97700447 secrecy of bank deposits

7/27/2019 97700447 Secrecy of Bank Deposits

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Law on Secrecy of Bank Deposits (RA 1405) Comia, A.T

LAW ON SECRECY OF BANK DEPOSITS

1. De la Rama v. Villarosa, 8 SCRA 413 (1963)

2. PNB v. Gancayco, 15 SCRA 91 (1965);

Filipino Saving and Mortgage Bank v. Purisima, 161 SCRA 576 (1988)

3. RCBC v. De Castro, 168 SCRA 49 (1988)

4. Mellon Bank, N.A. v. Magsino, 190 SCRA 633 (1990)

5. PCIB v. Court of Appeals, 193 SCRA 452 (1991)

6. Van Twest v. Court of Appeals, 230 SCRA 42 (1994)

7. Onate v. Abrogar, 241 SCRA 659 (1995)

8. Salvacion v. Central Bank, 278 SCRA 27 (1997)

9. Union Bank of the Philippines v. CA, 321 SCRA 563 (1999)

10. Marquez v. Desierto, 359 SCRA 772 (2001);

Office of the Ombudsman v. Ibay, 364 SCRA 281 (2001)

11. Intengan v. Court of Appeals, 377 SCRA 63 (2002)

12. Republic of the Philippines v. Cabrini, Green and Ross, 489 SCRA 644 (2006)

13. Ejercito v. Sandiganbayan, 509 SCRA 190 (2006)

14. China Bank Corporation v. Court of Appeals, 511 SCRA 110 (2006)

15. Republic v. Eugenio, 545 SCRA 384 (2008)

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LAW ON SECRECY OF BANK DEPOSITS

1. De la Rama v. Villarosa, 8 SCRA 413 (1963)

FACTS:

-Lourdes de la Rama brought an action in the Court of first Instance of Negros Occidental against lessee Augusto

R. 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 renta

for the 1953-54 sugarcane crop year, the rental for the 1954-55 crop year, rental and partly the reasonable value

for the use and occupation of the leased premises for the 1955-56 crop year, with stipulated attorney's fees, and

interests, etc.

-The court rendered a partial summary judgment decreeing the lease rescinded, cancelled and ordering

defendant Augusto R. Villarosa to surrender and deliver to De la Rama or her representatives the possession of

the leased premises, etc.

-Luzon Surety appealed.

-Upon Motion of De La Rama, the Lower Court issued an order for the issuance of writ of execution.

-Accordingly, the sheriff garnished the deposit of Luson Surety with the Philippine Trust Company to the amount

of P71,533.99.

-Only the sum of P31,535.57 was paid to the sheriff.

-CA modified the decision of the Trial Court with respect to the amount.

-Luzon Surety thereafter invoked the provisions of Sec. 5 of Rule 39, of the Rules of Court and demanded that an

interest of 6% should be paid on the difference between the sum actually garnished and the sum obtained in the

final judgment.

-Motion was denied. Hence, this appeal.

HELD:

-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.

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-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 in order to deliver the full amount garnished to the

plaintiff-appellee; all that was ordered to be delivered after the judgment had become final was the amount found

by the Court of Appeals to be due. The balance of the amount garnished, therefore, remained all the time in the

possession of the bank as part of the funds of the Luzon Surety Co., although the same could not be disposed of

by the owner.

2. PNB v. Gancayco, 15 SCRA 91 (1965);

Filipino Saving and Mortgage Bank v. Purisima, 161 SCRA 576 (1988)

FACTS:

-Ernesto Jimenez was the former administrator of the Agricultural Credit and Cooperative Administration (ACCA).

-He was investigated for unexplained wealth.

-The special prosecutors of DOJ Emilio Gancayco and Florentino Flor required Philippine National Bank to

produce at a hearing the records of the bank deposits of Jimenez.

-PNB declined to reveal its records invoking RA 1405.

-On the other hand, the special prosecutors demanded anew that Eduardo Romualdez, as bank president,

produce the records or he would be prosecuted for contempt citing the Anti-Graft and Corrupt Practices Act

(3019).

- Because of the threat of prosecution, plaintiffs filed an action for declaratory judgment

-. After trial, during which Senator Arturo M. Tolentino, author of the Anti-Graft and Corrupt Practices Act testified,

the court rendered judgment, sustaining the power of the defendants to compel the disclosure of bank accounts of

ACCFA Administrator Jimenez. The court said that, by enacting section 8 of, the Anti-Graft and Corrupt Practices

Act, Congress clearly intended to provide an additional ground for the examination of bank deposits. Without such

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provision, the court added prosecutors would be hampered if not altogether frustrated in the prosecution of those

charged with having acquired unexplained wealth while in public office.

