees .#r &!0B #. 8!s1s2 !n"
). 1s$1ss1n' BPIHs 0#%nter0&!1$ .#r $#r!& !n" e-e$>&!r(
"!$!'es !n" .#r !tt#rne(Hs .ees .#r &!0B #. $er1t 0#ns1"er1n' t3!t s%$$!r(
E%"'$ent 3!s 8een ren"ere" 1n .!9#r #. t3e Y%s.

BPI !>>e!&e" t3e "e01s1#n t# t3e C#%rt #. A>>e!&s ;CA= 1n CA-G.R. CV
7K?)). B%t t3e CA ren"ere" E%"'$ent #n J!n%!r( *F, *++7, !..1r$1n' t3e RTC
"e01s1#n 1n !&& res>e0ts. An" /3en BPI !sBe" .#r re0#ns1"er!t1#n,
4F?6
t3e CA "en1e" 1t
#n J%&( 5G, *++7,
4FK6
3en0e, t3e 8!nBHs re0#%rse t# t31s C#%rt.

T) I""2" P!"#('

BPI >resents t3e .#&&#/1n' 1ss%es:

5. L3et3er #r n#t t3e 0!se >resente" n# 'en%1ne 1ss%es #. .!0t
s%03 !s t# /!rr!nt ! s%$$!r( E%"'$ent 8( t3e RTC2 !n"

*. L3ere s%$$!r( E%"'$ent 1s >r#>er, /3et3er #r n#t t3e RTC
!n" t3e CA != 0#rre0t&( "e&ete" t3e >en!&t( 03!r'es 8e0!%se #. BPIHs
!&&e'e" .!1&%re t# 0#$>&( /1t3 t3e Tr%t3 1n Len"1n' A0t2 8= 0#rre0t&( re"%0e"
t3e !tt#rne(Hs .ees t# 5P #. t3e E%"'$ent "e8t2 !n" 0= >r#>er&( "1s$1sse"
BPIHs 0#%nter0&!1$s .#r $#r!& !n" e-e$>&!r( "!$!'es, !tt#rne(Hs .ees,
!n" &1t1'!t1#n e->enses.

T) Co2!(=" R2%-#/"

O#. A s%$$!r( E%"'$ent 1s !>t /3en t3e essent1!& .!0ts #. t3e 0!se !re
%n0#nteste" #r t3e >!rt1es "# n#t r!1se !n( 'en%1ne 1ss%e #. .!0t.
4F)6
Here, t# res#&9e
t3e 1ss%e #. t3e e-0ess19e 03!r'es !&&e'e"&( 1n0#r>#r!te" 1nt# t3e !%0t1#n 81" >r10e, t3e
RTC s1$>&( 3!" t# &##B !t != t3e >&e!"1n's #. t3e >!rt1es2 8= t3e &#!n !'ree$ents, t3e
>r#$1ss#r( n#te, !n" t3e re!& est!te $#rt'!'es 8et/een t3e$2 0= t3e .#re0&#s%re !n"
81""1n' "#0%$ents2 !n" "= t3e !"$1ss1#ns !n" #t3er "1s0&#s%res 8et/een t3e >!rt1es
"%r1n' >re-tr1!&. S1n0e t3e >!rt1es !"$1tte" n#t #n&( t3e e-1sten0e, !%t3ent101t(, !n"
'en%1ne e-e0%t1#n #. t3ese "#0%$ents 8%t !&s# /3!t t3e( st!te", t3e tr1!& 0#%rt "1" n#t
nee" t# 3#&" ! tr1!& .#r t3e re0e>t1#n #. t3e e91"en0e #. t3e >!rt1es.


BPI 0#nten"s t3!t ! s%$$!r( E%"'$ent /!s n#t >r#>er '19en t3e .#&&#/1n'
1ss%es t3!t t3e >!rt1es r!1se": 5= /3et3er #r n#t t3e &#!n !'ree$ents 8et/een t3e$
/ere 9!&1" !n" en.#r0e!8&e2 *= /3et3er #r n#t t3e Y%s 3!9e ! 0!%se #. !0t1#n !'!1nst
BPI2 F= /3et3er #r n#t t3e Y%s !re >r#>er >!rt1es 1n 1nterest2 G= /3et3er #r n#t t3e Y%s
!re est#>>e" .r#$ A%est1#n1n' t3e .#re0&#s%re >r#0ee"1n' !.ter enter1n' 1nt# !
0#$>r#$1se !'ree$ent /1t3 M!'n!0r!.t2 ?= /3et3er #r n#t t3e >en!&t( 03!r'es !n"
.ees !n" e->enses #. &1t1'!t1#n !n" >%8&10!t1#n !re e-0ess19e2 !n" K= /3et3er #r n#t
BPI 91#&!te" t3e Tr%t3 1n Len"1n' A0t.
4F76

B%t t3ese !re 1ss%es t3!t 0#%&" 8e re!"1&( res#&9e" 8!se" #n t3e .!0ts
est!8&1s3e" 8( t3e >&e!"1n's !n" t3e !"$1ss1#ns #. t3e >!rt1es.
4F,6
In"ee", BPI 3!s
.!1&e" t# n!$e !n( "#0%$ent #r 1te$ #. .!0t t3!t 1t /#%&" 3!9e /!nte" t# !""%0e !t t3e
tr1!& #. t3e 0!se. A tr1!& /#%&" 3!9e 8een s%03 ! 're!t /!ste #. t1$e !n" res#%r0es.

T*o. B#t3 t3e RTC !n" CA "e01s1#ns 01te" BPIHs !&&e'e" 91#&!t1#n #. t3e Tr%t3 1n
Len"1n' A0t !n" t3e r%&1n' #. t3e C#%rt 1n *ew $ampaguita +uilders Construction, Inc.
v. 'hilippine *ational +an,
4G+6
t# E%st1.( t3e1r "e&et1#n #. t3e >en!&t( 03!r'es. Se0t1#n G
#. t3e Tr%t3 1n Len"1n' A0t st!tes t3!t:

SEC. G. An( 0re"1t#r s3!&& .%rn1s3 t# e!03 >ers#n t# /3#$ 0re"1t 1s
e-ten"e", >r1#r t# t3e 0#ns%$$!t1#n #. t3e tr!ns!0t1#n, ! 0&e!r st!te$ent 1n
/r1t1n' sett1n' .#rt3, t# t3e e-tent !>>&10!8&e !n" 1n !00#r"!n0e /1t3 r%&es !n"
re'%&!t1#ns >res0r18e" 8( t3e B#!r", t3e .#&&#/1n' 1n.#r$!t1#n:

;5= t3e 0!s3 >r10e #r "e&19ere" >r10e #. t3e >r#>ert( #r ser910e t# 8e
!0A%1re"2
;*= t3e !$#%nts, 1. !n(, t# 8e 0re"1te" !s "#/n >!($ent !n"<#r
tr!"e-1n2
;F= t3e "1..eren0e 8et/een t3e !$#%nts set .#rt3 %n"er 0&!%ses ;5=
!n" ;*=2
;G= t3e 03!r'es, 1n"191"%!&&( 1te$1:e", /3103 !re >!1" #r t# 8e >!1"
8( s%03 >ers#n 1n 0#nne0t1#n /1t3 t3e tr!ns!0t1#n 8%t /3103 !re n#t 1n01"ent t#
t3e e-tens1#n #. 0re"1t2
;?= t3e t#t!& !$#%nt t# 8e .1n!n0e"2
;K= t3e .1n!n0e 03!r'e e->resse" 1n ter$s #. >es#s !n" 0ent!9#s2
!n"
;)= t3e >er0ent!'e t3!t t3e .1n!n0e 8e!rs t# t3e t#t!& !$#%nt t# 8e
.1n!n0e" e->resse" !s ! s1$>&e !nn%!& r!te #n t3e #%tst!n"1n' %n>!1"
8!&!n0e #. t3e #8&1'!t1#n.

Pen!&t( 03!r'e, /3103 1s &1A%1"!te" "!$!'es res%&t1n' .r#$ ! 8re!03,
4G56
.!&&s
%n"er 1te$ ;K= #r .1n!n0e 03!r'e. A .1n!n0e 03!r'e Ire>resents t3e !$#%nt t# 8e >!1"
8( t3e "e8t#r 1n01"ent t# t3e e-tens1#n #. 0re"1t.J
4G*6
T3e &en"er $!( >r#91"e .#r !
>en!&t( 0&!%se s# &#n' !s t3e !$#%nt #r r!te #. t3e 03!r'e !n" t3e 0#n"1t1#ns %n"er
/3103 1t 1s t# 8e >!1" !re "1s0&#se" t# t3e 8#rr#/er 8e.#re 3e enters 1nt# t3e 0re"1t
!'ree$ent.

In t31s 0!se, !&t3#%'3 BPI .!1&e" t# st!te t3e >en!&t( 03!r'es 1n t3e "1s0&#s%re
st!te$ent, t3e >r#$1ss#r( n#te t3!t t3e Y%s s1'ne", #n t3e s!$e "!te !s t3e
"1s0&#s%re st!te$ent, 0#nt!1ne" ! >en!&t( 0&!%se t3!t s!1": II<Le E#1nt&( !n" se9er!&&(,
>r#$1se t# .%rt3er >!( ! &!te >!($ent 03!r'e #n !n( #9er"%e !$#%nt 3ere1n !t t3e r!te
#. FP >er $#nt3.J T3e >r#$1ss#r( n#te 1s !n !0Bn#/&e"'$ent #. ! "e8t !n"
0#$$1t$ent t# re>!( 1t #n t3e "!te !n" %n"er t3e 0#n"1t1#ns t3!t t3e >!rt1es !'ree"
#n.
4GF6
It 1s ! 9!&1" 0#ntr!0t !8sent >r##. #. !0ts /3103 $1'3t 3!9e 91t1!te" 0#nsent.
4GG6


T3e A%est1#n 1s /3et3er #r n#t t3e re.eren0e t# t3e >en!&t( 03!r'es 1n t3e
>r#$1ss#r( n#te 0#nst1t%tes s%8st!nt1!& 0#$>&1!n0e /1t3 t3e "1s0&#s%re reA%1re$ent #.
t3e Tr%t3 1n Len"1n' A0t.
4G?6
T3e RTC !n" CA re&1e" #n t3e r%&1n' 1n *ew
$ampaguita !s !%t3#r1t( t3!t t3e n#n-"1s0&#s%re #. t3e >en!&t( 03!r'e ren"ers 1ts
1$>#s1t1#n 1&&e'!&. B%t *ew $ampaguita 1s n#t !tten"e" 8( t3e s!$e
01r0%$st!n0es. L3!t *ew $ampaguita "1s!&&#/e", 8e0!%se 1t /!s n#t $ent1#ne"
e1t3er 1n t3e "1s0&#s%re st!te$ent #r 1n t3e >r#$1ss#r( n#te, /!s t3e %n1&!ter!& 1n0re!se
1n t3e r!tes #. >en!&t( 03!r'es t3!t t3e 0re"1t#r 1$>#se" #n t3e 8#rr#/er. Here,
3#/e9er, 1t 1s n#t s3#/n t3!t BPI 1n0re!se" t3e r!te #. >en!&t( 03!r'e t3!t 1t 0#&&e0te"
.r#$ t3e Y%s.
4GK6


T3e r%&1n' t3!t 1s $#re 1n >#1nt 1s t3!t &!1" "#/n 1n he Consolidated +an, and
rust Corporation v. Court of %ppeals,
4G)6
! 0!se 01te" 1n *ew
$ampaguita. T3eConsolidated +an, r%&1n' "e0&!re" 9!&1" t3e >en!&t( 03!r'es t3!t
/ere st1>%&!te" 1n t3e >r#$1ss#r( n#tes.
4G76
L3!t t3e C#%rt "1s!&&#/e" 1n t3!t 0!se /!s
t3e 0#&&e0t1#n #. ! 3!n"&1n' 03!r'e t3!t t3e >r#$1ss#r( n#tes "1" n#t 0#nt!1n.

T3e C#%rt 3!s !..1r$e" t3!t .1n!n01!& 03!r'es !re !$>&( "1s0&#se" 1. st!te" 1n t3e
>r#$1ss#r( n#te 1n t3e 0!se #. &evelopment +an, of the 'hilippines v. %rcilla, Jr.
4G,6
T3e C#%rt t3ere s!1", IUn"er C1r0%&!r 5?7 #. t3e Centr!& B!nB, t3e &en"er 1s reA%1re"
t# 1n0&%"e t3e 1n.#r$!t1#n reA%1re" 8( R.A. F)K? 1n t3e 0#ntr!0t 0#9er1n' t3e 0re"1t
tr!ns!0t1#n #r !n( #t3er "#0%$ent t# 8e !0Bn#/&e"'e" !n" s1'ne" 8( t3e 8#rr#/er. In
!""1t1#n, t3e 0#ntr!0t #r "#0%$ent s3!&& s>e01.( !""1t1#n!& 03!r'es, 1. !n(, /3103 /1&& 8e
0#&&e0te" 1n 0!se 0ert!1n st1>%&!t1#ns 1n t3e 0#ntr!0t !re n#t $et 8( t3e "e8t#r.J In t31s
0!se, t3e >r#$1ss#r( n#tes s1'ne" 8( t3e Y%s 0#nt!1ne" "!t!, 1n0&%"1n' >en!&t(
03!r'es, reA%1re" 8( t3e Tr%t3 1n Len"1n' A0t. T3e( 0!nn#t !9#1" &1!81&1t( 8!se" #n !
r1'1" 1nter>ret!t1#n #. t3e Tr%t3 1n Len"1n' A0t t3!t 0#ntr!9enes 1ts '#!&.

N#net3e&ess, t3e 0#%rts 3!9e !%t3#r1t( t# re"%0e >en!&t( 03!r'es /3en t3ese
!re %nre!s#n!8&e !n" 1n1A%1t#%s.
4?+6
C#ns1"er1n' t3!t BPI 3!" !&re!"( re0e19e"
#9er P*.) $1&&1#n 1n 1nterest !n" t3!t 1t seeBs t# 1$>#se t3e >en!&t( 03!r'e #. FP >er
$#nt3 #r FKP >er !nn%$ #n t3e t#t!& !$#%nt "%eR>r1n01>!& >&%s 1nterest, /1t3 1nterest
n#t >!1" /3en "%e !""e" t# !n" 8e0#$1n' >!rt #. t3e >r1n01>!& !n" !&s# 8e!r1n'
1nterest !t t3e s!$e r!teRt3e C#%rt .1n"s t3e r%&1n' #. t3e RTC 1n 1ts #r1'1n!&
"e01s1#n
4?56
re!s#n!8&e !n" .!1r. T3%s, t3e >en!&t( 03!r'e #. 5*P >er !nn%$ #r 5P >er
$#nt3
4?*6
1s 1$>#se".

T)!. As .#r t3e !/!r" #. !tt#rne(Hs .ee, 1t 8e1n' >!rt #. ! >!rt(Hs &1A%1"!te"
"!$!'es, t3e s!$e $!( &1Be/1se 8e eA%1t!8&( re"%0e".
4?F6
T3e CA 0#rre0t&( !..1r$e"
t3e RTC Or"er
4?G6
t# re"%0e 1t .r#$ 5+P t# 5P 8!se" #n t3e .#&&#/1n' re!s#ns: ;5=
!tt#rne(Hs .ee 1s n#t essent1!& t# t3e 0#st #. 8#rr#/1n', 8%t ! $ere 1n01"ent #. 0#&&e0t1#n2
4??6
;*= 5P 1s E%st !n" !"eA%!te 8e0!%se BPI 3!" !&re!"( 03!r'e" .#re0&#s%re
e->enses2 ;F= !tt#rne(Hs .ee #. 5+P #. t3e t#t!& !$#%nt "%e 1s #ner#%s 0#ns1"er1n' t3e
r#te e..#rt t3!t '#es 1nt# e-tr!E%"101!& .#re0&#s%res.

WHEREFORE, t3e C#%rt DENIES t3e >et1t1#n !n" AFFIRMS t3e C#%rt #.
A>>e!&s e01s1#n 1n CA-G.R. CV 7K?)) "!te" J!n%!r( *F, *++7 s%8Ee0t t#
t3eRESTORATION #. t3e >en!&t( 03!r'e #. 5*P >er !nn%$ #r 5P >er $#nt3 #. t3e
!$#%nt "%e 0#$>%te" .r#$ "!te #. n#n>!($ent #r N#9e$8er *?, *++5.

SO ORDERED.