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STATCON; Application of principles of interpretation; Avoiding injustice.

Salvacion v. Central Bank


Justice Torres JR.
INTRO:
In our predisposition to discover the “original intent” of a statute, courts become the unfeeling pillars of
the status quo. Little do we realize that statutes or even constitutions are bundles of compromises thrown
our way by their framers. Unless we exercise vigilance, the statute may already be out of tune and
irrelevant to our day.
PETITION:
The petition is for declaratory relief. It prays for the following reliefs:
1. Immediately upon the filing of this petition, an Order be issued restraining the respondents
from applying and enforcing Section 113 of Central Bank Circular No. 960;

2. After hearing, judgment be rendered:

a. Declaring the respective rights and duties of petitioners and respondents;


b. Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provisions
of the Constitution, hence void; because its provision that “Foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever”
i. has taken away the right of petitioners to have the bank deposit of defendant
Greg Bartelli y Northcott garnished to satisfy the judgment rendered in
petitioners’ favor in violation of substantive due process guaranteed by the
Constitution;
ii. has given foreign currency depositors an undue favor or a class privilege in
violation of the equal protection clause of the Constitution;
iii. has provided a safe haven for criminals like the herein respondent Greg Bartelli y
Northcott since criminals could escape civil liability for their wrongful acts by
merely converting their money to a foreign currency and depositing it in a
foreign currency deposit account with an authorized bank.
iv. The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960
has exceeded its delegated quasi-legislative power.
1. the plaintiff’s substantive right to have the claim sought to beenforced by
the civil action secured by way of the writ of preliminary attachment as
granted by Rule 57 of the Revised Rules of Court;
2. the plaintiff’s substantive right to have the judgment credit satisfied by
way of the writ of execution out of the bank deposit of the judgment
debtor as granted to the judgment creditor by Rule 39 of the Revised
Rules of Court, which is beyond its power to do so.

Declaratory Relief: form of legally binding preventive adjudication by which a party involved can ask a court to
conclusively rule on and affirm the rights, duties, or obligations of one or more parties in civil
dispute.
ANTECEDENT FACTS

 Feb 4, 1989
o Greg Bartelli y Northcott, an American TOURIST, coaxed and lured Karen Salvacion,
then 12 years old to go with him to his apartment.
 Therein, Greg Bartelli detained and raped Karen Salvacion for four days
o up to February 7, 1989
o raped 10 times.
o [After-effects] She had been actually humiliated once when she was refused admission at
the Abad Santos High School, Arellano University, where she sought to transfer from
another school simply because the school authorities of the said High School learned
about what happened to her and allegedly feared that they might be implicated in the
case.
 Feb. 7, 1989
o Policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and
detained at the Makati Municipal Jail
 Feb. 16, 1989
o Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli,
 Serious Illegal Detention and
 four (4) counts of Rape.
o Petitioners filed with the Regional Trial Court of Makati Civil Case
 for damages with preliminary attachment against Greg Bartelli.
 Feb. 24, 1989
o the day there was a scheduled hearing for Bartelli’s petition for bail
 Bartelli escaped from jail.
 Feb 28, 1989
o Judge granted the application of Writ of Preliminary Attachment of the petitioner.
 March 1, 1989
o the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking
Corporation.
 China Banking Corporation invoked Republic Act No. 1405 as its answer to the
notice of garnishment served on it.
 Deputy Sheriff of Makati Armando de Guzman replied saying that the
garnishment did not violate the secrecy of bank deposits since the disclosure is
merely incidental to a garnishment properly and legally made by virtue of a
court order which has placed the subject deposits in custodia legis.
 In answer to this letter of the Deputy Sheriff of Makati, China Banking
Corporation invoked Section 113 of Central Bank Circular No. 960
 to the effect that the dollar deposits of defendant Greg Bartelli are
exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body, whatsoever.
 Petitioners asked the Central Bank whether said section has been repealed or amended since said
section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be
enforced by the civil action secured by way of the writ of preliminary attachment as granted to
the plaintiff under Rule 57 of the Revised Rules of Court.
o CB replied (SGD Agapito S. Fajardo – Central Bank Director)
Declaratory Relief: form of legally binding preventive adjudication by which a party involved can ask a court to
conclusively rule on and affirm the rights, duties, or obligations of one or more parties in civil
dispute.
 The cited provision is absolute in application. It does not admit of any exception,
nor has the same been repealed nor amended.

“The purpose of the law is to encourage dollar accounts within the country’s
banking system which would help in the development of the economy. There is
no intention to render futile the basic rights of a person as was suggested in your
subject letter. The law may be harsh as some perceive it, but it is still the law.
Compliance is, therefore, enjoined.

 March 29, 1990


o RTC of Makati rendered judgement in favor of the petitioners
 500k as moral damages for Karen Salvacion
 150K each for the parents
 100k for exemplary damages
 Atty’s fees (25% of total damages)
 Litigation expenses 10k
 Costs of the suit
 Notice of decision was published in Manila Bulletin once a week for 3 consecutive weeks
 After the lapse of 15 days from the date of the last publication of the notice of judgement and the
decision of RTC had become final
o Petitioners tried to execute on Bartelli’s dollar account with China Banking Corporation
 Bank invoked Sec. 113 of Central Bank Circular No. 960
 Thus petitioner seek relief from SC

CB: one reason for exempting the foreign currency deposits from attachment, garnishment or any other
order or process of any court,
 to assure the development and speedy growth of the Foreign Currency Deposit System and the
Offshore Banking System in the Philippines;
 that another reason is to encourage the inflow of foreign currency deposits into the banking
institutions thereby placing such institutions more in a position to properly channel the same to
loans and investments in the Philippines, thus directly contributing to the economic development
of the country
ISSUE:
1. May this Court entertain the instant petition despite the fact that original jurisdiction in petitions
for declaratory relief rests with the lower court? Yes. There is an exception to the general rule.

2. Should Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by
P.D. 1246, otherwise known as the Foreign Currency Deposit Act applies when the deposit does
not come from a lender or investor but from a mere transient or tourist who is not expected to
maintain the deposit in the bank for long.? NO

Declaratory Relief: form of legally binding preventive adjudication by which a party involved can ask a court to
conclusively rule on and affirm the rights, duties, or obligations of one or more parties in civil
dispute.
RULING
 Petition for declaratory relief can only be entertained and treated as a petition for mandamus to
require respondents (CB and China Bank) to honor and comply with the writ of execution in the
Civil Case
 SC has no original and exclusive jurisdiction over a petition of declaratory relief.
o However, there is an exception
 Where the petition has far reaching implications and raises questions that should
be resolved
 Can be treated as one for mandamus

 If Karen’s sad fate had happened to anybody’s own kin, it would be difficult for him to fathom
how the incentive for foreign currency deposit could be more important than his child’s rights to
said award of damages; in this case, the victim’s claim for damages from this alien who had the
gall to wrong a child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions.

 It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country’s
economy was in a shambles; when foreign investments were minimal and presumably, this was
the reason why said statute was enacted. But the realities of the present times show that the
country has recovered economically; and even if not, the questioned law still denies those entitled
to due process of law for being unreasonable and oppressive. The intention of the questioned law
may be good when enacted. The law failed to anticipate the iniquitous effects producing outright
injustice and inequality such as the case before us.

 SC: Sol Gen was correct:


o Section 113 was copied from Section 8 of Republic Act No. 6426, as amended by P.D.
1246
 Purpose of PD 1246:
 to assure the development and speedy growth of the Foreign Currency
Deposit system and the Offshore Banking in the Philippines.
 Offshore Banking System and Foreign Currency Deposit System were designed
to draw deposits from foreign lenders and investors
 It is these deposits that are induced by the two laws and given protection
and incentives by them.
 Not transient or a tourist 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.
 Greg Bartelli is thus not entitled to the protection of Sec. 113 of Central Bank
Circular No. 960 and PD. 1246 against attachment, garnishment or other court
processes.

 SC: 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 is
applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a
foreign guest like accused Greg Bartelli.

Declaratory Relief: form of legally binding preventive adjudication by which a party involved can ask a court to
conclusively rule on and affirm the rights, duties, or obligations of one or more parties in civil
dispute.
 This would negate Article 10 of the New Civil Code which provides that “in case of doubt in the
interpretation or application of laws, it is presumed that the lawmaking body intended right and
justice to prevail.
 “Ninguno non deue enriquecerse tortizeramente con dano de otro.” Simply stated, when the
statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the
vehement urge of conscience
DISPOSITION:
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as
it amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its
peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution
issued in Civil Case No. 89-3214, Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch
CXLIV, RTC Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y
Northcott in such amount as would satisfy the judgment.

SO ORDERED.

Declaratory Relief: form of legally binding preventive adjudication by which a party involved can ask a court to
conclusively rule on and affirm the rights, duties, or obligations of one or more parties in civil
dispute.