-PNB appealed the decision.

ISSUE:

-Whether or not a bank can be compelled to disclosed the records of accounts of a depositor who is under

investigation for unexplained wealth.

HELD:

- While Republic Act No. 1405 provides that bank deposits are "absolutely confidential ... and [therefore] may not

be examined, inquired or looked into," except in those cases enumerated therein, the Anti-Graft Law directs in

mandatory terms that bank deposits "shall be taken into consideration in the enforcement of this section

notwithstanding any provision of law to the contrary." The only conclusion possible is that section 8 of the Anti-

Graft Law is intended to amend section 2 of Republic Act No. 1405 by providing additional exception to the rule

against the disclosure of bank deposits.

- With regard to the claim that disclosure would be contrary to the policy making bank deposits confidential, it is

enough to point out that while section 2 of Republic Act 1405 declares bank deposits to be "absolutely

confidential," it nevertheless allows such disclosure in the following instances: (1) Upon written permission of the

depositor; (2) In cases of impeachment; (3) Upon order of a competent court in cases of bribery or dereliction of

duty of public officials; (4) In cases where the money deposited is the subject matter of the litigation. Cases of

unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these two

classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot

be different from the policy as to the other. This policy express the motion that a public office is a public trust and

any person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his

duty, is open to public scrutiny.

3. RCBC v. De Castro, 168 SCRA 49 (1988)

FACTS:

-In an action for recovery of unpaid tobacco deliveries, Phil. Virginia Tobacco Administration was ordered to pay

BADOC Planters Inc. within 48 hours.

-Upon Motion of BADOC, a writ of execution was issued.

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-Accordingly, Special sheriff Faustino Rigor issued a notice of garnishment addressed to the Gen. Manager

and/or cahier of Rizal Banking Corporation.

-Upon receipt of such notice RCBC duly informed PVTA thereof, to enable the latter to take the necessary steps

for its protection.

-On the very next day, however, RCBC was served with the order requiring it to deliver in check the amount

garnished to the designated sheriff and sheriff in turn, to cash the check and deliver the amount to judgement

creditor.

-RCBC complied and delivered a certified check.

-PVTA filed a motion for reconsideration

-BADOC failed to appear on the scheduled dates of hearing.

-The case was dismissed for failure to prosecute and BADOC and RCBC were ordered to jointly and severally

restore the account of PVTA with RCBC.

-Only RCBC filed a petition for review of the order of CFI.

ISSUE:

- Whether or not the bank should be held solidarily liable with the judgment creditor for reimbursement of the

garnished funds delivered to the sheriff who in turn delivered it to the judgment creditor in compliance with acourt

order.

HELD:

-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 was composed of two parts,

requiring: 1) RCBC to deliver in checkthe 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 tha

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

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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 fastensupon 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

- It may be concluded that the charge of breach of trust and/or dereliction of duty as well as lack of prudence in

effecting the immediate payment of the garnished amount is totally unfounded. Upon receipt of the Notice of

Garnishment, RCBC duly informed PVTA thereof to enable the latter to take the necessary steps for its protection.

However, right on the very next day after its receipt of such notice, RCBC was already served with the Order

requiring delivery of the garnished amount. Confronted as it was with a mandatory directive, disobedience to

which exposed it to a contempt order, it had no choice but to comply.

4. Mellon Bank, N.A. v. Magsino, 190 SCRA 633 (1990)

FACTS:

- 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.

-Javier opened a new dollar account 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.

-Formal demands of Mellon Bank and Manufacturers Hanover Bank, through Prudential Bank proved futile.

-Hence Mellon Bank filed a complaint praying that that the Javiers and each of them who used a portion of said

funds be declared as holders of the property in trust for it and later be compelled to transfer legal title and

possession.

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-During trial, Mellon Bank sought to introduce testimonies which revealed in formation on the bank account of

various persons whom it believed were responsible for the acquisitions to aid and abet Javiers in dissipating the

funds.

-The admission of the testimonies were objected to on the ground that it violates RA 1405.

-Initially the Lower Court conditionally allowed the testimonies.

-Said testimonies were moved to be stricken off.

