I. Short Title: Salvacion V - Central Bank II. FULL TITLE: KAREN E. SALVACION, Minor, Thru Federico N. Salvacion, JR., Father and

I. SHORT TITLE: SALVACION V.
CENTRAL BANK
II. FULL TITLE: KAREN 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. – G.R. No. 94723
August 21, 1997, TORRES, JR., J.
III. TOPIC: Law on Secrecy of Bank Deposits (Foreign Deposits)
IV. STATEMENT OF FACTS:

Greg Bartelli, an American tourist, coaxed and lured petitioner Karen Salvacion, then 12 years
old, to go with him to his apartment. Therein, Bartelli detained Salvacion for four days and was
able to rape the child multiple times.
After policemen and people living nearby, rescued Karen, Bartelli was arrested and detained at
the Makati Municipal Jail. The policemen recovered from Bartelli the following items: 1.) Dollar
Check, US 3,903.20; 2.) COCOBANK Bank Book (Peso Acct.); 3.) Dollar Account — China
Banking Corp., US$; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door Keys 6
pieces; 7.) Stuffed Doll used in seducing the complainant.
V. STATEMENT OF THE CASE:

Fiscal Condaya filed against Bartelli, Criminal Cases for Serious Illegal Detention and four
counts of Rape. Petitioners also filed with the Regional Trial Court (RTC) for damages with
preliminary attachment against Bartelli. Bartelli, however, was able to escape from jail.
The court issued an Order granting the application of petitioners, for the issuance of the writ of
preliminary attachment. After petitioners gave a bond by FGU Insurance Corporation in the
amount of P100,000, a Writ of Preliminary Attachment was issued by the trial court.
The Deputy Sheriff of Makati served a Notice of Garnishment on China Banking Corporation.
China Banking Corporation invoked RA. 1405 as its answer to the notice of garnishment.
The Deputy Sheriff sent his reply 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. China Banking
Corporation invoked Section 113 of CB Circular 960 to the effect that the dollar deposits or
defendant Bartelli are exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body, whatsoever.
This prompted the counsel for petitioners to make an inquiry with the Central Bank on whether
Section 113 of CB Circular 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.
The Central Bank responded that the cited provision is absolute in application. It does not admit
of any exception, nor has the same been repealed nor amended.
The trial court granted petitioners' motion for leave to serve summons by publication in the civil
case. Bartelli failed to file his answer to the complaint and was declared in default. After hearing
the case ex-parte, the court rendered judgment in favor of petitioners.
When the decision had become final, petitioners tried to execute on Bartelli's dollar deposit with
China Banking Corporation. Likewise, the bank invoked Section 113 of CB Circular 960. Thus,
petitioners decided to seek relief from this Court.
VI. ISSUE:
1. Whether or not Section 113 of CB Circular 960 and Section 8 of RA 6426,
as amended by PD 1246, otherwise known as the Foreign Currency
Deposit Act be made applicable to a foreign transient. (NO)
VII. RULING:
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 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.
If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom
how the incentive for foreign currency deposit could be more important than his child's rights to
said award of damages; in this case, the victim's claim for damages from this alien who had the
gall to wrong a child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions.
It is worth mentioning that RA 6426 was enacted in 1983 or at a time when the country's
economy was in a shambles; when foreign investments were minimal and presumably, this was
the reason why said statute was enacted. But the realities of the present times show that the
country has recovered economically; and even if not, the questioned law still denies those
entitled to due process of law for being unreasonable and oppressive. The intention of the
questioned law may be good when enacted. The law failed to anticipate the iniquitous effects
producing outright injustice and inequality such as the case before us.
In his Comment, the Solicitor General correctly opined, thus:

It is evident that the Offshore Banking System and the Foreign Currency Deposit System
were designed to draw deposits from foreign lenders and investors. It is these deposits
that are induced by the two laws and given protection and incentives by them.
Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of
deposit encouraged by PD 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 Bartelli is just a tourist or a transient. He deposited his dollars with

respondent China Banking 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 CB Circular
960 and PD 1246 against attachment, garnishment or other court processes.
In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that
the questioned Section 113 of CB Circular 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 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 tortizeramente con dano de otro." Simply stated, when the
statute is silent or ambiguous, this is one of those fundamental solutions that would respond to
the vehement urge of conscience.
It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used
as a device by accused 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 against legal tyranny.
We definitely cannot have both ways and rest in the belief that we have served the ends of
justice.
VIII. DISPOSITIVE PORTION:

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246,
insofar as it amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this
case because of its peculiar circumstances. Respondents are hereby REQUIRED to COMPLY
with the writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg
Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar
deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.
SO ORDERED.
IX. PREPARED BY: Sim, Lance Lester Angelo
I. UNION BANK OF THE PHILIPPINES v. CA & ALLIED BANK CORPORATION
II. FULL CASE TITLE: UNION BANK OF THE PHILIPPINES, petitioner, vs. COURT OF
APPEALS and ALLIED BANK CORPORATION, respondents.
III. PONENTE: Kapunan, J.
IV. TOPIC: Law on Secrecy of Bank Deposits
V. STATEMENT OF FACTS:
On March 21, 1990, a check in the amount of P1,000,000.00 was drawn against Account No.
0111-01854-8 with private respondent Allied Bank payable to the order of one Jose Ch. Alvarez.
The payee deposited the check with petitioner Union Bank who credited the P1,000,000.00 to the
account of Mr. Alvarez. Petitioner then sent the check for clearing through the Philippine
Clearing House Corporation (PCHC). When the check was presented for payment, a clearing
discrepancy was committed by Union Bank's clearing staff when the amount 1M was
erroneously "under-encoded" to 1,000php only.
Petitioner only discovered the under-encoding almost a year later. Thus, on May 7, 1991, Union
Bank notified Allied Bank of the discrepancy by way of a charge slip for P999,000.00 for
automatic debiting against of Allied Bank. The latter, however, refused to accept the charge slip
"since [the] transaction was completed per your [Union Bank's] original instruction and client's
account is now insufficiently funded."
VI. STATEMENT OF THE CASE:

The cause of action against defendant arose from defendant's deliberate violation of the
provisions of the PCHC Rule Book, Sec. 25.3, specifically on Under-Encoding of check
amounting to P1,000,000.00 drawn upon defendant's Tondo Branch which was deposited with
plaintiff, which was erroneously encoded at P1,000.00 which defendant as the receiving bank
thereof, never called nor notified the plaintiff of the error committed thus causing actual losses to
plaintiff in the principal amount of P999,000.00 exclusive of opportunity losses and interest.
Union Bank filed a complaint against Allied Bank before the PCHC Arbitration Committee
(Arbicom), praying that judgment be rendered in favor of plaintiff against defendant sentencing
it to pay plaintiff: The sum of P999,000.00, and other damages. Petitioner's theory is that private
respondent Allied Bank should have informed petitioner of the under-encoding pursuant to the
provisions of Section 25.3.1 of the PCHC Handbook. Failing in that duty, petitioner holds private
respondent directly liable for the P999,000.00 and other damages.
Union Bank filed in the RTC of Makati a petition for the examination of Account No. 111-
01854-8. Judgment on the arbitration case was held in abeyance pending the resolution of said
petition.
RTC dismissed the petition. It held that the case of the herein petitioner does not fall under any
of the foregoing exceptions to warrant a disclosure of or inquiry into the ledgers/books of
account of Allied Checking Account No. 111-01854-8. Needless to say, the complaint filed by
herein petitioner against Allied Banking Corporation before the PCHC Arbitration Committee
and is not one for bribery or dereliction of duty of public officials much less is there any showing
that the subject matter thereof is the money deposited in the account in question.
The Court of Appeals affirmed the dismissal of the petition, ruling that the case was not one
where the money deposited is the subject matter of the litigation. Hence, Union Bank is now
before this Court insisting that the money deposited in Account No. 0111-01854-8 is the subject
matter of the litigation which warrants the examination of the bank deposits.
VII. ISSUES:
Whether or not the case at bar falls under the last exception on Secrecy of Bank Deposits
VIII. RULING:
No, it does not fall under the last exception.
Sec. 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.
In the case at bar, petitioner is only fishing for information so it can determine the culpability of
private respondent and the amount of damages it can recover from the latter. It appears that the
true purpose for the examination is to aid petitioner in proving the extent of Allied Bank's
liability.
It does not seek recovery of the very money contained in the deposit. The subject matter of the
dispute may be the amount of P999,000.00 that petitioner seeks from private respondent as a
result of the latter's alleged failure to inform the former of the discrepancy; but it is not the
P999,000.00 deposited in the drawer's account. By the terms of R.A. No. 1405, the "money
deposited" itself should be the subject matter of the litigation. That petitioner feels a need for
such information in order to establish its case against private respondent does not, by itself,
warrant the examination of the bank deposits. The necessity of the inquiry, or the lack thereof, is
immaterial since the case does not come under any of the exceptions allowed by the Bank
Deposits Secrecy Act.
IX. DISPOSITIVE PORTION:

WHEREFORE, the petition is DENIED.
X. Prepared by: Allison C. Umandap
I. SHORT TITLE: EJERCITO VS. SANDIGANBAYAN

II. FULL TITLE: JOSEPH VICTOR G. EJERCITO, Petitioner, vs. SANDIGANBAYAN
(Special Division) and PEOPLE OF THE PHILIPPINES, Respondents. G.R. Nos.
157294-95, November 30, 2006, CARPIO MORALES,
IV. STATEMENT OF THE FACTS:
The present petition for certiorari under Rule 65 assails the Sandiganbayan Resolutions dated
February 7 and 12, 2003 denying petitioner Joseph Victor G. Ejercito’s Motions to Quash
Subpoenas Duces Tecum/Ad Testificandum, and Resolution dated March 11, 2003 denying his
Motion for Reconsideration of the first two resolutions.
The three resolutions were issued in Criminal Case No. 26558, "People of the Philippines v.
Joseph Ejercito Estrada, et al.," for plunder, defined and penalized in R.A. 7080, "AN ACT
DEFINING AND PENALIZING THE CRIME OF PLUNDER."
In above-stated case of People v. Estrada, et al., the Special Prosecution Panel filed on January
20, 2003 before the Sandiganbayan a Request for Issuance of Subpoena Duces Tecum for the
issuance of a subpoena directing the President of Export and Industry Bank (EIB, formerly
Urban Bank) or his/her authorized representative to produce documents about his trust account,
savings account, unrban manager’s check and their corresponding urban manager’s check
application forms, during the hearings scheduled on January 22 and 27, 2003.
The Special Prosecution Panel also filed on January 20, 2003, a Request for Issuance of
Subpoena Duces Tecum/Ad Testificandum directed to the authorized representative of
Equitable-PCI Bank to produce statements of account pertaining to certain accounts in the name
of "Jose Velarde" and to testify thereon.
The Sandiganbayan granted both requests by Resolution of January 21, 2003 and subpoenas
were accordingly issued.
The Special Prosecution Panel filed still another Request for Issuance of Subpoena Duces
Tecum/Ad Testificandum dated January 23, 2003 for the President of EIB or his/her authorized
representative to produce the same documents subject of the Subpoena Duces Tecum dated
January 21, 2003 and to testify thereon on the hearings scheduled on January 27 and 29, 2003
and subsequent dates until completion of the testimony. The request was likewise granted by the
Sandiganbayan. A Subpoena Duces Tecum/Ad Testificandum was accordingly issued on January
24, 2003.

