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G.R. No. 71479 October 18, 1990 MELLON BANK, N.A., petitioner, vs. HON. CELSO L.

MAGSINO The issue in the instant special civil action of certiorari is whether or not, by virtue of the principle of election of remedies, an action filed in California, U.S.A., 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. On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First National Bank of Moundsville, West Virginia, U.S.A. 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. On June 3, 1977, Javier opened a new dollar account (No. 343) in the Prudential Bank and deposited $999,943.70. Immediately their, Victoria Javier and her husband, Melchor Javier, Jr., 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. On June 14, 1977, Javier withdrew $475,000 from account No. 343 and converted it into eight cashier's checks made out to the following: (a) F.C. Hagedorn & Co., Inc., two cheeks for the total amount of P1,000,000; (b) Elnor Investment Co., Inc., two checks for P1,000,000; (c) Paramount Finance Corporation, two checks for P1,000,000; and (d) M. Javier, Jr., two checks for P496,000. The first six checks were delivered to Jose Marquez and Honorio Poblador, Jr. It appears that Melchor Javier, Jr. had requested Jose Marquez, a realtor, to look for properties for sale in the United States. Marquez offered a 160-acre lot in the Mojave desert in California City which was owned by Honorio Poblador, Jr. Javier, without having seen the property, agreed to buy it for P3,236,800 (US$437,405) although it was actually appraised at around $38,500. Consequently, as Poblador's agent, Marquez executed in Makati a deed of absolute sale in favor of the Javiers and had the document notarized in Manila before an associate of Poblador. Marquez executed another deed of sale indicating receipt of the purchase price and sent the deed to the Kern County Registrar in California for registration. Inasmuch as Poblador had requested that the purchase price should not be paid directly to him, the payment of P3,000,000 was coursed through Elnor Investment Co., Inc., allegedly Poblador's personal holding company; Paramount Finance, allegedly headed by Poblador's brother, and F.C. Hagedorn, allegedly a stock brokerage with extensive dealings with Poblador. The payment was made through the aforementioned six cashier's checks while the balance of P236,000 was paid in cash by Javier who did not even ask for a receipt. The two checks totalling P1,000,000 was delivered by Poblador to F.C. Hagedorn with specific instructions to purchase Atlas, SMC and Philex shares. The four checks for P2,000,000 with Elnor Investment and Paramount Finance as payees were delivered to the latter to purchase "bearer" notes.

Meanwhile, in July, 1977, Mellon Bank filed a complaint docketed as No. 148056 in the Superior Court of California, County of Kern, against Melchor Javier, Jane Doe Javier, Honorio Poblador, Jrn, and Does I through V. In its first amended complaint to impose constructive trust dated July 14, 1977, 1 Mellon Bank alleged that it had mistakenly and inadvertently cause the transfer of the sum of $999,000.00 to Jane Doe Javier; that it believes that the defendants had withdrawn said funds; that "the defendants and each of them have used a portion of said funds to purchase real property located in Kern County, California"; and that because of defendants' knowledge of Mellon Bank's mistake and inadvertence and their use of the funds to purchase the property, they and "each of them are involuntary or constructive trustees of the real property and of any profits therefrom, with a duty to convey the same to plaintiff forthwith." It prayed that the defendants and each of them be declared as holders of the property in trust for the plaintiff; that defendants be compelled to transfer legal title and possession of the property to the plaintiff; that defendants be made to pay the costs of the suit, and that other reliefs be granted them. On July 29, 1977, Mellon Bank also filed in the Court of First Instance of Rizal, Branch X, a complaint against the Javier spouses, Honorio Poblador, Jr., Domingo L. Jhocson, Jr., Jose Marquez, Roberto Gario, Elnor Investment Co., Inc., F.C. Hagedorn & Co., Inc. and Paramount Finance Corporation. After its amendment, Rafael Caballero and Tri-Arc Investment & Management Company, Inc. were also named defendants. 2 The amended and supplemental complaint alleged the facts set forth above and added that Roberto Gario, chief accountant of Prudential Bank, and who was the reference of Mrs. Ventosa's dollar remittances to Victoria Javier, immediately informed the Javiers of the receipt of US$1,000,000.00; that knowing the financial circumstances of Mrs. Ventosa and the fact that a mistake had been committed, the Javiers, with undue haste, took unlawful advantage of the mistake, withdrew the whole amount and transferred the same to a "343 dollar account"; that, aided and abetted by Poblador and Domingo L. Jhocson, the Javiers "compounded and completed the conversion" of the funds by withdrawing from the account dollars or pesos equivalent to US $975,000; that by force of law, the Javiers had been constituted trustees of an implied trust for the benefit of Mellon Bank with a clear duty to return to said bank the moneys mistakenly paid to them; that, upon request of Mellon Bank and Manufacturers Hanover Bank, Prudential Bank informed the Javiers of the erroneous transmittal of one million dollars first orally and later by letter-demand; that conferences between the representatives of the Javiers, led by Jhocson and Poblador, in the latter's capacity as legal and financial counsel, and representatives of Mellon Bank, proved futile as the Javiers claimed that most of the moneys had been irretrievably spent; that the Javiers could only return the amount if the Mellon Bank should agree to make an absolute quitclaim and waiver of future rights against them, and that in a scheme to conceal and dissipate the funds, through the active participation of Jose Marquez, the Javiers bought the California property of Poblador. It further alleged that trust fund moneys totalling P3,000,000.00 were made payable to Hagedorn Paramount and Elnor; that Hagedorn on instructions of Poblador, purchased shares of stock at a stock exchange for P1,000,000.00 but later, it hastily sold said shares at a loss of approximately P150,000.00 to the prejudice of the plaintiff; that proceeds of the sale were deposited by Hagedorn in the name of Poblador and/or the law office of Poblador, Nazareno, Azada, Tomacruz and Paredes; that dividends declared on the shares were delivered by Hagedorn to Caballero after the complaint had been filed and thereafter, Caballero deposited the dividends in his personal account; that after receiving the P1,000,000.00 trust money, Paramount issued promissory notes upon maturity

of which Paramount released the amount to unknown persons; that Elnor also invested P1,000,000.00 in Paramount for which the latter also issued promissory notes; that after the filing of the complaint, counsel for plaintiff requested Paramount not to release the amount after maturity; that in evident bad faith, Elnor transferred the non-negotiable Paramount promissory notes to Tri-Arc. that when the notes matured, Paramount delivered the proceeds of P1,000,000.00 to Tri-Arc; that Poblador knew or should have known that the attorney's fees he received from the Javiers came from the trust funds; and that despite formal demands even after the filing of the complaint, the defendants refused to return the trust funds which they continued concealing and dissipating. It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and Gario be ordered to account for and pay jointly and severally unto the plaintiff US$999,000.00 plus increments, additions, fruits and interests earned by the funds from receipt thereof until fully paid; (b) the other defendants be ordered to account for and pay unto the plaintiff jointly and severally with the Javiers to the extent of the amounts which each of them may have received directly or indirectly from the US$999,000.00 plus increments, additions, fruits and interests; (c) Marquez be held jointly and severally liable with Poblador for the amount received by the latter for the sale of the 160-acre lot in California City; and (d) defendants be likewise held liable jointly and severally for attomey's fees and litigation expenses plus exemplary damages. In due course, the defendants filed their answers and hearing of the case ensued. In his testimony, Jose Marquez stated that Prudential Bank and Trust Company checks Nos. 2530 and 2531 in the respective amounts of P100,000 and P900,000 payable to F. C. Hagedorn were delivered to him by Melchor Javier, Jr. as partial consideration for the sale of Poblador's property in California. After receiving the checks, Hagedorn purchased shares of Atlas Mining, Philex, Marcopper and San Miguel Corporation for Account No. 3000, which, according to Fred Hagedorn belonged to the law office of Poblador. 3 F.C. Hagedorn & Co., Inc. then sold the shares for P874,490.75 as evidenced by HSBC check No. 339736 for P400,000 and HSBC check No. 339737 for P474,490.75 payable to "cash". Mellon Bank traced these checks to Account 2825-1 of the Philippine Veterans Bank in the name of Cipriano Azada, Poblador's law partner and counsel to the Javiers. 4 An employee of the Philippine Veterans Bank thereafter introduced the specimen signature cards for Account No. 28251 thereby confirming Azada's ownership of the account. Defendants objected to this testimony on the grounds of Azada's absence, the confidentiality of the bank account, and the best evidence rule. The court overruled the objection. Another employee of the Philippine Veterans Bank then presented the ledger card for Account No. 2825-1, a check deposit slip and a daily report of returned items. The defendants objected but they were again overruled by the court. Mellon Bank then subpoenaed Erlinda Baylosis of the Philippine Veterans Bank to show that Azada deposited HSBC checks No. 339736 and 339737 amounting to P874,490.75 in his personal current account with said bank. It also subpoenaed Pilologo Red, Jr. of Hongkong & Shanghai Banking Corporation to prove that said amount was returned by Azada to Hagedorn. The testimonies of these witnesses were objected to by the defense on the grounds of res inter alios acta, immateriality, irrelevancy and confidentiality. To resolve the matter, the court ordered the parties to submit memoranda. The defendants' objections were also discussed at the hearing on July 13, 1982.