-The motion was granted.

-Motion for Reconsideration was denied, hence Mellon bank filed the instant petition.

HELD:

-Republic Act No. 1405 on the secrecy of bank deposits, 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 is aimed a

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

5. PCIB v. Court of Appeals, 193 SCRA 452 (1991)

FACTS:

- The instant case originated from an action filed with the National Labor Relations Commission (NLRC) by a

group of laborers who obtained therefrom a favorable judgment for the payment of against the Marinduque

Minings and Industrial Corporations.

-To enforce the judgment, Commission issued a writ of execution directing the Deputy Sheriff of Negros

Occidental, one Damian Rojas, to enforce the aforementioned judgment.

Accordingly, the deputy sheriff went to the mining site of the Marinduque Minings and Industrial Corporations and

served the writ of execution on the persons concerned, but nothing seemed to have happened thereat.

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-Thereafter, the Sheriff prepared on his own a Notice of Garnishment addressed to six (6) banks, all located in

Bacolod City, 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.

-Incidentally, the house lawyer of the Marinduque Minings and Industrial Corporations, Atty. Rexes V. Alejano,

acting on a tip regarding the existence of the said notice of garnishment, communicated with the bank manager,

the petitioner Jose Henares, verbally at first at around 2:00 o'clock in the afternoon of that day, and later

confirmed in a formal letter received by Henares at about 5:00 o'clock of that same day, requesting the

withholding of any release of the deposit of the private respondent with the petitioner bank.

-Meanwhile, at about 9:30 in the morning the deputy sheriff presented the Notice of Garnishment and the Writ of

Execution attached therewith to Henares and later in the afternoon, demanded from the latter, under pain of

contempt, the release of the deposit of the Marinduque Minings and Industrial Corporations.

-Henares, upon knowing from the Acting Provincial Sheriff that there was no restraining order from the National

Labor Relations Commission and on the favorable advice of the bank's legal counsel, issued a debit memo for the

full balance of the private respondent's account with the petitioner bank. Thereafter, he issued a manager's check

in the name of the Deputy Provincial Sheriff of Negros Occidental for the amount of P37,466.18, which was the

exact balance of the private respondent's account as of that day.

-On the following day, at about 1:00 o'clock in the afternoon, the deputy sheriff returned to the bank in order to

encash the check but before the actual encashment, the 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.

-Marinduque Minings and Industrial Corporations filed a 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.

-TC affirmed by CA, rendered judgment in favor of Marinduque Mining.

ISSUE:

-Whether or not a bank is liable for releasing its depositor's funds on the strength of the notice of garnishment

made by the deputy sheriff pursuant to a writ of execution issued by the National Labor Relations Commission

(NLRC).

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HELD:

-The prohibition against examination or inquiry into a bank deposit under RA 1405 does not preclude its being

garnished to ensure satisfaction of a judgment since the disclosure is purely incidental to the execution process

and it was not the intention of the legislature to place bank deposits beyond the reach of judgment creditor.

6. Van Twest v. Court of Appeals, 230 SCRA 42 (1994)

FACTS:

-Alexander Van Twest and Gloria Anacleto opened a joint foreign currency savings account with Interbank to hold

funds which "belonged entirely and exclusively" to Van Twest, to "facilitate the funding of certain business

undertakings" of both of them and which funds were to be "temporarily (held) in trust" by Gloria Anacleto, who

"shall turnover the same to plaintiff upon demand."

-Van Twest further alleged that withdrawals from the account were always made through their joint signatures;

that when his business relationship with Gloria Anacleto turned sour, the latter unilaterally closed their joint

account, withdrew the remaining balance of and placed the money in her own personal account with the same

bank.

-Van Twest thus sought an injunctive writ to prevent Gloria Anacleto from withdrawing the money at any time andthereby defeat Van Twest's main and pending action.

-The RTC granted the writ of preliminary injunction.

-CA reversed the order holding that Anacleto is a co-owner of the funds who could unilaterally control the

application thereof.

-Hence, petition for review seeking the reinstatement of writ of preliminary injunction.

-Anacleto contends for the first time that the personal currency deposit she is maintaining is exempt from process

issued by courts pursuant to RA 6426.

ISSUE:

-Whether or not Anacleto may invoke RA 6426.