Petitioner, claiming to have learned from the media that the Special Prosecution Panel had
requested for the issuance of subpoenas for the examination of bank accounts belonging to him,
attended the hearing of the case on January 27, 2003 and filed before the Sandiganbayan a letter
of even date expressing his concerns as follows:
xxxx
I am sure the prosecution is aware of our banking secrecy laws everyone supposed to observe.
But, instead of prosecuting those who may have breached such laws, it seems it is even going to
use supposed evidence which I have reason to believe could only have been illegally obtained.
xxxx
May I, therefore, ask your Honors, that in the meantime, the issuance of the subpoena be held in
abeyance for at least ten (10) days to enable me to take appropriate legal steps in connection with
the prosecution’s request for the issuance of subpoena concerning my accounts.
From the present petition, it is gathered that the "accounts" referred to by petitioner in his above-
quoted letter are Trust Account No. 858 and Savings Account No. 0116-17345-9.2
In open court, the Special Division of the Sandiganbayan, through Associate Justice Edilberto
Sandoval, advised petitioner that his remedy was to file a motion to quash, for which he was
given up to 12:00 noon the following day, January 28, 2003.
Petitioner, unassisted by counsel, thus filed on January 28, 2003 a Motion to Quash Subpoena
Duces Tecum/Ad Testificandum praying that the subpoenas previously issued to the President of
the EIB dated January 21 and January 24, 2003 be quashed.
In his Motion to Quash, petitioner claimed that his bank accounts are covered by R.A. No. 1405
(The Secrecy of Bank Deposits Law) and do not fall under any of the exceptions stated therein.
He further claimed that the specific identification of documents in the questioned subpoenas,
including details on dates and amounts, could only have been made possible by an earlier illegal
disclosure thereof by the EIB and the Philippine Deposit Insurance Corporation (PDIC) in its
capacity as receiver of the then Urban Bank.
The disclosure being illegal, petitioner concluded, the prosecution in the case may not be allowed
to make use of the information.
Before the Motion to Quash was resolved by the Sandiganbayan, the prosecution filed another
Request for the Issuance of Subpoena Duces Tecum/Ad Testificandum dated January 31, 2003,
again to direct the President of the EIB to produce, on the hearings scheduled on February 3 and
5, 2003, the same documents subject of the January 21 and 24, 2003 subpoenas with the
exception of the Bank of Commerce MC #0256254 in the amount of ₱2,000,000 as Bank of
Commerce MC #0256256 in the amount of ₱200,000,000 was instead requested. Moreover, the
request covered additional documents such as account forms, specimen signature card/s, and
statement of account in his Savings Account No. 1701-00646-1.
The prosecution also filed a Request for the Issuance of Subpoena Duces Tecum/Ad
Testificandum bearing the same date, January 31, 2003, directed to Aurora C. Baldoz, Vice
President-CR-II of the PDIC for her to produce different documents on the scheduled hearings
on February 3 and 5, 2003.
The subpoenas prayed for in both requests were issued by the Sandiganbayan on January 31,
2003.
On February 7, 2003, petitioner, this time assisted by counsel, filed an Urgent Motion to Quash
Subpoenae Duces Tecum/Ad Testificandum praying that the subpoena dated January 31, 2003
directed to Aurora Baldoz be quashed for the same reasons which he cited in the Motion to
Quash he had earlier filed.
On the same day, February 7, 2003, the Sandiganbayan issued a Resolution denying petitioner’s
Motion to Quash Subpoenae Duces Tecum/Ad Testificandum dated January 28, 2003.
Subsequently or on February 12, 2003, the Sandiganbayan issued a Resolution denying

petitioner’s Urgent Motion to Quash Subpoena Duces Tecum/Ad Testificandum dated February
7, 2003.
Petitioner’s Motion for Reconsideration dated February 24, 2003 seeking a reconsideration of the
Resolutions of February 7 and 12, 2003 having been denied by Resolution of March 11, 2003,
petitioner filed the present petition.
VI. ISSUES:
1. Whether petitioner’s Trust Account No. 858 is covered by the term "deposit" as used in R.A.
1405; (NO)
2. Whether petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9 are
excepted from the protection of R.A. 1405 (NO)
VII. RULING:
The contention that trust accounts are not covered by the term "deposits," as used in R.A. 1405,
by the mere fact that they do not entail a creditor-debtor relationship between the trustor and the
bank, does not lie. An examination of the law shows that the term "deposits" used therein is to be
understood broadly and not limited only to accounts which give rise to a creditor-debtor
relationship between the depositor and the bank.
The policy behind the law is laid down in Section 1:
SECTION 1. It is hereby declared to be the policy of the Government to give encouragement to

the people to deposit their money in banking institutions and to discourage private hoarding so
that the same may be properly utilized by banks in authorized loans to assist in the economic
development of the country. (Underscoring supplied)
If the money deposited under an account may be used by banks for authorized loans to third
persons, then such account, regardless of whether it creates a creditor-debtor relationship
between the depositor and the bank, falls under the category of accounts which the law precisely
seeks to protect for the purpose of boosting the economic development of the country.
Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between
petitioner and Urban Bank provides that the trust account covers "deposit, placement or
investment of funds" by Urban Bank for and in behalf of petitioner. The money deposited under
Trust Account No. 858, was, therefore, intended not merely to remain with the bank but to be
invested by it elsewhere. To hold that this type of account is not protected by R.A. 1405 would
encourage private hoarding of funds that could otherwise be invested by banks in other ventures,
contrary to the policy behind the law.
Section 2 of the same law in fact even more clearly shows that the term "deposits" was intended
to be understood broadly:
SECTION 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. (Emphasis and underscoring supplied)
The phrase "of whatever nature" proscribes any restrictive interpretation of "deposits."
Moreover, it is clear from the immediately quoted provision that, generally, the law applies not
only to money which is deposited but also to those which are invested. This further shows that
the law was not intended to apply only to "deposits" in the strict sense of the word. Otherwise,
there would have been no need to add the phrase "or invested."
Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858.
The protection afforded by the law is, however, not absolute, there being recognized exceptions
thereto, as above-quoted Section 2 provides. In the present case, two exceptions apply, to wit: (1)
the examination of bank accounts is upon order of a competent court in cases of bribery or
dereliction of duty of public officials, and (2) the money deposited or invested is the subject
matter of the litigation.
Petitioner contends that since plunder is neither bribery nor dereliction of duty, his accounts are
not excepted from the protection of R.A. 1405. Philippine National Bank v. Gancayco holds
otherwise:
Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason
is seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential. The policy as to one cannot be different from the policy as to the other. This policy
expresses the notion that a public office is a public trust and any person who enters upon its
discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to
public scrutiny.
Undoubtedly, cases for plunder involve unexplained wealth.

An examination of the "overt or criminal acts as described in Section 1(d)" of R.A. No. 7080
would make the similarity between plunder and bribery even more pronounced since bribery is
essentially included among these criminal acts. Thus Section 1(d) states:
d) "Ill-gotten wealth" means any asset, property, business enterprise or material possession of
any person within the purview of Section Two (2) hereof, acquired by him directly or indirectly
through dummies, nominees, agents, subordinates and or business associates by any combination
or series of the following means or similar schemes.
2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or

any other form of pecuniary benefit from any person and/or entity in connection with any
government contract or project or by reason of the office or position of the public officer
concerned;
Indeed, all the above-enumerated overt acts are similar to bribery such that, in each case, it may
be said that "no reason is seen why these two classes of cases cannot be excepted from the rule
making bank deposits confidential."
The crime of bribery and the overt acts constitutive of plunder are crimes committed by public
officers, and in either case the noble idea that "a public office is a public trust and any person
who enters upon its discharge does so with the full knowledge that his life, so far as relevant to
his duty, is open to public scrutiny" applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of
bribery must also apply to cases of plunder.
Respecting petitioner’s claim that the money in his bank accounts is not the "subject matter of
the litigation," the meaning of the phrase "subject matter of the litigation" as used in R.A. 1405 is
explained in Union Bank of the Philippines v. Court of Appeals, thus:
Petitioner contends that the Court of Appeals confuses the "cause of action" with the "subject of
the action". In Yusingco v. Ong Hing Lian, petitioner points out, this Court distinguished the two
concepts.
x x x "The cause of action is the legal wrong threatened or committed, while the object of the
action is to prevent or redress the wrong by obtaining some legal relief; but the subject of the
action is neither of these since it is not the wrong or the relief demanded, the subject of the action
is the matter or thing with respect to which the controversy has arisen, concerning which the
wrong has been done, and this ordinarily is the property or the contract and its subject matter, or
the thing in dispute."
The argument is well-taken. We note with approval the difference between the ‘subject of the
action’ from the ‘cause of action.’ We also find petitioner’s definition of the phrase ‘subject
matter of the action’ is consistent with the term ‘subject matter of the litigation’, as the latter is
used in the Bank Deposits Secrecy Act.
In Mellon Bank, N.A. v. Magsino, where the petitioner bank inadvertently caused the transfer of
the amount of US$1,000,000.00 instead of only US$1,000.00, the Court sanctioned the
examination of the bank accounts where part of the money was subsequently caused to be
deposited:
‘x x x Section 2 of [Republic Act No. 1405] allows the disclosure of bank deposits in cases
where the money deposited is the subject matter of the litigation. Inasmuch as Civil Case No.
26899 is aimed at recovering the amount converted by the Javiers for their own benefit,
necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to
whatever is concealed by being held or recorded in the name of persons other than the one
responsible for the illegal acquisition."
Clearly, Mellon Bank involved a case where the money deposited was the subject matter of the
litigation since the money deposited was the very thing in dispute. x x x" (Emphasis and
underscoring supplied)
The plunder case now pending with the Sandiganbayan necessarily involves an inquiry into the
whereabouts of the amount purportedly acquired illegally by former President Joseph Estrada.
In light then of this Court’s pronouncement in Union Bank, the subject matter of the litigation
cannot be limited to bank accounts under the name of President Estrada alone, but must include
those accounts to which the money purportedly acquired illegally or a portion thereof was
alleged to have been transferred. Trust Account No. 858 and Savings Account No. 0116-17345-9
in the name of petitioner fall under this description and must thus be part of the subject matter of
the litigation.
In a further attempt to show that the subpoenas issued by the Sandiganbayan are invalid and may
not be enforced, petitioner contends, as earlier stated, that the information found therein, given
their "extremely detailed" character, could only have been obtained by the Special Prosecution
Panel through an illegal disclosure by the bank officials concerned. Petitioner thus claims that,
following the "fruit of the poisonous tree" doctrine, the subpoenas must be quashed.
Petitioner further contends that even if, as claimed by respondent People, the "extremely-
detailed" information was obtained by the Ombudsman from the bank officials concerned during
a previous investigation of the charges against President Estrada, such inquiry into his bank
accounts would itself be illegal.
As no plunder case against then President Estrada had yet been filed before a court of competent
jurisdiction at the time the Ombudsman conducted an investigation, petitioner concludes that the
information about his bank accounts were acquired illegally, hence, it may not be lawfully used
to facilitate a subsequent inquiry into the same bank accounts.
Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405,
it bears noting, nowhere provides that an unlawful examination of bank accounts shall render the
evidence obtained therefrom inadmissible in evidence. Section 5 of R.A. 1405 only states that
"[a]ny violation of this law will subject the offender upon conviction, to an imprisonment of not
more than five years or a fine of not more than twenty thousand pesos or both, in the discretion
of the court."
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases
involving R.A. 1405, the Court finds no reason to apply the same in this particular case.
Clearly, the "fruit of the poisonous tree" doctrine presupposes a violation of law. If there was no
violation of R.A. 1405 in the instant case, then there would be no "poisonous tree" to begin with,
and, thus, no reason to apply the doctrine.
How the Ombudsman conducted his inquiry into the bank accounts of petitioner is recounted by
respondent People of the Philippines, viz:
x x x [A]s early as February 8, 2001, long before the issuance of the Marquez ruling, the Office
of the Ombudsman, acting under the powers granted to it by the Constitution and R.A. No. 6770,
and acting on information obtained from various sources, including impeachment (of then Pres.
Joseph Estrada) related reports, articles and investigative journals, issued a Subpoena Duces
Tecum addressed to Urban Bank. (Attachment "1-b") It should be noted that the description of
the documents sought to be produced at that time included that of numbered accounts 727, 737,
747, 757, 777 and 858 and included such names as Jose Velarde, Joseph E. Estrada, Laarni
Enriquez, Guia Gomez, Joy Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin Garcia.
The subpoena did not single out account 858.
xxxx
The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of

