Bank Secrecy Digest

SPECIAL COMMERCIAL LAW: LAW ON SECRECY OF BANK DEPOSITS (RA 1405)
TERESE RAY-ANNE O. AQUINO | 3A

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DE LA RAMA V. VILLAROSA

FACTS:

Lessor Lourdes de la Rama brought an action in
the Court of first Instance against lessee Augusto
R. Villarosa and the Villarosas surety, the Luzon
Surety Co., Inc. for judicial confirmation of the
cancellation, rescission and annulment of a
contract of lease of sugarland.
CFI rendered a partial summary judgment
decreeing the lease rescinded, cancelled and
annulled and ordering defendant Augusto R.
Villarosa to surrender and deliver to De LaRama or
her representatives the possession of the leased
premises, etc. and ordering Villarosa and Surety to
jointly and severally pay De La Rama for the
unpaid rents etc.
Subsequently, the court issued order for the
immediate execution of the above judgment. Upon
the application of De La Rama, the lower court
issued order for the issuance of a third alias writ of
execution directing the sheriff to satisfy the
judgment.
Accordingly, the sheriff of Manila garnished the
Villarosa with the Philippine Trust Co. (PTC) to the
amount of P71,533.99. and required the PTC not
to deliver, transfer or otherwise dispose of the said
amount belonging to Villarosa, to any person
except to the sheriff, or suffer the penalties
prescribed by law.
PTC complying with such notice, set aside the
amount of P71,533.99 out of the deposit of the
Villarosa in its possession for the benefit of the
sheriff of Manila and the De La Rama.
Luzon Surety perfected an appeal
However, the garnishee, PTC., refused to deliver
to the sheriff of Manila, the said amount garnished
to satisfy the writ of execution.
The lower court, ordered PTC to pay the sheriff out
of the deposit of the Luzon Surety Co., Inc. the
amount stated in the garnishment.
Before the order could be complied with by the
garnishee, the defendant Luzon Surety Co. filed a
petition for certiorari with preliminary injunction with
the Court of Appeals against the Court of First
Instance, the sheriff and the PTC.
Hence, sheriff was enjoined from enforcing the
order against PTC. So the garnishee did not
deliver to the sheriff any portion of the amount
garnished and De la Rama never received any for
satisfaction of the original judgment.
CA held Luzon Surety is hereby ordered to pay the
sum of P24,864.78 solidarity with Villarosa, to
Lourdes de la Rama.
Villarosa, invoking the provisions of section 5 of
Rule 39, Rules of Court, filed with the lower court a
verified motion for the restitution of the amount of
P39,998.42 (P71,533.99 minus P33,002.72 equals
P38,531.27), plus interest thereon at the rate of
6% per annum from August 18, 1959 until paid.
The above amount represents the balance
refundable to it after the Court of Appeals modified
the decision of the lower court, plus a 6% interest
thereon, invoking the provision of section 5 of Rule
39.
But this was opposed by De La Rama alleging that
by virtue of the writ of preliminary injunction issued
by the Court of Appeals the sheriff was never able
to collect from the Philippine Trust Company any
portion of the amount garnished.
The above order is the subject of this appeal to this
Court.
The gist of the Villarosa's appeal is inasmuch as
the full amount of P71,533.99 was garnished but
only the sum of P31,535.57 was paid, the amount
of the judgment awarded in the Court of Appeals,
plaintiff-De La Rama should pay an interest of 6%
of the difference between the total sum actually
garnished and the sum obtained by the plaintiff in
the final judgment or an interest of 6% etc. Basis
for this petition is Section 5 of Rule 39 which reads
as follows:
SEC. 5. Effect of reversal of judgment executed.
Where the judgment executed is reversed totally or
partially on appeal the trial court, on motion, after
the case is remanded to it, may issue such orders
of restitution as equity and justice may warrant
under the circumstances. (Rules of Court)
ISSUE: W/N the interest on the balance of
amount garnished be granted to Villarosa.
HELD: No.There are various reasons why the
petition for interest on the balance of the amount
garnished cannot be awarded to the defendant-
appellant. In the first place, the amount garnished
was not actually taken possession of by the sheriff,
even from the time of the garnishment, because

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upon the perfection of the defendant-appellant's
appeal to the Court of Appeals this Court issued an
injunction prohibiting execution of the judgment.
The plaintiff-appellee was, therefore, able to
secure a full satisfaction of the judgment only upon
final judgment of the Court on August 6, 1960. The
total sum garnished was not delivered to the sheriff
in execution, because the order for the execution
of the judgment of the lower court was suspended
in time by the appeal and the preliminary injunction
issue on appeal.
In the second place, the mere garnishment of
funds belonging to the party upon order of the
court does not have the effect of delivering the
money garnished to the sheriff or to the party in
whose favor the attachment is issued. The fund is
retained by the garnishee or the person holding the
money for the defendant.
The garnishee, or one in whose hands property is
attached or garnished, is universally regarded as
charged with its legal custody pending the
outcome of the attachment of garnishment, unless,
by local statute and practice, he is permitted to
surrender or pay the garnished property or funds
into court, to the attaching officer, or to a receiver
or trustee appointed to receive them. (5 Am. Jur.
14)
The effect of the garnishment, therefore, was to
require the Philippine Trust Company, holder of the
funds of the Luzon Surety Co., to set aside said
amount from the funds of the Luzon Surety Co.
and keep the same subject to the final orders of
the Court. In the case at bar there was never in
order to deliver the full amount garnished to the
plaintiff-appellee; all that was ordered to be
delivered after the judgment had become final was
the amount found by the Court of Appeals to be
due. The balance of the amount garnished,
therefore, remained all the time in the possession
of the bank as part of the funds of the Luzon
Surety Co., although the same could not be
disposed of by the owner.
In the third place, the motion by the defendant-
appellant for the payment of damages or interest
was presented when the judgment had already
become final. Damages incident to the issuance of
an attachment may only be claimed before final
judgment. (Rule 59, See. 20). In the case at bar
the judgment of the Court of Appeals was issued
on January 14, 1960. But the defendant-appellant's
request for interest or damages is dated July 22,
1960. The defendant-appellant's own record on
appeal shows that the decision of the Court of
Appeals had already become final and executory
time of the perfection of the appeal to this Court. A
last reason is the absence of any allegation to the
effect that the garnishment of appellant's funds in
the Philippine Trust Company caused actual
damages to defendant-appellant, for example, that
the funds could not be utilized to pay a pending
obligation as a result of which interest was paid on
such obligation.
2. PNB V. GANCAYCO
FACTS:.
Defendants Emilio A. Gancayco and Florentino
Flor, as special prosecutors of the Department of
Justice, required the Philippine National Bank
(PNB) to produce at a hearing the records of the
bank deposits of Ernesto T. Jimenez, former
administrator of the Agricultural Credit and
Cooperative Administration, who was then under
investigation for unexplained wealth.
In declining to reveal its records, the PNB invoked
Republic Act No. 1405 which provides:
SEC. 2. All deposits of whatever nature with
banks or banking institutions in the Philippines
including investments in bonds issued by the
Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby
considered as of an absolutely confidential nature
and may not be examined, inquired or looked into
by any person, government official, bureau or
office, except upon written permission of the
depositor, or in cases of impeachment, or upon
order of a competent court in cases of bribery or
dereliction of duty of public officials, or in cases
where the money deposited or invested is the
subject matter of the litigation.
On the other hand, the defendants cited the Anti-
Graft and Corrupt Practices Act (Republic Act No.
3019) in support of their claim of authority and
demanded anew that plaintiff Eduardo Z.
Romualdez, as bank president, produce the
records or he would be prosecuted for contempt.
The law invoked by the defendant states:
SEC. 8. Dismissal due to unexplained
wealth. - If in accordance with the provisions of RA
1379, a public official has been found to have
acquired during his incumbency, whether in his
name or in the name of other persons, an amount
of property and/or money manifestly out of
proportion to his salary and to his other lawful
income, that fact shall be a ground for dismissal or
removal. Properties in the name of the spouse and
unmarried children of such public official may be