HELD:

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- Anacletos contentions do not persuade. Her belated invocation of the provisions of R.A. No. 6426 as amended

violates basic procedural due process by interposing a new matter before this Court the consideration of which

would further delay a final disposition on the propriety of petitioner of petitioner's application for an injunctive writ.

-On a substantive, the Court holds that the privileges extended by the statute cited by private respondent areactually enjoyed, and are invocable only, by the petitioner, both because private respondent's transactions fall

outside the ambit of the statute, and because petitioner is the owner of the foreign exchange fund subject of this

case. This conclusion is anchored on the consistent and contemporaneous administrative construction by the

Central Bank of the basic statute, as manifested in the relevant circulars issued by it in implementation of that law

which are entitled to great respect by the courts.

7. Onate v. Abrogar, 241 SCRA 659 (1995)

FACTS:

- Oate offered to sell to Sunlife Assurance Company of Canada treasury bills at a discounted price.

-Sunlife paid the price by means of a check payable to Brunner Development Corporation.

-Brunner issued to it receipt with the undertaking to deliver the treasury bills to Sunlife.

-However, Brunner delivered instead promissory note in which it was made to appear that the transaction was amoney placement instead of sale of treasury bills.

-Hence, Sunlife sued Oate, Econ and Brunner for the delivery of the treasury bills.

-During trial, the judge ordered the examination of the books of accounts and ledgers of Brunner at the Urban

Bank and the records of account of Oate at BPI, even orderedPNB to produce the records regarding certain

checks deposited in it.

-The court orders were based on the allegations of Sunlife that the money paid by it to Brunner was subsequently

withdrawn from Urban Bank after it had been deposited by Brunner and then transferred to Oates account in the

BPI and to the unnamed account in the PNB.

-These orders were contended by Oate as a fishing expedition which the trial court should not have allowed.

ISSUE:

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-Whether or not the examination of the bank account in this case is prohibited by RA 1405.

HELD:

-The examination of the bank account in which the money paid by an insurance company for treasury bills was

deposited is prohibited by RA 1405 even if the insurance company sued the seller of the treasury bills for failure to

deliver the treasury bills, for the money is not subject matter of the litigation.

-Whether the transaction is considered a sale or money placement does not make the money the subject matter

of litigation within the meaning of Sec.2 of RA 1405 which prohibits the disclosure or inquiry into bank deposits

except in cases where the money deposited or interested is the subject matter of litigation nor will it matter

whether the money was swindled as Sunlife contends.

-However, since the attachment of the properties was invalid, the examination ordered with such attachment must

also be considered invalid.

8. Salvacion v. Central Bank, 278 SCRA 27 (1997)

FACTS:

-Greg Bartelli, an American tourist coaxed and lured Karen Salvacion, 12 years old to go with him to his

apartment and raped her there for several times.

-However, Bartelli was able to escape from jail and avoid punishment.

-The criminal cases were archived pending the arrest of Bartelli.

-On the other hand, Karen received a favorable judgment in the civil case for damage

-After the decision of the trial court become final, Karen tried to execute on Bartellis dollar account with China

Banking Corporation.

-Accordingly, the sheriff served a Notice of Garnishment on China Banking.

-China Banking invoked Section 113 of CB Circular 960 to the effect that the dollar deposits of Bartelli are exemp

from attachment, garnishment, or any other order or process of any court, legislative body, government agency or

any administrative body whatsoever.

-Upon inquiry with CB on whether Sec 113 of CB Circular 960 has any exception, CB responded that the

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which would help in the development of the economy and that there is no intention to render futile the basic rights

of a person, but it is the law though the law maybe harsh as some perceive it. Compliance is still enjoined.

-Hence, this petition for declaratory relief.

ISSUE:

-Whether or not the peculiar circumstances of the case warrants the execution on the foreign currency account

despite the exemption from court processes under RA 6426.

HELD:

-The provisions of Sec 113 of CB circular 960 and PD 1246, in so far as it amends Section 8 of RA 6426 are

inapplicable to this case because of its peculiar circumstances. CBC is required to comply with the writ of

execution and release to Karen the dollar deposit of Bartelli in such amount would satisfy the judgment.

-Provisions of The application of the law depend on the extent of its justice. Eventually, if we rule that the

questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any

other order or process of any court. Legislative body, government agency or any administrative body whatsoever

is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a foreign guest like

accused Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that in case of doubt in

the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to

prevail. Ninguno non deue enriquecerse tortizerzmente con damo de otro. Simply stated, when the statute is

silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of

conscience.