petitioner’s bank accounts, conducted before a case was filed with a court of competent
jurisdiction, was lawful.
For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner about four
months before Marquez was promulgated on June 27, 2001.
While judicial interpretations of statutes, such as that made in Marquez with respect to R.A. No.
6770 or the Ombudsman Act of 1989, are deemed part of the statute as of the date it was
originally passed, the rule is not absolute.
Columbia Pictures, Inc. v. Court of Appeals teaches:
It is consequently clear that a judicial interpretation becomes a part of the law as of the date that
law was originally passed, subject only to the qualification that when a doctrine of this
Court is overruled and a different view is adopted, and more so when there is a reversal
thereof, the new doctrine should be applied prospectively and should not apply to parties who
relied on the old doctrine and acted in good faith. (Emphasis and underscoring supplied)
When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of Bank
Deposits Law in Marquez, that "before an in camera inspection may be allowed there must be a
pending case before a court of competent jurisdiction", it was, in fact, reversing an earlier
doctrine found in Banco Filipino Savings and Mortgage Bank v. Purisima.
Banco Filipino involved subpoenas duces tecum issued by the Office of the Ombudsman, then
known as the Tanodbayan, in the course of its preliminary investigation of a charge of violation
of the Anti-Graft and Corrupt Practices Act.
While the main issue in Banco Filipino was whether R.A. 1405 precluded the Tanodbayan’s
issuance of subpoena duces tecum of bank records in the name of persons other than the one who
was charged, this Court, citing P.D. 1630, Section 10, the relevant part of which states:
(d) He may issue a subpoena to compel any person to appear, give sworn testimony, or produce
documentary or other evidence the Tanodbayan deems relevant to a matter under his inquiry,
held that "The power of the Tanodbayan to issue subpoenae ad testificandum and
subpoenae duces tecum at the time in question is not disputed, and at any rate does not
admit of doubt."
As the subpoenas subject of Banco Filipino were issued during a preliminary investigation, in
effect this Court upheld the power of the Tandobayan under P.D. 1630 to issue subpoenas duces
tecum for bank documents prior to the filing of a case before a court of competent jurisdiction.
Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite the fact
that the subpoena power of the Ombudsman under R.A. 6770 was essentially the same as that
under P.D. 1630. Thus Section 15 of R.A. 6770 empowers the Office of the Ombudsman to
(8) Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any
investigation or inquiry, including the power to examine and have access to bank accounts and
records;
A comparison of this provision with its counterpart in Sec. 10(d) of P.D. 1630 clearly shows that
it is only more explicit in stating that the power of the Ombudsman includes the power to
examine and have access to bank accounts and records which power was recognized with respect
to the Tanodbayan through Banco Filipino.
The Marquez ruling that there must be a pending case in order for the Ombudsman to validly
inspect bank records in camera thus reversed a prevailing doctrine. Hence, it may not be
retroactively applied.
The Ombudsman’s inquiry into the subject bank accounts prior to the filing of any case before a
court of competent jurisdiction was therefore valid at the time it was conducted.
In fine, the subpoenas issued by the Ombudsman in this case were legal, hence, invocation of the
"fruit of the poisonous tree" doctrine is misplaced.
At all events, even if the challenged subpoenas are quashed, the Ombudsman is not barred from
requiring the production of the same documents based solely on information obtained by it from
sources independent of its previous inquiry.
In particular, the Ombudsman, even before its inquiry, had already possessed information giving
him grounds to believe that (1) there are bank accounts bearing the number "858," (2) that such
accounts are in the custody of Urban Bank, and (3) that the same are linked with the bank
accounts of former President Joseph Estrada who was then under investigation for plunder.
The information on the existence of Bank Accounts bearing number "858" was, according to
respondent People of the Philippines, obtained from various sources including the proceedings
during the impeachment of President Estrada, related reports, articles and investigative journals.
In the absence of proof to the contrary, this explanation proffered by respondent must be upheld.
To presume that the information was obtained in violation of R.A. 1405 would infringe the
presumption of regularity in the performance of official functions.
Thus, with the filing of the plunder case against former President Estrada before the
Sandiganbayan, the Ombudsman, using the above independent information, may now proceed to
conduct the same investigation it earlier conducted, through which it can eventually obtain the
same information previously disclosed to it by the PDIC, for it is an inescapable fact that the
bank records of petitioner are no longer protected by R.A. 1405 for the reasons already explained
above.
Since conducting such an inquiry would, however, only result in the disclosure of the same
documents to the Ombudsman, this Court, in avoidance of what would be a time-wasteful and
circuitous way of administering justice, upholds the challenged subpoenas.
IN SUM, the Court finds that the Sandiganbayan did not commit grave abuse of discretion in
issuing the challenged subpoenas for documents pertaining to petitioner’s Trust Account No. 858
and Savings Account No. 0116-17345-9 for the following reasons:
1. These accounts are no longer protected by the Secrecy of Bank Deposits Law, there being two
exceptions to the said law applicable in this case, namely: (1) the examination of bank accounts
is upon order of a competent court in cases of bribery or dereliction of duty of public officials,
and (2) the money deposited or invested is the subject matter of the litigation. Exception (1)
applies since the plunder case pending against former President Estrada is analogous to bribery
or dereliction of duty, while exception (2) applies because the money deposited in petitioner’s
bank accounts is said to form part of the subject matter of the same plunder case.
2. The "fruit of the poisonous tree" principle, which states that once the primary source (the
"tree") is shown to have been unlawfully obtained, any secondary or derivative evidence (the
"fruit") derived from it is also inadmissible, does not apply in this case. In the first place, R.A.
1405 does not provide for the application of this rule. Moreover, there is no basis for applying
the same in this case since the primary source for the detailed information regarding petitioner’s
bank accounts – the investigation previously conducted by the Ombudsman – was lawful.
3. At all events, even if the subpoenas issued by the Sandiganbayan were quashed, the
Ombudsman may conduct on its own the same inquiry into the subject bank accounts that it
earlier conducted last February-March 2001, there being a plunder case already pending against
former President Estrada. To quash the challenged subpoenas would, therefore, be pointless
since the Ombudsman may obtain the same documents by another route. Upholding the
subpoenas avoids an unnecessary delay in the administration of justice.
VIII: DISPOSITIVE PORTION:
WHEREFORE, the petition is DISMISSED. The Sandiganbayan Resolutions dated February 7

and 12, 2003 and March 11, 2003 are upheld.
The Sandiganbayan is hereby directed, consistent with this Court’s ruling in Marquez v.
Desierto, to notify petitioner as to the date the subject bank documents shall be presented in court
by the persons subpoenaed.
IX. PREPARED BY: Claudette Irene S. Manalastas
Q: The special prosecution panel filed a Request for Issuance of Subpoena Duces Tecum
directing the President of Export and Industry Bank (EIB, formerly Urban Bank) or his/her
authorized representative to produce the Trust Account No. 858 and Savings Account No. 0116-
17345-9 of the petitioner. In his Motion to Quash, petitioner claimed that his bank accounts are
covered by R.A. No. 1405 (The Secrecy of Bank Deposits Law) and do not fall under any of the
exceptions stated therein. For, to respondent People, the law applies only to deposits which
strictly means the money delivered to the bank by which a creditor-debtor relationship is created
between the depositor and the bank. Thus, the Trust Account No. 858 should be inquired into,
not merely because it falls under the exceptions to the coverage of R.A. 1405, but because it is
not even contemplated therein. Is petitioner correct in saying that the Trust Account is covered
by the term “deposit” under R.A. 1405? (YES)
A: An examination of the law shows that the term deposits used therein is to be understood
broadly and not limited only to accounts which give rise to a creditor-debtor relationship
between the depositor and the bank.
If the money deposited under an account may be used by banks for authorized loans to third
persons, then such account, regardless of whether it creates a creditor-debtor relationship
between the depositor and the bank, falls under the category of accounts which the law precisely
seeks to protect for the purpose of boosting the economic development of the country.
To hold that this type of account is not protected by R.A. 1405 would encourage private hoarding
of funds that could otherwise be invested by banks in other ventures, contrary to the policy
behind the law.
Section 2 of the same law in fact even more clearly shows that the term deposits was intended to
be understood broadly:
SECTION 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 phrase of whatever nature proscribes any restrictive interpretation of deposits. Moreover, it
is clear from the immediately quoted provision that, generally, the law applies not only to money
which is deposited but also to those which are invested. This further shows that the law was not
intended to apply only to deposits in the strict sense of the word. Otherwise, there would have
been no need to add the phrase or invested.
I.SHORT TITLE: RCBC VS. HON. DE CASTRO AND PHILIPPINE VIRGINIA

TOBACCO ADMINISTRATION
II. FULL TITLE: RIZAL COMMERCIAL BANKING CORPORATION, petitioner, vs. THE
HONORABLE PACIFICO P. DE CASTRO and PHILIPPINE VIRGINIA TOBACCO
ADMINISTRATION, respondents G.R. No. L-34548 November 29, 1988 CORTES, J.:
In Civil Case No. Q-12785 of the Court of First Instance of Rizal, Quezon City Branch IX
entitled "Badoc Planters, Inc. versus Philippine Virginia Tobacco Administration, et al.," which
was an action for recovery of unpaid tobacco deliveries, an Order (Partial Judgment) was issued
on January 15, 1970 by the Hon. Lourdes P. San Diego, then Presiding Judge, ordering the
defendants therein to pay jointly and severally, the plaintiff Badoc Planters, Inc. (hereinafter
referred to as "BADOC") within 48 hours the aggregate amount of P206,916.76, with legal
interests thereon.
On January 26,1970, BADOC filed an Urgent Ex-Parte Motion for a Writ of Execution of the
said Partial Judgment which was granted on the same day by the herein respondent judge who
acted in place of the Hon. Judge San Diego who had just been elevated as a Justice of the Court
of Appeals. Accordingly, the Branch Clerk of Court on the very same day, issued a Writ of
Execution addressed to Special Sheriff Faustino Rigor, who then issued a Notice of Garnishment
addressed to the General Manager and/or Cashier of Rizal Commercial Banking Corporation
(hereinafter referred to as RCBC), the petitioner in this case, requesting a reply within five (5)
days to said garnishment as to any property which the Philippine Virginia Tobacco
Administration (hereinafter referred to as "PVTA") might have in the possession or control of
petitioner or of any debts owing by the petitioner to said defendant. Upon receipt of such Notice,
RCBC notified PVTA thereof to enable the PVTA to take the necessary steps for the protection
of its own interest.
Upon an Urgent Ex-Parte Motion dated January 27, 1970 filed by BADOC, the respondent Judge
issued an Order granting the Ex-Parte Motion and directing the herein petitioner "to deliver in
check the amount garnished to Sheriff Faustino Rigor and Sheriff Rigor in turn is ordered to cash
the check and deliver the amount to the plaintiff's representative and/or counsel on record." In
compliance with said Order, petitioner delivered to Sheriff Rigor a certified check in the sum of
P 206,916.76.
Respondent PVTA filed a Motion for Reconsideration dated February 26,1970 which was
granted in an Order dated April 6,1970, setting aside the Orders of Execution and of Payment
and the Writ of Execution and ordering petitioner and BADOC "to restore, jointly and severally,
the account of PVTA with the said bank in the same condition and state it was before the
issuance of the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with
interests at the legal rate from January 27, 1970 until fully paid to the account of the PVTA This
is without prejudice to the right of plaintiff to move for the execution of the partial judgment
pending appeal in case the motion for reconsideration is denied and appeal is taken from the said
partial judgment."
The Motion for Reconsideration of the said Order of April 6, 1970 filed by herein petitioner was
denied in the Order of respondent judge dated June 10, 1970 and on June 19, 1970, which was
within the period for perfecting an appeal, the herein petitioner filed a Notice of Appeal to the
Court of Appeals from the said Orders.
This case was then certified by the Court of Appeals to this Honorable Court, involving as it does
purely questions of law.
VI. ISSUE:
Should the bank be held solidarily liable with the judgment creditor to its depositor for
reimbursement of the garnished funds? (NO)
VII. RULING:
It must be noted that the Order of respondent Judge dated April 6, 1970 directing the plaintiff to
reimburse PVTA the amount of P206,916.76 with interests became final as to said plaintiff who
failed to even file a motion for reconsideration, much less to appeal from the said Order.
Consequently, the order to restore the account of PVTA with RCBC in the same condition and
state it was before the issuance of the questioned orders must be upheld as to the plaintiff,
BADOC.
However, the questioned Order of April 6, 1970 must be set aside insofar as it ordered the
petitioner RCBC, jointly and severally with BADOC, to reimburse PVTA.
The petitioner merely obeyed a mandatory directive from the respondent Judge dated January 27,
1970, ordering petitioner 94 "to deliver in check the amount garnished to Sheriff Faustino Rigor
and Sheriff Rigor is in turn ordered to cash the check and deliver the amount to the plaintiffs
representative and/or counsel on record."
PVTA however claims that the manner in which the bank complied with the Sheriffs Notice of
Garnishment indicated breach of trust and dereliction of duty on the part of the bank as custodian
of government funds. It insistently urges that the premature delivery of the garnished amount by
RCBC to the special sheriff even in the absence of a demand to deliver made by the latter, before
the expiration of the five-day period given to reply to the Notice of Garnishment, without any
reply having been given thereto nor any prior authorization from its depositor, PVTA and even if
the court's order of January 27, 1970 did not require the bank to immediately deliver the
garnished amount constitutes such lack of prudence as to make it answerable jointly and
severally with the plaintiff for the wrongful release of the money from the deposit of the PVTA.
The respondent Judge in his controverted Order sustained such contention and blamed RCBC for
the supposed "hasty release of the amount from the deposit of the PVTA without giving PVTA a
chance to take proper steps by informing it of the action being taken against its deposit, thereby
observing with prudence the five-day period given to it by the sheriff."
Such allegations must be rejected for lack of merit. In the first place, it should be pointed out that
RCBC did not deliver the amount on the strength solely of a Notice of Garnishment; rather, the
release of the funds was made pursuant to the aforesaid Order of January 27, 1970. While the
Notice of Garnishment dated January 26, 1970 contained no demand of payment as it was a mere
request for petitioner to withold any funds of the PVTA then in its possession, the Order of
January 27, 1970 categorically required the delivery in check of the amount garnished to the
special sheriff, Faustino Rigor.
In the second place, the bank had already filed a reply to the Notice of Garnishment stating that it
had in its custody funds belonging to the PVTA, which, in fact was the basis of the plaintiff in
filing a motion to secure delivery of the garnished amount to the sheriff.
Lastly, the bank, upon the receipt of the Notice of Garnishment, duly informed PVTA thereof to
enable the latter to take the necessary steps for the protection of its own interest.
It is important to stress, at this juncture, that there was nothing irregular in the delivery of the
funds of PVTA by check to the sheriff, whose custody is equivalent to the custody of the court,
he being a court officer. The order of the court dated January 27, 1970 was composed of two
parts, requiring: 1) RCBC to deliver in check the amount garnished to the designated sheriff and
2) the sheriff in turn to cash the check and deliver the amount to the plaintiffs representative
and/or counsel on record. It must be noted that in delivering the garnished amount in check to the
sheriff, the RCBC did not thereby make any payment, for the law mandates that delivery of a
check does not produce the effect of payment until it has been cashed. [Article 1249, Civil
Code.]
Moreover, by virtue of the order of garnishment, the same was placed in custodia legis and
therefore, from that time on, RCBC was holding the funds subject to the orders of the court a
quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over
the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility
over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can
be attributed to RCBC in delivering its depositor's funds pursuant to a court order which was
merely in the exercise of its power of control over such funds.
... The garnishment of property to satisfy a writ of execution operates as an attachment

and fastens upon the property a lien by which the property is brought under the jurisdiction of the
court issuing the writ. It is brought into custodia legis, under the sole control of such court [De
Leon v. Salvador, G.R. Nos. L-30871 and L-31603, December 28,1970, 36 SCRA 567, 574.]
Finally, it is contended that RCBC was bound to inquire into the legality and propriety of the
Writ of Execution and Notice of Garnishment issued against the funds of the PVTA deposited
with said bank. But the bank was in no position to question the legality of the garnishment since
it was not even a party to the case. As correctly pointed out by the petitioner, it had neither the
personality nor the interest to assail or controvert the orders of respondent Judge. It had no
choice but to obey the same inasmuch as it had no standing at all to impugn the validity of the
partial judgment rendered in favor of the plaintiff or of the processes issued in execution of such
judgment.
RCBC cannot therefore be compelled to make restitution solidarily with the plaintiff BADOC.
Plaintiff BADOC alone was responsible for the issuance of the Writ of Execution and Order of
Payment and so, the plaintiff alone should bear the consequences of a subsequent annulment of
such court orders; hence, only the plaintiff can be ordered to restore the account of the PVTA.