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taken into consideration, when their acquisition
through legitimate means cannot be satisfactorily
shown. Bank deposits shall be taken into
consideration in the enforcement of this section,
notwithstanding any provision of law to the
contrary.
Because of the threat of prosecution,
plaintiffs filed an action for declaratory judgment in
the Court of First Instance. After trial, during which
Senator Arturo M. Tolentino, author of the Anti-
Graft and Corrupt Practices Act testified, the court
rendered judgment, sustaining the power of the
defendants to compel the disclosure of bank
accounts of ACCFA Administrator Jimenez. The
court said that, by enacting section 8 of, the Anti-
Graft and Corrupt Practices Act, Congress clearly
intended to provide an additional ground for the
examination of bank deposits. Without such
provision, the court added prosecutors would be
hampered if not altogether frustrated in the
prosecution of those charged with having acquired
unexplained wealth while in public office.c
From that judgment, PNB appealed to this
Court. In brief, plaintiffs' position is that section 8 of
the Anti-Graft Law "simply means that such bank
deposits may be included or added to the assets of
the Government official or employee for the
purpose of computing his unexplained wealth if
and when the same are discovered or revealed in
the manner authorized by Section 2 of Republic
Act 1405, which are (1) Upon written permission of
the depositor; (2) In cases of impeachment; (3)
Upon order of a competent court in cases of
bribery or dereliction of duty of public officials; and
(4) In cases where the money deposited or
invested is the subject matter of the litigation."
PNB argues that to construe section 8 of the
Anti-Graft Law as allowing inquiry into bank
deposits would be to negate the policy expressed
in section 1 of Republic Act No. 1405 which is "to
give encouragement to the people to deposit their
money in banking institutions and to discourage
private hoarding so that the same may be utilized
by banks in authorized loans to assist in the
economic development of the country."
ISSUE: W/N a bank can be compelled to
disclose the records of accounts of a depositor
who is under investigation for unexplained
wealth.
HELD: YES. The truth is that these laws are
so repugnant to each other than no reconciliation
is possible. Thus, while Republic Act No. 1405
provides that bank deposits are "absolutely
confidential ... and [therefore] may not be
examined, inquired or looked into," except in those
cases enumerated therein, the Anti-Graft Law
directs in mandatory terms that bank deposits
"shall be taken into consideration in the
enforcement of this section, notwithstanding any
provision of law to the contrary." The only
conclusion possible is that section 8 of the Anti-
Graft Law is intended to amend section 2 of
Republic Act No. 1405 by providing additional
exception to the rule against the disclosure of bank
deposits.
With regard to the claim that disclosure
would be contrary to the policy making bank
deposits confidential, it is enough to point out that
while section 2 of Republic Act 1405 declares bank
deposits to be "absolutely confidential," it
nevertheless allows such disclosure in the
following instances: (1) Upon written permission of
the depositor; (2) In cases of impeachment; (3)
Upon order of a competent court in cases of
bribery or dereliction of duty of public officials; (4)
In cases where the money deposited is the subject
matter of the litigation. Cases of unexplained
wealth are similar to cases of bribery or dereliction
of duty and no reason is seen why these two
classes of cases cannot be excepted from the rule
making bank deposits confidential. The policy as to
one cannot be different from the policy as to the
other. This policy express the motion that a public
office is a public trust and any person who enters
upon its discharge does so with the full knowledge
that his life, so far as relevant to his duty, is open
to public scrutiny.
3. BANCO FILIPINO SAVINGS BANK AND
MORTGAGE V. PURISIMA
FACTS:
The Bureau of Internal Revenue accused Customs
special agent Manuel Caturla before the
Tanodbayan of having illegal acquired property
manifestly out of proportion to his salary and other
lawful income. During the preliminary investigation,
the Tanodbayan issued a subpoena duces tecum
to the Banco Filipino Savings and Mortgage Bank,
commanding its representative to appear at a
specified time at the Office of the Tanodbayan and
furnish the latter with duly certified copies of the
records in all its branches and extension offices of
the loans, savings and time deposits and other
banking transactions, in the names of Caturla, his
wife, Purita, their children, and/or Pedro Escuyos.
Caturla moved to quash the subpoena for violating
Sections 2 and 3 of RA 1405 which was denied by
the Tanodbayan. In fact, the Tanodbayan issued
another subpoena which expanded its scope

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including the production of bank records not only of
the persons enumerated above but of additional
persons and entities as well.
The Banco Filipino filed an action for declaratory
relief with the CFI of Manila which was denied by
the lower court. Thus this special civil action of
certiorari in the SC.

ISSUE: Whether or not the Law on Secrecy of
Bank Deposits precludes production by
subpoena duces tecum of bank records of
transactions by or in the names of the wife,
children and friends of a special agent of the
Bureau of Customs accused before the
Tanodbayan of having allegedly acquired
property manifestly out of proportion to his
salary and other lawful income in violation of
RA 3019?

HELD: NO. In PNB v. Gancayco, we ruled that:
while Section 2 of Republic Act No. 1405 provides
that bank deposits are absolutely confidential
and, therefore, may not be examined, inquired or
looked into, except in those cases enumerated
therein, Section 8 of Republic Act No. 3019 (Anti-
graft law) directs in mandatory terms that bank
deposits shall be taken into consideration in the
enforcement of this section, notwithstanding any
provision of law to the contrary. The only
conclusion possible is that Section 8 of the Anti-
Graft Law is intended to amend Section 2 of
Republic Act No. 1405 by providing an additional
exception to the rule against the disclosure of bank
deposits.
The inquiry into illegally acquired property or
property not legitimately acquired extends to
cases where such property is concealed by being
held by or recorded in the name of other persons.
This proposition is made clear by RA 3019 which
quite categorically states that the term legitimately
acquired property of a public officer or employee
shall not include property unlawfully acquired by
the respondent, but its ownership is concealed by
its being recorded in the name of, of held by,
respondents spouse, ascendants, descendants,
relatives or any other persons.
To sustain the petitioners theory, and restrict the
inquiry only to property held by or in the name of
the government official or employee, or his spouse
and unmarried children is unwarranted in the light
of the provisions of the statutes in question, and
would make available to persons in government
who illegally acquire property an easy and fool-
proof means of evading investigation and
prosecution; all they have to do would be to simply
place the property in the possession or name of
persons other than their spouse and unmarried
children. This is an absurdity that we will not
ascribe to the lawmakers.
4. RCBC V. DE CASTRO
FACTS:
In a prior case of action for recovery of unpaid
tobacco deliveries, the court issued an order
directing the Philippine Tobacco Industries Admin
(PVTA) to pay BADOC Planters a certain amount
of money.

BADOC filed an Urgent Ex-Parte Motion for a Writ
of Execution of the said Partial Judgment which
was granted on the same. Accordingly, the Branch
Clerk of Court on the very same day, issued a Writ
of Execution addressed to Special Sheriff, who
then issued a Notice of Garnishment addressed to
the General Manager and/or Cashier of Rizal
Commercial Banking Corporation.
The respondent Judge issued an Order directing
RCBC "to deliver in check the amount garnished to
Sheriff Faustino Rigor and Sheriff Rigor in turn is
ordered to cash the check and deliver the amount
to the BADOCs representative. In compliance with
said Order, RCBC delivered to Sheriff Rigor a
certified check in the sum of P 206,916.76.
PVTA filed a MR, which was granted. It ordered
RCBC and BADOC "to restore, jointly and
severally, the account of PVTA with the said bank
in the same condition and state it was before the
issuance of the aforesaid Orders by reimbursing
the PVTA of the amount of P 206, 916.76 with
interests at the legal rate.
RCBC then filed a MR, which was denied, by the
court.
Hence, this petition.
ISSUE: W/N the bank is liable for releasing its
depositor's funds upon orders of the court,
pursuant to a writ of garnishment.
HELD: No. It is important to stress, at this juncture,
that there was nothing irregular in the delivery of
the funds of PVTA by check to the sheriff, whose
custody is equivalent to the custody of the court,
he being a court officer. The order of the court
dated January 27, 1970 was composed of two
parts, requiring: 1) RCBC to deliver in check the
amount garnished to the designated sheriff and 2)
the sheriff in turn to cash the check and deliver the
amount to the plaintiffs representative and/or

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counsel on record. It must be noted that in
delivering the garnished amount in check to the
sheriff, the RCBC did not thereby make any
payment, for the law mandates that delivery of a
check does not produce the effect of payment until
it has been cashed. [Article 1249, Civil Code.]
Moreover, by virtue of the order of garnishment,
the same was placed in custodia legis and
therefore, from that time on, RCBC was holding the
funds subject to the orders of the court a quo. That
the sheriff, upon delivery of the check to him by
RCBC encashed it and turned over the proceeds
thereof to the plaintiff was no longer the concern of
RCBC as the responsibility over the garnished
funds passed to the court. Thus, no breach of trust
or dereliction of duty can be attributed to RCBC in
delivering its depositor's funds pursuant to a court
order which was merely in the exercise of its power
of control over such funds.
... The garnishment of property to satisfy a writ of
execution operates as an attachment and fastens
upon the property a lien by which the property is
brought under the jurisdiction of the court issuing
the writ. It is brought into custodia legis, under the
sole control of such court [De Leon v. Salvador,
G.R. Nos. L-30871 and L-31603, December
28,1970, 36 SCRA 567, 574.]
The respondent judge however, censured the
petitioner for having released the funds "simply on
the strength of the Order of the court which. far
from ordering an immediate release of the amount
involved, merely serves as a standing authority to
make the release at the proper time as prescribed
by the rules." [Rollo, p. 81.]
This argument deserves no serious consideration.
As stated earlier, the order directing the bank to
deliver the amount to the sheriff was distinct and
separate from the order directing the sheriff to
encash the said check. The bank had no choice
but to comply with the order demanding delivery of
the garnished amount in check. The very tenor of
the order called for immediate compliance
therewith. On the other hand, the bank cannot be
held liable for the subsequent encashment of the
check as this was upon order of the court in the
exercise of its power of control over the funds
placed in custodia legis by virtue of the
garnishment.

5. MELLON BANK V. MAGSINO

FACTS:
This case involves the erroneous transfer of US
$1,000,000 to Victoria Javier instead of US $1,000
only. Dolores Ventosa requested the transfer of
$1000 from the First National Bank of West
Virginia, USA to Victoria Javier in Manila through
the Prudential Bank. Accordingly, the First National
Bank requested the petitioner, Mellon Bank, to
effect the transfer. Unfortunately, the wire sent by
Mellon Bank to Manufacturers Hanover Bank, a
correspondent of Prudential Bank, indicated the
amount transferred as US $1,000,000.00 instead
of US $1,000.00. Hence, Manufacturers Hanover
Bank transferred one million dollars less bank
charges of $6.30 to the Prudential Bank for the
account of Victoria Javier.
Javier opened a new dollar account in Prudential
Bank and deposited $999,943. Immediately,
thereafter, Javier and her husband made
withdrawals from the account, deposited them in
several banks only to withdraw them later in an
apparent plan to conceal, launder and dissipate
the erroneously sent amount. One of the things
they bought was real property in California, USA
which was the subject of an action for recovery by
Mellon Bank. Later, it filed a case in the Philippines
for the recovery of the whole amount, including the
purchase price of the real property located in the
US.
Among other things, private respondents raised
the issue of whether or not, by virtue of the
principle of election of remedies, an action filed in
California, USA, to recover real property located
therein and to constitute a constructive trust on
said property precludes the filing in our jurisdiction
of an action to recover the purchase price of said
real property. SC ruled that the filing of a recovery
suit in the US does not preclude the filing of an
action in the Philippines for the recovery of the
purchase price.
With regard to our subject matter, Erlinda Baylosis
of the Philippine Veterans Bank and Pilologo Red,
Jr. of Hongkong and Shanghai Banking
Corporation were required to give testimonies with
regard to the deposits and checks issued by the
private respondents Javier, et. al.. These
testimonies were questioned for being immaterial
and irrelevant as well as covered by RA 1405 on
confidentiality.