-It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the countrys economy was in a

shambles; when foreign investments were minimal and presumably, this was the reason why said statute was

enacted. But the realities of the present times show that the country has recovered economically; and even if not

the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The

intention of the questioned law may be good when enacted. The law failed to anticipate the inquitous effects

producing outright injustice and inequality such as as the case before us.

-It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used as a device by

accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the expense of the innocent.

-Call it what it may but is there no conflict of legal policy here? Dollar against Peso? Upholding the final and

executory judgment of the lower court against the Central Bank Circular protecting the foreign depositor?

Shielding or protecting the dollar deposit of a transient alien depositor against injustice to a national and victim of

a crime? This situation calls for fairness against legal tyranny.

9. Union Bank of the Philippines v. CA, 321 SCRA 563 (1999)

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FACTS:

- A check in the amount of One Million Pesos (P1,000,000.00) was drawn against Account No. 0111-01854-8 with

Allied Bank payable to the order of one Jose Ch. Alvarez. The payee deposited the check with Union Bank who

credited the P1,000,000.00 to the account of Mr. Alvarez.

-Union Bank sent the check for clearing through the Philippine Clearing House Corporation (PCHC). When the

check was presented for payment, a clearing discrepancy was committed by Union Banks clearing staff when the

amount of One Million Pesos (P1,000,000.00) was erroneously under-encoded to One Thousand Pesos

(P1,000.00) only.

-Union Bank only discovered the under-encoding almost a year later.

-Thus, Union Bank Notified Allied Bank of the discrepancy by way of a charge slip for Nine Hundred Ninety-Nine

Thousand Pesos (P999,000.00) for automatic debiting against the account of Allied Bank.

-The latter, however, refused to accept the charge slip since [the] transaction was completed per your [UnionBanks] original instruction and clients account is now insufficiently funded.

-Subsequently, Union Bank filed a complaint against Allied Bank before the PCHC Arbitration Committee

(Arbicom), alleging that Allied Bank should have informed it of the under coding pursuant to the Section 25 of

PCHC handbook which states that: The receiving bank should inform the erring bank about the under coding of

the amount not later than 10 am of the following clearing day.

-The judgment on the arbitration case was held in abeyance pending the resolution of the petition filed by Union

Bank.

-RTC, affirmed by CA dismissed the petition holding that case of Union Bank does not fall under any of the

exceptions to warrant a disclosure of or inquiry into the ledger/books of account in dispute.

-CA held that the case was not one where the money deposited is the subject matter of the litigation, particularly

nowhere in Union Banks complaint does it mention of the amount it seeks to recover from the Account itself, but

seeks of P999,000 only as an incident of its alleged opportunity losses and interest as a result of its own

employees admitted error in encoding the check.

-Hence, this petition.

ISSUE:

-Whether or not the case at bar falls under the last exeption.

HELD:

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-A collecting bank which sued the drawee bank to recover the deficiency between the amount credited to the

account of the depositor and the amount obtained from the drawee bank because the latter had erroneously

undercoded the amount of the check it presented for clearing from P1M to P1,000 is not entitled to examine the

account of the drawer of the check, because the money in the account of the drawer is not the subject matter of

the litigation. The collecting bank was only fishing for information so it could determine the culpability of the

drawee bank and the amounts of damages it could recover from the latter. It does not seek the recovery of the

very money contained in the deposit. The subject matter of the dispute may be the amount of P999,000 that the

ollecting bank seeks from the drawee bank as a result of the latters alleged failure to inform the former of the

discrepancy ; but it is not the P999,000 deposited in the drawers account. By the terms of RA 1405, the money

deposited itself should be the subject matter of the litigation.

10. Marquez v. Desierto, 359 SCRA 772 (2001);

Office of the Ombudsman v. Ibay, 364 SCRA 281 (2001)

FACTS:

- Marquez received an Order from the Ombudsman Aniano A. Desierto, to produce several bank documents for

purposes of inspection in camera relative to various accounts maintained at Union Bank of the Philippines, Julia

Vargas Branch, where Marquez is the branch manager. The accounts to be inspected are involved in a case

pending with the Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al.

-Marquez failed to comply with the order due to the fact that the bank could not identify the account since the

checks were issued in cash or bearer.

-OMB found the explanation unacceptable and warned Marquez that her failure to comply would subject her in

pain of contempt and prosecution for obstruction.