WHEREFORE, the petition is hereby granted and the petitioner is ABSOLVED from any
liability to respondent PVTA for reimbursement of the funds garnished. The questioned Order of
the respondent Judge ordering the petitioner, jointly and severally with BADOC, to restore the
account of PVTA are modified accordingly.
IX. PREPARED BY: Claudette Irene S. Manalastas
Q: PVTA was adjudged to pay jointly and severally, Badoc Planters, Inc. within 48 hours the
aggregate amount of P206,916.76, with legal interests thereon.Upon the issuance of Urgent Ex-
Parte Motion for a Writ of Execution, Judge Z ordered RCBC to deliver in check the amount
garnished in the amount of P206,916.76. PVTA then filed a motion for reconsideration which
was granted by Judge Z thereby ordering RCBC and BADOC "to restore, jointly and severally,
the account of PVTA with the said bank in the same condition and state it was before the
issuance of the aforesaid Orders by reimbursing the PVTA of the amount of P 206, 916.76 with
interests at the legal rate from January 27, 1970 until fully paid to the account of the PVTA.
Should the bank be held solidarily liable with the judgment creditor to its depositor for
reimbursement of the garnished funds? (NO)
A: The bank, upon the receipt of the Notice of Garnishment, duly informed PVTA thereof to
enable the latter to take the necessary steps for the protection of its own interest.
It is important to stress that there was nothing irregular in the delivery of the funds of PVTA by
check to the sheriff, whose custody is equivalent to the custody of the court, he being a court
officer. Moreover, by virtue of the order of garnishment, the same was placed in custodia legis
and therefore, from that time on, RCBC was holding the funds subject to the orders of the court a
quo. That the sheriff, upon delivery of the check to him by RCBC encashed it and turned over
the proceeds thereof to the plaintiff was no longer the concern of RCBC as the responsibility
over the garnished funds passed to the court. Thus, no breach of trust or dereliction of duty can
be attributed to RCBC in delivering its depositor's funds pursuant to a court order which was
merely in the exercise of its power of control over such funds.
I. SHORT TITLE: MELLON BANK VS. MAGSINO
II. FULL TITLE: MELLON BANK, N.A., vs. HON. CELSO L. MAGSINO, in his capacity
as Presiding Judge of Branch CLIX of the Regional Trial Court at Pasig; MELCHOR JAVIER,
JR., VICTORIA JAVIER; HEIRS OF HONORIO POBLADOR, JR., namely: Elsa Alunan
Poblador, Honorio Poblador III, Rafael Poblador, Manuel Poblador, Ma. Regina Poblador, Ma.
Concepcion Poblador & Ma. Dolores Poblador; F.C. HAGEDORN & CO., INC.; DOMINGO
JHOCSON, JR.; JOSE MARQUEZ; ROBERTO GARINO; ELNOR INVESTMENT CO., INC.;
PARAMOUNT FINANCE CORPORATION; RAFAEL CABALLERO; and TRI-ARC
INVESTMENT and MANAGEMENT CO., INC. - G.R. No. 71479 October 18, 1990
III. TOPIC: Secrecy of Bank Deposits
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, 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 as
payment for the purchase of a 160-acre lot in the Mojave desert in California City.
V. STATEMENT OF THE CASE
On July 29, 1977, Mellon Bank 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 Gariño, 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. 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; and that "the defendants and each
of them have used a portion of said funds to purchase real property located in Kern County,
California. It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson and Gariño 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; and (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.
Mellon Bank traced the 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. 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. Respondents' principal objection to the
testimonies of Baylosis and Red is their alleged irrelevance to the issues raised in Civil Case No.
26899. They argue 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.
IV. ISSUE
1. Whether or not to allow the questioned testimonies of Baylosis and Red to remain on
record would be in violation of the provisions of Republic Act No. 1405 on the
secrecy of bank deposits.
VII. RULING
NO. Section 2 of said law allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. Inasmuch as 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.
VIII. DISPOSITIVE PORTION

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. SO ORDERED.
IX. PREPARED BY: Chyles Denise E. Legaspi
Q: Ventosa sought to transfer $1,000 to Victoria Javier in Manila. Unfortunately the wire sent by
Mellon Bank indicated the amount transferred as "US$1,000,000.00" instead of US$1,000.00.
Hence 1 Million dollars less bank charges was transferred to the account of Javier in Prudential
Bank. Javier then opened a new dollar account (no. 343)in the Prudential Bank and deposited
$999,943.70. Javier withdrew some money from account No. 343 and converted it into 8
cashier's checks. Later on, the checks were traced to an account maintained at the Philippine
Veterans Bank. Mellon Bank then subpoenaed 2 bank personnel to show that the checks were
deposited in the said account. Javier opposed the testimonies of the bank personnel on the ground
that it would violate the provisions of Republic Act No. 1405 on the secrecy of bank deposits.
Would the allowance of the testimonies of the bank personnel violate R.A. 1405?
A: NO. Section 2 of said law allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. Since the case filed 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.
I. SHORT TITLE: PCIB V. CA
II. FULL TITLE: Philippine Commercial & Industrial Bank v. Court of

Appeals and Marinduque Mining- G.R. No. 84526, 28 January 1991, Sarmiento, J.
A group of laborers obtained a favorable judgment from the National Labor Relations
Commission (NLRC) for the payment of backwages amounting to P205,853.00 against the
private respondent Marinduque Mining. On April 26, 1976, the said Commission issued a writ
of execution directing the Deputy Sheriff of Negros Occidental, one Damian Rojas, to enforce
the aforementioned judgment.
When the execution of the said writ was not successful, the Sheriff prepared on his own a Notice
of Garnishment dated April 29, 1976 addressed to six (6) banks, one of which being the
petitioner herein, directing the bank concerned to immediately issue a check in the name of the
Deputy Provincial Sheriff of Negros Occidental in an amount equivalent to the amount of the
garnishment and that proper receipt would be issued therefor.
On April 29, 1976, the deputy sheriff presented the Notice of Garnishment and the Writ of
Execution attached therewith to the petitioner Henares and later in the afternoon, demanded from
the latter, under pain of contempt, the release of the deposit of the private respondent.
Petitioner Henares then issued a debit memo for the full balance of the private respondent's
account with the petitioner bank. Thereafter, he issued a manager's check in the name of the
Deputy Provincial Sheriff of Negros Occidental for the amount of P37,466.18, which was the
exact balance of the private respondent's account as of that day.
On the following day, April 30, 1976, the deputy sheriff returned to the bank in order to encash
the check but before the actual encashment, the petitioner Henares once again inquired about any
existing restraining order from the NLRC and upon being told that there was none, the latter
allowed the said encashment
On July 6, 1976, the private respondent, then plaintiff, filed a complaint before the Regional
Trial Court of Manila, Branch II, against the petitioners and Damian Rojas, the Deputy
Provincial Sheriff of Negros Occidental, then defendants, alleging that the former's current
deposit with the petitioner bank was levied upon, garnished, and with undue haste unlawfully
allowed to be withdrawn, and notwithstanding the alleged unauthorized disclosure of the said
current deposit and unlawful release thereof, the latter have failed and refused to restore the
amount of P37,466.18 to the former's account despite repeated demands.
The trial court rendered its judgment in favor of the private respondent. On appeal, the
respondent court in a decision dated February 26, 1988, first reversed the said judgment of the
lower court, but however, on the motion for reconsideration filed by the private respondent,
subsequently annulled and set aside its said decision in the resolution dated June 27, 1988. On
August 3, 1988, the respondent court denied the petitioner's own motion for reconsideration.
VI. ISSUE/S:
1. Whether or not petitioners had legal basis in releasing the
garnished deposit of private respondent to the sheriff;
2. Whether or not petitioners violated Republic Act No. 1405,
otherwise known as the Secrecy of Bank Deposits Act, when they
allowed the sheriff to garnish the deposit of private respondent.
VII. RULING:
1. YES. nowhere in the record of the present case is there any evidence of an appeal by the
private respondent from the decision of the NLRC or the existence of any restraining order to
prevent the release of the private respondent's deposit to the deputy sheriff at the time of the
service of the notice of garnishment and writ of execution to the petitioners.
On the contrary, the uncontroverted statements in the deposition of the petitioner Henares that he
had previously sought the advice of the bank's counsel and that he had checked twice with the
Acting Provincial Sheriff who had informed him of the absence of any restraining order, belie
any allegation of undue and indecent haste in the release of the said deposit in question
Moreover, there is no issue concerning the indebtedness of the petitioner bank to the private
respondent since the latter has never denied the existence of its deposit with the former, the said
deposit being considered a credit in favor of the depositor against the bank.16 We therefore see
no application for Sec. 39, Rule 39 of the Rules of Court invoked by the private respondent as to
necessitate the "examination of the debtor of the judgment debtor."
Rather, we find the immediate release of the funds by the petitioners on the strength of the notice
of garnishment and writ of execution, whose issuance, absent any patent defect, enjoys the
presumption of regularity.
2. NO. The Court in China Banking Corporation vs. Ortega had the occasion to dispose of
this issue when it stated, thus:
It is clear from the discussion of the conference committee report on Senate Bill No. 351
and House Bill No. 3977, which later became Republic Act 1405, 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 existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is hard to conceive that it was ever within the
intention of Congress to enable debtors to evade payment of their just debts, even if
ordered by the Court, through the expedient of converting their assets into cash and
depositing the same in a bank.
Since there is no evidence that the petitioners themselves divulged the information that the
private respondent had an account with the petitioner bank and it is undisputed that the said
account was properly the object of the notice of garnishment and writ of execution carried out by
the deputy sheriff, a duly authorized officer of the court, we can not therefore hold the petitioners
liable under R.A. 1405
WHEREFORE, the petition is GRANTED and the challenged Resolutions dated June
27, 1988 and August 13, 1988 of the Court of Appeals are hereby ANNULLED and
SET ASIDE and its Decision dated February 26, 1988 dismissing the complaint is
hereby REINSTATED. With costs against the private respondent.
VIII. Q & A:
Q: A group of laborers obtained a favorable judgment from the National Labor Relations
Commission (NLRC) for the payment of backwages amounting to P205,853.00 against
Marinduque Mining. A writ of execution was issued but it was not enforced by the Sheriff. The
sheriff then on his own prepared a Notice of Garnishment addressed to six banks, on of which
was PCIB, directing the bank concerned to immediately issue a check in the name of the Deputy
Provincial Sheriff of Negros Occidental in an amount equivalent to the amount of the
garnishment and that proper receipt would be issued therefor. A manager’s check was then
issued in the name of the Deputy Sheriff and the latter was able to encash it. Marinduque Mining
argued that its current deposit with the PCIB was levied upon, garnished, and with undue haste
unlawfully allowed to be withdrawn, and notwithstanding the alleged unauthorized disclosure of
the said current deposit and unlawful release thereof. Was there a violation of RA 1405 or the
Bank Secrecy Law?
A: NO. It is clear from the discussion of the conference committee report on Senate Bill No. 351
and House Bill No. 3977, which later became Republic Act 1405, 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 existence of the deposit is disclosed the disclosure is purely incidental to the
execution process. It is hard to conceive that it was ever within the intention of Congress to
enable debtors to evade payment of their just debts, even if ordered by the Court, through the
expedient of converting their assets into cash and depositing the same in a bank.
Since there is no evidence that the PCIB themselves divulged the information that Marinduque
Mining had an account with the bank and it is undisputed that the said account was properly the
object of the notice of garnishment and writ of execution carried out by the deputy sheriff, a duly
authorized officer of the court, there is therefore no violation of R.A. 1405
IX. Prepared by: JOHN VINCENT F. FERMIN
I. SHORT TITLE: VAN TWEST VS. COURT OF APPEALS
II. FULL TITLE: ALEXANDER VAN TWEST and THE HON. SALVADOR P. DE
GUZMAN, in his capacity as Presiding Judge of the Regional Trial Court of Makati, Branch 142
vs. THE HON. COURT OF APPEALS and GLORIA ANACLETO - G.R. No. 106253 February
10, 1994
III. TOPIC: Secrecy of Bank Deposits - Foreign Currency Deposit Act of the
Philippines
In 1989, Alexander Van Twest and private respondent Gloria Anacleto opened a joint foreign
currency savings account with International Corporate Bank ("Interbank") to hold funds, which
petitioner alleged "belonged entirely and exclusively" to him, to "facilitate the funding of certain
business undertakings" of both of them and which funds were to be "temporarily held in trust" by
private respondent, who "shall turnover the same to plaintiff upon demand." Petitioner further
alleged that withdrawals from the account were always made through their joint signatures.
When his business relationship with private respondent turned sour, the latter unilaterally closed
their joint account, withdrew the remaining balance of Deutschmark (DM) 269,777.37 and
placed the money in her own personal account with the same bank.
On March 1990, petitioner filed a complaint against private respondent Anacleto and Interbank
for recovery of a sum of money, before Branch 142 of the Regional Trial Court of Makati.
Petitioner also sought an injunctive writ to prevent private respondent from withdrawing the
money at any time
On March 28, 1990, the RTC issued an order enjoining private respondent and Interbank from
effecting and allowing withdrawals from the foreign currency deposit account until further orders
from the trial court. The preliminary injunction order of the Regional Trial Court was, however,
annulled on petition for certiorari filed by private respondent before the Court of Appeals in a
Decision dated 19 July 1991. Thus, petitioner filed a Petition for Review before the Supreme
Court.
Private respondent raised for the first time before the Supreme Court that that the personal
foreign currency deposit account she is maintaining is exempt from processes issued by the
courts, pursuant to Section 8 of R.A. 6426 as amended by P. D. 1246, the statute in force on 26
February 1990, the date she withdrew the foreign exchange fund from her joint account with
petitioner and transferred the same to her personal account. Private respondent adds that the
Court has plenary authority to disregard the procedural defect attending private respondent's new
contention; since this case cannot be resolved adequately without a ruling on the nature of the
exemption from court processes granted by the statute.
IV. ISSUE
Whether or not private respondent can invoke Section 8 of R.A. 6426 as amended by P. D. 1246
VII. RULING
NO. Petitioner has affirmatively shown that the Deutschmark originated from him alone and that
he alone was owner thereof. By depositing those funds in a joint 'and/or' account, petitioner did
not convey ownership thereof to private respondent and private respondent could not convert
those funds to her personal and exclusive ownership and use.
As to Private Respondent’s belated invocation of R.A. No. 6426, the Court held that the
privileges extended by the statute cited by private respondent are actually enjoyed, and are
invokable only, by the petitioner, both because private respondent's transactions fall outside the
ambit of the statute, and because petitioner is the owner of the foreign exchange fund subject of
this case. This conclusion is anchored on the consistent and contemporaneous administrative
construction by the Central Bank of the basic statute, as manifested in the relevant circulars
issued by it in implementation of that law, which are entitled to great respect by the courts
Circular No. 960, Series of 1983 provides in relevant part:

