Examination of deposits in compliance with orders of garnishment

China Banking Corp. vs Ortega, 49 SCRA 355 (1973)

Facts:
Petitioner refuses to comply with a court process garnishing the bank deposit of a
judgment debtor by invoking the provisions of Republic Act No. 1405 (Secrecy of Bank
Deposits Act) which allegedly prohibits the disclosure of any information relative to bank
deposits.

Issue:
Whether or not a banking institution may validly refuse to comply with a court process
garnishing the bank deposit of a judgment debtor, by invoking the provisions of Republic
Act No. 1405.

Held:
No. It is sufficiently clear from the foregoing discussion of the conference committee
report of the two houses of Congress that the prohibition against examination of or
inquiry into a bank deposit under Republic Act 1405 does not preclude its being
garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a
case, and if the existence of the deposit is disclosed the disclosure is purely incidental to
the execution process. It is hard to conceive that it was ever within the intention of
Congress to enable debtors to evade payment of their just debts, even if ordered by the
Court, through the expedient of converting their assets into cash and depositing the
same in a bank
Court-ordered examination of deposits on grounds of equity -

Salvacion vs Central Bank, 278 SCRA 27 (1997)

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: NO.
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.

A limited pro hac vice ruling -

China Banking Corp. vs CA (511 SCRA 110 (2006)
Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other
properties, US dollar deposits with Citibank N.A. amounting to not less than
P35,000,000.00 and US$864,000.00. Mary Margaret Dee received these amounts from
Citibank N.A. through checks which she allegedly deposited at China Banking
Corporation (China Bank). He likewise accused his son-in-law, George Dee, husband of
his daughter, Mary Margaret, of transferring his real properties and shares of stock in
George Dees name without any consideration. Jose Gotianuy, died during the pendency
of the case before the trial court. He was substituted by his daughter, Elizabeth Gotianuy
Lo. The latter presented the US Dollar checks withdrawn by Mary Margaret Dee from his
US dollar placement with Citibank.
-Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to Cristota
Labios and Isabel Yap, employees of China Bank, to testify on the case.
-China Bank opposed.
TC:
-The disclosure is only as to the name or whose name the said fund is deposited is not
violative of the law
CA:
-Affirmed TC. The law protects only the deposit itself but not the name of depositor.
CBs Contention:
-Jose Gotianuy is not the owner of the questioned foreign currency deposit, thus, he
cannot invoke the aid of the court in compelling the disclosure of someone elses foreign
currency deposit.
ISSUE:
-Whether or not Jose Gotianuy as co payee of a foreign currency depositor in checks
deposited in the account of Mary Margaret Dee is a depositor.
HELD:
-The law provides that all foreign currency deposits authorized under Republic Act No.
6426, as amended by Sec. 8, Presidential Decree No. 1246, Presidential Decree No.
1035, as well as foreign currency deposits authorized under Presidential Decree No.
1034 are considered absolutely confidential in nature and may not be inquired into.
There is only one exception to the secrecy of foreign currency deposits, that is,
disclosure is allowed upon the written permission of the depositor.
-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.
-As CA ruled:
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 readily demonstrate that the late Jose Gotianuy is one of the payees of
said checks. Being a co-payee thereof, then he or his estate can be considered as a co-
depositor of said checks. Ergo, since the late Jose Gotianuy is a co-depositor of the
CBC account, then his request for the assailed subpoena is tantamount to an express
permission of a depositor for the disclosure of the name of the account holder.