-Instead of complying, Marquez together with Union Bank filed a petition for declaratory relief seeking a definite

ruling as regards her rights under RA 1405 and the power of OMB to inspect bank deposit under Sec. 15 RA6770

-Prayer for TRO was denied by TC.

-OMB moved to dismiss but was denied.

ISSUE:

-Whether or not the order of the OMB to have an in camera inspection of the questioned account pending

investigation at its office is allowed as an exception to the law on secrecy of bank deposits.

HELD:

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-Before an in camera inspection may be allowed, there must be a pending case before a court of competent

jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of the

pending case before the court of competent jurisdiction. The bank personnel and the account holder must be

notified to be present during the inspection, and such inspection may cover only the account identified in the

pending case.

In Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on Secrecy of

Bank Deposits, as amended, declares bank deposits to be absolutely confidential except:

(1) In an examination made in the course of a special or general examination of a bank that is

specifically authorized by the Monetary Board after being satisfied that there is reasonable ground to

believe that a bank fraud or serious irregularity has been or is being committed and that it is

necessary to look into the deposit to establish such fraud or irregularity,

(2) In an examination made by an independent auditor hired by the bank to conduct its regular audit

provided that the examination is for audit purposes only and the results thereof shall be for the

exclusive use of the bank,

(3) Upon written permission of the depositor,

(4) In cases of impeachment,

(5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or

(6) In cases where the money deposited or invested is the subject matter of the litigation

In the case at bar, there is yet no pending litigation before any court of competent authority. What is existingis an investigation by the office of the Ombudsman. In short, what the Office of the Ombudsman would wish to do

is to fish for additional evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan. Clearly,

there was no pending case in court which would warrant the opening of the bank account for inspection.

11. Intengan v. Court of Appeals, 377 SCRA 63 (2002)

FACTS:

-Citibank filed a complaint for violation of section 31 in relation to section 144 of the Corporation Code against two

(2) of its officers, Dante L. Santos and Marilou Genuino for allegedly managing and causing existing bank

clients/depositors to divert their money from Citibank to products offered by other companies that were

commanding higher rate of yields.

-This was done by transferring bank clients monies to Torrance Development Corporation and Global Pacific

Corporation, two companies in which they have financial interests, who in turn placed the monies of the bank

clients in securities, shares of stock and other certificates.

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-Out of these transactions, they both derived substantial financial gains.

-When these anomalous/ highly irregular activities were discovered Citibank filed a complaint for violation of Sec

31 of the Corporation Code against Santos and Genuino.

-Documents were presented to substantiate the case, which included documents pertaining to US dollar deposits

of Intengan, Neri and Brawner.

-As an incident thereto, Intengan et al., filed their respective motions for the exclusion and physical withdrawal of

their bank records that were attached.

-Thereafter the Provincial Prosecutor directed the filing of information against Officers of Citibank for violation of

RA 1405.

-On appeal, DOJ secretary ordered the withdrawal of the informations.

-Appellate court sustained DOJ

-Hence, this petition.

HELD:

-A case for violation of Republic Act No. 6426 should have been the proper case brought against private

respondents. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners

dollar deposits without the latters written permission. It does not matter if that such disclosure was necessary

to establish Citibanks case against Dante L. Santos and Marilou Genuino. Lims act of disclosing details of

petitioners bank records regarding their foreign currency deposits, with the authority of Reyes, would appear

to belong to that species of criminal acts punishable by special laws, called malum prohibitum.

-Ordinarily, the dismissal of the instant petition would have been without prejudice to the filing of the proper

charges against private respondents. The matter would have ended here were it not for the intervention of time

specifically the lapse thereof. So as not to unduly prolong the settlement of the case, we are constrained to rule

on a material issue even though it was not raised by the parties. We refer to the issue of prescription.

-The filing of the complaint or information in the case at bar for alleged violation of Republic Act No. 1405 did not

have the effect of tolling the prescriptive period. For it is the filing of the complaint or information corresponding to

the correct offense which produces that effect.

-It may well be argued that the foregoing disquisition would leave petitioners with no remedy in law. We point out

however, that the confidentiality of foreign currency deposits mandated by Republic Act No. 6426, as amended by

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Presidential Decree No. 1246, came into effect as far back as 1977. Hence, ignorance thereof cannot be

pretended. On one hand, the existence of laws is a matter of mandatory judicial notice; on the other, ignorantia

legis non excusat. Even during the pendency of this appeal, nothing prevented the petitioners from filing a

complaint charging the correct offense against private respondents. This was not done, as everyone involved was

content to submit the case on the basis of an alleged violation of Republic Act No. 1405 (Bank Secrecy Law)

however, incorrectly invoked

12. Republic of the Philippines v. Cabrini, Green and Ross, 489 SCRA 644 (2006)

FACTS:

-In the exercise of its power under Sec. 10 of RA 9160, the Anti-money Laundering Council (AMLC) issued freeze

orders against various bank accounts.

-The frozen bank accounts were previously found prima facie to be related to the unlawful activities o

respondents.

-Under RA 9160, a freeze order issued by AMLC is effective for a period not exceeding 15 days unless extended

upon order of the court.

-Accordingly, before the lapse of the period of effectivity of its freeze orders, the AMLC filed with the CA petitions

for extension of effectivity of its freeze orders.

-The AMLC invoked the jurisdiction of the CA in the belief that the power given to the CA to issue temporary

restraining order (TRO) or writ of injunction carried with it the power to extend the effectivity of a freeze order.

-However, CA disagreed with AMLC and dismissed the petitions, ruling that it was not vested by RA. 9160 with

the power to extend freeze order issued by AMLC.

ISSUE:

-Which Court has jurisdiction to extend the effectivity of a freeze order?

HELD:

-The amendment of RA 9194 by RA 9160 erased any doubt on the jurisdiction of the CA over extension of Freeze

orders.

-As the law now stands, it is solely the CA which has the authority to issue a freeze order as well as extend its

effectivity.Page 17 of 22


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-It also has the exclusive jurisdiction to extend existing freeze orders previously issued by the AMLC vis--vis

accounts and deposits related to money laundering activities.

13. Ejercito v. Sandiganbayan, 509 SCRA 190 (2006)

FACTS:

-[In the case of Pp. v. Estrada] Special Prosecution Panel (composed of the Ombudsman, the Special Prosecutor

Deputy Special Prosecutor, Asst. Ombudsman, Special Prosecution III and SP II), filed before Sandiganbayan a

request for the issuance of subpoena duces tecum directing the president of Export and Industry Bank (EIB) or

his/her representative to produce documents relating to the acts therein specified.

-The Special Prosecution Panel likewise requested for issuance of Subpoena Duces Tecum / Ad testificandum

directed to the authorized representative of Equitable-PCI Bank to produce statements of accounts in the name of

Jose Velarde and testify thereon.

-Estrada, claiming to have learned from the media that the Special Prosecution Panel had requested for the

issuance of subpoenas the examination of bank accounts belonging to him, attended the hearing of the case and

filed before the Sandiganbayan a letter of opposition and requested that he be given time to retain the services of

a lawyer and prayed that the issuance of the subpoena be held in abeyance for at least 10 days to enable him to

take appropriate legal steps.

-In open court, Associate Justice Sandoval of Sandiganbayan advised Estrada that his remedy was to file a

motion to quash, for which he was given up to 12nn the following day.

-Estrada unassisted by counsel filed a motion to quash claiming that his bank accounts are covered by RA 1405

and do not fall under any of the exceptions stated therein.

-Other requests for issuance of Subpoenas were filed, and thus issued, hence, motion to quash was filed by

Estrada but was denied by Sandiganbayan. Sandiganbayan further denied Motion for reconsideration.

ISSUES:

1. Whether or not Estradas Account is covered by the term deposit as used in RA 1405.

2. Whether or not Estradas Trust and Savings accounts are excepted from the protection of RA 1405.

HELD:

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-An examination of RA 1405 shows that the term deposits used therein is to be understood broadly and not

limited 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. The phrase of whatever nature

proscribes any restrictive interpretation of deposits. RA 1405 applies not only to money which are invested, such

as those placed in a trust account.

-These accounts are no longer protected by the Secrecy of Bank Deposits Law, there being two exceptions

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 Estradas bank

accounts is said to form part of the subject matter of the same plunder case.

14. China Bank Corporation v. Court of Appeals, 511 SCRA 110 (2006)

FACTS:

- Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar

deposits with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00. Mary Margaret Dee

received these amounts from Citibank N.A. through checks which she allegedly deposited at China Banking

Corporation (China Bank). He likewise accused his son-in-law, George Dee, husband of his daughter, Mary

Margaret, of transferring his real properties and shares of stock in George Dees name without any consideration

Jose Gotianuy, died during the pendency of the case before the trial court. He was substituted by his daughter,

Elizabeth Gotianuy Lo. The latter presented the US Dollar checks withdrawn by Mary Margaret Dee from his US

dollar placement with Citibank.

-Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to Cristota Labios and Isabel Yap,

employees of China Bank, to testify on the case.

-China Bank opposed.

TC:

-The disclosure is only as to the name or whose name the said fund is deposited is not violative of the law

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CA:

-Affirmed TC. The law protects only the deposit itself but not the name of depositor.

CBs Contention:

-Jose Gotianuy is not the owner of the questioned foreign currency deposit, thus, he cannot invoke the aid of the

court in compelling the disclosure of someone elses foreign currency deposit.

ISSUE:

-Whether or not Jose Gotianuy as co payee of a foreign currency depositor in checks deposited in the account of

Mary Margaret Dee is a depositor.

HELD:

-The law provides that all foreign currency deposits authorized under Republic Act No. 6426, as amended by Sec

8, Presidential Decree No. 1246, Presidential Decree No. 1035, as well as foreign currency deposits authorized

under Presidential Decree No. 1034 are considered absolutely confidential in nature and may not be inquired into

There is only one exception to the secrecy of foreign currency deposits, that is, disclosure is allowed upon the

written permission of the depositor.

-As the owner of the funds unlawfully taken and which are undisputably now deposited with China Bank, Jose

Gotianuy has the right to inquire into the said deposits.

-A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course of business, to

be placed to his credit and subject to his check or the beneficiary of the funds held by the bank as trustee.

-As CA ruled:

Furthermore, it is indubitable that the Citibank checks were drawn against the foreign currency

account with Citibank, NA. The monies subject of said checks originally came from the late Jose

Gotianuy, the owner of the account. Thus, he also has legal rights and interests in the CBC

account where said monies were deposited. More importantly, the Citibank checks readily

demonstrate that the late Jose Gotianuy is one of the payees of said checks. Being a co-payee

thereof, then he or his estate can be considered as a co-depositor of said checks. Ergo, since

the late Jose Gotianuy is a co-depositor of the CBC account, then his request for the assailed

subpoena is tantamount to an express permission of a depositor for the disclosure of the name of

the account holder.Page 20 of 22


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15. Republic v. Eugenio, 545 SCRA 384 (2008)

FACTS:

-A series of investigation concerning the award of the NAIA 3 contracts to PIATCO were undertaken by the

Ombudsman and the compliance and Investigation Staff (CIS) of Anti-Money Laundering Council.

-The OSG wrote AMLC requesting the latters assistance in obtaining more evidence to completely reveal the

financial trail of corruption surrounding the NAIA 3 Project.

-The CIS conducted an intelligence database search on the financial transactions of certain individuals involved in

the award, including Pontaleon Alvarez who had been the chairman of the PBAC Technical committee, NAIA 3

Project.

-The search revealed that Alvarez maintained 8 bank accounts with 6 different banks.

-AMLC issued resolution whereby the council resolved to authorize the executive director of the AMLC to sign

and verify an application to inquire into and/or examine the deposits or investments of Pantaleon Alvarez et al.

and their related web of accounts wherever theses may be found and to authorize the AMLC Secretariat to

conduct an inquiry into the subject accounts once the RTC-Makati grants the application to inquire into and/or

examine bank accounts of those persons. RTC grants the application.

-Pursuant to the order, CIS proceeded to inquire and examine the deposits, investments and related web

accounts.

-Special Prosecutor of the Ombudsman wrote a letter requesting AMLC to investigate the accounts of Alvarez et

al, which AMLC likewise heeded.

-Again, AMLC filed an application, this time with RTC Manila, to inquire into and/or examine 13 accounts and 2

related web of accounts allegedly having been used to facilitate corruption in NAIA 3 Project.

-Manila RTC issued an order granting Ex-parte the application.

-Alvarez filed an Urgent Motion to stay enforcement of the order.

-RTC stayed the order but soon after, reinstated the same.

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HELD:

-There is no need for a pre existing or pending case in court for violation of the Anti- Money Laundering Law

before a bank inquiry order may be issued by the court. However it does not follow that such order may be availed

of ex-parte. A bank inquiry order, unlike a freeze order can not be issued unless notice is given to the owners of

the account, allowing them the opportunity to contest the issuance of such order.