Sec. 102. Foreign currency funds ineligible for deposits.
a. Foreign exchange purchased from authorized agent banks in accordance with existing
regulations such as excess travel funds; unspent financial assistance of dependents abroad of
Philippine residents; foreign exchange acquired from any resident persons, firm, association
and corporation; and transfers to foreign currency deposit account or receipt from another
foreign currency deposit account, whether for payment of legitimate obligation or otherwise,
are not eligible for deposit under the System.
This Circular was in force at the time private respondent undertook her questioned transactions;
thus, such local transfer from the original joint foreign currency account to another (personal)
foreign currency account, was not an eligible foreign currency deposit within the coverage of
R.A. No. 6426 and not entitled to the benefit of the confidentiality provisions of R.A. No. 6426
Circular No. 960 was superseded by Circular No. 1318, Series of 1992, which did not reenact
and continue the administrative provision above-mentioned (Section 102). Nevertheless,
although transfers from one foreign currency deposit account to another foreign currency deposit
account in the Philippines are now eligible deposits under the Central Bank's Foreign Currency
Deposit System, private respondent is still not entitled to the confidentiality provisions of the
relevant circulars. For, as noted earlier, private respondent is not the owner of such foreign
currency funds and her personal deposit account is not, under Section 49 of Circular No. 1318,
protected by this Circular.
VIII. DISPOSITIVE PORTION
ACCORDINGLY, the Petition for Review is hereby GRANTED. The Decision and Resolution
of the Court of Appeals dated 19 July 1991 and 9 July 1992, respectively, are hereby
REVERSED and SET ASIDE. The temporary restraining order issued by the Court dated 12
August 1992, enjoining the public respondent from dissolving the writ of preliminary injunction
issued by the Regional Trial Court through its case is hereby REMANDED to the trial court for
continuation of the main proceeding in Civil Case No. 90-659. No pronouncement as to costs.
SO ORDERED.
IX. PREPARED BY: Chyles Denise E. Legaspi
15. VAN TWEST V. COURT OF APPEALS
Q: In 1989, Van Twest and Anacleto opened a joint foreign currency account with Interbank. When
the business relationship between the 2 turned sour, Anacleto unilaterally closed their joint
account, withdrew the remaining balance and placed the money in her own personal account
(another foreign currency deposit account) with the same bank. Van Twest then filed a case against
Anacleto. She also sought an injunctive writ to prevent Anacleto from withdrawing the money at
any time. Anacleto argued that the personal foreign currency deposit account she is maintaining at
Interbank is exempt from processes issued by the courts, pursuant to Section 8 of R.A. 6426 as
amended, when she withdrew the foreign exchange fund from her joint account with Van Twest
and transferred the same to her personal account on 26 February 1990. Can Anacleto successfully
invoke R.A. 6426 (Foreign Currency Deposit Act)?
A: NO. Section 102 of CB Circular No. 960, Series of 1983 states that transfers to foreign currency
deposit account or receipt from another foreign currency deposit account, whether for payment of
legitimate obligation or otherwise, are not eligible for deposit under the System. This Circular was in
force at the time Anacleto undertook her questioned transactions; thus, such local transfer from the
original joint foreign currency account to another (personal) foreign currency account, was not an
eligible foreign currency deposit within the coverage of R.A. No. 6426 and not entitled to the benefit
of the confidentiality provisions of R.A. No. 6426. Circular No. 960 was superseded by Circular No.
1318, Series of 1992, which did not reenact and continue Section 102. Nevertheless, although
transfers from one foreign currency deposit account to another foreign currency deposit account in
the Philippines are now eligible deposits, Anacleto is still not entitled to the confidentiality
provisions because Anacleto is not the owner of such foreign currency funds and her personal
deposit account is not, under Section 49 of Circular No. 1318, protected by this Circular.
I. SHORT TITLE: OFFICE OF THE OMBUDSMAN V. IBAY
II. FULL TITLE: Office of the Ombudsman v. Hon. Ibay et. al.- GR No. 137538. 03
September 2001, Quisimbing, J.
Sometime in 1998, petitioner conducted an investigation on the alleged "scam" on the Public
Estates Authority-Amari Coastal Bay Development Corporation. Initial result of the
investigation revealed that the alleged anomaly was committed through the issuance of checks
which were subsequently deposited in several financial institutions. On April 29, 1998, petitioner
issued an Order directing private respondent Lourdes Marquez, branch manager of Union Bank
of the Philippines branch at Julia Vargas Avenue, Pasig City, to produce several bank documents
for inspection, reportedly maintained in the said branch. The documents referred to include bank
account application forms, signature cards, transactions history, bank statements, bank ledgers,
debit and credit memos, deposit and withdrawal slips, application for purchase of manager's
checks, used manager's checks and check microfilms. The inspection would be done "in camera"
wherein the bank records would be examined without bringing the documents outside the bank
premises.
Private respondent failed to comply with petitioner's order. She explained that the subject
accounts pertain to International Corporate Bank (Interbank) which merged with Union Bank in
1994. She added that despite diligent efforts, the bank could not identify these accounts since the
checks were issued in cash or bearer forms. She informed petitioner that she had to first verify
from the Interbank records in its archives the whereabouts of said accounts.
On June 16, 1998, petitioner issued an order to private respondent to produce the requested bank
documents for "in camera" inspection. In the event of her failure to comply as directed, private
respondent was ordered to show cause why she should not be cited for contempt and why she
should not be charged for obstruction.
Private respondent filed a petition for declaratory relief with an application for temporary
restraining order and/or preliminary injunction before the Regional Trial Court of Makati City,
Branch 135, presided by respondent Judge Francisco Ibay. In her petition, private respondent
averred that under Sections 2 and 3 of R.A. 1405 (Law on Secrecy of Bank Deposits), she had
the legal obligation not to divulge any information relative to all deposits of whatever nature
with banks in the Philippines. But petitioner's Order cited Section 15 (8) of R.A. 6770 stating
that the Ombudsman had the power to examine and have access to bank accounts and records.
Petitioner moved to dismiss the aforesaid petition for declaratory relief on the ground that the
RTC has no jurisdiction over the subject matter thereof. In an order dated August 19, 1998, now
being assailed, public respondent denied petitioner's motion to dismiss. Petitioner then filed an
ex-parte motion for extended ruling. On December 22, 1998, public respondent issued an order
declaring that it has jurisdiction over the case since it is an action for declaratory relief under
Rule 63 of the Rules of Court
VI. ISSUE/S:
1. Whether or not public respondent acted without jurisdiction and/or
with grave abuse of discretion in entertaining the cited petition for
declaratory relief.
2. Whether or not private respondent may be compelled by petitioner
to produce the said bank documents
VII. RULING:
1. NO. The special civil action of declaratory relief falls under the exclusive jurisdiction of the
Regional Trial Court.5 It is not among the actions within the original jurisdiction of the Supreme
Court even if only questions of law are involved.6 Similarly, the Rules of Court is explicit that
such action shall be brought before the appropriate Regional Trial Court
The requisites of an action for declaratory relief are: (1) there must be a justiciable controversy
must be between persons whose interests are adverse; (3) that the party seeking the relief has a
legal interest in the controversy; and (4) that the issue is ripe for judicial determination. In this
case, the controversy concerns the extent of the power of petitioner to examine bank accounts
under Section 15 (8) of R.A. 6770 vis-à-vis the duty of banks under Republic Act 1405 not to
divulge any information relative to deposits of whatever nature. The interests of the parties are
adverse considering the antagonistic assertion of a legal right on one hand, that is the power of
Ombudsman to examine bank deposits, and on the other, the denial thereof apparently by private
respondent who refused to allow petitioner to inspect in camera certain bank accounts.
2. NO. In any event, the relief being sought by private respondent in her action for declaratory
relief before the RTC of Makati City has been squarely addressed by our decision in Marquez vs.
Desierto. In that case, we ruled that before an in camera inspection of bank accounts may be
allowed, there must be a pending case before a court of competent jurisdiction. Further, the
account must be clearly identified, and the inspection limited to the subject matter of the pending
case before the court of competent jurisdiction. The bank personnel and the account holder must
be notified to be present during the inspection, and such inspection may cover only the account
identified in the pending case. In the present case, since there is no pending litigation yet before a
court of competent authority, but only an investigation by the Ombudsman on the so-called
"scam", any order for the opening of the bank account for inspection is clearly premature and
legally unjustified.
WHEREFORE, the instant petition is DISMISSED
VIII. Q & A:
Q: The Office of the Ombudsman issued an Order directing Lourdes Marquez, branch manager
of Union Bank of the Philippines to produce several bank documents for inspection, reportedly
maintained in the said branch. This was because sometime in 1998, an investigation on the
alleged "scam" on the Public Estates Authority-Amari Coastal Bay Development Corporation
revealed that the alleged anomaly was committed through the issuance of checks which were
subsequently deposited in several financial institutions. The inspection would be done "in
camera" wherein the bank records would be examined without bringing the documents outside
the bank premises. Lourdes failed to comply with the said order. Can Lourdes, as the branch
manager of the bank, be compelled by the Office of the Ombudsman to produce said bank
documents?
A: NO. In Marquez vs. Desierto it was ruled that before an in camera inspection of bank
accounts may be allowed, there must be a pending case before a court of competent jurisdiction.
Further, the account must be clearly identified, and the inspection limited to the subject matter of
the pending case before the court of competent jurisdiction. The bank personnel and the account
holder must be notified to be present during the inspection, and such inspection may cover only
the account identified in the pending case. In the present case, since there is no pending litigation
yet before a court of competent authority, but only an investigation by the Ombudsman on the
so-called "scam", any order for the opening of the bank account for inspection is clearly
premature and legally unjustified.
IX. PREPARED BY: JOHN VINCENT F. FERMIN
I. SHORT TITLE: CHINA BANKING CORPORATION V. CA
II. FULL TITLE: CHINA BANKING CORPORATION versus THE HONORABLE