RA 6426 can be invoked only by the owner of the funds

- Van Twest vs. CA, 230 SCRA 42 (1994)
FACTS: Alexander Van Twest and Gloria Anacleto opened a joint foreign currency
savings account with Interbank to hold funds which "belonged entirely and exclusively"
to Van Twest, to "facilitate the funding of certain business undertakings" of both of them
and which funds were to be "temporarily (held) in trust" by Gloria Anacleto, who "shall
turnover the same to plaintiff 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 Anacleto turned
sour, the latter unilaterally closed their joint account, withdrew the remaining balance of
and placed the money in her own personal account with the same bank.
Van Twest thus sought an injunctive writ to prevent Gloria Anacleto from withdrawing the
money at any time and thereby defeat Van Twest's main and pending action.
The RTC granted the writ of preliminary injunction.
CA reversed the order holding that Anacleto is a co-owner of the funds who could
unilaterally control the application thereof.
Hence, petition for review seeking the reinstatement of writ of preliminary injunction.
Anacleto contends for the first time that the personal currency deposit she is maintaining
is exempt from process issued by courts pursuant to RA 6426.
ISSUE:
Whether or not Anacleto may invoke RA 6426.
HELD:
Anacletos contentions do not persuade. Her belated invocation of the provisions of R.A.
No. 6426 as amended violates basic procedural due process by interposing a new
matter before this Court the consideration of which would further delay a final disposition
on the propriety of petitioner of petitioner's application for an injunctive writ.
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.

Other cases:
1. BSB Group, Inc. vs Sally Go, GR No. 168644, 612 SCRA 596 (Feb. 16, 2010)
FACTS: Petitioner, the BSB Group, Inc., is a duly organized domestic corporation
presided by its herein representative, Ricardo Bangayan (Bangayan). Respondent
Sally Go, alternatively referred to as Sally Sia Go and Sally Go-Bangayan, is
Bangayan's wife, who was employed in the company as a cashier, and was
engaged, among others, to receive and account for the payments made by the
various customers of the company.

In 2002, Bangayan filed with the Manila Prosecutor's Office a complaint for estafaa
nd/or qualified theft against respondent, alleging that several checks representing the
aggregate amount of P1,534,135.50 issued by the company's customers in payment
of their obligation were, instead of being turned over to the company's coffers,
indorsed by respondent who deposited the same to her personal banking account
maintained at Security Bank and Trust Company (Security Bank) in Divisoria, Manila
Branch. Upon a finding that the evidence adduced was uncontroverted, the assistant
city prosecutor recommended the filing of the Information for qualified theft against
respondent.
Accordingly, respondent was charged before the Regional Trial Court of Manila. She
was found guilty; that in the commission of the said offense, said accused acted with
grave abuse of confidence, being then employed as cashier by said complainant at
the time of the commission of the said offense and as such she was entrusted with
the said amount of money.
Respondent entered a negative plea when arraigned. The trial ensued. On the
premise that respondent had allegedly encashed the subject checks and deposited
the corresponding amounts thereof to her personal banking account.
Petitioner, opposing respondent's move, argued for the relevancy of the Metrobank
account on the ground that the complaint-affidavit showed that there were two
checks which respondent allegedly deposited in an account with the said bank. To
this, respondent filed a supplemental motion to quash, invoking the absolutely
confidential nature of the Metrobank account under the provisions of Republic
Act(R.A.) No. 1405. The trial court did not sustain respondent; hence, it denied the
motion to quash for lack of merit.
Meanwhile, the prosecution was able to present in court the testimony of Elenita
Marasigan (Marasigan), the representative of Security Bank. In a nutshell
,Marasigan's testimony sought to prove that between 1988 and 1989, respondent
,while engaged as cashier at the BSB Group, Inc., was able to run away with the
checks issued to the company by its customers, endorse the same, and credit the
corresponding amounts to her personal deposit account with Security Bank. In the
course of the testimony, the subject checks were presented to Marasigan for
identification and marking as the same checks received by respondent, endorsed,
and then deposited in her personal account with Security Bank. CA affirmed RTCs
decision.

ISSUE: Whether or not there is no difference between cash and check for purposes
of prosecuting respondent for theft of cash

HELD: In theft, the act of unlawful taking connotes deprivation of personal property
of one by another with intent to gain, and it is immaterial that the offender is able or
unable to freely dispose of the property stolen because the deprivation relative to the
offended party has already ensued from such act of execution. The allegation of theft
of money, hence, necessitates that evidence presented must have a tendency to
prove that the offender has unlawfully taken money belonging to another.
Interestingly, petitioner has taken pains in attempting to draw a connection between
the evidence subject of the instant review, and the allegation of theft in the
Information by claiming that respondent had fraudulently deposited the checks in her
own name. But this line of argument works more prejudice than favor, because it in
effect, seeks to establish the commission, not of theft, but rather of some other crime
probably estafa.
Moreover, that there is no difference between cash and check is true in other
instances. In estafa by conversion, for instance, whether the thing converted is cash
or check, is immaterial in relation to the formal allegation in an information for that
offense; a check, after all, while not regarded as legal tender, is normally accepted
under commercial usage as a substitute for cash, and the credit it represents
instated monetary value is properly capable of appropriation. And it is in this respect
that what the offender does with the check subsequent to the act of unlawfully taking
it becomes material inasmuch as this offense is a continuing one. In other words, in
pursuing a case for this offense, the prosecution may establish its cause by the
presentation of the checks involved. These checks would then constitute the best
evidence to establish their contents and to prove the elemental act of conversion in
support of the proposition that the offender has indeed indorsed the same in his own
name.

2. Union Bank vs. CA, 321 SCRA 563 (1999)

A check in the amount of One Million Pesos (P1,000,000.00) was drawn against Account
No. 0111-01854-8 with Allied Bank payable to the order of one Jose Ch. Alvarez. The
payee deposited the check with Union Bank who credited the P1,000,000.00 to the
account of Mr. Alvarez.
-Union Bank sent the check for clearing through the Philippine Clearing House
Corporation (PCHC). 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.
-Union Bank 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.
he latter, 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), alleging that Allied Bank should have informed it of the
under coding pursuant to the Section 25 of PCHC handbook which states that: The
receiving bank should inform the erring bank about the under coding of the amount not
later than 10 am of the following clearing day.
-The judgment on the arbitration case was held in abeyance pending the resolution of
the petition filed by Union Bank.
-RTC, affirmed by CA dismissed the petition holding that case of Union Bank does not
fall under any of the exceptions to warrant a disclosure of or inquiry into the ledger/books
of account in dispute.
-CA held that the case was not one where the money deposited is the subject matter of
the litigation, particularly nowhere in Union Banks complaint does it mention of the
amount it seeks to recover from the Account itself, but seeks of P999,000 only as an
incident of its alleged opportunity losses and interest as a result of its own employees
admitted error in encoding the check.
-Hence, this petition.
ISSUE:
-Whether or not the case at bar falls under the last exeption.
HELD:
-A collecting bank which sued the drawee bank to recover the deficiency between the
amount credited to the account of the depositor and the amount obtained from the
drawee bank because the latter had erroneously undercoded the amount of the check it
presented for clearing from P1M to P1,000 is not entitled to examine the account of the
drawer of the check, because the money in the account of the drawer is not the subject
matter of the litigation. The collecting bank was only fishing for information so it could
determine the culpability of the drawee bank and the amounts of damages it could
recover from the latter. It does not seek the recovery of the very money contained in the
deposit. The subject matter of the dispute may be the amount of P999,000 that the
ollecting bank seeks from the drawee bank as a result of the latters alleged failure to
inform the former of the discrepancy ; but it is not the P999,000 deposited in the
drawers account. By the terms of RA 1405, the money deposited itself should be the
subject matter of the litigation.

3. Carmen Intengan v. Court of Appeals, 377 SCRA 63 (2002)
FACTS: On September 21, 1993, Citibank filed a complaint for violation of section 31
in relation to section 144 of the Corporation Code against two (2) of its officers,
Dante L. Santos and Marilou Genuino. Attached to the complaint was an affidavit
executed by private respondent Vic Lim, a vice-president of Citibank.
As evidence, Lim annexed bank records purporting to establish the deception
practiced by Santos and Genuino. Some of the documents pertained to the dollar
deposits of petitioners Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P. Brawner. In
turn, private respondent Joven Reyes, vice-president/business manager of the
Global Consumer Banking Group of Citibank, admits to having authorized Lim to
state the names of the clients involved and to attach the pertinent bank records,
including those of petitioners
Petitioners aver that respondents violated RA 1405.

ISSUE: Whether or not Respondents are liable for violation of Secrecy of Bank
Deposits Act, RA 1405.

HELD: No. 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, However, applying Act No.
3326, the offense prescribes in eight years, therefore, per available records, private
respondents may no longer be haled before the courts for violation of Republic Act
No. 6426.