HELD: Private respondents protestations that to
allow the questioned testimonies to remain on
record would be in violation of the provisions of RA

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1405 on the secrecy of bank deposits is
unfounded. Section 2 of said law allows the
disclosure of bank deposits in cases where the
money deposited is the subject matter of the
litigation. Inasmuch as the civil case is aimed at
recovering the amount converted by the Javiers for
their own benefit, necessarily, an inquiry into the
whereabouts of the illegally acquired amount
extends to whatever is concealed by being held or
recorded in the name of persons other than the
one responsible for the illegal acquisition.
6.PCIB V. COURT OF APPEALS
FACTS:
The case originated from an action filed with NLRC
by laborers of Marinduque Mining Corporation. The
said laborers obtained a favorable judgment
whereby the NLRC Commissioner issued a writ of
execution to satisfy the award of backwages
amounting to 205K against their employer Mining
Corporation.
The sheriff served the writ but nothing happened.
Hence, the Sheriff prepared on his own a Notice of
Garnishment addressed to six (6) banks, including
PCIB, directing the bank concerned to immediately
issue a check in the name of the Deputy Provincial
Sheriff in an amount equivalent to the amount of
the garnishment.
Atty. Alejano the in house counsel of the Mining
Corporation learned about the execution of
Judgment. Atty. Alejano called the bank manager,
Jose Hernas to withhold any claim against the
deposit account of Mining Corporation.
Subsequently, Sheriff went to the PCIB and
presented the Writ. Jose, upon knowing from the
Acting Provincial Sheriff that there was no
restraining order from the National Labor Relations
Commission and on the favorable advice of the
bank's legal counsel, issued a debit memo for the
full balance of the private respondent's account
with the petitioner bank. Thereafter, he issued a
manager's check in the name of the Deputy
Provincial Sheriff of Negros Occidental for the
amount of P37,466.18, which was the exact
balance of the private respondent's account as of
that day.
On the following day since there was no TRO
issued by NLRC, when sheriff asked for its
enforcement, Jose Hernas allowed the same.

Hence, Mining Corporartion, filed a complaint
before the RTC against Sheriff, PCIB, alleging that
the former's current deposit with the petitioner
bank was levied upon, garnished, and with undue
haste unlawfully allowed to be withdrawn, and
notwithstanding the alleged unauthorized
disclosure of the said current deposit and unlawful
release thereof, the latter have failed and refused
to restore the amount of P37,466.18 to the former's
account despite repeated demands.
Trial court rendered judgment in favor of
Marinduque Mining Corporation. On appeal, the
Court of Appeals initially reversed the trial courts
order but later affirmed it. Thus, this petition to the
SC.

ISSUE: Whether or not the petitioners violated
the Secrecy of Bank Deposits Act, when they
allowed the sheriff to garnish the deposit of
Marinduque Mining Corporation?

HELD: NO. The SC first ruled that the release
of the deposit by the bank was not done in undue
and indecent haste. We find the immediate release
of the funds by the petitioner bank on the strength
of the notice of garnishment and writ of execution,
whose issuance, absent any patent defect, enjoys
the presumption of regularity.
The SC likewise did not find any violation
whatsoever by the petitioners of RA 1405,
otherwise known as the Secrecy of Bank Deposits
Act. The Court, in China Banking Corporation v.
Ortega, had the occasion to dispose of this issue
when it stated, to wit:
It is clear from the discussion of the conference
committee report on Senate Bill No. 351 and
House Bill No. 3977, which later became Republic
Act No. 1405, that the prohibition against
examination of or inquiry into a bank deposit under
Republic Act No. 1405 does not preclude its being
garnished to insure satisfaction of a judgment.
Indeed, there is no real inquiry in such a case, and
if existence of the deposit is disclosed, the
disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever
within the intention of Congress to enable debtors
to evade payment of their just debts, even if
ordered by the Court, through the expedient of
converting their assets into cash and depositing
the same in a bank.
Since there is no evidence that the petitioners
themselves divulged the information that the
private respondent had an account with the
petitioner bank and it is undisputed that the said
account was properly the object of the notice of
garnishment and writ of execution carried out by
the deputy sheriff, a duly authorized officer of the

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court, we cannot therefore hold the petitioners
liable under RA 1405.
7. ALEXANDER VAN TWEST V. COURT OF
APPEALS
FACTS:
Alexander Van Twest (Van Twest) and Gloria
Anacieto (Gloria) opened a joint foreign currency
savings account with International Corporate Bank
(Interbank) to hold funds which "belonged entirely
and exclusively" to Van Twest, to "facilitate the
funding of certain business undertakings" of Van
Twest and Gloria and which funds were to be
"temporarily (held) in trust" by Gloria, who "shall
turnover the same to Van Twest upon demand."

Van Twest further alleged that withdrawals from
the account were always made through their joint
signatures; that when his business relationship
with Gloria turned sour, Gloria unilaterally closed
their joint account, withdrew the remaining balance
of Deutschmark (DM) 269,777.37 and placed the
money in her own personal account with the same
bank.

Hence, Van Twest filed a complaint against Gloria
and interbank for recovery of a sum of money.

Van Twest thus sought an injunctive writ to prevent
Gloria from withdrawing the money at any time and
thereby defeat Van Twests claim in pending
action in the above stated case.

TRO was issued. After the hearing, the enjoined
ordered Gloria and Interbank from effecting and
allowing withdrawals from the Foreign Currency
Deposit Account until further orders of the court.
But such order was questioned by Gloria by filing a
petition for Certiora before CA in order to annul the
RTCs order, which the CA granted. Van Twest
filed a MR but it was denied.
Hence, this present petition.
In a Resolution dated 12 August 1992, the Court
motu proprio issued an indefinite temporary
restraining order enjoining the Court of Appeals
from enforcing its questioned Decision and
Resolution.
7
The parties subsequently complied
with the requirement of the Court to submit
responsive pleadings in amplification of their
respective positions regarding the soundness of
the Court of Appeals' Decision under review.
8
The
Court then resolved to give due course to the
Petition and required the parties to submit their
memoranda. The parties did.
9

Deliberating on the present Petition for Review, the
Court considers that the Court of Appeals was in
reversible
Deliberating on the present Petition for Review, the
Court considers that the Court of Appeals was in
reversible error in annulling the writ of preliminary
injunction issued in petitioner's favor by the
Regional Trial Court.
In ruling that petitioner was not entitled to the
provisional remedy of preliminary injunction during
the pendency of Civil Case No. 90-659, the Court
of Appeals said:
ISSUE:

HELD: On a substantive, the Court holds that the
privileges extended by the statute cited by private
respondent are actually enjoyed, and are invocable
only, by the petitioner, both because private
respondent's transactions fall outside the ambit of
the statute, and because petitioner is the owner of
the foreign exchange fund subject of this case.
This conclusion is anchored on the consistent and
contemporaneous administrative construction by
the Central Bank of the basic statute, as
manifested in the relevant circulars issued by it in
implementation of that law, which are entitled to
great respect by the courts.
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Section 8 of R.A. No. 6426 (the Foreign Currency
Deposit Act), as amended by P.D. No. 1246, which
is still in force, provides:
Sec. 8. Secretary of Foreign Currency Deposits
All foreign currency deposits authorized under this
Act, as amended by Presidential Decree No. 1035,
as well as foreign currency deposits authorized
under Presidential Decree No. 1034, are hereby
declared as and considered of an absolutely
confidential nature and, except upon the written
permission of the depositor, in no instance shall
such foreign currency deposits be examined,
inquired or looked into by any person, government
official, bureau or office, whether judicial or
administrative or legislative or any other entity
whether public or private: Provided, however, that
said foreign currency shall be exempt from
attachment, garnishment, or any other order or
process of any court, legislative body, government
agency or any administrative body whatsoever.
26

(Emphasis supplied)
Section one hundred-two of Circular No. 960,

8
Series of 1983, provides in relevant part:
xxx xxx xxx
Sec. 102. Foreign currency funds ineligible for
deposits.
a. Foreign exchange purchased from authorized
agent banks in accordance with existing
regulations such as excess travel funds; unspent
financial assistance of dependents abroad of
Philippine residents; foreign exchange acquired
from any resident persons, firm, association and
corporation; and transfers to foreign currency
deposit account or receipt from another foreign
currency deposit account, whether for payment of
legitimate obligation or otherwise, are not eligible
for deposit under the System.
xxx xxx xxx
27

(Emphasis supplied)
This Circular was in force at the time private
respondent undertook her questioned transactions;
thus, such local transfer from the original joint
foreign currency account to another (personal)
foreign currency account, was not an eligible
foreign currency deposit within the coverage of
R.A. No. 6426 and not entitled to the benefit of the
confidentiality provisions of R.A. No. 6426.
Circular No. 960 was superseded by Circular No.
1318, Series of 1992, which did not reenact and
continue the administrative provision above-
mentioned (Section 102). Nevertheless, Section
seventy-four, Chapter seven of Circular No. 1318,
which deals with the foreign currency deposit
system, provides in relevant part;
Section 74. Definition of Terms. As used in this
Chapter, the following terms shall have the
meaning indicated unless the context clearly
indicates otherwise:
xxx xxx xxx
The definition of such other terms used in this
Chapter shall be consistent with the definition of
terms used under the Chapter on Offshore Banking
System.
28
(Emphasis supplied)
Section forty-nine, Chapter five of the same
Circular, dealing with the Offshore Banking
System, stated in part:
Section 49. Definition of Terms. . . .
xxx xxx xxx
d. "Deposit" shall refer to funds in foreign
currencies which are accepted and held by an
OBU business, with the obligation to return an
equivalent amount to the owner thereof, with or
without interest;
xxx xxx xxx
29

(Emphasis supplied)
In other words, although transfers from one foreign
currency deposit account to another foreign
currency deposit account in the Philippines are
now eligible deposits under the Central Bank's
Foreign Currency Deposit System, private
respondent is still not entitled to the confidentiality
provisions of the relevant circulars. For, as noted
earlier, private respondent is not the owner of such
foreign currency funds and her personal deposit
account is not, under Section 49 of Circular No.
1318, protected
8. ONATE V. ABROGAR
FACTS: Sun Life Assurance Company of Canada
(Sun Life) filed a complaint for a sum of money
with a prayer for the immediate issuance of a writ
of attachment against Brunner Corporation, Onate,
and Noel L. Dio. The following day the Judge
issued an order granting the issuance of a writ of
attachment.
Upon Sun Life's ex-parte motion, the trial court
amended the writ of attachment to reflect the
alleged amount of the indebtedness. That same
day, the Sheriff, accompanied by a representative
of Sun Life, attempted to serve summons and a
copy of the amended writ of attachment upon
Brunner corporation but was not able to do so
since there was no responsible officer to receive
the same.