COURT OF APPEALS and JOSE "JOSEPH" GOTIANUY as substituted by ELIZABETH
GOTIANUY LO. - G.R. No. 140687, December 18, 2006, J. CHICO-NAZARIO
III. TOPIC: FOREGIN CURRENCY DEPOSIT ACT – PRO HAC VICE RULING
Jose "Joseph" Gotianuy filed a complaint for recovery of sums of money and annulment of sales
of real properties and shares of stock against his son-in-law, George Dee, and his daughter, Mary
Margaret Dee, before the Regional Trial Court (RTC).
Jose Gotianuy accused Mary Margaret Dee of stealing US dollar deposits with Citibank N.A.
amounting to not less than P35,000,000.00 and US $864,000.00. Mary Margaret Dee received
these amounts from Citibank N.A. through checks which she deposited at China Banking
Corporation (China Bank). He accused George Dee of transferring his real properties and shares
of stock in George Dee's name without any consideration. Jose Gotianuy died during the
pendency of the case before the RTC. He was substituted by his daughter Elizabeth Gotianuy Lo,
who presented the US Dollar checks withdrawn by Mary Margaret Dee from his US dollar
placement with Citibank.
Upon motion of Elizabeth Gotianuy Lo, the RTC issued a subpoena to Cristota Labios and Isabel
Yap, employees of China Bank, to testify with regard to the Citibank Checks and other matters
material and relevant to the issues of the case. China Bank moved for a reconsideration. The
RTC issued an Order partly denying and partly granting the motion for reconsideration, in the
sense that Isabel Yap and/or Cristuta Labios are directed to testify only for the purpose of
disclosing in whose name or names is the foreign currency fund deposited with China Bank and
not to other matters material and relevant to the issues of the case. China Bank filed a Petition for
Certiorari with the Court of Appeals (CA). The CA denied the petition and affirmed the Order of
the RTC. The China Bank filed a petition with the Supreme Court (SC).
VI. ISSUE:
1. Whether or not China Bank is correct that the Citibank dollar checks with both Jose
Gotianuy and/or Mary Margaret Dee as payees, deposited with China Bank, may not be looked
into under the law on secrecy of foreign currency deposits.
VII. RULING:
1. NO. The law protects only the deposits itself but not the name of the depositor. Thus, the
coverage of the law extends only to the foreign currency deposit in the China Bank account
where Mary Margaret Dee deposited the Citibank checks and nothing more.
The law provides that all foreign currency deposits authorized under RA 6426, as amended by
Sec. 8, PD 1246, PD No. 1035, as well as foreign currency deposits authorized under PD 1034
are considered absolutely confidential in nature and may not be inquired into. There is only one
exception to the secrecy of foreign currency deposits, that is, disclosure is allowed upon the
written permission of the depositor.
The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee are co-payees of
various Citibank checks; (2) Mary Margaret Dee withdrew these checks from Citibank; (3) Mary
Margaret Dee admitted in her Answer to the Request for Admissions by the Adverse Party sent
to her by Jose Gotianuy that she withdrew the funds from Citibank upon the instruction of her
father Jose Gotianuy and that the funds belonged exclusively to the latter; (4) these checks were
endorsed by Mary Margaret Dee at the dorsal portion; and (5) Jose Gotianuy discovered that
these checks were deposited with China Bank as shown by the stamp of China Bank at the dorsal
side of the checks.
Since Jose Gotianuy is the named co-payee of Mary Margaret Dee in the Citibank checks, which
checks were deposited by Mary Margaret Dee in China Bank, then, Jose Gotianuy is likewise a
depositor thereof. As the owner of the funds unlawfully taken and which are undisputably now
deposited with China Bank, Jose Gotianuy has the right to inquire into the said deposits. Jose
Gotianuy’s request for the assailed subpoena is tantamount to an express permission of a
depositor for the disclosure of the name of the account holder. On that basis, no written consent
from Mary Margaret Dee is necessitated.
All things considered and in view of the distinctive circumstances attendant to the present case,
we are constrained to render a limited PRO HAC VICE RULING. Clearly it was not the intent of
the legislature when it enacted the law on secrecy on foreign currency deposits to perpetuate
injustice. This Court is of the view that the allowance of the inquiry would be in accord with the
rudiments of fair play, the upholding of fairness in our judicial system and would be an
avoidance of delay and time-wasteful and circuitous way of administering justice.

WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of
Appeals dated 29 October 1999 affirming the Order of the RTC, Branch 58, Cebu City dated 16
April 1999 is AFFIRMED and this case is ordered REMANDED to the trial court for
continuation of hearing with utmost dispatch consistent with the above disquisition. No costs.
IX. PREPARED BY: MANGUIAT, Julie Ann C.
I. RCBC VS HI-TRI DEVELOPMENT CORPORATION
II. FULL TITLE:Rizal Commercial Banking Corporation, Petitioner, vs. Hi-Tri Development
Corporation and Luz R. Bakunawa, Respondents. - G.R. No. 192413 June 13, 2012
III. PONENTE: SERENO, J.
IV. TOPIC: Law on Secrecy of Bank Deposits
Luz Bakunawa and her husband Manuel, now deceased (“Spouses Bakunawa”) are registered
owners of six (6) parcels of land covered by TCT Nos. 324985 and 324986 of the Quezon City
Register of Deeds, and TCT Nos. 103724, 98827 of the Makati Register of Deeds. These lots
were sequestered by the PCGG.
In 1990, Millan, through her representative, Montemayor, offered to buy said lots for P6, 724,
085.71. with the promise that she will take care of clearing whatever preliminary obstacles there
may be to effect a “completion of the sale”. The Spouses Bakunawa gave to Millan the Owner’s
Copies of said TCTs and in turn, Millan made a downpayment of P1,019,514.29 for the intended
purchase. However, for one reason or another, Millan was not able to clear said obstacles.
Spouses Bakunawa rescinded the sale and offered to return to Millan her downpayment.
However, Millan refused to accept back the downpayment. Consequently. Spouses Bakunawa,
through their company, Hi-Tri, took out on October 28, 1991, a Manager’s Check from RCBC-
Ermita in the amount of P1,019,514.29, payable to Millan’s company Rosmil c/o Millan and
used this as one of their basis of a complaint against Millan and Montemayor which they filed
with RTC.
Being part and parcel of said complaint, and consistent with their prayer that Millan be ordered
to receive the amount of the downpayment, Spouses Bakunawa, upon advice of their counsel,
retained the custody of RCBC Manager’s Check and refrained from canceling or negotiating it.
All throughout the proceedings, Millan was informed that the Manager’s Check was available for
her withdrawal, she being the payee.
On January 31, 2003, during the pendency of the abovementioned case and without the
knowledge of Hi-Tri and Spouses Bakunawa x x x RCBC reported the “P1,019,514.29-credit
existing in favor of Rosmil” to the Bureau of Treasury as among its “unclaimed balances” as of
January 31, 2003. Allegedly, a copy of the Sworn Statement executed by Florentino N.
Mendoza, Manager and Head of RCBC’s AMDSD was posted within the premises of RCBC-
Ermita.
On December 14, 2006, x x x Republic, through the OSG, filed with the RTC the action below
for Escheat.
On April 30, 2008, Spouses Bakunawa settled amicably their dispute with Rosmil and Millan.
But during negotiations and evidently prior to said settlement, Manuel Bakunawa through Hi-Tri
inquired from RCBC-Ermita the availability of the P1,019,514.29. under RCBC Manager’s
Check. Hi-Tri and Spouses Bakunawa were however dismayed when they were informed that the
amount was already subject of the escheat proceedings before the RTC.

Before the Court is a Rule 45 Petition for Review on Certiorari filed by petitioner Rizal
Commercial Banking Corporation (RCBC) against respondents Hi-Tri Development Corporation
(Hi-Tri) and Luz R. Bakunawa (Bakunawa). Petitioner seeks to appeal from the 26 November
2009 Decision and 27 May 2010 Resolution of the Court of Appeals (CA),1 which reversed and
set aside the 19 May 2008 Decision and 3 November 2008 Order of the Makati City Regional
Trial Court (RTC) in Civil Case No. 06-244.2 The case before the RTC involved the Complaint
for Escheat filed by the Republic of the Philippines (Republic) pursuant to Act No. 3936, as
amended by Presidential Decree No. 679 (P.D. 679), against certain deposits, credits, and
unclaimed balances held by the branches of various banks in the Philippines. The trial court
declared the amounts, subject of the special proceedings, escheated to the Republic and ordered
them deposited with the Treasurer of the Philippines (Treasurer) and credited in favor of the
Republic.3 The assailed RTC judgments included an unclaimed balance in the amount of ₱
1,019,514.29, maintained by RCBC in its Ermita Business Center branch.
The trial court rendered its decision declaring the deposits, credits, and unclaimed balances of the
escheat proceedings to the Republic. Among those included in the order of forfeiture was the
amount of the downpayent held by RCBC as allocated funds intended for the payment of
Manager’s Check issued in favor of Rosmil. Respondents filed omnibus motion seeking partial
reconsideration of the RTC Decision insofar as it escheated the fund allocated, allowe to
intervene in the case and their motion considered as an answer-in-intervention. RTC denied the
motion of respondents. RTC denied the said motions. CA reversed the assailed decisions.
VII. ISSUE:Whether or not the escheat of the account in RCBC is proper
VIII. RULING:
No. An ordinary check refers to a bill of exchange drawn by a depositor (drawer) on a bank
(drawee), requesting the latter to pay a person named therein (payee) or to the order of the payee
or to the bearer, a named sum of money. The issuance of the check does not of itself operate as
an assignment of any part of the funds in the bank to the credit of the drawer. Here, the bank
becomes liable only after it accepts or certifies the check. After the check is accepted for
payment, the bank would then debit the amount to be paid to the holder of the check from the
account of the depositor-drawer.
There are checks of a special type called managers or cashiers checks. These are bills of
exchange drawn by the banks manager or cashier, in the name of the bank, against the bank
itself. Typically, a managers or a cashiers check is procured from the bank by allocating a
particular amount of funds to be debited from the depositors account or by directly paying or
depositing to the bank the value of the check to be drawn. Since the bank issues the check in its
name, with itself as the drawee, the check is deemed accepted in advance. Ordinarily, the check
becomes the primary obligation of the issuing bank and constitutes its written promise to pay
upon demand.
Nevertheless, the mere issuance of a managers check does not ipso facto work as an automatic
transfer of funds to the account of the payee. In case the procurer of the managers or cashiers
check retains custody of the instrument, does not tender it to the intended payee, or fails to make
an effective delivery, we find the following provision on undelivered instruments under the
Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. Every contract on a negotiable instrument is
incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto.
As between immediate parties and as regards a remote party other than a holder in due course,
the delivery, in order to be effectual, must be made either by or under the authority of the party
making, drawing, accepting, or indorsing, as the case may be; and, in such case, the delivery may
be shown to have been conditional, or for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where the instrument is in the hands of a holder
in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him
is conclusively presumed. And where the instrument is no longer in the possession of a party
whose signature appears thereon, a valid and intentional delivery by him is presumed until the
contrary is proved.
Since there was no delivery, presentment of the check to the bank for payment did not occur. An
order to debit the account of respondents was never made. In fact, petitioner confirms that the
Managers Check was never negotiated or presented for payment to its Ermita Branch, and that
the allocated fund is still held by the bank. As a result, the assigned fund is deemed to remain
part of the account of Hi-Tri, which procured the Managers Check. The doctrine that the deposit
represented by a managers check automatically passes to the payee is inapplicable, because the
instrument although accepted in advance remains undelivered. Hence, respondents should have
been informed that the deposit had been left inactive for more than 10 years, and that it may be
subjected to escheat proceedings if left unclaimed.

WHEREFORE the Petition is DENIED. The 26 November 2009 Decision and 27 May 2010
Resolution of the Court of Appeals in CA-G.R. SP No. 107261 are hereby AFFIRMED.
X. PREPARED BY: Cruz, Jeyana Alethea A.
Question: What are Escheat Proceedings?