For the first time, Poblador's counsel raised the matter of "election of remedies." 5 At the July 20, 1982 hearing, the lower court, then presided by Judge Eficio Acosta, conditionally allowed the testimonies of Baylosis and Red. Baylosis afffirmed that Azada deposited checks Nos. 339736 and 339737 in the total amount of P874,490.75 in his personal account with the Philippine Veterans Bank but almost simultaneously, Azada issued his PVB check for the same amount in favor of Hagedorn Consequently, Azada's check initially bounced. For his part, Red testified that Azada's check for P874,490.75 was received by the Hongkong & Shanghai Banking Corporation and credited to the account of Hagedorn . The defendants then moved to strike off the testimonies of Baylosis and Red from the record. Defendant Paramount Finance Corporation, which is not a party to the California case, thereafter filed its memorandum raising the matter of "election of remedies". It averred that inasmuch as the Mellon Bank had filed in California an action to impose constructive trust on the California property and to recover the same, Mellon Bank can no longer try to regain the purchase price of the same property through Civil Case No. 26899. The other defendants adopted Paramount's stand. After Mellon Bank filed its reply to the memorandum of Paramount, on September 10, 1982, Judge Acosta issued a resolution ordering that the testimonies of Baylosis and Red and the documents they testified on, which were conditionally allowed, be stricken from the records. 6 Judge Acosta explained: After a judicious evaluation of the arguments of the parties the Court is of the view that in cases where money held in trust was diverted by the trustee, under the "rule of trust pursuit" the beneficiary "may elect whether to accept the trust estate in its new form or hold the trustee responsible for it in its original condition" (Lathrop vs. Hampton, 31 Cal. 17; Zodos vs. Marefalos 48 Idaho 291; Bahle vs. Hasselbrach 64 NW Eq. 334, 51 Sections 508-76 Am Jur. 2d p. 475), and that "an election to pursue one remedy waives and bars pursuit of any inconsistent remedy"(76 Am Jur. 2d S253). The instant complaint among others is for the recovery of the purchase price of the Kern property as held in trust for the plaintiff while in the California case the plaintiff maintains that the Kern property is held in trust for the plaintiff, which positions are inconsistent with each other. Neither can the plaintiff now abandon his complaint for the recovery of the Kern property and pursue his complaint for the recovery of the purchase price of said property for "if he has first sought to follow the res, the plaintiff cannot thereafter hold the trustee personally responsible" and "when once there has been an election to do one of two things, you cannot retract it and do the other thing. The election once made is finally made." (Fowler vs. Bowvery Savings Bank 113 N.Y. 450, 21 N.E. 172, 4 LRA 145, 10 Am. S.R. 479. 2 Silv. 280, 23, Abb. N. Cos. 133065 C. J. p. 980 Note 32). The fact that the California case has been stayed pending determination of the instant case only means that should this case be dismissed, the California case can proceed to its final determination. Furthermore, when the plaintiff filed the California case for the transfer of legal title and possession of the Kern property to the plaintiff it in

effect ratified the transaction for "by taking the proceeds or product of a wrongful transfer of trust property or funds, the beneficiary ratifies the transaction" (Board of Commissioner vs. Strawn [CA6 Ohio] 157 F. 49, 76 Am Jur. 2d Section 253). Consequently the purchase price of the California property received by defendant Poblador from Javier is no longer the proper subject matter of litigation and the movement and disposition of the purchase price is therefore within the scope of the absolutely confidential nature of bank deposits as provided by Sec. 2, R.A. 1405 as amended by PD No. 1792. Mellon Bank moved for reconsideration, alleging that said order prevented the presentation of evidence on the purchase price of the California property; that the California case cannot be considered a waiver of the pursuit of the purchase price as even if said case was filed fifteen days prior to the filing of the original complaint in this case, except for the Javiers, no other defendants raised in their answers the affirmative defense of the filing of the California case; that after the amendment of the complaint, none of the defendants raised the matter of "election of remedies" in their answers; that realizing this procedural error, Paramount sought the amendment of its answer to reflect the "defence" of "election of remedies"; that, disregarding its previous orders allowing evidence and testimonies on Account No. 2825-1, the court made a turnabout and ruled that the testimonies on said account were irrelevant and confidential under Republic Act No. 1405; that Philippine law and jurisprudence does not require the election of remedies for they favor availment of all remedies; that even United States jurisprudence frowns upon election of remedies if it will lead to an inequitable result; that, as held by this Court in Radiowealth vs. Javier, 7 there can be no binding election of remedies before the decision on the merits is had; that until Mellon Bank gets full recovery of the trust moneys, any contention of election of remedy is premature, and that, the purchase price being the subject of litigation, inquiring into its movement, including its deposit in banks, is allowed under Republic Act No. 1405. Defendants filed their respective comments and oppositions to the motion for reconsideration. In its reply, the Mellon Bank presented proof to the effect that in the California case, defendants filed motions to stake out the cross-complaint of Mellon Bank, for summary judgment and to stay or dismiss the action on the ground of inconvenient forum but the first two motions and the motion to dismiss were denied "without prejudice to renew upon determination of the Philippine action." The motion to stay proceedings was "granted until determination of the Philippine action." 8 On October 28, 1983, the lower court, through Judge Acosta, denied the motion for reconsideration and ordered the continuation of the hearing (Rollo, p. 182). The plaintiff filed a motion for the reconsideration of both the September 10, 1982 and October 28, 1983 orders. After the parties had filed comments, opposition and reply, the court, through Judge Celso L. Magsino, denied Mellon Bank's second motion for reconsideration on the ground that it was "prescribed by the 1983 Interim Rules of Court" in an order dated July 9, 1985. 9 The court ruled that the determination of the relevancy of the testimonies of Baylosis and Red was "premised directly and principally" on whether or not Mellon Bank could still recover the purchase price of the California property notwithstanding the filing of the case in California to recover title and possession of the said property. After quoting the resolution of September 10, 1982, the Court ruled that it was a "final order or a definitive judgment with respect to the claim of plaintiff for the recovery" of the purchase price of the California property. It stated:

The adjudication in the Order of September 10, 1982 and the Order of October 28, 1983, which has the effect of declaring that plaintiff has no cause of action against the defendants for the recovery of the proceeds of the sale of Kern property in the amount of Three Million Three Hundred Fifty Thousand Pesos (P3,500,000.00 [sic]) for having filed a complaint for the recovery of the Kern property in the Superior Court of California, County of Kern is a final and definitive disposition of the claim of the plaintiff to recover in the instant action the proceeds of sale of said property against the defendants. The issue of "election of remedy" by the plaintiff was lengthily and thoroughly discussed and argued by the parties before the rendition of the resolution of September 10, 1982, and in the motion for reconsideration and oppositions thereto before its resolution in the Order of October 28, 1983. Such issue is a substantive one as it refers to the existence of plaintiffs cause of action to recover the proceeds of the sale of the Kern property in this action, and that issue was presented to the Court as if a motion to dismiss or a preliminary hearing of an affirmative defense on the ground that plaintiff has no cause of action, and was resolved against plaintiff in the Order of September 10, 1982, after a full hearing of all the parties. Said Order of September 10, 1982 has the effect of putting an end to the controversy between the parties as to the right of plaintiff to claim or recover the proceeds of the sale of the Kern property from the defendants. It is therefore an adjudication upon the merits. 10 Hence, Mellon Bank filed the instant petition for certiorari claiming that the resolution of September 10, 1982 and the orders of October 28, 1983 and July 9, 1985 are void for being unlawful and oppressive exercises of legal authority, subversive of the fair administration of justice, and in excess of jurisdiction. The petition is founded on its allegations that: (a) the resolution of September 10, 1982 is interlocutory as it does not dispose of Civil Case No. 26899 completely: (b) the evidence stricken from the records is relevant on the basis of the allegations of the amended and supplemental complaint, and (c) the doctrine of election of remedies, which has long been declared obsolete in the United States, is not applicable in this case. With the exception of the Javiers, all the respondents filed their respective comments on the petition. Having failed to file said comment, the Javiers' counsel of record, Azada, Tomacruz & Cacanindin, 11 was required to show cause why disciplinary action should not be taken against it. And, having also failed to show cause, it was fined P300. In his motion for reconsideration of the resolution imposing said fine, Cipriano Azada alleged that in Civil Case No. 26899, the Javiers were indeed represented by the law firm of Poblador, Azada, Tomacruz & Cacanindin but he was never the lawyer of the Javiers' in his personal capacity; that after the death of Honorio Poblador, Jr., he had withdrawn from the partnership; that he is the counsel of the Administratrix of the Estate of Honorio Poblador, Jr. for which he had filed a comment, and that should the Court still require him to file comment for the Javiers despite the lack of client-lawyer relationship, he would adopt the comment he had filed for the said Administratrix. 12 In its effort to locate the Javiers so that their side could be heard, we required the petitioner to furnish us with the Javiers' address as well as the name and address of their counsel. 13 In compliance therewith, counsel for petitioner manifested that the Javiers had two known addresses in San Juan, Metro Manila and in Sampaloc, Manila; that since their conviction in Crim. Case No. CCC-VII 2369-P.C. of the Pasig Regional Trial Court,