Nonetheless, Sheriff proceeded, over a
period of several days, to serve notices of
garnishment upon several commercial banks and
financial institutions, and levied on attachment a
condominium unit and a real property belonging to
petitioner Oate.
Aggrieved party filed an "Urgent Motion to
Discharge/Dissolve Writ of Attachment." That
same day, Sun Life filed an ex-parte motion to
examine the books of accounts and ledgers of
petitioner Brunner Development Corporation
(Brunner, for brevity) at the Urban Bank and to

9
obtain copies thereof, which motion was granted
by respondent Judge. The examination of said
account was made. Hence, Brunner filed a petition
to nullify the proceeding.
Sun Life filed another motion for examination of
bank accounts, this time seeking the examination
of Account No. 0041-0277-03 with the Bank of
Philippine Islands (BPI) which, incidentally,
Brunner claim not to be owned by them and the
records of Philippine National Bank (PNB) with
regard to checks payable to Brunner. Sun Life
asked the court to order both banks to comply with
the notice of garnishment.

Brunner filed a petition to discharge the
attachment. But the judge denied it. Hence,
Brunners basic argument is that Judge acted with
grave abuse of discretion in issuing ex parte the
original and amended writs of preliminary
attachment and the corresponding notices of
garnishment and levy on attachment since the trial
court had not yet acquired jurisdiction over them;
and allowing the examination of the bank records
though no notice was given to them.
ISSUE: W/N Judge acted in excess of its
Jurisdiction in ordering the examination of
bank records despite no notice of the
examination were ever given to them.
HELD: The records show that, on January 21,
1992, respondent judge ordered the examination
of the books of accounts and ledgers of Brunner at
the Urban Bank, Legaspi Village branch, and on
January 30, 199 the records of account of
petitioner Oate at the BPI, even as he ordered the
PNB to produce the records regarding certain
checks deposited in it.
First. Sun Life defends these court orders on the
ground that the money paid by it to Brunner was
subsequently withdrawn from the Urban Bank after
it had been deposited by Brunner and then
transferred to BPI and to the unnamed account in
the petitioner Oate's account in the BPI and to the
unnamed account in the PNB.
The issue before the trial court, however, concerns
the nature of the transaction between petitioner
Brunner and Sun Life. In its complaint, Sun Life
alleges that Oate, in his personal capacity and as
president of Econ, offered to sell to Sun Life
P46,990,000.00 worth of treasury bills owned by
Econ and Brunner at the discounted price of
P39,526,500.82; that on November 27, 1991, Sun
Life paid the price by means of a check payable to
Brunner; that Brunner, through its president Noel L.
Dio, issued to it a receipt with undertaking to
deliver the treasury bills to Sun Life; and that on
December 4, 1991, Brunner and Dio delivered
instead a promissory note, dated November 27,
1991, in which it was made to appear that the
transaction was a money placement instead of sale
of treasury bills.
Thus the issue is whether the money paid to
Brunner was the consideration for the sale of
treasury bills, as Sun Life claims, or whether it was
money intended for placement, as petitioners
allege. Petitioners do not deny receipt of
P39,526,500.82 from Sun Life. Hence, whether the
transaction is considered a sale or money
placement does not make the money the "subject
matter of litigation" within the meaning of 2 of
Republic Act No. 1405 which prohibits the
disclosure or inquiry into bank deposits except "in
cases where the money deposited or invested is
the subject matter of litigation." Nor will it matter
whether the money was "swindled" as Sun Life
contends.
Second. The examination of bank books and
records cannot be justified under Rule 57, 10.
This provision states:
Sec. 10. Examination of party whose property is
attached and persons indebted to him or
controlling his property; delivery of property to
officer. Any person owing debts to the party
whose property is attached or having in his
possession or under his control any credit or other
personal property belonging to such party, may be
required to attend before the court in which the
action is pending, or before a commissioner
appointed by the court, and be examined on oath
respecting the same. The party whose property is
attached may also be required to attend for the
purpose of giving information respecting his
property, and may be examined on oath. The court
may, after such examination, order personal
property capable of manual delivery belonging to
him, in the possession of the person so required to
attend before the court, to be delivered to the clerk
of the court, sheriff, or other proper officer on such
terms as may be just, having reference to any lien
thereon or claims against the same, to await the
judgment in the action.
Since, as already stated, the attachment of
petitioners' properties was invalid, the examination
ordered in connection with such attachment must
likewise be considered invalid. Under Rule 57,
10, as quoted above, such examination is only
proper where the property of the person examined
has been validly attached.

10
9. SALVACION V. CENTRAL BANK
Facts: Greg Bartelli, an American tourist, was
arrested for committing four counts of rape and
serious illegal detention against Karen Salvacion.
Police recovered from him several dollar checks
and a dollar account in the China Banking Corp.
He was, however, able to escape from prison. In a
civil case filed against him, the trial court awarded
Salvacion moral, exemplary and attorneys fees
amounting to almost P1,000,000.00.
Salvacion tried to execute the judgment on the
dollar deposit of Bartelli with the China Banking
Corp. but the latter refused arguing that Section 11
of Central Bank Circular No. 960 exempts foreign
currency deposits from attachment, garnishment,
or any other order or process of any court,
legislative body, government agency or any
administrative body whatsoever.
Salvacion therefore filed this action for declaratory
relief in the Supreme Court.
ISSUE: Should Section 113 of Central Bank
Circular No. 960 and Section 8 of Republic Act
No. 6426, as amended by PD 1246, otherwise
known as the Foreign Currency Deposit Act be
made applicable to a foreign transient?

HELD: The provisions of Section 113 of Central
Bank Circular No. 960 and PD No. 1246, insofar as
it amends Section 8 of Republic Act No. 6426, are
hereby held to be INAPPLICABLE to this case
because of its peculiar circumstances.
Respondents are hereby required to comply with
the writ of execution issued in the civil case and to
release to petitioners the dollar deposit of Bartelli in
such amount as would satisfy the judgment.

Supreme Court ruled that the questioned law
makes futile the favorable judgment and award of
damages that Salvacion and her parents fully
deserve. It then proceeded to show that the
economic basis for the enactment of RA No. 6426
is not anymore present; and even if it still exists,
the questioned law still denies those entitled to due
process of law for being unreasonable and
oppressive. The intention of the law may be good
when enacted. The law failed to anticipate the
iniquitous effects producing outright injustice and
inequality such as the case before us.
The SC adopted the comment of the Solicitor
General who argued that the Offshore Banking
System and the Foreign Currency Deposit System
were designed to draw deposits from foreign
lenders and investors and, subsequently, to give
the latter protection. However, the foreign currency
deposit made by a transient or a tourist is not the
kind of deposit encouraged by PD Nos. 1034 and
1035 and given incentives and protection by said
laws because such depositor stays only for a few
days in the country and, therefore, will maintain his
deposit in the bank only for a short time.
Considering that Bartelli is just a tourist or a
transient, he is not entitled to the protection of
Section 113 of Central Bank Circular No. 960 and
PD No. 1246 against attachment, garnishment or
other court processes.
Further, the SC said: In fine, the application of the
law depends on the extent of its justice. Eventually,
if we rule that the questioned Section 113 of
Central Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or
process of any court, legislative body, government
agency or any administrative body whatsoever, is
applicable to a foreign transient, injustice would
result especially to a citizen aggrieved by a foreign
guest like accused Greg Bartelli. This would
negate Article 10 of the New Civil Code which
provides that in case of doubt in the interpretation
or application of laws, it is presumed that the
lawmaking body intended right and justice to
prevail.

10. UNION BANK V. COURT OF APPEALS
FACTS: An amount amounting 1M was drawn
against an account with Allied Banking payable to
the order of Alvarez. Mr. Alvarez deposited the
check with Union Bank who credited 1M to the
account of Mr. Alvarez.
Unionbank sent the check for clearing.
When the check was presented for payment, a
clearing discrepancy was committed by Union
Banks clearing staff when the amount of One
Million Pesos (P1,000,000.00) was erroneously
under-encoded to One Thousand Pesos
(P1,000.00) only.
Unionbank only discovered the under-
encoding almost a year later. Thus, Union Bank
Notified Allied Bank of the discrepancy by way of a
charge slip for Nine Hundred Ninety-Nine
Thousand Pesos (P999,000.00) for automatic
debiting against the account of Allied Bank. Allied
Banking, however, refused to accept the charge
slip since [the] transaction was completed per
your [Union Banks] original instruction and clients
account is now insufficiently funded.
Subsequently, Union Bank filed a complaint
against Allied Bank before the PCHC Arbitration
Committee (Arbicom).
Unionbank filed in RCT a petition for the
examination of the said account. The RTC held

11
that the case involve does not fall under any of the
foregoing exceptions to warrant a disclosure of or
inquiry into the ledgers/books of account of Allied
Checking Account No. 111-01854-8. UNionbanks
complaint primarily hing[e]s on the alleged
deliberate violation by Allied Bank Corporation of
the provisions of the Clearing House Rules and as
principal reliefs, it seeks for the recovery of
amounts of money as a consequence of an alleged
under-coding.
On appeal to CA, the same affirmed RTCs
decision, ruling that the case was not one where
the money deposited is the subject matter of the
litigation. We see no cogent reason to depart from
the time-honored general banking rule that all
deposits of whatever nature with banks are
considered of absolutely confidential nature and
may not be examined, inquired or looked into by
any person, government official, bureau or office
and corollarily, that it is unlawful for any official or
employee of a bank to disclose to any person any
information concerning deposits.
Nowhere in petitioner collecting banks complaint
filed before the PCHC does it mention of the
amount it seeks to recover from Account No. 0111-
018548 itself, but speaks of P999,000.00 only as
an incident of its alleged opportunity losses and
interest as a result of its own employees admitted
error in encoding the check.

ISSUE: W/N The subject matter involves money
deposited.

HELD: Failing in that duty, petitioner holds private
respondent directly liable for the P999,000.00 and
other damages. It does not appear that petitioner
is seeking reimbursement from the account of the
drawer. This much is evident in petitioners
complaint before the Arbicom.
xxx plaintiffs cause of action against defendant
arose from defendants deliberate violation of the
provisions of the PCHC Rule Book, Sec. 25.3,
specifically on Under-Encoding of check amounting
to P1,000,000.00 drawn upon defendants Tondo
Branch which was deposited with plaintiff herein
sometime on May 20, 1990. From the check
amount of P1,000,000.00, it was instead
erroneously encoded at P1,000.00 which
defendant as the receiving bank thereof, never
called nor notified the plaintiff of the error
committed thus causing actual losses to plaintiff in
the principal amount of P999,000.00 exclusive of
opportunity losses and interest thereon
whatsoever. xxx[8]
Petitioner even requested private respondents
Branch Manager for reimbursement from private
respondents account through the automatic
debiting system.
Hence, the amount actually debited from the
subject account becomes very material and
germane to petitioners claim for reimbursement as
it is only upon examination of subject account can
it be proved that indeed a discrepancy in the
amount credited to petitioner was committed,
thereby, rendering respondent Allied Bank liable to
petitioner for the deficiency. The money deposited
in aforesaid account is undeniably the subject
matter of the litigation since the issue in the
Arbicom case is whether respondent Bank should
be held liable to petitioner for reimbursement of the
amount of money constituting the difference
between the amount of the check and the amount
credited to petitioner, that is, P999,000.00, which
has remained deposited in aforesaid account.
On top of the allegations in the complaint, which
can be verified only by examining the subject bank
account, the defense of respondent Allied Bank
that the reimbursement cannot be made since
clients account is not sufficiently funded at the
time petitioner sent its Charge Slip, bolsters
petitioners contention that the money in subject
account is the very subject matter of the pending
Arbicom case.
Indeed, to prove the allegations in its Complaint
before the PCHC Arbitration Committee, and to
rebut private respondents defense on the matter,
petitioner needs to determine:
1. how long respondent Allied Bank had willfully or
negligently allowed the difference of P999,000.00
to be maintained in the subject account without
remitting the same to petitioner;
2. whether indeed the subject account was no
longer sufficiently funded when petitioner sent its
charge slip for reimbursement to respondent bank
on May 7, 1991; and
3. whether or not respondent Allied Banks
actuations in refusing to immediately reimburse the
discrepancy was attended by good or bad faith.
In other words, only a disclosure of the pertinent
details and information relating to the transactions
involving subject account will enable petitioner to
prove its allegations in the pending Arbicom
case. xxx[14]

12
In short, petitioner is fishing for information
so it can determine the culpability of private
respondent and the amount of damages it can
recover from the latter. It does not seek recovery
of the very money contained in the deposit. The
subject matter of the dispute may be the amount of
P999,000.00 that petitioner seeks from private
respondent as a result of the latters alleged failure
to inform the former of the discrepancy; but it is not
the P999,000.00 deposited in the drawers
account. By the terms of R.A. No. 1405, the
money deposited itself should be the subject
matter of the litigation.
That petitioner feels a need for such information in
order to establish its case against private
respondent does not, by itself, warrant the
examination of the bank deposits. The necessity
of the inquiry, or the lack thereof, is immaterial
since the case does not come under any of the
exceptions allowed by the Bank Deposits Secrecy
Act.

11. MARQUEZ V. DESIERTO
FACTS: Marquez received an order from
Ombudsman Desierto, ordering Marquez to
produce several bank documents for purposed of
inspection in CAMERA relative to various accounts
maintained at Union Bank of the Philippines
(UBP). The accounts to be inspected were
involved in a case pending with the Ombudsman
which involves violation of RA 3019 Sec. 3 (e) and
(g) relative to the Joint Venture Agreement
between the Public Estates Authority and AMARI.
The Order was grounded onOmbudsman Act of
1989) which provides that OMBs power includes
the power to examine and have access to bank
accounts and records; and to punish contempt who
will not obey the orders.
Petitioner agreed to an in camera inspection set
on June 3, 1998. However, on June 4, 1998,
Marquez wrote the Ombudsman that the accounts
in question could not readily be identified since the
checks were issued in cash or bearer, and asked
for time to respond to the order. Marquez surmised
that these accounts had long been dormant, hence
were not covered by the new account number
generated by the UB system, thus sought to verify
from the Interbank records archives for the
whereabouts of these accounts.
Marquez together with UBP filed a petition for
declaratory relief, prohibition and injunction with
the Makati RTC against the Ombudsman allegedly
because the Ombudsman and other persons
acting under his authority were continuously
harassing her to produce the bank documents
relative to the accounts in question and threatening
her to cite in contempt. But it was denied by RTC.
An order of contempt was issued. Marquez
reiterated that she had no intention to disobey the
orders of the Ombudsman. However, she wanted
to be clarified as to how she would comply with the
orders without her breaking any law, particularly
RA 1405.
ISSUE: Whether or not the order of the
Ombudsman to have an in camera inspection of
the questioned account is allowed as an exception
to the law on secrecy of bank deposits (RA 1405).
HELD: An examination of the secrecy of bank
deposits law (RA 1405) would reveal the following
exceptions:
1. Where the depositor consents in writing;
2. Impeachment case;
3. By court order in bribery or dereliction of duty
cases against public officials;
4. Deposit is subject of litigation;
5. Sec. 8, R. A. No. 3019, in cases of unexplained
wealth as held in the case of PNB vs. Gancayco
We rule that before an in camera inspection may
be allowed, there must be a pending case before a
court of competent jurisdiction. Further, the
account must be clearly identified, the inspection
limited to the subject matter of the pending case
before the court of competent jurisdiction. The
bank personnel and the account holder must be
notified to be present during the inspection, and
such inspection may cover only the account
identified in the pending case.
In Union Bank of the Philippines v. Court of
Appeals, we held that Section 2 of the Law on
Secrecy of Bank Deposits, as amended, declares
bank deposits to be absolutely confidential
except:
(1) In an examination made in the course of a
special or general examination of a bank that is
specifically authorized by the Monetary Board after

13
being satisfied that there is reasonable ground to
believe that a bank fraud or serious irregularity has
been or is being committed and that it is necessary
to look into the deposit to establish such fraud or
irregularity,
(2) In an examination made by an independent
auditor hired by the bank to conduct its regular
audit provided that the examination is for audit
purposes only and the results thereof shall be for
the exclusive use of the bank,
(3) Upon written permission of the depositor,
(4) In cases of impeachment,
(5) Upon order of a competent court in cases of
bribery or dereliction of duty of public officials, or
(6) In cases where the money deposited or
invested is the subject matter of the litigation
In the case at bar, there is yet no pending litigation
before any court of competent authority. What is
existing is an investigation by the office of the
Ombudsman. In short, what the Office of the
Ombudsman would wish to do is to fish for
additional evidence to formally charge Amado
Lagdameo, et. al., with the Sandiganbayan.
Clearly, there was no pending case in court which
would warrant the opening of the bank account for
inspection.
Zones of privacy are recognized and protected in
our laws. The Civil Code provides that every
person shall respect the dignity, personality,
privacy and peace of mind of his neighbors and
other persons and punishes as actionable torts
several acts for meddling and prying into the
privacy of another. It also holds a public officer or
employee or any private individual liable for
damages for any violation of the rights and liberties
of another person, and recognizes the privacy of
letters and other private communications. The
Revised Penal Code makes a crime of the violation
of secrets by an officer, the revelation of trade and
industrial secrets, and trespass to dwelling.
Invasion of privacy is an offense in special laws
like the Anti-Wiretapping Law, the Secrecy of
Bank Deposits Act, and the Intellectual Property
Code.
Ombudsman is ordered to cease and desist from
requiring Union Bank Manager Lourdes T.
Marquez, or anyone in her place to comply with the
order dated October 14, 1998, and similar orders.

12. OFFICE OF THEOMBUDSMAN V. IBAY
FACTS:
OMB conducted an investigation on the alleged
"scam" on the Public Estates Authority-Amari
Coastal Bay Development Corporation. Initial result
of the investigation revealed that the alleged
anomaly was committed through the issuance of
checks which were subsequently deposited in
several financial institutions. OMB issued an Order
directing Lourdes Marquez, branch manager of
Union Bank of the Philippines to produce several
bank documents for inspection relative to certain
Account maintained in the said branch.
The documents referred to include bank account
application forms, signature cards, transactions
history, bank statements, bank ledgers, debit and
credit memos, deposit and withdrawal slips,
application for purchase of manager's checks,
used manager's checks and check microfilms.
The inspection would be done "in camera" wherein
the bank records would be examined without
bringing the documents outside the bank premises.
Its purpose was to identify the specific bank
records prior to the issuance of the required
information not in any manner needed in or
relevant to the investigation.
Marquez failed to comply with OMB's order. She
explained that the subject accounts pertain to
International Corporate Bank (Interbank) which
merged with Union Bank in 1994.

Marquez then filed a petition for declaratory relief
with an application for temporary restraining order
and/or preliminary injunction before the Regional
Trial Court . In her petition, private respondent
averred that under Sections 2 and 3 of R.A. 1405
(Law on Secrecy of Bank Deposits), she had the
legal obligation not to divulge any information
relative to all deposits of whatever nature with
banks in the Philippines.
ISSUE: W/N OMB can inquire into the
questioned accounts

HELD: In any event, the relief being sought by
private respondent in her action for declaratory

14
relief before the RTC of Makati City has been
squarely addressed by our decision in Marquez vs.
Desierto.
8
In that case, we ruled that before an in
camera inspection of bank accounts may be
allowed, there must be a pending case before a
court of competent jurisdiction. Further, the
account must be clearly identified, and the
inspection limited to the subject matter of the
pending case before the court of competent
jurisdiction. The bank personnel and the account
holder must be notified to be present during the
inspection, and such inspection may cover only the
account identified in the pending case. In the
present case, since there is no pending litigation
yet before a court of competent authority, but only
an investigation by the Ombudsman on the so-
called "scam", any order for the opening of the
bank account for inspection is clearly premature
and legally unjustified.
13. INTENGAN V. COURT OF APPEALS
FACTS:
Citibank filed a complaint for violation of
corporation code against its 2 officers namely
Santos and Genuino.

Citibank Vice-president Lim, he alleges that he was
assigned by the management of the Citibank to
investigate certain anomalous and highly irregular
activities of Treasurer of the Global Consumer
Group of the bank, wherein Santos was the VP
and Genuino was the Asst. VP and also performs
the function of Account Officer.

It appeared that Santos and Genuino have been
actively engaged in business endeavors that were
in conflict with the business of the bank.

It was found that with the use of two (2) companies
in which they have personal financial interest,
namely Torrance Development Corporation and
Global Pacific Corporation, they managed or
caused existing bank clients/depositors to divert
their money from Citibank, N.A., such as those
placed in peso and dollar deposits and money
placements, to products offered by other
companies that were commanding higher rate of
yields.

This was done by first transferring bank clients
monies to Torrance and Global which in turn
placed the monies of the bank clients in securities,
shares of stock and other certificates of third
parties.

It also appeared that out of these transactions, Mr.
Dante L. Santos and Ms. Marilou Genuino derived
substantial financial gains.

In the course of the investigation, it was found that
the bank clients among of them is Intengan, which
Mr. Santos and Ms. Genuino helped/caused to
divert their Dollar deposits/money placements with
Citibank, NA. to Torrance and Global (their family
corporations) for subsequent investment in
securities, shares of stocks and debt papers.
It appears that Intengan have long standing
accounts with Citibank, N.A. in savings/dollar
deposits and/or in trust accounts and/or money
placements. Hence, a complaint was filed against
Santos and Genuino for violation of Section 31 of
the Corporation Code in acquiring any interest
adverse to the corporation in respect of any matter
which has been reposed in him in confidence.
The complaint was supported by bank records
presented by Lim, which revealed the deposits of
herein petitioner.
As an incident to the foregoing, Intengan and other
depositors filed their respective motions for the
exclusions and physical withdrawal of their bank
records that were attached in the complaint.
Thereafter, the provincial Prosecutor directed the
filing of information against Lim et. Al, for the
alleged violation of Bank Secrecy Law.
ISSUE: Whether or not Lim et. Al. are liable for
violation of Secrecy of Bank Deposits Act, RA
1405.
HELD: The finest legal minds in the country - from
the parties respective counsel, the Provincial
Prosecutor, the Department of Justice, the Solicitor
General, and the Court of Appeals - all appear to
have overlooked a single fact which dictates the
outcome of the entire controversy. A circumspect
review of the record shows us the reason. The
accounts in question are U.S. dollar deposits;
consequently, the applicable law is not Republic
Act No. 1405 but Republic Act (RA) No. 6426,
known as the Foreign Currency Deposit Act of the
Philippines, section 8 of which provides:
Sec. 8. Secrecy of Foreign Currency Deposits.- All
foreign currency deposits authorized under this
Act, as amended by Presidential Decree No. 1035,
as well as foreign currency deposits authorized
under Presidential Decree No. 1034, are hereby

15
declared as and considered of an absolutely
confidential nature and, except upon the written
permission of the depositor, in no instance shall
such foreign currency deposits be examined,
inquired or looked into by any person, government
official bureau or office whether judicial or
administrative or legislative or any other entity
whether public or private: Provided, however, that
said foreign currency deposits shall be exempt
from attachment, garnishment, or any other order
or process of any court, legislative body,
government agency or any administrative body
whatsoever.[21 (italics supplied)
Thus, under R.A. No. 6426 there is only a single
exception to the secrecy of foreign currency
deposits, that is, disclosure is allowed only upon
the written permission of the depositor.
Incidentally, the acts of private respondents
complained of happened before the enactment on
September 29, 2001 of R.A. No. 9160 otherwise
known as the Anti-Money Laundering Act of 2001.
A case for violation of Republic Act No. 6426
should have been the proper case brought against
private respondents. Private respondents Lim and
Reyes admitted that they had disclosed details of
petitioners dollar deposits without the latters written
permission. It does not matter if that such
disclosure was necessary to establish Citibanks
case against Dante L. Santos and Marilou
Genuino. Lims act of disclosing details of
petitioners bank records regarding their foreign
currency deposits, with the authority of Reyes,
would appear to belong to that species of criminal
acts punishable by special laws, called malum
prohibitum.

A violation of Republic Act No. 6426 shall subject
the offender to imprisonment of not less than one
year nor more than five years, or by a fine of not
less than five thousand pesos nor more than
twenty-five thousand pesos, or both.[24 Applying
Act No. 3326, the offense prescribes in eight
years.[25 Per available records, private
respondents may no longer be haled before the
courts for violation of Republic Act No. 6426.
Private respondent Vic Lim made the disclosure in
September of 1993 in his affidavit submitted before
the Provincial Fiscal.[26 In her complaint-
affidavit,[27 Intengan stated that she learned of the
revelation of the details of her foreign currency
bank account on October 14, 1993. On the other
hand, Neri asserts that she discovered the
disclosure on October 24, 1993.[28 As to Brawner,
the material date is January 5, 1994.[29 Based on
any of these dates, prescription has set in.[30
The filing of the complaint or information in the
case at bar for alleged violation of Republic Act No.
1405 did not have the effect of tolling the
prescriptive period. For it is the filing of the
complaint or information corresponding to the
correct offense which produces that effect.[31
It may well be argued that the foregoing
disquisition would leave petitioners with no remedy
in law. We point out, however, that the
confidentiality of foreign currency deposits
mandated by Republic Act No. 6426, as amended
by Presidential Decree No. 1246, came into effect
as far back as 1977. Hence, ignorance thereof
cannot be pretended. On one hand, the existence
of laws is a matter of mandatory judicial notice;[32
on the other, ignorantia legis non excusat.[33 Even
during the pendency of this appeal, nothing
prevented the petitioners from filing a complaint
charging the correct offense against private
respondents. This was not done, as everyone
involved was content to submit the case on the
basis of an alleged violation of Republic Act No.
1405 (Bank Secrecy Law), however, incorrectly
invoked.

14. REPUBLIC OF THE PHILS V. CABRINI
GREEN and ROSS

In the exercise of its power under Section 10 of
RA 9160, the Anti-Money Laundering Council
(AMLC) issued freeze orders against various bank
accounts of respondents. The frozen bank
accounts were previously found prima facie to be
related to the unlawful activities of respondents.

Under RA 9160, a freeze order issued by the
AMLC is effective for a period not exceeding 15
days unless extended upon order of the court.
Accordingly, before the lapse of the period of
effectivity of its freeze orders, the AMLC[filed with
the Court of Appeals (CA) various petitions for
extension of effectivity of its freeze orders.

The AMLC invoked the jurisdiction of
the CA in the belief that the power given to the CA
to issue a temporary restraining order (TRO) or writ
of injunction against any freeze order issued by the
AMLC carried with it the power to extend the
effectivity of a freeze order. In other words, the
AMLC interpreted the phrase upon order of the
court to refer to the CA.

However, the CA disagreed with the
AMLC and dismissed the petitions. It uniformly
ruled that it was not vested by RA 9160 with the
power to extend a freeze order issued by the
AMLC.

16

Hence, these consolidated petitions
which present a common issue: which court has
jurisdiction to extend the effectivity of a freeze
order?

ISSUE: Who has jurisdiction over the case?

HELD: During the pendency of these petitions, or
on March 3, 2003, Congress enacted RA 9194 (An
Act Amending Republic Act No. 9160, Otherwise
Known as the Anti-Money Laundering Act of
2001).[6] It amended Section 10 of RA 9160 as
follows:

SEC. 7. Section 10 of [RA 9160]
is hereby amended to read as
follows:

SEC. 10. Freezing of Monetary
Instrument or Property. The
Court of Appeals, upon
application ex parte by the
AMLC and after determination
that probable cause exists that
any monetary instrument or
property is in any way related
to an unlawful activity as
defined in Sec. 3(i) hereof,
may issue a freeze order
which shall be effective
immediately. The freeze order
shall be for a period of twenty
(20) days unless extended by
the court.[7] (emphasis
supplied)

Section 12 of RA 9194 further provides:

SEC 12. Transitory
Provision. Existing freeze
orders issued by the AMLC
shall remain in force for a
period of thirty (30) days
after the effectivity of this
Act, unless extended by the
Court of Appeals.
(emphasis supplied)

On April 3, 2003, the Office of the
Solicitor General (OSG) filed a Very Urgent
Motion to Remand Cases to the Honorable Court
of Appeals (with Prayer for Issuance of Temporary
Restraining Order and/or Writ of Preliminary
Injunction).[8] The OSG prayed for the remand of
these cases to the CA pursuant to RA 9194. It also
asked for the issuance of a TRO on the ground
that the freeze orders would be automatically lifted
on April 22, 2003 by operation of law and the
money or deposits in the concerned bank accounts
may be taken out of the reach of law enforcement
authorities. The OSG further manifested that
pending in the CA were 29 other cases involving
the same issue. It requested that these cases be
included in the coverage of the TRO prayed for.

On April 21, 2003, the Court issued a
TRO in these cases and in all other similar cases
pending before all courts in the Philippines.
Respondents, the concerned banks, and all
persons acting in their behalf were directed to give
full force and effect to existing freeze orders until
further orders from this Court.

On May 5, 2003, the OSG informed the
Court that on April 22, 2003 the CA issued a
resolution in CA-G.R. SP No. 69371 (the subject of
G.R. No. 154694) granting the petition for
extension of freeze orders.[9] Hence, the OSG
prayed for the dismissal of G.R. No. 154694 for
being moot. It also reiterated its earlier prayer for
the remand of G.R. Nos. 154522, 155554 and
155711 to the CA.

The amendment by RA 9194 of RA 9160 erased
any doubt on the jurisdiction of the CA over the
extension of freeze orders. As the law now stands,
it is solely the CA which has the authority to issue
a freeze order as well as to extend its effectivity. It
also has the exclusive jurisdiction to extend
existing freeze orders previously issued by the
AMLC vis--vis accounts and deposits related to
money-laundering activities.

16. EJERCITO V. SANDIGANBAYAN

FACTS:
In connection with the plunder case filed
against Estrada, Special Prosecutor filed before
the Sandiganbayan a Request for Issuance of
Subpoena Duces Tecum for the issuance of a
subpoena directing the President of Export and
Industry Bank (EIB, formerly Urban Bank) or
his/her authorized representative to produce the
following documents during the hearings:

I. For Trust Account No. 858;
1. Account Opening Documents;
2. Trading Order No. 020385 dated January 29,
1999;
3. Confirmation Advice TA 858;
4. Original/Microfilm copies, including the dorsal
side, of the following:
a. Bank of Commerce MC # 0256254 in
the amount of P2,000,000.00;

17
b. Urban bank Corp. MC # 34181 dated
November 8, 1999 in the amount
of P10,875,749.43;
c. Urban Bank MC # 34182 dated
of P42,716,554.22;
d. Urban Bank Corp. MC # 37661 dated
of P54,161,496.52;
5. Trust Agreement dated January 1999: Trustee:
Joseph Victor C. Ejercito Nominee:
URBAN BANK-TRUST DEPARTMENT
Special Private Account No. (SPAN) 858;
and
6. Ledger of the SPAN # 858.
II. For Savings Account No. 0116-17345-9
1. Signature Cards; and
2. Statement of Account/Ledger

The special prosecution panel also filed a request
for the issuance of Subpoena Duces Tecum/Ad
tesificandum directed to the authorized
representatives of Equitable PCI to produce
statements of account pertaining to certain
accounts in the name of JOSE VELARDE and to
testify. All requests were granted accordingly.

Upon learning of the said requests, Estrada wrote
a letter to Sandiganbayn asking that the issuance
of the subpoena be held in abeyance for at least
ten (10) days to enable him to take appropriate
legal steps in connection with the prosecutions
request for the issuance of subpoena concerning
his (my) accounts.

Then, Estrada filed a Motion to Quash Subpoena
Duces Tecum/Ad Testificandum praying that the
subpoenas previously issued to the President of
the EIB be quashed. In his Motion to Quash,
petitioner claimed that his bank accounts are
covered by R.A. No. 1405 (The Secrecy of Bank
Deposits Law) and do not fall under any of the
exceptions stated therein. He further claimed that
the specific identification of documents in the
questioned subpoenas, including details on dates
and amounts, could only have been made possible
by an earlier illegal disclosure thereof by the EIB
and the Philippine Deposit Insurance Corporation
(PDIC) in its capacity as receiver of the then Urban
Bank.

Before the motion was resolved by the
Sandiganbayan, the prosecution filed another
Request for the Issuance of Subpoena Duces
Tecum/Ad Testificandum, again to direct the
President of the EIB to produce, on the hearings
scheduled, additional documents for Savings
Account No. 1701-00646-1. The prosecution also
filed a Request for the Issuance of Subpoena
Duces Tecum/Ad Testificandum, directed to Aurora
C. Baldoz, Vice President-CR-II of the PDIC for her
to produce certain
The subpoena prayed for in both requests were
issued by the Sandiganbayan.
Consequently, Ejercito filed an Urgent Motion to
Quash Subpoenae Duces Tecum/Ad
Testificandum praying that the subpoena directed
to the bank be quashed for the same reasons
which he cited in the motion to quash he had
earlier filed, which the Sandiganbayan, in a
Resolution, denied. Ejercito filed the present
petition for certiorari under Rule 65 assailing the
Sandiganbayan
Resolutions denying his Motions to Quash
Subpoenas Duces Tecum/Ad Testificandum, and
Resolution denying his Motion for Reconsideration
of the first two resolutions.
People posits that Trust Account No. 858 may be
inquired into, not merely because it falls under the
exceptions to the coverage of R.A. 1405, but
because it is not even contemplated therein. To
People, the law applies only to deposits which
strictly means the money delivered to the bank by
which a creditor-debtor relationship is created
between the depositor and the bank.
ISSUE: Whether petitioners Trust Account
No. 858 is covered by the term deposit as
used in R.A. 1405;

Whether petitioners Trust Account No. 858 and
Savings Account No. 0116-17345-9 are
excepted from the protection of R.A. 1405; and

Whether the extremely-detailed information
contained in the Special Prosecution Panels
requests for subpoena was obtained through a
prior illegal disclosure of petitioners bank
accounts, in violation of the fruit of the
poisonous tree doctrine.
HELD:
The Sandiganbayan did not commit grave abuse of
discretion in issuing the challenged subpoena for
documents pertaining to Ejercitos Trust Account
No. 858 and Savings Account No. 0116-17345-9
for the following reasons:
1. Plunder is excepted from the protection of RA
1405 otherwise known as The Secrecy of Bank
Deposits Law.

18
R.A. 1405 is broad enough to cover Trust Account
No. 858. However, the protection afforded by the
law is not absolute. There being recognized
exceptions thereto, as above-quoted Section 2
provides. In the present case, two exceptions
apply, to wit: (1) the examination of bank accounts
is upon order of a competent court in cases of
bribery or dereliction of duty of public officials, and
(2) the money deposited or invested is the subject
Ejercito contends that since plunder is neither
bribery nor dereliction of duty, his accounts are not
excepted from the protection of R.A. 1405.
Philippine National Bank v. Gancayco holds
otherwise:
Cases of unexplained wealth are similar to cases
of bribery or dereliction of duty and no reason is
seen why these two classes of cases cannot be
excepted from the rule making bank deposits
confidential. The policy as to one cannot be
different from the policy as to the other. This policy
expresses the notion that a public office is a public
trust and any person who enters upon its
discharge does so with the full knowledge that his
life, so far as relevant to his duty, is open to public
scrutiny.
Undoubtedly, cases for plunder involve
unexplained wealth. The crime of bribery and the
overt acts constitutive of plunder are crimes
committed by public officers, and in either case the
The petition is DISMISSED.
Noble idea that a public office is a public trust and
any person who enters upon its discharge does so
with the full knowledge that his life, so far as
relevant to his duty, is open to public scrutiny
applies with equal force.
Also, the plunder case now pending with the
Sandiganbayan necessarily involves an inquiry into
the whereabouts of the amount purportedly
acquired illegally by former President Joseph
Estrada. The meaning of the phrase subject
matter of the litigation as used in R.A. 1405 is
explained in Union Bank of the Philippines v. Court
of Appeals, thus:
In Mellon Bank, N.A. v. Magsino, where the
petitioner bank inadvertently caused the transfer of
the amount of US$1,000,000.00 instead of only
US$1,000.00, the Court sanctioned the
examination of the bank accounts where part of
the money was subsequently caused to be
deposited:
x x x Section 2 of [Republic Act No. 1405] allows
the disclosure of bank deposits in cases where the
money deposited is the subject matter of the
litigation. Inasmuch as Civil Case No. 26899 is
aimed at recovering the amount converted by the
Javiers for their own benefit, necessarily, an inquiry
into the whereabouts of the illegally acquired
amount extends to whatever is concealed by being
held or recorded in the name of persons other than
the one responsible for the illegal acquisition.
Clearly, Mellon Bank involved a case where the
money deposited was the subject matter of the
litigation since the money deposited was the very
thing in dispute. x x x
In light then of the Courts pronouncement in Union
Bank, the subject matter of the litigation cannot be
limited to bank accounts under the name of
President Estrada alone, but must include those
accounts to which the money purportedly acquired
illegally or a portion thereof was alleged to have
been transferred. Trust Account No. 858 and
Savings Account No. 0116-17345-9 in the name of
Ejercito fall under this description and must thus be
part of the subject matter of the litigation.
Hence, these accounts are no longer protected by
the Secrecy of Bank Deposits Law, there being two
exceptions to the said law applicable in this case,
namely: (1)the examination of bank accounts is
upon order of a competent court in cases of bribery
or dereliction of duty of public officials, and (2)the
money deposited or invested is the subject matter
of the litigation. Exception (1) applies since the
plunder case pending against former President
Estrada is analogous to bribery or dereliction of
duty, while exception (2) applies because the
money deposited in Ejercitos bank accounts is
said to form part of the subject matter of the same
plunder case.
2. The fruit of the poisonous tree doctrine or the
exclusionary rule is inapplicable in cases of
unlawful examination of bank accounts.
Ejercitos attempt to make the exclusionary rule
applicable to the instant case fails. R.A. 1405, it
bears noting, nowhere provides that an unlawful
examination of bank accounts shall render the
evidence obtained therefrom inadmissible in
evidence. Section 5 of R.A. 1405 only states that
[a]ny violation of this law will subject the offender
upon conviction, to an imprisonment of not more
than five years or a fine of not more than twenty
thousand pesos or both, in the discretion of the
court.

19
Even assuming arguendo, however, that the
exclusionary rule applies in principle to cases
involving R.A. 1405, the Court finds no reason to
apply the same in this particular case. The fruit of
the poisonous tree doctrine presupposes a
violation of law. If there was no violation of R.A.
1405 in the instant case, then there would be no
poisonous tree to begin with, and, thus, no
reason to apply the doctrine.
Hence, the fruit of the poisonous tree principle,
which states that once the primary source (the
tree) is shown to have been unlawfully obtained,
any secondary or derivative evidence (the fruit)
derived from it is also inadmissible, does not apply
in this case. In the first place, R.A. 1405 does not
provide for the application of this rule. Moreover,
there is no basis for applying the same in this case
since the primary source for the detailed
information regarding Joseph Victor G. Ejercitos
bank accounts the investigation previously
conducted by the Ombudsman was lawful.
3. The extremely-detailed information was
obtained by the Ombudsman from sources
independent of its previous inquiry.
In a further attempt to show that the subpoenas
issued by the Sandiganbayan are invalid and may
not be enforced, Ejercito contends that the
information found therein, given their extremely
detailed character, could only have been obtained
by the Special Prosecution Panel through an illegal
disclosure by the bank officials concerned. He thus
claims that, following the fruit of the poisonous
tree doctrine, the subpoenas must be quashed.
He further contends that even if, as claimed by
People, the extremely-detailed information was
obtained by the Ombudsman from the bank
officials concerned during a previous investigation
of the charges against President Estrada, such
inquiry into his bank accounts would itself be
illegal.
How the Ombudsman conducted his inquiry into
the bank accounts of Ejercito is recounted by the
People of the Philippines. At all events, even if the
challenged subpoenas are quashed, the
Ombudsman is not barred from requiring the
production of the same documents based solely on
information obtained by it from sources
independent of its previous inquiry. The
Ombudsman may conduct on its own the same
inquiry into the subject bank accounts that it earlier
conducted last February-March 2001, there being
a plunder case already pending against former
President Estrada. To quash the challenged
subpoenas would, therefore, be pointless since the
Ombudsman may obtain the same documents by
another route. Upholding the subpoenas avoids an
unnecessary delay in the administration of justice.

17. CHINA BANK CORPORATION V. COURT OF
APPEALS

FACTS:
A Complaint for recovery of sums of money and
annulment of sales of real properties and shares of
stock was filed by Jose Joseph Gotianuy against
his son-in-law, George Dee, and his daughter,
Mary Margaret Dee, before the Regional Trial
Court.
Jose Gotianuy accused his daughter Mary
Margaret Dee of stealing his US dollar deposits
with Citibank N.A. amounting to not less than
P35,000,000.00 and US$864,000.00.
Mary Margaret Dee received these amounts from
Citibank N.A. through checks which she allegedly
deposited at China Bank. He likewise accused his
son-in-law, George Dee, husband Mary Margaret,
of transferring his real properties and shares of
stock in George Dees name without any
consideration.
Jose Gotianuy, died during the pendency of the
case before the trial court.
He was substituted by his daughter, Elizabeth
Gotianuy Lo.
Elizabeth presented the US Dollar checks
withdrawn by Mary Margaret Dee from his US
dollar placement with Citibank.
Elizabeth filed a motion with trial court for the
issuance of subpoena to employees of China Bank
to testify on the case. The court granted this. China
Bank moved for a reconsideration. The court
partially granted the motion however allowed the
employees to testify. Hence, China Bank filed a
certiorari before the CA. But CA affirmed RTCs
decision.
ISSUE: W/N a foreign Currency Deposit may be
look into?

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

The Court of Appeals, in allowing the
inquiry, considered Jose Gotianuy, a co-depositor

20
of Mary Margaret Dee. It reasoned that since Jose
Gotianuy is the named co-payee of the latter in the
subject checks, which checks were deposited in
China Bank, then, Jose Gotianuy is likewise a
depositor thereof. On that basis, no written
consent from Mary Margaret Dee is necessitated.

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

The following facts are established: (1) Jose
Gotianuy and Mary Margaret Dee are co-payees of
various Citibank checks;[15] (2) Mary Margaret
Dee withdrew these checks from Citibank;[16] (3)
Mary Margaret Dee admitted in her Answer to the
Request for Admissions by the Adverse Party sent
to her by Jose Gotianuy[17] that she withdrew the
funds from Citibank upon the instruction of her
father Jose Gotianuy and that the funds belonged
exclusively to the latter; (4) these checks were
endorsed by Mary Margaret Dee at the dorsal
portion; and (5) Jose Gotianuy discovered that
these checks were deposited with China Bank as
shown by the stamp of China Bank at the dorsal
side of the checks.

Thus, with this, there is no issue as to the
source of the funds. Mary Margaret Dee declared
the source to be Jose Gotianuy. There is likewise
no dispute that these funds in the form of Citibank
US dollar Checks are now deposited with China
Bank.

As the owner of the funds unlawfully taken
and which are undisputably now deposited with
China Bank, Jose Gotianuy has the right to inquire
into the said deposits.

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

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

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

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

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


21

18. REPUBLIC V. EUGENIO

FACTS: After the Agan v. PIATCO ruling, a series
of investigations concerning the award of the NAIA
3 contracts to PIATCO were undertaken by the
Ombudsman and the Compliance and
Investigation Staff (CIS) of the Anti-Money
Laundering Council (AMLC).
The OSG wrote AMLC requesting AMLCs
assistance in obtaining more evidence to
completely reveal the financial trail of corruption
surrounding the NAIA 3 Project, and also noting
that the Republic was presently defending itself in
two international arbitration cases. The CIS
conducted an intelligence database search on the
financial transactions of certain individuals involved
in the award, including Alvarez (Chairman of the
Pre-Qualification Bids and Awards Technical
Committee). By this time, Alvarez had already
been charged by the Ombudsman with violation of
Section 3(J) of the Anti Graft and Corrupt Practices
Act.1 The search revealed that Alvarez maintained
8 bank accounts with 6 different banks
The AMLC issued a resolution authorizing its
Executive Director to sign and verify an application
to inquire into the deposits or investments of
Alvarez et al. and to authorize the AMLC
Secretariat to conduct an inquiry once the RTC
grants the application. The rationale for the
resolution was founded on the findings of the CIS
that amounts were transferred from a Hong Kong
bank account to bank accounts in the Philippines
maintained by respondents. The Resolution also
noted that by awarding the contract to PIATCO
(despite its lack of financial capacity) Alvarez
violated Section 3(E) of the Anti Graft and Corrupt
Practices Act.2
The MAKATI RTC rendered an Order granting the
AMLC the authority to inquire and examine the
subject bank accounts of Alvarez et al.
In response to a letter of Special Prosecutor Villa-
Ignacio, AMLC issued a Resolution authorizing its
Executive Director to inquire into and examine the
accounts of Alvarez, PIATCO, and several other
entities involved in the nullified contract. AMLC
filed an application before the MANILA RTC to
inquire into the accounts alleged as having been
used to facilitate corruption in the NAIA 3 Project.
The ex parte application was granted and the
MANILA RTC issued a bank inquiry order. Alvarez
alleged that he fortuitously learned of the bank
inquiry order, which was issued following an ex
parte application, and he argued that nothing in the
Anti- Money Laundering Act (AMLA) authorized
the AMLC to seek the authority to inquire into bank
accounts ex parte.
After several motions, manifestations, orders and
resolutions the case went up to the SC. Alvarez et
al.s position: The AMLA, being a substantive
penal statute, has no retroactive effect and the
bank inquiry order could not apply to deposits or
investments opened prior to the effectivity of the
AMLA (17 October 2001). The subject bank
accounts, opened in 1989 to 1990, could not be
the subject of the bank inquiry order without
violating the constitutional prohibition against ex
post facto laws.

ISSUE: Whether or not the proscription against ex
post facto laws applies to Section 11 of the AMLA
(a provision which does not provide a penal
sanction BUT which merely authorizes the
inspection of suspect accounts and deposits).

HELD: YES. It is clear that no person may be
prosecuted under the PENAL provisions of the
AMLA for acts committed prior to the enactment of
the law (17 October 2001).
With respect to the AUTHORITY TO INSPECT, it
should be noted that an ex post facto law is one
that (among others) deprives a person accused of
a crime of some lawful protection to which he has
become entitled, such as the protection of a former
conviction or acquittal, or a proclamation of
amnesty.
PRIOR to the AMLA:
(1) The fact that bank accounts were involved in
activities later on enumerated in the law did not, by
itself, remove such accounts from the shelter of
absolute confidentiality.
(2) In order that bank accounts could be examined,
there was need to secure either the written
permission of the depositor OR a court order
authorizing such examination, assuming that they
were involved in cases of bribery or dereliction of
duty of public officials, or in a case where the
money deposited or invested was itself the subject
In addition to providing for the definition and
penalties for the crime of money laundering, the
AMLA also authorizes certain provisional remedies
that would aid the AMLC in the enforcement of the
AMLA. These are the freeze order authorized
under Section 10, and the bank inquiry order
authorized under Section 11.

cralawRespondents posit that a bank inquiry order
under Section 11 may be obtained only upon the
pre-existence of a money laundering offense case
already filed before the courts.
[68]
The conclusion is
based on the phrase upon order of any competent
court in cases of violation of this Act, the word
cases generally understood as referring to actual
cases pending with the courts.

We are unconvinced by this proposition, and agree
instead with the then Solicitor General who

22
conceded that the use of the phrase in cases of
was unfortunate, yet submitted that it should be
interpreted to mean in the event there are
violations of the AMLA, and not that there are
already cases pending in court concerning such
violations.
[69]
If the contrary position is adopted,
then the bank inquiry order would be limited in
purpose as a tool in aid of litigation of live cases,
and wholly inutile as a means for the government
to ascertain whether there is sufficient evidence to
sustain an intended prosecution of the account
holder for violation of the AMLA. Should that be
the situation, in all likelihood the AMLC would be
virtually deprived of its character as a discovery
tool, and thus would become less circumspect in
filing complaints against suspect account holders.
After all, under such set-up the preferred strategy
would be to allow or even encourage the
indiscriminate filing of complaints under the AMLA
with the hope or expectation that the evidence of
money laundering would somehow surface during
the trial. Since the AMLC could not make use of
the bank inquiry order to determine whether there
is evidentiary basis to prosecute the suspected
malefactors, not filing any case at all would not be
an alternative. Such unwholesome set-up should
not come to pass. Thus Section 11 cannot be
interpreted in a way that would emasculate the
remedy it has established and encourage the
unfounded initiation of complaints for money
laundering.

Still, even if the bank inquiry order may be availed
of without need of a pre-existing case under the
AMLA, it does not follow that such order may be
availed of ex parte. There are several reasons why
the AMLA does not generally sanction ex parte
applications and issuances of the bank inquiry
order.

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SPECIAL COMMERCIAL LAW: LAW ON SECRECY OF BANK DEPOSITS (RA 1405)

TERESE RAY-ANNE O. AQUINO | 3A

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