Answer: Escheat proceedings refer to the judicial process in which the state, by virtue of its
sovereignty, steps in and claims abandoned, left vacant, or unclaimed property, without there
being an interested person having a legal claim thereto. In the case of dormant accounts, the state
inquires into the status, custody, and ownership of the unclaimed balance to determine whether
the inactivity was brought about by the fact of death or absence of or abandonment by the
depositor. If after the proceedings the property remains without a lawful owner interested to
claim it, the property shall be reverted to the state "to forestall an open invitation to self-service
by the first comers." However, if interested parties have come forward and lain claim to the
property, the courts shall determine whether the credit or deposit should pass to the claimants or
be forfeited in favor of the state. We emphasize that escheat is not a proceeding to penalize
depositors for failing to deposit to or withdraw from their accounts. It is a proceeding whereby
the state compels the surrender to it of unclaimed deposit balances when there is substantial
ground for a belief that they have been abandoned, forgotten, or without an owner.
I. DOÑA ADELA EXPORT INTERNATIONAL, INC. v. TRADE AND INVESTMENT

DEVELOPMENT CORPORATION, ET AL.
II. FULL CASE TITLE: DOÑA ADELA EXPORT INTERNATIONAL, INC., petitioner vs.
TRADE AND INVESTMENT DEVELOPMENT CORPORATION (TIDCORP), and THE
BANK OF THE PHILIPPINE ISLANDS (BPI), respondent
III. PONENTE: Villarama, Jr., J.
IV. TOPIC: Secrecy of Bank Deposits
Petitioner Doña Adela Export International, Inc., filed a Petition for Voluntary Insolvency, and
the case was raffled to RTC Mandaluyong. The RTC, after finding the petition sufficient in form
and substance, issued an order declaring petitioner as insolvent and staying all civil proceedings
against petitioner. Thereafter, Atty. Arlene Gonzales was appointed as receiver. After taking her
oath, Atty. Gonzales proceeded to make the necessary report, engaged appraisers and required
the creditors to submit proof of their respective claims.
Atty. Gonzales then filed a Motion for Parties to Enter Into Compromise Agreement
incorporating therein her proposed terms of compromise. Then, creditors TIDCORP and BPI
also filed a Joint Motion to Approve Agreement which contained that Petitioner and the
members of its Board of Directors shall waive all rights to confidentiality provided under the
provisions of Law on Secrecy of Bank Deposits (R.A. No. 1405), and The General Banking Law
of 2000 (R.A. No. 8791). Accordingly, the petitioner and the members of its Board of Directors
by these presents grant TIDCORP and BPI access to any deposit or other accounts maintained by
them with any bank. The RTC rendered the assailed Decision approving the Joint Motion to
Approve Agreement.

Petitioner filed a motion for partial reconsideration and claimed that TIDCORP and BPI’s
agreement imposes on it several obligations such as payment of expenses and taxes and waiver
of confidentiality of its bank deposits but it is not a party and signatory to the said agreement.
RTC denied the motion.
Petitioner asserts that express and written waiver from the depositor concerned is required by law
before any third person or entity is allowed to examine bank deposits or bank records. According
to petitioner, it is not a party to the compromise agreement between BPI and TIDCORP and its
silence or acquiescence is not tantamount to an admission that binds it to the compromise
agreement of the creditors especially the waiver of confidentiality of bank deposits.
Respondent TIDCORP contends that the waiver of confidentiality under Republic Act (R.A.)
Nos. 1405 and 8791 does not require the express or written consent of the depositor. It is
TIDCORP’s position that upon declaration of insolvency, the insolvency court obtains complete
jurisdiction over the insolvent’s property which includes the authority to issue orders to look into
the insolvent’s bank deposits. Since bank deposits are considered debts owed by the banks to the
petitioner, the receiver is empowered to recover them even without petitioner’s express or
written consent.
VII. ISSUE/S:
Whether or not the petitioner is bound by the provision in the BPI-TIDCORP Joint Motion to
Approve Agreement that petitioner shall waive its rights to confidentiality of its bank deposits
under R.A. No. 1405 and R.A. No. 8791.
VIII. RULING:
R.A. No. 1405 provides for exceptions when records of deposits may be disclosed. These are
under any of the following instances:
(a) upon written permission of the depositor
(b) in cases of impeachment
(c) upon order of a competent court in the case of bribery or dereliction of duty of public
officials or
(d) when the money deposited or invested is the subject matter of the litigation, and
(e) in cases of violation of the Anti-Money Laundering Act, the Anti-Money Laundering Council
may inquire into a bank account upon order of any competent court.
In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP only.
There was no written consent given by petitioner or its representative, Epifanio Ramos, Jr., that
petitioner is waiving the confidentiality of its bank deposits. The provision on the waiver of the
confidentiality of petitioner’s bank deposits was merely inserted in the agreement. It is clear
therefore that petitioner is not bound by the said provision since it was without the express
consent of petitioner who was not a party and signatory to the said agreement.
In addition, considering that petitioner was already declared insolvent by the RTC, all its
property, assets and belongings were ordered delivered to the appointed receiver or assignee.
Thus, in the order of the RTC appointing Atty. Gonzales as receiver, petitioner was directed to
assign and convey to Atty. Gonzales all its real and personal property, monies, estate and effects
with all the deeds, books and papers relating thereto, pursuant to Section 32 of the Insolvency
Law. Such assignment shall operate to vest in the assignee all of the estate of the insolvent debtor
not exempt by law from execution. Corollarily, the stipulation in the Joint Motion to Approve
Compromise Agreement that petitioner waives its right to confidentiality of its bank deposits
requires the approval and conformity of Atty. Gonzales as receiver since all the property, money,
estate and effects of petitioner have been assigned and conveyed to her and she has the right to
recover all the estate, assets, debts and claims belonging to or due to the insolvent debtor. the
waiver of confidentiality of petitioner’s bank deposits in the BPI-TIDCORP Joint Motion to
Approve Agreement lacks the required written consent of petitioner and conformity of the
receiver. The Court holds that petitioner is not bound by the said provision.

WHEREFORE, premises considered, the petition is hereby GRANTED. The second paragraph
of the November 15, 2011 Decision of the Regional Trial Court of Mandaluyong City, Branch
211, in SEC Case No. MC06-103 is hereby MODIFIED to read as follows: As regards the Joint
Motion to Approve Agreement dated July 29, 2011, filed by creditors Trade and Investment
Development Corporation of the Philippines and the Bank of the Philippine Islands, with the
exception of paragraph 4 and paragraph 5 thereof pertaining to Expenses and Taxes and Waiver
of Confidentiality, the same is likewise APPROVED, for the same is not contrary to law, morals,
good customs, public order or public policy, and the fact that the Court-Appointed Receiver in
her Reply filed on October 24, 2011 intimated her conformity to said Joint Motion to Approve
Agreement. No costs. SO ORDERED.
I. Prepared by: Allison C. Umandap
I. SHORT TITLE: DE LA RAMA V. VILLAROSA, ET. AL
II. FULL TITLE: LOURDES DE LA RAMA, plaintiff-appellee, vs. AUGUSTO R.

VILLAROSA, ET AL., defendants, LUZON SURETY COMPANY, INC., defendant-appellant.
– G.R. No. L-17927
June 29, 1963, LABRADOR, J.
III. TOPIC: Law on Secrecy of Bank Deposits (Garnishment)

Plaintiff lessor de la Rama brought an action in the CFI against defendant lessee Villarosa and
the latter's surety, the Luzon Surety Co., Inc. for judicial confirmation of the cancellation,
rescission and annulment of a contract of lease of sugarland, and the payment of the unpaid
balance of the rental for the 1953-55 sugarcane crop year, rental and partly the reasonable value
for the use and occupation of the leased premises for the 1955-56 crop year, etc.

The lower court rendered a partial summary judgment decreeing the lease rescinded, cancelled
and annulled, and ordering defendant Villarosa to surrender and deliver to plaintiff the
possession of the leased premises, etc. After trial, the court rendered a decision ordering the
lessee and his surety to pay the lessor.
The lower court issued an order for the immediate execution of the above judgment.
Accordingly, the sheriff garnished the deposit of defendant-appellant with the Philippine Trust
Co. to the amount of P71,533.99. The Philippine Trust Co., complying with such notice, set aside
the amount of P71,533.99 out of the deposit of the defendant-appellant in its possession. In the
meantime, Luzon Surety Co., Inc. perfected an appeal before the CA.
The garnishee, the Philippine Trust Co., refused to deliver to the sheriff the amount garnished by
the latter to satisfy the writ of execution, so the lower court ordered said company to pay the
sheriff out of the deposit of the Luzon Surety Co., Inc. the amount stated in the garnishment.
Before the order could be complied with by the garnishee, the defendant Luzon Surety Co. filed
a petition for certiorari with preliminary injunction with the CA.
Upon filing of the petition the sheriff was enjoined from enforcing the order against the
Philippine Trust Co. So the garnishee did not deliver to the sheriff any portion of the amount
garnished and plaintiff-appellee never received any amount either in full or partial satisfaction of
the original judgment of the trial court then under execution.
The CA issued a joint decision on the main case and on the petition for certiorari ordering
defendant-appellant Luzon Surety to pay the sum of P24,864.78 solidarity with defendant-
appellant Villarosa, to de la Rama, plus legal interest.
The defendant-appellant, invoking Section 5 of Rule 39, filed with the lower court a verified
motion for the restitution of the amount of P39,998.42 (?) (P71,533.99 minus P33,002.72 equals
P38,531.27), plus interest thereon at the rate of 6% per annum. The above amount represents the
balance refundable to it, plus a 6% interest thereon.
The lower court denied the motion of the Luzon Surety Co., Inc. and issued a fourth alias writ of
execution directing the sheriff to enforce the judgment of the CA on the sum of P33,002.72 then
under garnishment and in the possession of the Philippine Trust Co.
The above order is the subject of this appeal to this Court.
VI. ISSUE:
1. Whether or not the petition for interest on the balance of the amount
garnished can be awarded to the defendant-appellant. (NO)
VII. RULING:
In the first place, the amount garnished was not actually taken possession of by the sheriff, even
from the time of the garnishment, because upon the perfection of the defendant-appellant's
appeal to the CA, such Court issued an injunction prohibiting execution of the judgment. The
plaintiff-appellee was, therefore, able to secure a full satisfaction of the judgment only upon final
judgment of the Court. The total sum garnished was not delivered to the sheriff in execution,
because the order for the execution of the judgment of the lower court was suspended in time by
the appeal and the preliminary injunction issue on appeal.
In the second place, the mere garnishment of funds belonging to the party upon order of the court
does not have the effect of delivering the money garnished to the sheriff or to the party in whose
favor the attachment is issued. The fund is retained by the garnishee or the person holding the
money for the defendant.
The garnishee, or one in whose hands property is attached or garnished, is universally regarded
as charged with its legal custody pending the outcome of the attachment of garnishment, unless,
by local statute and practice, he is permitted to surrender or pay the garnished property or funds
into court, to the attaching officer, or to a receiver or trustee appointed to receive them.
The effect of the garnishment, therefore, was to require the Philippine Trust Company, holder of
the funds of the Luzon Surety Co., to set aside said amount from the funds of the Luzon Surety
Co. and keep the same subject to the final orders of the Court.
In the case at bar, there was never an order to deliver the full amount garnished to the plaintiff-
appellee; all that was ordered to be delivered, after the judgment had become final, was the
amount found by the CA to be due. The balance of the amount garnished, therefore, remained all
the time in the possession of the bank as part of the funds of the Luzon Surety Co., although the
same could not be disposed of by the owner.