the Javiers had gone into hiding and warrants for their arrest still remain unserved; 14 that the Javiers' counsel of record in Civil Case No. 26899 is Atty. Cipriano Azada; that the same counsel appeared for the Javiers in Criminal Case No. 39851 of the Pasig Regional Trial Court which is a tax evasion case filed by the Republic of the Philippines, and that during the hearings of the civil and tax evasion cases against the Javiers, Atty. Cipriano Azada, Jr. represented them. 15 Inasmuch as copies of the resolution requiring comment on the petition and the petition itself addressed to Melchor Javier were returned with the notations "moved" and "deceased", the Court required that said copies be sent to Mrs. Javier herself and that petitioner should inform the Court of the veracity of Javier's death. 16 A copy of the resolution addressed to Mrs. Javier was returned also with the notation "deceased." 17 Counsel for petitioner accordingly informed the Court that he learned that the Javiers had fled the country and that he had no way of verifying whether Melchor Javier had indeed died. 18 In view of these circumstances, the Javiers' comment on the petition shall be dispensed with as the Court deems the pleadings filed by the parties sufficient bases for resolving this case. The Javiers shall be served copies of this decision in accordance with Section 6, Rule 13 of the Rules of Court by delivering said copies to the clerk of court of the lower court, with proof of failure of both personal service and service by mail. We hold that the lower court gravely abused its discretion in ruling that the resolution of September 10, 1982 is a "final and definitive disposition" of petitioner's claim for the purchase price of the Kern property. The resolution is interlocutory and means no more than what it states in its dispositive portion-the testimonies of Baylosis and Red and the documents they testified on, should be stricken from the record. That the resolution discusses the common-law principle of election of remedies, a subject matter which shall be dealt with later, is beside the point. It is interlocutory because the issue resolved therein is merely the admissibility of the plaintiff's evidence. 19 As such, it does not dispose of the case completely but leaves something more to be done upon its merits. 20 There are things left undone in Civil Case No. 26899 after the issuance of the September 10, 1982 resolution not only because of its explicit dispositive portion but also due to the fact that even until now, the case is still pending and being heard. 21 Furthermore, the lower court's holding in its July 9, 1985 order that petitioner's second motion for reconsideration is proscribed by the 1983 Interim Rules of Court which disallows such motion on a final order or judgment, should be rectified. As explained above, the resolution of September 10, 1982 is not a final one. It also contains conclusions on procedural matters which, if left unchecked, would prejudice petitioner's substantive rights. In effect, therefore, the July 9, 1985 order is a shortcut disposition of Civil Case No. 26899 in total disregard of petitioner's right to a thorough ventilation of its claims. By putting a premium on procedural technicalities over the resolution of the merits of the case, the lower court rode roughshod over the basic judicial tenet that litigations should, as much as possible, be decided on their merits and not on technicalities. 22 The trial court's patent grave abuse of discretion therefore forces us to exercise supervisory authority to correct its errors notwithstanding the fact that ordinarily, this Court would not entertain a petition for certiorari questioning the legality and validity of an interlocutory order. 23

Respondents' principal objection to the testimonies of Baylosis and Red is their alleged irrelevance to the issues raised in Civil Case No. 26899. The fallacy of this objection comes to fore upon a scrutiny of the complaint. Petitioner's theory therein is that after the Javiers had maliciously appropriated unto themselves $999,000, the other private respondents conspired and participated in the concealment and dissipation of said amount. The testimonies of Baylosis and Red are therefore needed to establish the scheme to hide the erroneously sent amount. Private respondents' protestations that to allow the questioned testimonies to remain on record would be in violation of the provisions of Republic Act No. 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. 24 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. 25 We view respondents' reliance on the procedural principle of election of remedies as part of their ploy to terminate Civil Case No. 26899 prematurely. With the exception of the Javiers, respondents failed to raise it as a defense in their answers and therefore, by virtue of Section 2, Rule 9 of the Rules of Court, such defense is deemed waived.26 Notwithstanding its lengthy and thorough discussion during the hearing and in pleadings subsequent to the answers, the issue of election of remedies has not, contrary to the lower court's assertion, been elevated to a "substantive one." Having been waived as a defense, it cannot be treated as if it has been raised in a motion to dismiss based on the nonexistence of a cause of action. Moreover, granting that the defense was properly raised, it is inapplicable in this case. In its broad sense, election of remedies refers to the choice by a party to an action of one of two or more coexisting remedial rights, where several such rights arise out of the same facts, but the term has been generally limited to a choice by a party between inconsistent remedial rights, the assertion of one being necessarily repugnant to, or a repudiation of, the other. In its technical and more restricted sense, election of remedies is the adoption of one of two or more coexisting remedies, with the effect of precluding a resort to the others. 27 As a technical rule of procedure, the purpose of the doctrine of election of remedies is not to prevent recourse to any remedy, but to prevent double redress for a single wrong. 28 It is regarded as an application of the law of estoppel, upon the theory that a party cannot, in the assertion of his right occupy inconsistent positions which form the basis of his respective remedies. However, when a certain state of facts under the law entitles a party to alternative remedies, both founded upon the Identical state of facts, these remedies are not considered inconsistent remedies. In such case, the invocation of one remedy is not an election which will bar the other, unless the suit upon the remedy first invoked shall reach the stage of final adjudication or unless by the invocation of the remedy first sought to be enforced, the plaintiff shall have gained an advantage thereby or caused detriment or change of situation to the other. 29 It must be pointed out that ordinarily, election of remedies is not made until the judicial proceedings has gone to judgment on the merits. 30 Consonant with these rulings, this Court, through Justice J.B.L. Reyes, opined that while some American authorities hold that the mere initiation of proceedings constitutes a binding choice

of remedies that precludes pursuit of alternative courses, the better rule is that no binding election occurs before a decision on the merits is had or a detriment to the other party supervenes. 31 This is because the principle of election of remedies is discordant with the modern procedural concepts embodied in the Code of Civil Procedure which Permits a party to seek inconsistent remedies in his claim for relief without being required to elect between them at the pleading stage of the litigation. 32 It should be noted that the remedies pursued in the California case and in Civil Case No. 26899 are not exactly repugnant or inconsistent with each other. If ever, they are merely alternative in view of the inclusion of parties in the latter case who are not named defendants in the former. The causes of action, although they all stem from the erroneous transmittal of dollars, are distinct as shown by the complaints lengthily set out above. The bar of an election of remedies does not apply to the assertion of distinct causes of action against different persons arising out of independent transactions. 33 As correctly pointed out by the petitioner, the doctrine of election of remedies is not favored in the United States for being harsh. 34 Its application with regard to two cases filed in two different jurisdictions is also circumscribed by jurisprudence on abatement of suits. Thus, in Brooks Erection Co. v. William R. Montgomery & Associates, Inc.,35 it is held: The pendency of an action in the courts of one state or country is not a bar to the institution of another action between the same parties and for the same cause of action in a court of another state or country, nor is it the duty of the court in which the latter action is brought to stay the same pending a determination of the earlier action, even though the court in which the earlier action is brought has jurisdiction sufficient to dispose of the entire controversy. Nevertheless, sometimes stated as a matter of comity not of right, it is usual for the court in which the later action is brought to stay proceedings under such circumstances until the earlier action is determined. However, in view of the fact that the California court wherein the case for recovery of the Kern property was first filed against the Javiers had stayed proceedings therein until after the termination of Civil Case No. 26899, the court below can do no less than expedite the disposition of said case. We cannot dispose of this case without condemning in the strongest terms possible the acts of chicanery so apparent from the records. The respective liabilities of the respondents are still being determined by the court below. We must warn, however, against the use of technicalities and obstructive tactics to delay a just settlement of this case. The taking advantage of the petitioner's mistake to gain sudden and undeserved wealth is marked by circumstances so brazen and shocking that any further delay will reflect poorly on the kind of justice our courts dispense. The possible involvement of lawyers in this sorry scheme stamps a black mark on the legal profession. The Integrated Bar of the Philippines (IBP) must be made aware of the ostensible participation, if not instigation, in the spiriting away of the missing funds. The IBP must take the proper action at the appropriate time against all lawyers involved in any misdeeds arising from this case. WHEREFORE, the resolution of September 10, 1982 and the orders of October 28, 1982 and July 9, 1985 are hereby annulled. The lower court is ordered to proceed with dispatch in the disposition of Civil case No. 26899, considering that

thirteen (13) years have gone by since the original erroneous remittance. Service of this decision on the Javier spouses shall be in accordance with Section 6, Rule 13 of the Rules of Court. A copy of this decision shall be served on the Integrated Bar of the Philippines. The decision is immediately executory. Costs against private respondents

G.R. No. L-34964 January 31, 1973 CHINA BANKING CORPORATION vs. HON. WENCESLAO ORTEGA, The only issue in this petition for certiorari to review the orders dated March 4, 1972 and March 27, 1972, respectively, of the Court of First Instance of Manila in its Civil Case No. 75138, is whether or not a banking institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor, by invoking the provisions of Republic Act No. 1405. * On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. Upon motion of the plaintiff the trial court declared the defendants in default for failure to answer within the reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. On January 20, 1970 judgment by default was rendered against the defendants. To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B & B Forest Development Corporation with the China Banking Corporation. Accordingly, a notice of garnishment was issued by the Deputy Sheriff of the trial court and served on said bank through its cashier, Tan Kim Liong. In reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any information relative to bank deposits. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of court. In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However, Tan Kim Liong was ordered "to inform the Court within five days from receipt of this order whether or not there is a deposit in the China Banking Corporation of defendant B & B Forest Development Corporation, and if there is any deposit, to hold the same intact and not allow any withdrawal until further order from this Court." Tan Kim Liong moved to reconsider but was turned down by order of March 27, 1972. In the same order he was directed "to comply with the order of this Court dated March 4, 1972 within ten (10) days from the receipt of copy of this order, otherwise his arrest and confinement will be ordered by the Court." Resisting the two orders, the China Banking Corporation and Tan Kim Liong instituted the instant petition. The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads: Sec. 2. All deposits of whatever nature with banks or banking institutions in the Philippines including

investments in bonds issued by the Government of the Philippines, its political subdivisions and its instrumentalities, are hereby considered as of absolutely confidential nature and may not be examined, inquired or looked into by any person, government official, bureau or office, except upon written permission of the depositor, or in cases of impeachment, or upon order of a competent court in cases of bribery or dereliction of duty of public officials, or in cases where the money deposited or invested is the subject matter of the litigation. Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two hereof any information concerning said deposits. Sec. 5. Any violation of this law will subject offender upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both, in the discretion of the court. The petitioners argue that the disclosure of the information required by the court does not fall within any of the four (4) exceptions enumerated in Section 2, and that if the questioned orders are complied with Tan Kim Liong may be criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest Development Corporation. Specifically referring to this case, the position of the petitioners is that the bank deposit of judgment debtor B & B Forest Development Corporation cannot be subject to garnishment to satisfy a final judgment against it in view of the aforequoted provisions of law. We do not view the situation in that light. The lower court did not order an examination of or inquiry into the deposit of B & B Forest Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform the court whether or not the defendant B & B Forest Development Corporation had a deposit in the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold the same intact and not allow any withdrawal until further order. It will be noted from the discussion of the conference committee report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Act 1405, that it was not the intention of the lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. Thus: Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the Committee on Ways and Means to clarify this further. Suppose an individual has a tax case. He is being held liable by the Bureau of Internal Revenue for, say, P1,000.00 worth of tax liability, and because of this the deposit of this individual is attached by the Bureau of Internal Revenue. Mr. RAMOS. The attachment will only apply after the court has pronounced sentence declaring the liability of such person. But where the primary aim is to determine whether he has a bank deposit in order to bring about a proper assessment by the Bureau of Internal Revenue, such inquiry is not authorized by this proposed law. Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment or garnishment of money deposited is allowed. Let us assume, for instance, that there is a preliminary attachment which is for garnishment or for holding liable all moneys deposited belonging to a certain individual, but such attachment or garnishment will bring out into the open

the value of such deposit. Is that prohibited by this amendment or by this law? Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the inquiry is made only for the purpose of satisfying a tax liability already declared for the protection of the right in favor of the government; but when the object is merely to inquire whether he has a deposit or not for purposes of taxation, then this is fully covered by the law. Mr. MARCOS. And it protects the depositor, does it not? Mr. RAMOS. Yes, it protects the depositor. Mr. MARCOS. The law prohibits a mere investigation into the existence and the amount of the deposit. Mr. RAMOS. Into the very nature of such deposit. Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment or attachment of the deposit is not allowed? Mr. RAMOS. No, without judicial authorization. Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as well as the substantive law on the matter is amended? Mr. RAMOS. Yes. That is the effect. Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the liability of an individual for taxation purposes and this judgment is sought to be executed ... in the execution of that judgment, does this bill, or this proposed law, if approved, allow the investigation or scrutiny of the bank deposit in order to execute the judgment? Mr. RAMOS. To satisfy a judgment which has become executory. Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the deposit is half a million, will this bill allow scrutiny into the deposit in order that the judgment may be executed? Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation to the Government, but not to determine whether a deposit has been made in evasion of taxes. xxx xxx xxx Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery of a sum of money the plaintiff wishes to attach the properties of the defendant to insure the satisfaction of the judgment. Once the judgment is rendered, does the gentleman mean that the plaintiff cannot attach the bank deposit of the defendant? Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to which I replied that outside the very purpose of this law it could be reached by attachment. Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached? Mr. RAMOS. That is so. (Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27, 1955). It is sufficiently clear from the foregoing discussion of the conference committee report of the two houses of Congress that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405 does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the execution process. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade payment of their just debts, even if ordered by the Court, through the expedient of converting their assets into cash and depositing the same in a bank.

WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively, are hereby affirmed, with costs against the petitioners-appellants. G.R. No. L-18343 September 30, 1965

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 Manila 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.1awphl.nt From that judgment, plaintiffs 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." In support of their position, plaintiffs contend, first, that the Anti-Graft Law (which took effect on August 17, 1960) is a general law which cannot be deemed to have impliedly repealed section 2 of Republic Act No. 1405 (which took effect on Sept. 9, 1955), because of the rule that repeals by implication are not favored. Second, they argue 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." Contrary to their claim that their position effects a reconciliation of the provisions of the two laws, plaintiffs are actually making the provisions of Republic Act No. 1405 prevail over those of the Anti-Graft Law, because even without the latter law the balance standing to the depositor's credit can be considered provided its disclosure is made in any of the cases provided in Republic Act No. 1405. 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. Indeed, it is said that if the new law is inconsistent with or repugnant to the old law, the presumption against the intent to repeal by implication is overthrown because the inconsistency or repugnancy reveals an intent to repeal the

PHILIPPINE NATIONAL BANK and EDUARDO Z. ROMUALDEZ, in his capacity as President of the Philippine National Bank, plaintiffs-appellants, vs. EMILIO A. GANCAYCO and FLORENTINO FLOR, Special Prosecutors of the Dept. of Justice, defendants-appellees. REGALA, J.: The principal question presented in this case is whether a bank can be compelled to disclose the records of accounts of a depositor who is under investigation for unexplained wealth. This question arose when defendants Emilio A. Gancayco and Florentino Flor, as special prosecutors of the Department of Justice, required the plaintiff Philippine National Bank to produce at a hearing to be held at 10 a.m. on February 20, 1961 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 plaintiff bank 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. The plaintiff bank also called attention to the penal provision of the law which reads: SEC. 5. Any 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. 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 Republic Act Numbered One thousand three hundred seventy-nine, 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 taken into consideration, when their

existing law. And whether a statute, either in its entirety or in part, has been repealed by implication is ultimately a matter of legislative intent. (Crawford, The Construction of Statutes, Secs. 309-310. Cf. Iloilo Palay and Corn Planters Ass'n v. Feliciano, G.R. No. L-24022, March 3, 1965). The recent case of People v. De Venecia, G.R. No. L20808, July 31, 1965 invites comparison with this case. There it was held: The result is that although sec. 54 [Rev. Election Code] prohibits a classified civil service employee from aiding any candidate, sec. 29 [Civil Service Act of 1959] allows such classified employee to express his views on current political problems or issues, or to mention the name of his candidate for public office, even if such expression of views or mention of names may result in aiding one particular candidate. In other words, the last paragraph of sec. 29 is an exception to sec. 54; at most, an amendment to sec. 54. 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. WHEREFORE, the decision appealed from is affirmed, without pronouncement as to costs.

Banco Filipino Savings & 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, dating back to 1969, appearing in the names of Caturla, his wife, Purita Caturla, their children Manuel, Jr., Marilyn and Michael and/or Pedro Escuyos. 4 Caturla moved to quash the subpoena duces tecum 5 arguing that compliance therewith would result in a violation of Sections 2 and 3 of the Law on Secrecy of Bank Deposits. Then Tanodbayan Vicente Ericta not only denied the motion for lack of merit, and directed compliance with the subpoena, 6 but also expanded its scope through a second subpoena duces tecum, 7 this time requiring production by Banco Filipino of the bank records in all its branches and extension offices, of Siargao Agro-Industrial Corporation, Pedro Escuyos or his wife, Emeterio Escuyos, Purita Caturla, Lucia Escuyos or her husband, Romeo Escuyos, Emerson Escuyos, Fraterno Caturla, Amparo Montilla, Cesar Caturla, Manuel Caturla or his children, Manuel Jr., Marilyn and Michael, LTD Pub/Restaurant, and Jose Buo or his wife, Evelyn. Two other subpoena of substantially the same tenor as the second were released by the Tanodbayan's Office. 8 The last required obedience under sanction of contempt. The Banco Filipino Savings & Mortgage Bank, hereafter referred to simply as BF Bank, took over from Caturla in the effort to nullify the subpoenae. It filed a complaint for declaratory relief with the Court of First Instance of Manila, 9 which was assigned by raffle to the sala of respondent Judge Fidel Purisima. BF Bank prayed for a judicial declaration as to whether its compliance with the subpoenae duces tecum would constitute an infringement of the provisions of Sections 2 and 3 of R.A. No. 1405 in relation to Section 8 of R.A. No. 3019. It also asked that pending final resolution of the question, the Tanodbayan be provisionally restrained from exacting compliance with the subpoenae. Respondent Judge Purisima issued an Order denying for lack of merit the application by BF Bank for a preliminary injunction and/or restraining order. 10 This Order is now impugned in the instant certiorari action instituted by BF Bank before this Court, as having been issued with grave abuse of discretion, amounting to lack of jurisdiction. It is the bank's theory that the order declining to grant that remedy operated as a premature adjudication of the very issue raised in the declaratory suit, and as judicial sufferance of a transgression of the bank deposits statute, and so constituted grievous error correctible by certiorari. It further argues that subpoenae in question are in the nature of "fishing expeditions" or "general warrants" since they authorize indiscriminate inquiry into bank records; that, assuming that such an inquiry is allowed as regards public officials under investigation for a violation of the Anti-Graft & Corrupt Practices Act, it is constitutionally impermissible with respect to private individuals or public officials not under investigation on a charge of violating said Act; and that while prosecution of offenses should not, as a rule, be enjoined, there are recognized exceptions to the principle one of which is here present, i.e. to avoid multiplicity of suits, similar subpoenae having been directed to other banks as well. It is difficult to see how the refusal by the Court a quo to issue the temporary restraining order applied for by the petitioner in other words, its disagreement with the petitioner's advocated theory could be deemed so whimsical, capricious, despotic or oppressive an act as to constitute grave abuse of discretion. Obviously, the writ of certiorari cannot issue simply on a

G.R. No. L-56429 May 28, 1988 BANCO FILIPINO SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. FIDEL PURISIMA, etc., and HON. VICENTE ERICTA and JOSE DEL FIERO, etc., respondents. NARVASA, J.: The verdict in this special civil action of certiorari turns upon the question of whether or not the "Law on Secrecy of Bank Deposits" 1 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 theTanodbayan of having allegedly acquired property manifestly out of proportion to his salary and other lawful income, in violation of the "Anti-Graft and Corrupt Practices Act." 2 The Customs special agent involved is Manuel Caturla, and the accusation against him was filed by the Bureau of Internal Revenue. 3 In the course of the preliminary investigation thereof, the Tanodbayan issued a subpoenaduces tecum to the

showing of disagreement between a party and the court upon some material factual or legal issue. There must be a reasonable demonstration that a party's contentions are so clearly correct, or the court's ruling thereon so clearly wrong, to justify the issuance of a writ of certiorari. No such demonstration exists in this case. Indeed, for aught that the record shows, the Court's refusal to grant the application for a restraining order was, in the premises, licit and proper, or its validity, fairly debatable, at the very least. Be this as it may, on the merits the petitioner cannot succeed. Its declared theory is untenable. The provisions of R.A. No. 1405 subject of BF's declaratory action, read as follows: 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 litigation. Sec. 3. It shall be unlawful for any official or employee of a banking institution to disclose to any person other than those mentioned in Section two hereof any information concerning said deposits The other provision involved in the declaratory action is Section 8 of R.A. No. 3019. It reads: Sec. 8. Dismissal due to unexplained wealth. If in accordance with the provisions of Republic Act Numbered One thousand three hundred seventy-nine, 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 this 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 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 prohibition of law to the contrary. In our decision in Philippine National Bank v. Gancayco, rendered on September 30, 1966, 11 we upheld the judgment of the Trial Court "sustaining the power of the defendants (special prosecutors of the Department of Justice) to compel the disclosure (by PNB) of bank accounts of ACCFA Administrator Jimenez (then under investigation for unexplained wealth), .. (it being ruled) 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 .. (for) without such provision, the .. prosecutors would be hampered if not altogether frustrated in the prosection of those charged with having acquired unexplained wealth while in public office. 12 We ourselves declared in said case that 13 .. 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 an additional exception to the rule against the disclosure of bank desposits. xxx xxx xxx ... Cases of unexplained wealth 14 are similar to cases of bribery or dereliction of duty 15 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. 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 R.A. No. 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, or held by, respondent's spouse, ascendants, descendants, relatives or any other persons." 16 To sustain the petitioner's 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 would 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. The power of the Tanodbayan to issue subpoenae ad testificandcum and subpoenae duces tecum at the time in question is not disputed, and at any rate does not admit of doubt. 17 The subpoenae issued by him, will be sustained against the petitioner's impugnation. WHEREFORE, the petition for certiorari is DISMISSED, with costs against petitioner.

(9) Punish for contempt in accordance with the Rules of Court and under the same procedure and with the same penalties provided therein. G.R. No. 135882 June 27, 2001 Clearly, the specific provision of R.A. 6770, a later legislation, modifies the law on the Secrecy of Bank Deposits (R.A.1405) and places the office of the Ombudsman in the same footing as the courts of law in this regard."2 The basis of the Ombudsman in ordering an in camera inspection of the accounts is a trail managers checks purchased by one George Trivinio, a respondent in OMB-0970411, pending with the office of the Ombudsman. It would appear that Mr. George Trivinio, purchased fifty one (51) Managers Checks (MCs) for a total amount of P272.1 Million at Traders Royal Bank, United Nations Avenue branch, on May 2 and 3, 1995. Out of the 51 MCs, eleven (11) MCs in the amount of P70.6 million, were deposited and credited to an account maintained at the Union Bank, Julia Vargas Branch.3 On May 26, 1998, the FFIB panel met in conference with petitioner Lourdes T. Marquez and Atty. Fe B. Macalino at the bank's main office, Ayala Avenue, Makati City. The meeting was for the purpose of allowing petitioner and Atty. Macalino to view the checks furnished by Traders Royal Bank. After convincing themselves of the veracity of the checks, Atty. Macalino advised Ms. Marquez to comply with the order of the Ombudsman. Petitioner agreed to an in camera inspection set on June 3, 1998.4 However, on June 4,1998, petitioner wrote the Ombudsman explaining to him that the accounts in question cannot readily be identified and asked for time to respond to the order. The reason forwarded by the petitioner was that "despite diligent efforts and from the accounts numbers presented, we can not identify these accounts since the checks are issued in cash or bearer. We surmised that these accounts have long been dormant, hence are not covered by the new account number generated by the Union Bank system. We therefore have to verify from the Interbank records archives for the whereabouts of these accounts.5 The Ombudsman, responding to the request of the petitioner for time to comply with the order, stated: "firstly, it must be emphasized that Union Bank, Julia Vargas Branch was depositary bank of the subject Traders Royal Bank Manager's Check (MCs), as shown at its dorsal portion and as cleared by the Philippines Clearing House, not the International Corporate Bank. Notwithstanding the facts that the checks were payable to cash or bearer, nonetheless, the name of the depositor(s) could easily be identified since the account numbers x x x where said checks were deposited are identified in the order. Even assuming that the accounts xxx were already classified as "dormant accounts," the bank is still required to preserve the records pertaining to the accounts within a certain period of time as required by existing banking rules and regulations. And finally, the in camera inspection was already extended twice from May 13, 1998 to June 3,1998 thereby giving the bank enough time within which to sufficiently comply with the order."6

LOURDES T. MARQUEZ, in her capacity as Branch Manager, UNION BANK OF THE PHILIPPINES, petitioner, vs. HONORABLE ANIANO A. DESIERTO, in his capacity as OMBUDSMAN, ANGEL C. MAYOR-ALGO, JR., MARY ANN CORPUZ-MANALAC AND JOSE T. DE JESUS, JR., in their capacity as Chairman and Members of the Panel, respectively, respondents. PARDO, J.: In the petition at bar, petitioner seeks to -a. Annul and set aside, for having been issued without or in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction, respondents' order dated September 7, 1998 in OMB0-97-0411, In Re: Motion to Cite Lourdes T. Marquez for indirect contempt, received by counsel of September 9,1998, and their order dated October 14,1998, denying Marquez's motion for reconsideration dated September 10, 1998, received by counsel on October 20, 1998. b. Prohibit respondents from implementing their order dated October 14, 1998, in proceeding with the hearing of the motion to cite Marquez for indirect contempt, through the issuance by this Court of a temporary restraining order and/or preliminary injunction.1 The antecedent facts are as follows: Sometime in May 1998, petitioner Marquez received an Order from the Ombudsman Aniano A. Desierto dated April 29, 1998, to produce several bank documents for purposes of inspection in camera relative to various accounts maintained at Union Bank of the Philippines, Julia Vargas Branch, where petitioner is the branch manager. The accounts to be inspected are Account Nos. 011-37270, 240-020718, 245-30317-3 and 245-30318-1, involved in a case pending with the Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et al. The order further states: "It is worth mentioning that the power of the Ombudsman to investigate and to require the production and inspection of records and documents is sanctioned by the 1987 Philippine Constitution, Republic Act No. 6770, otherwise known as Ombudsman Act of 1989 and under existing jurisprudence on the matter. It must be noted that R.A. 6770 especially Section 15 thereof provides, among others, the following powers, functions and duties of the Ombudsman, to wit: xxx (8) Administer oaths, issue subpoena duces tecum and take testimony in any investigation or inquiry, including the power to examine and have access to banks accounts and records;

Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner to produce the bank documents relative to accounts in issue. The order states: Viewed from the foregoing, your persistent refusal to comply with Ombudsman's order in unjustified, and is merely intended to delay the investigation of the case. Your act constitutes disobedience of or resistance to a lawful order issued by this office and is punishable as Indirect Contempt under Section 3(b) of R.A. 6770. The same may also constitute obstruction in the lawful exercise of the functions of the Ombudsman which is punishable under Section 36 of R.A. 6770.7 On July 10,1998, petitioner together with Union Bank of the Philippines, filed a petition for declaratory relief, prohibition and injunctions8 with the Regional Trial Court, Makati City, against the Ombudsman. The petition was intended to clear the rights and duties of petitioner. Thus, petitioner sought a declaration of her rights from the court due to the clear conflict between RA No.6770, Section 15 and R.A. No. 1405, Sections 2 and 3. Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman and the other persons acting under his authority were continuously harassing her to produce the bank documents relatives to the accounts in question. Moreover, on June 16, 1998, the Ombudsman issued another order stating that unless petitioner appeared before the FFIB with the documents requested, petitioner manager would be charged with indirect contempt and obstruction of justice. In the meantime,9 on July 14, 1998, the lower court denied petitioner's prayer for a temporary restraining order and stated us: "After hearing the arguments of the parties, the court finds the application for a Temporary Restraining Order to be without merit. "Since the application prays for restraint of the respondent, in the exercise of his contempt powers under Section 15(9) in relation to paragraph (8) of RA. 6770, known as " The Ombudsman Act of 1989", there is no great or irreparable injury from which petitioners may suffer, if respondent is not so restrained. Respondent should he decide to exercise his contempt powers would still have to apply with the court. x x x Anyone who, without lawful excuse x x x refuses to produce documents for inspection, when thereunto lawfully required shall be subject to discipline as in case of contempt of Court and upon application of the individual or body exercising the power in question shall be dealt with by the Judge of the First Instance (now RTC) having jurisdiction of the case in a manner provided by the law (section 580 of the Revised Administrative Code). Under the present Constitution only judges may issue warrants, hence, respondent should apply with the Court for the issuance of the warrant needed for the enforcement of his contempt orders. It is in these proceedings where petitioner may question the propriety of respondent's exercise of his contempt powers. Petitioners are not therefore left without any adequate remedy. "The questioned orders were issued with the investigation of the case of Fact-Finding and Intelligence Bureau vs. Amado Lagdameo, et. al., OMB-0-97-0411, for violation of RA. 3019. Since

petitioner failed to show prima facie evidence that the subject matter of the investigation is outside the jurisdiction of the Office of the Ombudsman, no writ of injunction may be issued by this Court to delay this investigation pursuant to section 14 of Ombudsman Act of 1989."10 On July 20,1998, petitioner filed a motion for reconsideration based on the following grounds: a. Petitioners' application for filed Temporary Restraining Order is not only to restrain the Ombudsman from exercising his contempt powers, but to stop him from implementing his Orders dated April 29, 1998 and June 16, 1998: and b. The subject matter of the investigation being conducted by the Ombudsman at petitioners' premises is outside his jurisdiction.11 On July 23, 1998, the Ombudsman filed a motion to dismiss the petition for declaratory relief12 on the ground that the Regional Trial Court has no jurisdiction to hear a petition for relief from the findings and orders of the Ombudsman, citing R.A. No. 6770, Sections 14 and 27. On August 7, 1998, the Ombudsman filed an opposition to petitioner's motion for reconsideration dated July 20, 1998.13 On August 19,1998, the lower court denied petitioner's motion for reconsideration,14 and also the Ombudsman's motion to dismiss. 15 On August 21, 1998, petitioner received a copy of the motion to cite her for contempt, filed with the Office of the Ombudsman by Agapito B. Rosales, Director, Fact Finding and Intelligence Bureau (FFIB).16 On August 31, 1998, petitioner filed with the Ombudsman an opposition to the motion to cite her in contempt on the ground that the filing thereof was premature due to the petition pending in the lower court.17 Petitioner likewise reiterated that she had no intention to disobey the orders of the Ombudsman. However, she wanted to be clarified as to how she would comply with the orders without her breaking any law, particularly RA. No. 1405.18 Respondent Ombudsman panel set the incident for hearing on September 7, 1998.19 After hearing, the panel issued an order dated September 7, 1998, ordering petitioner and counsel to appear for a continuation of the hearing of the contempt charges against her.20 On September 10, 1998, petitioner filed with the Ombudsman a motion for reconsideration of the above order.21Her motion was premised on the fact that there was a pending case with the Regional Trial Court, Makati City,22which would determine whether obeying the orders of the Ombudsman to produce bank documents would not violate any law. The FFIB opposed the motion,23 and on October 14, 1998, the Ombudsman denied the motion by order the dispositive portion of which reads: "Wherefore, respondent Lourdes T. Marquez's motion for reconsideration is hereby DENIED, for lack of merit. Let the hearing of the motion of the Fact Finding Intelligence Bureau (FFIB) to cite her for indirect contempt to be intransferrably set to 29 October 1998 at 2:00 o'clock p.m. at which date and time she should

appear personally to submit her additional evidence. Failure to do so shall be deemed a waiver thereof."24 Hence, the present petition.25 The issue is whether petitioner may be cited for indirect contempt for her failure to produce the documents requested by the Ombudsman. And whether the order of the Ombudsman to have an in camera inspection of the questioned account is allowed as an exception to the law on secrecy of bank deposits (R.A. No.1405). An examination of the secrecy of bank deposits law (R.A. No.1405) would reveal the following exceptions: 1. Where the depositor consents in writing; 2. Impeachment case; 3. By court order in bribery or dereliction of duty cases against public officials; 4. Deposit is subject of litigation; 5. Sec. 8, R.A. No.3019, in cases of unexplained wealth as held in the case of PNB vs. Gancayco.26 The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the Ombudsman against Amado Lagdameo, et. al. for violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates Authority and AMARI. We rule that before an in camera inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be notified to be present during the inspection, and such inspection may cover only the account identified in the pending case. In Union Bank of the Philippines v. Court of Appeals, we held that "Section 2 of the Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be "absolutely confidential" except: (1) In an examination made in the course of a special or general examination of a bank that is specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into the deposit to establish such fraud or irregularity, (2) In an examination made by an independent auditor hired by the bank to conduct its regular audit provided that the examination is for audit purposes only and the results thereof shall be for the exclusive use of the bank, (3) Upon written permission of the depositor, (4) In cases of impeachment, (5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or (6) In cases where the money deposited or invested is the subject matter of the litigation".27 In the case at bar, there is yet no pending litigation before any court of competent authority. What is existing is an investigation by the Office of the Ombudsman. In short, what the office of the ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et.

al., with the Sandiganbayan. Clearly, there was no pending case in court which would warrant the opening of the bank account for inspection. Zone of privacy are recognized and protected in our laws. The Civil Code provides that" [e]very person shall respect the dignity, personality, privacy and peace of mind of his neighbors and other persons" and punishes as actionable torts several acts for meddling and prying into the privacy of another. It also holds 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, revelation of trade and industrial secrets, and trespass to dwelling. Invasion of privacy is an offense in special laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the Intellectual Property Code.28 IN VIEW WHEREOF, we GRANT the petition. We order the Ombudsman to cease and desist from requiring Union Bank Manager Lourdes T. Marquez, or anyone in her place to comply with the order dated October 14,1998, and similar orders. No costs.

AREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E. SALVACION, petitioners, vs. CENTRAL BANK OF THE PHILIPPINES, CHINA BANKING CORPORATION and GREG BARTELLI y NORTHCOTT, respondents. DECISION TORRES, JR., J.: In our predisposition to discover the original intent of a statute, courts become the unfeeling pillars of the status quo. Little do we realize that statutes or even constitutions are bundles of compromises thrown our way by their framers. Unless we exercise vigilance, the statute may already be out of tune and irrelevant to our day. The petition is for declaratory relief. It prays for the following reliefs: a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents from applying and enforcing Section 113 of Central Bank Circular No. 960; b.) After hearing, judgment be rendered: 1.) Declaring the respective rights and duties of petitioners and respondents; 2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the provision of the Constitution, hence void; because its provision that Foreign currency deposits shall be exempt from attachment, garnishment, or any other order to process of any court, legislative body, government agency or any administrative body whatsoever i.) has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners favor in

violation of substantive due guaranteed by the Constitution;

process

legislative body, government agency or any administrative body, whatsoever. This prompted the counsel for petitioners to make an inquiry with the Central Bank in a letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or whether said section has been repealed or amended since said section has rendered nugatory the substantive right of the plaintiff to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57 of the Revised Rules of Court. The Central Bank responded as follows:

ii.) has given foreign currency depositors an undue favor or a class privilege in violation of the equal protection clause of the Constitution; iii.) has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminals could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank. The antecedents facts: On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account China Banking Corp., US $/A#54105028-2; 4.) ID-122-308877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant. On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and 805 for four (4) counts of Rape. On the same day, petitioners filed with the Regional Trial Court of Makati Civil Case No. 89-3214 for damages with preliminary attachment against Greg Bartelli. On February 24, 1989, the day there was a scheduled hearing for Bartellis petition for bail the latter escaped from jail. On February 28, 1989, the court granted the fiscals Urgent Ex-Parte Motion for the Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989. Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989 granting the application of herein petitioners, for the issuance of the writ of preliminary attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the amount P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on February 28, 1989. On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply to China Banking Corporation saying that the garnishment did not violate the secrecy of bank deposits since the disclosure is merely incidental to a garnishment properly and legally made by virtue of a court order which has placed the subject deposits in custodia legis. In answer to this letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20, 1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits of defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or process of any court,

May 26, 1989 Ms. Erlinda S. Carolino 12 Pres. Osmea Avenue South Admiral Village Paranaque, Metro Manila Dear Ms. Carolino: This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB Circular No. 960 (1983). The cited provision is absolute in application. It does not admit of any exception, nor has the same been repealed nor amended. The purpose of the law is to encourage dollar accounts within the countrys banking system which would help in the development of the economy. There is no intention to render futile the basic rights of a person as was suggested in your subject letter. The law may be harsh as some perceive it, but it is still the law. Compliance is, therefore, enjoined.

Very truly yours, (SGD) AGAPITO S. FAJARDO Director[1] Meanwhile, on April 10, 1989, the trial court granted petitioners motion for leave to serve summons by publication in the Civil Case No. 89-3214 entitled Karen Salvacion. et al. vs. Greg Bartelli y Northcott. Summons with the complaint was published in the Manila Times once a week for three consecutive weeks. Greg Bartelli failed to file his answer to the complaint and was declared in default on August 7, 1989. After hearing the case ex-parte, the court rendered judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant, ordering the latter: 1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages; 2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the amount of P150,000.00 each or a total of P300,000.00 for both of them; 3. To pay plaintiffs exemplary damages of P100,000.00; and 4. To pay attorneys fees in an amount equivalent to 25% of the total amount of damages herein awarded; 5. To pay litigation expenses of P10,000.00; plus

6. Costs of the suit. SO ORDERED. The heinous acts of respondents Greg Bartelli which gave rise to the award were related in graphic detail by the trial court in its decision as follows: The defendant in this case was originally detained in the municipal jail of Makati but was able to escape therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch 136, where he was charged with four counts of Rape and Serious Illegal Detention (Crim. Cases Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, summons was served upon defendant by publication in the Manila Times, a newspaper of general circulation as attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said newspaper. Defendant, however, failed to file his answer to the complaint despite the lapse of the period of sixty (60) days from the last publication; hence, upon motion of the plaintiffs through counsel, defendant was declared in default and plaintiffs were authorized to present their evidence ex parte. In support of the complaint, plaintiffs presented as witness the minor Karen E. Salvacion, her father, Federico N. Salacion, Jr., a certain Joseph Aguilar and a certain Liberato Mandulio, who gave the following testimony: Karen took her first year high school in St. Marys Academy in Pasay City but has recently transferred to Arellano University for her second year. In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a concrete bench in front of Plaza Fair, an American approached her. She was then alone because Edna Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5) The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he talked to her. He said he was a Math teacher and told her that he has a sister who is a nurse in New York. His sister allegedly has a daughter who is about Karens age and who was with him in his house along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5). The American asked Karen what was her favorite subject and she told him its Pilipino. He then invited her to go with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed toy to persuade her to teach his niece. (Id., pp.5-6) They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendants house along Kalayaan Avenue. (Id., p.6) When they reached the apartment house, Karen notices that defendants alleged niece was not outside the house but defendant told her maybe his niece was inside. When Karen did not see the alleged niece inside the house, defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id., p. 7) Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his niece was not

there. Defendant got a piece of cotton cord and tied Karens hands with it, and then he undressed her. Karen cried for help but defendant strangled her. He took a packing tape and he covered her mouth with it and he circled it around her head. (Id., p. 7) Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet and hands spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex organ. She felt severe pain. She tried to shout but no sound could come out because there were tapes on her mouth. When defendant withdrew his finger it was full of blood and Karen felt more pain after the withdrawal of the finger. (Id., p.8) He then got a Johnsons Baby Oil and he applied it to his sex organ as well as to her sex organ. After that he forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it difficult to breathe and she perspired a lot while feeling severe pain. She merely presumed that he was able to insert his sex organ a little, because she could not see. Karen could not recall how long the defendant was in that position. (Id., pp. 8-9) After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he untied her hands. Karen could only hear the sound of the water while the defendant, she presumed, was in the bathroom washing his sex organ. When she took a shower more blood came out from her. In the meantime, defendant changed the mattress because it was full of blood. After the shower, Karen was allowed by defendant to sleep. She fell asleep because she got tired crying. The incident happened at about 4:00 p.m. Karen had no way of determining the exact time because defendant removed her watch. Defendant did not care to give her food before she went to sleep. Karen woke up at about 8:00 oclock the following morning. (Id., pp. 9-10) The following day, February 5, 1989, a Sunday, after breakfast of biscuit and coke at about 8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She was raped for the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which defendant had stored downstairs; it was he who cooked the rice that is why it looks like lugaw. For the third time, Karen was raped again during the night. During those three times defendant succeeded in inserting his sex organ but she could not say whether the organ was inserted wholly. Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor put a tape on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all those windows and doors were closed. And even if she shouted for help, nobody would hear her. She was so afraid that if somebody would hear her and would be able to call a police, it was still possible that as she was still inside the house, defendant might kill her. Besides, the defendant did not leave that Sunday, ruling out her chance to call for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14) On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after breakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that there was a window because everything was covered by a carpet, until defendant opened the window for around fifteen minutes or less to let some air in, and she found that the window was covered by styrofoam and plywood. After that, he again closed the window with a hammer and he put the styrofoam, plywood, and carpet back. (Id., pp. 14-15)

That Monday evening, Karen had a chance to call for help, although defendant left but kept the door closed. She went to the bathroom and saw a small window covered by styrofoam and she also spotted a small hole. She stepped on the bowl and she cried for help through the hole. She cried: Maawa na po kayo sa akin. Tulungan nyo akong makalabas dito. Kinidnap ako! Somebody heard her. It was a woman, probably a neighbor, but she got angry and said she was istorbo. Karen pleaded for help and the woman told her to sleep and she will call the police. She finally fell asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16) She woke up at 6:00 oclock the following morning, and she saw defendant in bed, this time sleeping. She waited for him to wake up. When he woke up, he again got some food but he always kept the door locked. As usual, she was merely fed with biscuit and coke. On that day, February 7, 1989, she was again raped three times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 9:00, and the third was after lunch at 12:00 noon. After he had raped her for the second time he left but only for a short while. Upon his return, he caught her shouting for help but he did not understand what she was shouting about. After she was raped the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom and shouted for help. After shouting for about five minutes, she heard many voices. The voices were asking for her name and she gave her name as Karen Salvacion. After a while, she heard a voice of a woman saying they will just call the police. They were also telling her to change her clothes. She went from the bathroom to the room but she did not change her clothes being afraid that should the neighbors call the police and the defendant see her in different clothes, he might kill her. At that time she was wearing a T-shirt of the American bacause the latter washed her dress. (Id., p. 16) Afterwards, defendant arrived and opened the door. He asked her if she had asked for help because there were many policemen outside and she denied it. He told her to change her clothes, and she did change to the one she was wearing on Saturday. He instructed her to tell the police that she left home and willingly; then he went downstairs but he locked the door. She could hear people conversing but she could not understand what they were saying. (Id., p. 19) When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at the door as hard as she could. She heard somebody going upstairs and when the door was opened, she saw a policeman. The policeman asked her name and the reason why she was there. She told him she was kidnapped. Downstairs, he saw about five policemen in uniform and the defendant was talking to them. Nakikipag-areglo po sa mga pulis, Karen added. The policeman told him to just explain at the precinct. (Id., p. 20) They went out of the house and she saw some of her neighbors in front of the house. They rode the car of a certain person she called Kuya Boy together with defendant, the policeman, and two of her neighbors whom she called Kuya Bong Lacson and one Ate Nita. They were brought to SubStation I and there she was investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her mother together with some of their neighbors. Then they were brought to the second floor of the police headquarters. (Id., p. 21) At the headquarters, she was asked several questions by the investigator. The written statement she gave to the police was marked Exhibit A. Then they proceeded to the National Bureau of Investigation together with the investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her private parts. It was already 3:00 in early morning, of the

following day when they reached the NBI, (TSN, Aug. 15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit B. She was studying at the St. Marys Academy in Pasay City at the time of the Incident but she subsequently transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because she was ashamed to be the subject of conversation in the school. She first applied for transfer to Jose Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit Station but she was denied admission after she told the school the true reason for her transfer. The reason for their denial was that they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46) xxx xxx xxx

After the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and she is always in a state of shock; she has been absent-minded and is ashamed even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad. (Id., p. 11) The father prays for P500,000.00 moral damages for Karen for this shocking experience which probably, she would always recall until she reaches old age, and he is not sure if she could ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-11) Pursuant to an Order granting leave to publish notice of decision, said notice was published in the Manila Bulletin once a week for three consecutive weeks. After the lapse of fifteen (15) days from the date of the last publication of the notice of judgment and the decision of the trial court had become final, petitioners tried to execute on Bartellis dollar deposit with China Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960. Thus, petitioners decided to seek relief from this Court. The issues raised and the arguments articulated by the parties boil down to two: May this Court entertain the instant petition despite the fact that original jurisdiction in petitions for declaratory relief rests with the lower court? She Section 113 of Central Bank Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a foreign transient? Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. should be adjudged as unconstitutional on the grounds that: 1.) it has taken away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott garnished to satisfy the judgment rendered in petitioners favor in violation of substantive due process guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue favor or a class privilege n violation of the equal protection clause of the Constitution; 3.) it has provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since criminal could escape civil liability for their wrongful acts by merely converting their money to a foreign currency and depositing it in a foreign currency deposit account with an authorized bank; and 4.) The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has exceeded its delegated quasi- legislative power when it took away: a.) the plaintiffs substantive right to have the claim sought to be enforced by the civil action secured by way of the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court; b.) the plaintiffs substantive right to have the judgment credit satisfied by way of the writ of

execution out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of Court, which is beyond its power to do so. On the other hand, respondent Central Bank, in its Comment alleges that the Monetary Board in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority because the subject Section is copied verbatim from a portion of R.A. No. 6426 as amended by P.D. 1246. Hence, it was not the Monetary Board that grants exemption from attachment or garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it does not violate the substantive due process guaranteed by the Constitution because a.) it was based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class. Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits from attachment, garnishment or any other order process of any court, is to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines; that another reason is to encourage the inflow of foreign currency deposits into the banking institutions thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country; that the subject section is being enforced according to the regular methods of procedure; and that it applies to all currency deposits made by any person and therefore does not violate the equal protection clause of the Constitution. Respondent Central Bank further avers that the questioned provision is needed to promote the public interest and the general welfare; that the State cannot just stand idly by while a considerable segment of the society suffers from economic distress; that the State had to take some measures to encourage economic development; and that in so doing persons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of Court provide that some properties are exempted from execution/attachment especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides, among others, that foreign currency deposits shall be exempted from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. For its part, respondent China Banking Corporation, aside from giving reasons similar to that of respondent Central Bank, also stated that respondent China Bank is not unmindful of the inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg Bartelli; that it is not only too willing to release the dollar deposit of Bartelli which may perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh effect to these laws on petitioners, CBC has no other alternative but to follow the same. This court finds the petition to be partly meritorious. Petitioner deserves to receive the damages awarded to her by the court. But this petition for declaratory relief can only be entertained and treated as a petition for mandamus to require respondents to honor and comply with the writ of execution in Civil Case No. 89-3214. The Court has no original and exclusive jurisdiction over a petition for declatory relief.[2] However, exceptions to this rule have been recognized. Thus, where the petition has farreaching implications and raises questions that should be resolved, it may be treated as one for mandamus.[3]

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her gesture of kindness by teaching his alleged niece the Filipino language as requested by the American, trustingly went with said stranger to his apartment, and there she was raped by said American tourist Greg Bartelli. Not once, but ten times. She was detained therein for four (4) days. This American tourist was able to escape from the jail and avoid punishment. On the other hand, the child, having received a favorable judgment in the Civil Case for damages in the amount of more than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and besmirched reputation she had suffered and may continue to suffer for a long, long time; and knowing that this person who had wronged her has the money, could not, however get the award of damages because of this unreasonable law. This questioned law, therefore makes futile the favorable judgment and award of damages that she and her parents fully deserve. As stated by the trial court in its decision, Indeed, after hearing the testimony of Karen, the Court believes that it was indoubtedly a shocking and traumatic experience she had undergone which could haunt her mind for a long, long time, the mere recall of which could make her feel so humiliated, as in fact she had been actually humiliated once when she was refused admission at the Abad Santos High School, Arellano University, where she sought to transfer from another school, simply because the school authorities of the said High School learned about what happened to her and allegedly feared that they might be implicated in the case. xxx The reason for imposing exemplary or corrective damages is due to the wanton and bestial manner defendant had committed the acts of rape during a period of serious illegal detention of his hapless victim, the minor Karen Salvacion whose only fault was in her being so naive and credulous to believe easily that defendant, an American national, could not have such a bestial desire on her nor capable of committing such heinous crime. Being only 12 years old when that unfortunate incident happened, she has never heard of an old Filipino adage that in every forest there is a snake, xxx.[4] If Karens sad fate had happened to anybodys own kin, it would be difficult for him to fathom how the incentive for foreign currency deposit could be more important than his childs right to said award of damages; in this case, the victims claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is mere visitor. This further illustrates the flaw in the questioned provisions. It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the countrys economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the inquitous effects producing outright injustice and inequality such as as the case before us. It has thus been said thatBut I also know,[5] that laws and institutions must go hand in hand with the progress of the human mind. As that becomes more developed, more enlightened, as new discoveries are made, new truths are disclosed and manners and opinions change with

the change of circumstances, institutions must advance also, and keep pace with the times We might as well require a man to wear still the coat which fitted him when a boy, as civilized society to remain ever under the regimen of their barbarous ancestors. thus: In his comment, the Solicitor General correctly opined, "The present petition has far-reaching implications on the right of a national to obtain redress for a wrong committed by an alien who takes refuge under a law and regulation promulgated for a purpose which does not contemplate the application thereof envisaged by the allien. More specifically, the petition raises the question whether the protection against attachment, garnishment or other court process accorded to foreign currency deposits PD No. 1246 and CB Circular No. 960 applies when the deposit does not come from a lender or investor but from a mere transient who is not expected to maintain the deposit in the bank for long. The resolution of this question is important for the protection of nationals who are victimized in the forum by foreigners who are merely passing through. xxx xxx Respondents China Banking Corporation and Central Bank of the Philippines refused to honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the following provision of Central Bank Circular No. 960: Sec. 113 Exemption from attachment. Foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426: Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such rules and regulations as may be necessary to carry out the provisions of this Act which shall take effect after the publication of such rules and regulations in the Official Gazette and in a newspaper of national circulation for at least once a week for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing the rights of depositors, the rules and regulations at the time the deposit was made shall govern. The aforecited Section 113 was copied from Section 8 of Republic Act No. 6426. As amended by P.D. 1246, thus: Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreign currency deposits authorized under this Act, as amended by Presidential Decree No. 1035, as well as foreign currency deposits authorized under Presidential Decree No. 1034, are hereby declared as and considered of an absolutely

confidential nature and, except upon the written permission of the depositor, in no instance shall such foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative or any other entity whether public or private: Provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. The purpose of PD 1246 in according protection against attachment, garnishment and other court process to foreign currency deposits is stated in its whereases, viz.: WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035, certain Philippine banking institutions and branches of foreign banks are authorized to accept deposits in foreign currency; WHEREAS, under provisions of Presidential Decree No. 1034 authorizing the establishment of an offshore banking system in the Philippines, offshore banking units are also authorized to receive foreign currency deposits in certain cases; WHEREAS, in order to assure the development and speedy growth of the Foreign Currency Deposit System and the Offshore Banking System in the Philippines, certain incentives were provided for under the two Systems such as confidentiality subject to certain exceptions and tax exemptions on the interest income of depositors who are nonresidents and are not engaged in trade or business in the Philippines; WHEREAS, making absolute the protective cloak of confidentiality over such foreign currency deposits, exempting such deposits from tax, and guaranteeing the vested right of depositors would better encourage the inflow of foreign currency deposits into the banking institutions authorized to accept such deposits in the Philippines thereby placing such institutions more in a position to properly channel the same to loans and investments in the Philippines, thus directly contributing to the economic development of the country; Thus, one of the principal purposes of the protection accorded to foreign currency deposits is to assure the development and speedy growth of the Foreign Currency Deposit system and the Offshore Banking in the Philippines (3rd Whereas). The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No. 1034 are as follows: WHEREAS, conditions conducive to the establishment of an offshore banking

system, such as political stability, a growing economy and adequate communication facilities, among others, exist in the Philippines; WHEREAS, it is in the interest of developing countries to have as wide access as possible to the sources of capital funds for economic development; WHEREAS, an offshore banking system based in the Philippines will be advantageous and beneficial to the country by increasing our links with foreign lenders, facilitating the flow of desired investments into the Philippines, creating employment opportunities and expertise in international finance, and contributing to the national development effort. WHEREAS, the geographical location, physical and human resources, and other positive factors provide the Philippines with the clear potential to develop as another financial center in Asia; On the other hand, the Foreign Currency Deposit system was created by PD No. 1035. Its purpose are as follows: WHEREAS, the establishment of an offshore banking system in the Philippines has been authorized under a separate decree; WHEREAS, a number of local commercial banks, as depository bank under the Foreign Currency Deposit Act (RA No. 6426), have the resources and managerial competence to more actively engage in foreign exchange transactions and participate in the grant of foreign currency loans to resident corporations and firms; WHEREAS, it is timely to expand the foreign currency lending authority of the said depository banks under RA 6426 and apply to their transactions the same taxes as would be applicable to transaction of the proposed offshore banking units; It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD No. 1035). It is these depositors that are induced by the two laws and given protection and incentives by them. Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit encourage by PD Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor stays only for a few days in the country and, therefore, will maintain his deposit in the bank only for a short time. Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China Banking Corporation only for safekeeping during his temporary stay in the Philippines.

For the reasons stated above, the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment, garnishment or other court processes.[6] In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any court. Legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. Ninguno non deue enriquecerse tortizerzmente con damo de otro. Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377) It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent. Call it what it may but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of a crime? This situation calls for fairness legal tyranny. We definitely cannot have both ways and rest in the belief that we have served the ends of justice. IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends Section 8 of R.A. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances. Respondents are hereby REQUIRED to COMPLY with the writ of execution issued in Civil Case No. 89-3214, Karen Salvacion, et al. vs. Greg Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.