FOR ALL THE FOREGOING, the judgment of the court below denying defendant-appellant's
petition for interest on its fund garnished is affirmed, with costs against defendant-appellant.
IX. PREPARED BY: Sim, Lance Lester Angelo
I. Short Title: Estrada v Desierto
II: Full Title: JOSEPH E. ESTRADA, petitioner, vs. HON. ANIANO A. DESIERTO, in his capacity as
Ombudsman, PAUL ELMER CLEMENTE, JENNIFER A. AGUSTIN-SE, PELAGIO S. APOSTOL and
ROBERTO E. KALLOS, in their capacities as EPIB officers, LILIAN B. HEFTI, PACITA M. EQUILLOS,
ARCHANGEL A. ALBIENTO, ANICETO T. DAGDAG, JR., RIZA P. DEL ROSARIO, VICTOR Q. LIM and
CATHERINE WEIR. respondents.
IV. G.R. No. 156160. December 9, 2004, CHICO-NAZARIO,J.
V. DOCTRINE: A declaration by the Supreme Court that the public respondents

did not gravely abuse their discretion in issuing the resolutions dismissing
petitioner’s complaint does not necessarily translate to a declaration of assent in
the findings of fact and conclusions of law contained therein. With respect
specifically to the resolution for violation of Section 8 of Rep. Act. No. 6426,
public respondents relied on the “whereas” clause of P.D. No. 1246 which
amended Rep. Act No. 6426 and on the Salvacion case to conclude that only non-
residents who are not engaged in trade and business are under the mantle of
protection of Section 8 of Rep. Act. No. 6426.
VI. STATEMENT OF FACTS:
The Bureau of Internal Revenue (BIR) placed petitioner’s foreign currency deposit account at
Citibank Greenhills Branch under constructive distraint.
Contending that the BIR action was unlawful, petitioner filed on 31 January 2001 a complaint
against respondent BIR officials and respondent Citibank officers before the Office of the
Ombudsman for allegedly violating (a) Section 8 of the Foreign Currency Deposits Act
(Republic Act No. 6426); (b) Article 177 of the Revised Penal Code; and (c) Section 3(e) of the
Anti-Graft and Corrupt Practices Act (Rep. Act No. 3019);
The Evaluation and Preliminary Investigation Bureau (EPIB) of the Office of the Ombudsman
issued a Resolution recommending the dismissal of the aforesaid complaint for want of
probable cause to indict respondent bank and BIR officials. Petitioner filed a Motion for
Reconsideration of said Resolution, upon the ground that errors of fact and law were
committed prejudicial to the interest of petitioner. EPIB officers issued an order, approved
by respondent Desierto, denying petitioner’s Motion for Reconsideration
Estrada filed a petition for certiorari under Rule 65 before the Court of Appeals;
CA promulgated the assailed resolution dismissing the petition on the ground that it did not
fall under its jurisdiction pursuant to Rep. Act No. 6770 and relying on the case of Fabian v
Desierto stating that the Court of Appeals is now vested with exclusive appellate jurisdiction
involving a review of decisions or orders of the Office of the Ombudsman in administrative
disciplinary cases only. Estrada filed a Motion for Reconsideration, but it was denied by CA.
Estrada filed this instant petition for review on certiorari praying that the Court of Appeals take
cognizance of the petition for certiorari under Rule 65 filed therein.
Petitioner argues that Section 14 of Rep. Act No. 6770 (The Ombudsman Act of 1989), which was
made the basis by the Court of Appeals in dismissing his petition, is unconstitutional as it allegedly
provides for direct appeal to the Supreme Court.
VII. STATEMENT OF THE CASE:
Estrada filed a complaint against respondent BIR officials and respondent Citibank officers before
the Office of the Ombudsman. EPIB recommended the dismissal of the complaint, which was
approved by Ombudsman Desierto.
Estrada filed a petition for certiorari before the CA, but it was denied on the ground that it is not an
administrative case. Estrada filed a petition for review on certiorari before SC praying that CA take
cognizance of his petition.
VIII. ISSUES:
1. SPCL ISSUE: W/N Public Respondents violated Section 8 of Rep. Act No. 6426 (Foreign
Currency Deposits Act of the Philippines). (NO, but note that SC did not answer whether
respondent’s rationale on the basis of the Whereas clause and the Salvacion case is correct because
in this case there’s no abuse of discretion)
2. Main Issue: W/N the Court of Appeals has jurisdiction to entertain original petitions for
certiorari from decisions of the Office of the Ombudsman in criminal cases. (NO)
3. ISSUE: W/N respondent Hefti being the Deputy Commissioner of BIR had indeed usurped the
duty of the BIR Commissioner when she issued the notice of distraint. (NO)
4. ISSUE : W/N public respondents violated Sec. 3(e) of Rep. Act No. 3019. (NO)
IX. RULING:
1. SPCL ISSUE: NO Public Respondents did not violate Section 8 of Rep. Act No. 6426
Public respondents ratiocinated —
At this point, it is worth stressing, that this office in its previous Order dated 20 February
2001, ruled that the absolute confidentiality of foreign currency deposit account provided for
under R.A. 6426 does not apply to the foreign currency deposit accounts of herein
complainant, since the protection under the said law is intended only for depositors who are
non residents and are not engaged in trade and business in the Philippines. In coming out
with such ruling, this office has as its basis one of the Whereas clauses of P.D. 1246 which
amended Sec. 8 of R.A. 6426. For emphasis, the pertinent provision of the said law is
hereby quoted:
WHEREAS, .xxx on the interest of the income of depositors who are nonresidents and are
not engaged in trade or business in the Philippines.
And:
In Salvacion v. Central Bank and China Bank, 278 SCRA 27 (1997), the Highest Tribunal
adopted the opinion of the Office of the Solicitor General (OSG) that only foreign currency
deposits of foreign lenders and investors are given protection and incentives by the law, and
further ruled that the Foreign Currency Deposits Act cannot be utilized to perpetuate
injustice. Following such pronouncements, it is respectfully submitted that foreign
currency deposits of Filipino depositors, including herein complainant, are not
covered by the Foreign Currency Deposits Act, and are thus not exempt from the
processes duly-issued by the BIR.
The Court do not perceive any grave abuse of discretion on the part of the public respondents
when they issued the aforecited rulings. Thus, SC defer to the policy of non-interference in
the conduct of preliminary investigations. SC have invariably stated that it is not sound
practice to depart from the policy of non-interference in the Ombudsman’s exercise of
discretion to determine whether or not to file information against an accused.
A cautionary word. A declaration by this Court that the public respondents did not gravely abuse
their discretion in issuing the resolutions dismissing petitioner’s complaint does not necessarily
translate to a declaration of assent in the findings of fact and conclusions of law contained therein.
With respect specifically to the resolution for violation of Section 8 of Rep. Act. No. 6426, public
respondents relied on the “whereas” clause of P.D. No. 1246 which amended Rep. Act No. 6426 and
on the Salvacion case to conclude that only non-residents who are not engaged in trade and
business are under the mantle of protection of Section 8 of Rep. Act. No. 6426. Assuming that such
reliance is erroneous as contended by petitioner, this Court, on petition for certiorari, cannot
correct the same as the error is not of a degree that would amount to a clear case of abuse of
discretion of the grave and malevolent kind
2. NO. CA has no jurisdiction.

In Tirol, Jr. v. Del Rosario, we had occasion to rule that Rep. Act No. 6770 does not provide for the
remedy of appeal from decisions of the Ombudsman in criminal or non-administrative cases. The
aggrieved party may instead avail himself of the original petition for certiorari when the
circumstances would warrant the use thereof:
. . . As we ruled in Fabian, the aggrieved party is given the right to appeal to the Court of
Appeals. Such right of appeal is not granted to parties aggrieved by orders and decisions of
the Ombudsman in criminal cases, like finding probable cause to indict accused persons.
However, an aggrieved party is not without recourse where the finding of the Ombudsman as
to the existence of probable cause is tainted with grave abuse of discretion, amounting to lack
or excess of jurisdiction. An aggrieved party may file a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure.
Thus, in cases when the aggrieved party is questioning the Office of the Ombudsman’s
finding of lack of probable cause, as in this case, there is likewise the remedy of certiorari
under Rule 65 to be filed with this Court and not with the Court of Appeals following our
ruling in Perez v. Office of the Ombudsman
3. NO. Hefti did not usurp the authority of the Commissioner.
While it is true that under Sec. 206 of the NIRC as amended, the Commissioner of the BIR and not
any Officer of the BIR was the one granted with the power to issue a notice of distraint, it bears to
stress, however, that when respondent Hefti exercised such function of the BIR Commissioner, she
was then designated Officer-In-Charge of the BIR by President Gloria Macapagal-Arroyo, as
evidenced by a photocopy of her Memorandum of Appointment dated January 23, 2001. By virtue
of her appointment as Officer-In-Charge of BIR, it necessary follows that respondent Hefti
can now legally exercise the duties and functions pertaining to the BIR Commissioner,
including the issuance of a constructive distraint. Hence, the charge for Usurpation of Official
Function does not apply to said respondent.
4. NO. Public respondents did not violate Sec. 3(e) of Rep. Act No. 3019.
Be it emphasized that the issuance of the notice of distraint by respondent Hefti was done in
accordance with her function as the then Officer-In-Charge of the BIR. Furthermore,
complainant failed to show the alleged undue injury he suffered because of the said distraint.
There is nowhere in the records of this case to show that he was deprived by the Citibank
Greenhills branch to withdraw any amount from his own foreign currency account deposit, nor was
there a record of his attempt to withdraw from his foreign currency deposit with the said bank.
Hence, the charge for violation of Sec. 3(e) under R.A. 3019 can not prosper for failure to establish
the actual damage or injury suffered by the complainant.
X. DISPOSITIVE PORTION:
WHEREFORE, premises considered, the instant petition is hereby DISMISSED for lack of merit and
the resolutions of the Court of Appeals in CA-G.R. SP No. 71722 dated 29 July 2002 and 20
November 2002 are hereby AFFIRMED. Costs against petitioner.
XI. Prepared by: Lorane Angeli L. Basbas

ESTRADA V DESIERTO
Q: BIR placed Estrada’s foreign currency deposit account at Citibank under constructive
distraint. BIR ruled that the absolute confidentiality of foreign currency deposit account provided
for under R.A. 6426 does not apply to the foreign currency deposit accounts of herein
complainant, since the protection under the said law is intended only for depositors who are non
residents and are not engaged in trade and business in the Philippines. Estrada filed a complaint
for violation of Section 8 of Rep. Act No. 6426. Ombudsman dismissed the complaint for lack of
probable cause. CA denied the petition for certiorari for lack of jurisdiction. Does Bir commit
grave abuse of discretion?
A: No. A declaration by the Supreme Court that the BIR did not gravely abuse their discretion in
issuing the resolutions dismissing petitioner’s complaint does not necessarily translate to a
declaration of assent in the findings of fact and conclusions of law contained therein. With
respect specifically to the resolution for violation of Section 8 of Rep. Act. No. 6426, public
respondents relied on the “whereas” clause of P.D. No. 1246 which amended Rep. Act No. 6426
and on the Salvacion case to conclude that only non-residents who are not engaged in trade and
business are under the mantle of protection of Section 8 of Rep. Act. No. 6426.

I. Short Title: Salvacion V - Central Bank II. FULL TITLE: KAREN E. SALVACION, Minor, Thru Federico N. Salvacion, JR., Father and

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I. SHORT TITLE: SALVACION V.

III. TOPIC: Law on Secrecy of Bank Deposits (Foreign Deposits)

IV. STATEMENT OF FACTS:

V. STATEMENT OF THE CASE:

In his Comment, the Solicitor General correctly opined, thus:

Respondent Bartelli is just a tourist or a transient. He deposited his dollars with

VIII. DISPOSITIVE PORTION:

I. UNION BANK OF THE PHILIPPINES v. CA & ALLIED BANK CORPORATION

III. PONENTE: Kapunan, J.

IV. TOPIC: Law on Secrecy of Bank Deposits

VI. STATEMENT OF THE CASE:

No, it does not fall under the last exception.

IX. DISPOSITIVE PORTION:

X. Prepared by: Allison C. Umandap

I. SHORT TITLE: EJERCITO VS. SANDIGANBAYAN

V. STATEMENT OF THE CASE:

Subsequently or on February 12, 2003, the Sandiganbayan issued a Resolution denying

The policy behind the law is laid down in Section 1:

SECTION 1. It is hereby declared to be the policy of the Government to give encouragement to

Undoubtedly, cases for plunder involve unexplained wealth.

2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or

The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of

Columbia Pictures, Inc. v. Court of Appeals teaches:

VIII: DISPOSITIVE PORTION:

WHEREFORE, the petition is DISMISSED. The Sandiganbayan Resolutions dated February 7

IX. PREPARED BY: Claudette Irene S. Manalastas

I.SHORT TITLE: RCBC VS. HON. DE CASTRO AND PHILIPPINE VIRGINIA

III. TOPIC: Law on Secrecy of Bank Deposits (Foreign Deposits)

IV. STATEMENT OF FACTS:

V. STATEMENT OF THE CASE:

... The garnishment of property to satisfy a writ of execution operates as an attachment

VIII. DISPOSITIVE PORTION:

IX. PREPARED BY: Claudette Irene S. Manalastas

I. SHORT TITLE: MELLON BANK VS. MAGSINO

III. TOPIC: Secrecy of Bank Deposits

IV. STATEMENT OF FACTS:

VIII. DISPOSITIVE PORTION

The decision is immediately executory. Costs against private respondents. SO ORDERED.

IX. PREPARED BY: Chyles Denise E. Legaspi

I. SHORT TITLE: PCIB V. CA

II. FULL TITLE: Philippine Commercial & Industrial Bank v. Court of

III. TOPIC: Secrecy of Bank Deposits

IV. STATEMENT OF FACTS:

V. STATEMENT OF THE CASE:

VIII. DISPOSITIVE PORTION:

I. SHORT TITLE: VAN TWEST VS. COURT OF APPEALS

IV. STATEMENT OF FACTS:

V. STATEMENT OF THE CASE:

Circular No. 960, Series of 1983 provides in relevant part:

VIII. DISPOSITIVE PORTION

IX. PREPARED BY: Chyles Denise E. Legaspi

15. VAN TWEST V. COURT OF APPEALS

III. TOPIC: Secrecy of Bank Deposits

IV. STATEMENT OF FACTS:

V. STATEMENT OF THE CASE:

I. SHORT TITLE: CHINA BANKING CORPORATION V. CA

II. FULL TITLE: CHINA BANKING CORPORATION versus THE HONORABLE

IV. STATEMENT OF FACTS: