Anti-Money Laundering Act of 2001 (RA 9160)

AN ACT DEFINING THE CRIME OF MONEY LAUNDERING, PROVIDING PENALTIES

THEREFOR AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
SECTION 1. Short Title. This Act shall be known as the "Anti-Money Laundering Act of
2001."
SEC. 2. Declaration of Policy. It is hereby declared the policy of the State to protect
and preserve the integrity and confidentiality of bank accounts and to ensure that the
Philippines shall not be used as a money laundering site for the proceeds of any unlawful
activity. Consistent with its foreign policy, the State shall extend cooperation in transnational
investigations and prosecutions of persons involved in money laundering activities wherever
committed.
SEC. 3. Definitions. For purposes of this Act, the following terms are hereby defined as
follows:
(a) "Covered institution" refers to:
(1) banks, non-banks, quasi-banks, trust entities, and all other institutions and their
subsidiaries and affiliates supervised or regulated by the Bangko Sentral ng Pilipinas (BSP);
(2) insurance companies and all other institutions supervised or regulated by the Insurance
Commission; and
(3) (i) securities dealers, brokers, salesmen, investment houses and other similar entities
managing securities or rendering services as investment agent, advisor, or consultant, (ii)
mutual funds, close-end investment companies, common trust funds, pre-need companies
and other similar entities, (iii) foreign exchange corporations, money changers, money
payment, remittance, and transfer companies and other similar entities, and (iv) other
entities administering or otherwise dealing in currency, commodities or financial derivatives
based thereon, valuable objects, cash substitutes and other similar monetary instruments or
property supervised or regulated by Securities and Exchange Commission and Exchange
Commission
(b) "Covered transaction" is a single, series, or combination of transactions involving a total
amount in excess of Four million Philippine pesos (Php4,000,000.00) or an equivalent
amount in foreign currency based on the prevailing exchange rate within five (5)
consecutive banking days except those between a covered institution and a person who, at
the time of the transaction was a properly identified client and the amount is commensurate
with the business or financial capacity of the client; or those with an underlying legal or
trade obligation, purpose, origin or economic justification.
It likewise refers to a single, series or combination or pattern of unusually large and
complex transactions in excess of Four million Philippine pesos (Php4,000,000.00) especially

cash deposits and investments having no credible purpose or origin, underlying trade
obligation or contract.
(c) "Monetary instrument" refers to:
(1) coins or currency of legal tender of the Philippines, or of any other country;
(2) drafts, checks and notes;
(3) securities or negotiable instruments, bonds, commercial papers, deposit certificates,
trust certificates, custodial receipts or deposit substitute instruments, trading orders,
transaction tickets and confirmations of sale or investments and money market instruments;
and
(4) other similar instruments where title thereto passes to another by endorsement,
assignment or delivery.
(d) "Offender" refers to any person who commits a money laundering offense.
(e) "Person" refers to any natural or juridical person.
(f) "Proceeds" refers to an amount derived or realized from an unlawful activity.
(g) "Supervising Authority" refers to the appropriate supervisory or regulatory agency,
department or office supervising or regulating the covered institutions enumerated in
Section 3(a).
(h) "Transaction" refers to any act establishing any right or obligation or giving rise to any
contractual or legal relationship between the parties thereto. It also includes any movement
of funds by any means with a covered institution.
(i) "Unlawful activity" refers to any act or omission or series or combination thereof
involving or having relation to the following:
(1) Kidnapping for ransom under Article 267 of Act No. 3815, otherwise known as the
Revised Penal Code, as amended;
(2) Sections 3, 4, 5, 7, 8 and 9 of Article Two of Republic Act No. 6425, as amended,
otherwise known as the Dangerous Drugs Act of 1972;
(3) Section 3 paragraphs B, C, E, G, H and I of Republic Act No. 3019, as amended;
otherwise known as the Anti-Graft and Corrupt Practices Act;
(4) Plunder under Republic Act No. 7080, as amended;
(5) Robbery and extortion under Articles 294, 295, 296, 299, 300, 301 and 302 of the
Revised Penal Code, as amended;
(6) Jueteng and Masiao punished as illegal gambling under Presidential Decree No. 1602;

(7) Piracy on the high seas under the Revised Penal Code, as amended and Presidential
Decree No. 532;
(8) Qualified theft under Article 310 of the Revised Penal Code, as amended;
(9) Swindling under Article 315 of the Revised Penal Code, as amended;
(10) Smuggling under Republic Act Nos. 455 and 1937;
(11) Violations under Republic Act No. 8792, otherwise known as the Electronic Commerce
Act of 2000;
(12) Hijacking and other violations under Republic Act No. 6235; destructive arson and
murder, as defined under the Revised Penal Code, as amended, including those perpetrated
by terrorists against non-combatant persons and similar targets;
(13) Fraudulent practices and other violations under Republic Act No. 8799, otherwise
known as the Securities Regulation Code of 2000;
(14) Felonies or offenses of a similar nature that are punishable under the penal laws of
other countries.
SEC. 4. Money Laundering Offense. Money laundering is a crime whereby the proceeds
of an unlawful activity are transacted, thereby making them appear to have originated from
legitimate sources. It is committed by the following:
(a) Any person knowing that any monetary instrument or property represents, involves, or
relates to, the proceeds of any unlawful activity, transacts or attempts to transact said
monetary instrument or property.
(b) Any person knowing that any monetary instrument or property involves the proceeds of
any unlawful activity, performs or fails to perform any act as a result of which he facilitates
the offense of money laundering referred to in paragraph (a) above.
(c) Any person knowing that any monetary instrument or property is required under this Act
to be disclosed and filed with the Anti-Money Laundering Council (AMLC), fails to do so.
SEC. 5. Jurisdiction of Money Laundering Cases. The regional trial courts shall have
jurisdiction to try all cases on money laundering. Those committed by public officers and
private persons who are in conspiracy with such public officers shall be under the jurisdiction
of the Sandiganbayan.
SEC. 6. Prosecution of Money Laundering.
(a) Any person may be charged with and convicted of both the offense of money laundering
and the unlawful activity as herein defined.
(b) Any proceeding relating to the unlawful activity shall be given precedence over the
prosecution of any offense or violation under this Act without prejudice to the freezing and
other remedies provided.

SEC. 7. Creation of Anti-Money Laundering Council (AMLC). The Anti-Money

Laundering Council is hereby created and shall be composed of the Governor of the Bangko
Sentral ng Pilipinas as chairman, the Commissioner of the Insurance Commission and the
Chairman of the Securities and Exchange Commission as members. The AMLC shall act
unanimously in the discharge of its functions as defined hereunder:
(1) to require and receive covered transaction reports from covered institutions;
(2) to issue orders addressed to the appropriate Supervising Authority or the covered
institution to determine the true identity of the owner of any monetary instrument or
property subject of a covered transaction report or request for assistance from a foreign
State, or believed by the Council, on the basis of substantial evidence, to be, in whole or in
part, wherever located, representing, involving, or related to, directly or indirectly, in any
manner or by any means, the proceeds of an unlawful activity;
(3) to institute civil forfeiture proceedings and all other remedial proceedings through the
Office of the Solicitor General;
(4) to cause the filing of complaints with the Department of Justice or the Ombudsman for
the prosecution of money laundering offenses;
(5) to initiate investigations of covered transactions, money laundering activities and other
violations of this Act;
(6) to freeze any monetary instrument or property alleged to be proceeds of any unlawful
activity;
(7) to implement such measures as may be necessary and justified under this Act to
counteract money laundering;
(8) to receive and take action in respect of, any request from foreign states for assistance in
their own anti-money laundering operations provided in this Act;
(9) to develop educational programs on the pernicious effects of money laundering, the
methods and techniques used in money laundering, the viable means of preventing money
laundering and the effective ways of prosecuting and punishing offenders; and
(10) to enlist the assistance of any branch, department, bureau, office, agency or
instrumentality of the government, including government-owned and -controlled
corporations, in undertaking any and all anti-money laundering operations, which may
include the use of its personnel, facilities and resources for the more resolute prevention,
detection and investigation of money laundering offenses and prosecution of offenders.
SEC. 8. Creation of a Secretariat. The AMLC is hereby authorized to establish a
secretariat to be headed by an Executive Director who shall be appointed by the Council for
a term of five (5) years. He must be a member of the Philippine Bar, at least thirty-five (35)
years of age and of good moral character, unquestionable integrity and known probity. All
members of the Secretariat must have served for at least five (5) years either in the
Insurance Commission, the Securities and Exchange Commission or the Bangko Sentral ng
Pilipinas (BSP) and shall hold full-time permanent positions within the BSP.

SEC. 9. Prevention of Money Laundering; Customer Identification Requirements

and Record Keeping.
(a) Customer Identification. - Covered institutions shall establish and record the true
identity of its clients based on official documents. They shall maintain a system of verifying
the true identity of their clients and, in case of corporate clients, require a system of
verifying their legal existence and organizational structure, as well as the authority and
identification of all persons purporting to act on their behalf.The provisions of existing laws
to the contrary notwithstanding, anonymous accounts, accounts under fictitious names, and
all other similar accounts shall be absolutely prohibited. Peso and foreign currency nonchecking numbered accounts shall be allowed. The BSP may conduct annual testing solely
limited to the determination of the existence and true identity of the owners of such
accounts.
(b) Record Keeping. - All records of all transactions of covered institutions shall be
maintained and safely stored for five (5) years from the dates of transactions. With respect
to closed accounts, the records on customer identification, account files and business
correspondence, shall be preserved and safely stored for at least five (5) years from the
dates when they were closed.
(c) Reporting of Covered Transactions. - Covered institutions shall report to the AMLC all
covered transactions within five (5) working days from occurrence thereof, unless the
Supervising Authority concerned prescribes a longer period not exceeding ten (10) working
days.
When reporting covered transactions to the AMLC, covered institutions and their officers,
employees, representatives, agents, advisors, consultants or associates shall not be deemed
to have violated Republic Act No. 1405, as amended; Republic Act No. 6426, as amended;
Republic Act No. 8791 and other similar laws, but are prohibited from communicating,
directly or indirectly, in any manner or by any means, to any person the fact that a covered
transaction report was made, the contents thereof, or any other information in relation
thereto. In case of violation thereof, the concerned officer, employee, representative, agent,
advisor, consultant or associate of the covered institution, shall be criminally liable.
However, no administrative, criminal or civil proceedings, shall lie against any person for
having made a covered transaction report in the regular performance of his duties and in
good faith, whether or not such reporting results in any criminal prosecution under this Act
or any other Philippine law.
When reporting covered transactions to the AMLC, covered institutions and their officers,
employees, representatives, agents, advisors, consultants or associates are prohibited from
communicating, directly or indirectly, in any manner or by any means, to any person, entity,
the media, the fact that a covered transaction report was made, the contents thereof, or any
other information in relation thereto. Neither may such reporting be published or aired in
any manner or form by the mass media, electronic mail, or other similar devices. In case of
violation thereof, the concerned officer, employee, representative, agent, advisor, consultant
or associate of the covered institution, or media shall be held criminally liable.
SEC. 10. Authority to Freeze. Upon determination that probable cause exists that any
deposit or similar account is in any way related to an unlawful activity, the AMLC may issue
a freeze order, which shall be effective immediately, on the account for a period not
exceeding fifteen (15) days. Notice to the depositor that his account has been frozen shall
be issued simultaneously with the issuance of the freeze order. The depositor shall have

seventy-two (72) hours upon receipt of the notice to explain why the freeze order should be
lifted. The AMLC has seventy-two (72) hours to dispose of the depositors explanation. If it
fails to act within seventy-two (72) hours from receipt of the depositors explanation, the
freeze order shall automatically be dissolved. The fifteen (15)-day freeze order of the AMLC
may be extended upon order of the court, provided that the fifteen (15)-day period shall be
tolled pending the courts decision to extend the period.
No court shall issue a temporary restraining order or writ of injunction against any freeze
order issued by the AMLC except the Court of Appeals or the Supreme Court.
SEC. 11. Authority to Inquire into Bank Deposits. Notwithstanding the provisions of
Republic Act No. 1405, as amended; Republic Act No. 6426, as amended; Republic Act No.
8791, and other laws, the AMLC may inquire into or examine any particular deposit or
investment with any banking institution or non-bank financial institution upon order of any
competent court in cases of violation of this Act when it has been established that there is
probable cause that the deposits or investments involved are in any way related to a money
laundering offense: Provided, That this provision shall not apply to deposits and investments
made prior to the effectivity of this Act.
SEC. 12. Forfeiture Provisions.
(a) Civil Forfeiture. - When there is a covered transaction report made, and the court has, in
a petition filed for the purpose ordered seizure of any monetary instrument or property, in
whole or in part, directly or indirectly, related to said report, the Revised Rules of Court on
civil forfeiture shall apply.
(b) Claim on Forfeited Assets. - Where the court has issued an order of forfeiture of the
monetary instrument or property in a criminal prosecution for any money laundering offense
defined under Section 4 of this Act, the offender or any other person claiming an interest
therein may apply, by verified petition, for a declaration that the same legitimately belongs
to him and for segregation or exclusion of the monetary instrument or property
corresponding thereto. The verified petition shall be filed with the court which rendered the
judgment of conviction and order of forfeiture, within fifteen (15) days from the date of the
order of forfeiture, in default of which the said order shall become final and executory. This
provision shall apply in both civil and criminal forfeiture.
(c) Payment in Lieu of Forfeiture. - Where the court has issued an order of forfeiture of the
monetary instrument or property subject of a money laundering offense defined under
Section 4, and said order cannot be enforced because any particular monetary instrument or
property cannot, with due diligence, be located, or it has been substantially altered,
destroyed, diminished in value or otherwise rendered worthless by any act or omission,
directly or indirectly, attributable to the offender, or it has been concealed, removed,
converted or otherwise transferred to prevent the same from being found or to avoid
forfeiture thereof, or it is located outside the Philippines or has been placed or brought
outside the jurisdiction of the court, or it has been commingled with other monetary
instruments or property belonging to either the offender himself or a third person or entity,
thereby rendering the same difficult to identify or be segregated for purposes of forfeiture,
the court may, instead of enforcing the order of forfeiture of the monetary instrument or
property or part thereof or interest therein, accordingly order the convicted offender to pay
an amount equal to the value of said monetary instrument or property. This provision shall
apply in both civil and criminal forfeiture.

SEC. 13. Mutual Assistance among States.

(a) Request for Assistance from a Foreign State. - Where a foreign State makes a request
for assistance in the investigation or prosecution of a money laundering offense, the AMLC
may execute the request or refuse to execute the same and inform the foreign State of any
valid reason for not executing the request or for delaying the execution thereof. The
principles of mutuality and reciprocity shall, for this purpose, be at all times recognized.
(b) Powers of the AMLC to Act on a Request for Assistance from a Foreign State. - The AMLC
may execute a request for assistance from a foreign State by: (1) tracking down, freezing,
restraining and seizing assets alleged to be proceeds of any unlawful activity under the
procedures laid down in this Act; (2) giving information needed by the foreign State within
the procedures laid down in this Act; and (3) applying for an order of forfeiture of any
monetary instrument or property in the court: Provided, That the court shall not issue such
an order unless the application is accompanied by an authenticated copy of the order of a
court in the requesting State ordering the forfeiture of said monetary instrument or property
of a person who has been convicted of a money laundering offense in the requesting State,
and a certification or an affidavit of a competent officer of the requesting State stating that
the conviction and the order of forfeiture are final and that no further appeal lies in respect
of either.
(c) Obtaining Assistance from Foreign States. - The AMLC may make a request to any
foreign State for assistance in (1) tracking down, freezing, restraining and seizing assets
alleged to be proceeds of any unlawful activity; (2) obtaining information that it needs
relating to any covered transaction, money laundering offense or any other matter directly
or indirectly related thereto; (3) to the extent allowed by the law of the foreign State,
applying with the proper court therein for an order to enter any premises belonging to or in
the possession or control of, any or all of the persons named in said request, and/or search
any or all such persons named therein and/or remove any document, material or object
named in said request: Provided, That the documents accompanying the request in support
of the application have been duly authenticated in accordance with the applicable law or
regulation of the foreign State; and (4) applying for an order of forfeiture of any monetary
instrument or property in the proper court in the foreign State: Provided, That the request is
accompanied by an authenticated copy of the order of the regional trial court ordering the
forfeiture of said monetary instrument or property of a convicted offender and an affidavit of
the clerk of court stating that the conviction and the order of forfeiture are final and that no
further appeal lies in respect of either.
(d) Limitations on Requests for Mutual Assistance. - The AMLC may refuse to comply with
any request for assistance where the action sought by the request contravenes any
provision of the Constitution or the execution of a request is likely to prejudice the national
interest of the Philippines unless there is a treaty between the Philippines and the
requesting State relating to the provision of assistance in relation to money laundering
offenses.
(e) Requirements for Requests for Mutual Assistance from Foreign States. - A request for
mutual assistance from a foreign State must (1) confirm that an investigation or prosecution
is being conducted in respect of a money launderer named therein or that he has been
convicted of any money laundering offense; (2) state the grounds on which any person is
being investigated or prosecuted for money laundering or the details of his conviction; (3)
give sufficient particulars as to the identity of said person; (4) give particulars sufficient to
identify any covered institution believed to have any information, document, material or

object which may be of assistance to the investigation or prosecution; (5) ask from the
covered institution concerned any information, document, material or object which may be
of assistance to the investigation or prosecution; (6) specify the manner in which and to
whom said information, document, material or object obtained pursuant to said request, is
to be produced; (7) give all the particulars necessary for the issuance by the court in the
requested State of the writs, orders or processes needed by the requesting State; and (8)
contain such other information as may assist in the execution of the request.
(f) Authentication of Documents. - For purposes of this Section, a document is
authenticated if the same is signed or certified by a judge, magistrate or equivalent officer
in or of, the requesting State, and authenticated by the oath or affirmation of a witness or
sealed with an official or public seal of a minister, secretary of State, or officer in or of, the
government of the requesting State, or of the person administering the government or a
department of the requesting territory, protectorate or colony. The certificate of
authentication may also be made by a secretary of the embassy or legation, consul general,
consul, vice consul, consular agent or any officer in the foreign service of the Philippines
stationed in the foreign State in which the record is kept, and authenticated by the seal of
his office.
(g) Extradition. - The Philippines shall negotiate for the inclusion of money laundering
offenses as herein defined among extraditable offenses in all future treaties.
SEC. 14. Penal Provisions.
(a) Penalties for the Crime of Money Laundering. The penalty of imprisonment ranging from
seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos
(Php 3,000,000.00) but not more than twice the value of the monetary instrument or
property involved in the offense, shall be imposed upon a person convicted under Section
4(a) of this Act.
The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than
One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than
Three million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted
under Section 4(b) of this Act.
The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than
One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred
thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person
convicted under Section 4(c) of this Act.
(b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6) months
to one (1) year or a fine of not less than One hundred thousand Philippine pesos
(Php100,000.00) but not more than Five hundred thousand Philippine pesos
(Php500,000.00), or both, shall be imposed on a person convicted under Section 9(b) of
this Act.
(c) Malicious Reporting. Any person who, with malice, or in bad faith, reports or files a
completely unwarranted or false information relative to money laundering transaction
against any person shall be subject to a penalty of six (6) months to four (4) years
imprisonment and a fine of not less than One hundred thousand Philippine pesos (Php100,
000.00) but not more than Five hundred thousand Philippine pesos (Php500, 000.00), at the

discretion of the court: Provided, That the offender is not entitled to avail the benefits of the
Probation Law.
If the offender is a corporation, association, partnership or any juridical person, the penalty
shall be imposed upon the responsible officers, as the case may be, who participated in the
commission of the crime or who shall have knowingly permitted or failed to prevent its
commission. If the offender is a juridical person, the court may suspend or revoke its
license. If the offender is an alien, he shall, in addition to the penalties herein prescribed, be
deported without further proceedings after serving the penalties herein prescribed. If the
offender is a public official or employee, he shall, in addition to the penalties prescribed
herein, suffer perpetual or temporary absolute disqualification from office, as the case may
be.
Any public official or employee who is called upon to testify and refuses to do the same or
purposely fails to testify shall suffer the same penalties prescribed herein.
(d) Breach of Confidentiality. The punishment of imprisonment ranging from three (3) to
eight (8) years and a fine of not less than Five hundred thousand Philippine pesos
(Php500,000.00) but not more than One million Philippine pesos (Php1,000,000.00), shall
be imposed on a person convicted for a violation under Section 9(c).
SEC. 15. System of Incentives and Rewards. A system of special incentives and
rewards is hereby established to be given to the appropriate government agency and its
personnel that led and initiated an investigation, prosecution and conviction of persons
involved in the offense penalized in Section 4 of this Act.
SEC. 16. Prohibitions Against Political Harassment. This Act shall not be used for
political persecution or harassment or as an instrument to hamper competition in trade and
commerce.
No case for money laundering may be filed against and no assets shall be frozen, attached
or forfeited to the prejudice of a candidate for an electoral office during an election period.
SEC. 17. Restitution. Restitution for any aggrieved party shall be governed by the
provisions of the New Civil Code.
SEC. 18. Implementing Rules and Regulations. Within thirty (30) days from the
effectivity of this Act, the Bangko Sentral ng Pilipinas, the Insurance Commission and the
Securities and Exchange Commission shall promulgate the rules and regulations to
implement effectively the provisions of this Act. Said rules and regulations shall be
submitted to the Congressional Oversight Committee for approval.
Covered institutions shall formulate their respective money laundering prevention programs
in accordance with this Act including, but not limited to, information dissemination on
money laundering activities and its prevention, detection and reporting, and the training of
responsible officers and personnel of covered institutions.
SEC. 19. Congressional Oversight Committee. There is hereby created a
Congressional Oversight Committee composed of seven (7) members from the Senate and
seven (7) members from the House of Representatives. The members from the Senate shall
be appointed by the Senate President based on the proportional representation of the

parties or coalitions therein with at least two (2) Senators representing the minority. The
members from the House of Representatives shall be appointed by the Speaker also based
on proportional representation of the parties or coalitions therein with at least two (2)
members representing the minority.
The Oversight Committee shall have the power to promulgate its own rules, to oversee the
implementation of this Act, and to review or revise the implementing rules issued by the
Anti-Money Laundering Council within thirty (30) days from the promulgation of the said
rules.
SEC. 20. Appropriations Clause. The AMLC shall be provided with an initial
appropriation of Twenty-five million Philippine pesos (Php25,000,000.00) to be drawn from
the national government. Appropriations for the succeeding years shall be included in the
General Appropriations Act.
SEC. 21. Separability Clause. If any provision or section of this Act or the application
thereof to any person or circumstance is held to be invalid, the other provisions or sections
of this Act, and the application of such provision or section to other persons or
circumstances, shall not be affected thereby.
SEC. 22. Repealing Clause. All laws, decrees, executive orders, rules and regulations or
parts thereof, including the relevant provisions of Republic Act No. 1405, as amended;
Republic Act No. 6426, as amended; Republic Act No. 8791, as amended and other similar
laws, as are inconsistent with this Act, are hereby repealed, amended or modified
accordingly.
SEC. 23. Effectivity. This Act shall take effect fifteen (15) days after its complete
publication in the Official Gazette or in at least two (2) national newspapers of general
circulation.

REPUBLIC ACT No. 6426

AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES, AND FOR
OTHER PURPOSES.
Section 1. Title. This act shall be known as the "Foreign Currency Deposit Act of the Philippines."
Section 2. Authority to deposit foreign currencies. Any person, natural or juridical, may, in accordance
with the provisions of this Act, deposit with such Philippine banks in good standing, as may, upon
application, be designated by the Central Bank for the purpose, foreign currencies which are acceptable
as part of the international reserve, except those which are required by the Central Bank to be
surrendered in accordance with the provisions of Republic Act Numbered two hundred sixty-five
(Now Rep. Act No. 7653).
Section 3. Authority of banks to accept foreign currency deposits. The banks designated by the Central
Bank under Section two hereof shall have the authority:
(1) To accept deposits and to accept foreign currencies in trust Provided, That numbered
accounts for recording and servicing of said deposits shall be allowed;
(2) To issue certificates to evidence such deposits;
(3) To discount said certificates;
(4) To accept said deposits as collateral for loans subject to such rules and regulations as may be
promulgated by the Central Bank from time to time; and
(5) To pay interest in foreign currency on such deposits.
Section 4. Foreign currency cover requirements. Except as the Monetary Board may otherwise
prescribe or allow, the depository banks shall maintain at all times a one hundred percent foreign currency
cover for their liabilities, of which cover at least fifteen percent shall be in the form of foreign currency
deposit with the Central Bank, and the balance in the form of foreign currency loans or securities, which
loans or securities shall be of short term maturities and readily marketable. Such foreign currency loans
may include loans to domestic enterprises which are export-oriented or registered with the Board of
Investments, subject to the limitations to be prescribed by the Monetary Board on such loans. Except as
the Monetary Board may otherwise prescribe or allow, the foreign currency cover shall be in the same
currency as that of the corresponding foreign currency deposit liability. The Central Bank may pay interest
on the foreign currency deposit, and if requested shall exchange the foreign currency notes and coins into
foreign currency instruments drawn on its depository banks. (As amended by PD No. 1453, June 11,
1978.)
Depository banks which, on account of networth, resources, past performance, or other pertinent criteria,
have been qualified by the Monetary Board to function under an expanded foreign currency deposit
system, shall be exempt from the requirements in the preceding paragraph of maintaining fifteen percent
(15%) of the cover in the form of foreign currency deposit with the Central Bank. Subject to prior Central
Bank approval when required by Central Bank regulations, said depository banks may extend foreign
currency loans to any domestic enterprise, without the limitations prescribed in the preceding paragraph
regarding maturity and marketability, and such loans shall be eligible for purposes of the 100% foreign
currency cover prescribed in the preceding paragraph. (As added by PD No. 1035.)

Section 5. Withdrawability and transferability of deposits. There shall be no restriction on the withdrawal
by the depositor of his deposit or on the transferability of the same abroad except those arising from the
contract between the depositor and the bank.
Section 6. Tax exemption. All foreign currency deposits made under this Act, as amended by PD No.
1035, as well as foreign currency deposits authorized under PD No. 1034, including interest and all other
income or earnings of such deposits, are hereby exempted from any and all taxes whatsoever
irrespective of whether or not these deposits are made by residents or nonresidents so long as the
deposits are eligible or allowed under aforementioned laws and, in the case of nonresidents, irrespective
of whether or not they are engaged in trade or business in the Philippines. (As amended by PD No.
1246, prom. Nov. 21, 1977.)
Section 7. Rules and regulations. The Monetary Board of the Central Bank shall promulgate such rules
and regulations as may be necessary to carry out the provisions of this Act which shall take effect after
the publications in the Official Gazette and in a newspaper of national circulation for at least once a week
for three consecutive weeks. In case the Central Bank promulgates new rules and regulations decreasing
the rights of depositors, rules and regulations at the time the deposit was made shall govern.
Section 8. Secrecy of foreign currency deposits. All foreign currency deposits authorized under this Act,
as amended by PD No. 1035, as well as foreign currency deposits authorized under PD No. 1034, are
hereby declared as and considered of an absolutely confidential nature and, except upon the written
permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or
looked into by any person, government official, bureau or office whether judicial or administrative or
legislative, or any other entity whether public or private; Provided, however, That said foreign currency
deposits shall be exempt from attachment, garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body whatsoever. (As amended by PD No.
1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.)
Section 9. Deposit insurance coverage. The deposits under this Act shall be insured under the
provisions of Republic Act No. 3591, as amended (Philippine Deposit Insurance Corporation), as well as
its implementing rules and regulations: Provided, That insurance payment shall be in the same currency
in which the insured deposits are denominated.
Section 10. Penal provisions. Any willful violation of this Act or any regulation duly promulgated by the
Monetary Board pursuant hereto shall subject the offender upon conviction to an imprisonment of not less
than one year nor more than five years or a fine of not less than five thousand pesos nor more than
twenty-five thousand pesos, or both such fine and imprisonment at the discretion of the court.
Section 11. Separability clause. The provisions of this Act are hereby declared to be separable and in
the event one or more of such provisions are held unconstitutional, the validity of other provisions shall
not be affected thereby.
Section 12. Repealing clause. All acts, executive orders, rules and regulations, or parts thereof, which
are inconsistent with any provisions of this Act are hereby repealed, amended or modified accordingly,
without prejudice, however, to deposits made thereunder.
Section 12-A. Amendatory enactments and regulations. In the event a new enactment or regulation is
issued decreasing the rights hereunder granted, such new enactment or regulation shall not apply to
foreign currency deposits already made or existing at the time of issuance of such new enactment or
regulation, but such new enactment or regulation shall apply only to foreign currency deposits made after
its issuance. (As added by PD No. 1246, prom. Nov. 21, 1977.)
Section 13. Effectivity. This Act shall take effect upon its approval.

FIRST DIVISION
GOVERNMENT
SERVICE
INSURANCE SYSTEM,
Petitioner,

G.R. No. 189206

Present:
-versus-

THE HONORABLE 15TH DIVISION OF THE

COURT OF APPEALS and INDUSTRIAL
BANK
OF KOREA,
TONG YANG
MERCHANT
BANK,
HANAREUM
BANKING CORP., LAND BANK OF THE
PHILIPPINES, WESTMONT BANK and
DOMSAT HOLDINGS, INC.,
Respondents.

CORONA, C.J.,
Chairperson
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.

Promulgated:

June 8, 2011
x ----------------------------------------------------------------------------------------x
DECISION
PEREZ, J.:
The subject of this petition for certiorari is the Decision[1] of the Court of Appeals in CA-G.R. SP
No. 82647 allowing the quashal by the Regional Trial Court (RTC) of Makati of a subpoena for the
production of bank ledger. This case is incident to Civil Case No. 99-1853, which is the main case for
collection of sum of money with damages filed by Industrial Bank of Korea, Tong Yang Merchant Bank,
First Merchant Banking Corporation, Land Bank of the Philippines, and Westmont Bank (now United
Overseas Bank), collectively known as the Banks against Domsat Holdings, Inc. (Domsat) and the
Government Service Insurance System (GSIS). Said case stemmed from a Loan Agreement, [2] whereby
the Banks agreed to lend United States (U.S.) $11 Million to Domsat for the purpose of financing the
lease and/or purchase of a Gorizon Satellite from the International Organization of Space
Communications (Intersputnik).[3]
The controversy originated from a surety agreement by which Domsat obtained a surety bond
from GSIS to secure the payment of the loan from the Banks. We quote the terms of the Surety Bond in
its entirety.[4]

Republic of the Philippines

GOVERNMENT SERVICE INSURANCE SYSTEM
GENERAL INSURANCE FUND
GSIS Headquarters, Financial Center
Roxas Boulevard, Pasay City
G(16) GIF Bond 027461
SURETY BOND
KNOW ALL MEN BY THESE PRESENTS:
That we, DOMSAT HOLDINGS, INC., represented by its President as
PRINCIPAL, and the GOVERNMENT SERVICE INSURANCE SYSTEM, as
Administrator of the GENERAL INSURANCE FUND, a corporation duly organized and
existing under and by virtue of the laws of the Philippines, with principal office in the
City of Pasay, Metro Manila, Philippines as SURETY, are held and firmly bound unto the
OBLIGEES: LAND BANK OF THE PHILIPPINES, 7 th Floor, Land Bank Bldg. IV. 313
Sen. Gil J. Puyat Avenue, Makati City; WESTMONT BANK, 411 Quintin Paredes St.,
Binondo, Manila: TONG YANG MERCHANT BANK, 185, 2-Ka, Ulchi-ro, Chungk-ku,
Seoul, Korea; INDUSTRIAL BANK OF KOREA, 50, 2-Ga, Ulchi-ro, Chung-gu, Seoul,
Korea; and FIRST MERCHANT BANKING CORPORATION, 199-40, 2-Ga, Euliji-ro,
Jung-gu, Seoul, Korea, in the sum, of US $ ELEVEN MILLION DOLLARS
($11,000,000.00) for the payment of which sum, well and truly to be made, we bind
ourselves, our heirs, executors, administrators, successors and assigns, jointly and
severally, firmly by these presents.
THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS:
WHEREAS, the above bounden PRINCIPAL, on the 12 th day of December, 1996
entered into a contract agreement with the aforementioned OBLIGEES to fully and
faithfully
Guarantee the repayment of the principal and interest on the loan granted
the PRINCIPAL to be used for the financing of the two (2) year lease of a
Russian Satellite from INTERSPUTNIK, in accordance with the terms
and conditions of the credit package entered into by the parties.
This bond shall remain valid and effective until the loan including
interest has been fully paid and liquidated,
a copy of which contract/agreement is hereto attached and made part hereof;
WHEREAS, the aforementioned OBLIGEES require said PRINCIPAL to give a
good and sufficient bond in the above stated sum to secure the full and faithful
performance on his part of said contract/agreement.
NOW, THEREFORE, if the PRINCIPAL shall well and truly perform and fulfill
all the undertakings, covenants, terms, conditions, and agreements stipulated in said

contract/agreements, then this obligation shall be null and void; otherwise, it shall remain
in full force and effect.
WITNESS OUR HANDS AND SEALS this 13th day of December 1996 at Pasay
City, Philippines.
DOMSAT HOLDINGS, INC
Principal

GOVERNMENT SERVICE INSURANCE

SYSTEM
General Insurance Fund

By:
CAPT. RODRIGO A. SILVERIO
President

By:
AMALIO A. MALLARI
Senior Vice-President
General Insurance Group

When Domsat failed to pay the loan, GSIS refused to comply with its obligation reasoning that
Domsat did not use the loan proceeds for the payment of rental for the satellite. GSIS alleged that
Domsat, with Westmont Bank as the conduit, transferred the U.S. $11 Million loan proceeds from the
Industrial Bank of Korea to Citibank New York account of Westmont Bank and from there to the Binondo
Branch of Westmont Bank.[5] The Banks filed a complaint before the RTC of Makati against Domsat and
GSIS.
In the course of the hearing, GSIS requested for the issuance of a subpoena duces tecum to the
custodian of records of Westmont Bank to produce the following documents:
1.
Ledger covering the account of DOMSAT Holdings, Inc. with Westmont
Bank (now United Overseas Bank), any and all documents, records, files, books, deeds,
papers, notes and other data and materials relating to the account or transactions of
DOMSAT Holdings, Inc. with or through the Westmont Bank (now United Overseas
Bank) for the period January 1997 to December 2002, in his/her direct or indirect
possession, custody or control (whether actual or constructive), whether in his/her
capacity as Custodian of Records or otherwise;
2.
All applications for cashiers/ managers checks and bank transfers funded
by the account of DOMSAT Holdings, Inc. with or through the Westmont Bank (now
United Overseas Bank) for the period January 1997 to December 2002, and all other data
and materials covering said applications, in his/her direct or indirect possession, custody
or control (whether actual or constructive), whether in his/her capacity as Custodian of
Records or otherwise;
3.
Ledger covering the account of Philippine Agila Satellite, Inc. with
Westmont Bank (now United Overseas Bank), any and all documents, records, files,
books, deeds, papers, notes and other data and materials relating to the account or
transactions of Philippine Agila Satellite, Inc. with or through the Westmont bank (now
United Overseas Bank) for the period January 1997 to December 2002, in his/her direct

or indirect possession, custody or control (whether actual or constructive), whether in

his/her capacity as Custodian of Records or otherwise;
4.
All applications for cashiers/managers checks funded by the account of
Philippine Agila Satellite, Inc. with or through the Westmont Bank (now United Overseas
Bank) for the period January 1997 to December 2002, and all other data and materials
covering said applications, in his/her direct or indirect possession, custody or control
(whether actual or constructive), whether in his/her capacity as Custodian of Records or
otherwise.[6]
The RTC issued a subpoena decus tecum on 21 November 2002.[7] A motion to quash was filed
by the banks on three grounds: 1) the subpoena is unreasonable, oppressive and does not establish the
relevance of the documents sought; 2) request for the documents will violate the Law on Secrecy of Bank
Deposits; and 3) GSIS failed to advance the reasonable cost of production of the documents. [8] Domsat
also joined the banks motion to quash through its Manifestation/Comment. [9] On 9 April 2003, the RTC
issued an Order denying the motion to quash for lack of merit. We quote the pertinent portion of the
Order, thus:
After a careful consideration of the arguments of the parties, the Court did not
find merit in the motion.
The serious objection appears to be that the subpoena is violative of the Law on
Secrecy of Bank Deposit, as amended. The law declares bank deposits to be absolutely
confidential except: x x x (6) In cases where the money deposited or invested is the
subject matter of the litigation.
The case at bench is for the collection of a sum of money from defendants that
obtained a loan from the plaintiff. The loan was secured by defendant GSIS which was
the surety. It is the contention of defendant GSIS that the proceeds of the loan was
deviated to purposes other than to what the loan was extended. The quashal of the
subpoena would deny defendant GSIS its right to prove its defenses.
WHEREFORE, for lack of merit the motion is DENIED.[10]

On 26 June 2003, another Order was issued by the RTC denying the motion for reconsideration
filed by the banks.[11] On 1 September 2003 however, the trial court granted the second motion for
reconsideration filed by the banks. The previous subpoenas issued were consequently quashed.[12] The
trial court invoked the ruling inIntengan v. Court of Appeals,[13] where it was ruled that foreign currency
deposits are absolutely confidential and may be examined only when there is a written permission from
the depositor. The motion for reconsideration filed by GSIS was denied on 30 December 2003.
Hence, these assailed orders are the subject of the petition for certiorari before the Court of
Appeals. GSIS raised the following arguments in support of its petition:

I.
Respondent Judge acted with grave abuse of discretion when it favorably considered
respondent banks (second) Motion for Reconsideration dated July 9, 2003 despite the
fact that it did not contain a notice of hearing and was therefore a mere scrap of paper.
II.
Respondent judge capriciously and arbitrarily ignored Section 2 of the Foreign Currency
Deposit Act (RA 6426) in ruling in his Orders dated September 1 and December 30, 2003
that the US$11,000,000.00 deposit in the account of respondent Domsat in Westmont
Bank is covered by the secrecy of bank deposit.
III.
Since both respondent banks and respondent Domsat have disclosed during the trial the
US$11,000,000.00 deposit, it is no longer secret and confidential, and petitioner GSIS
right to inquire into what happened to such deposit can not be suppressed. [14]
The Court of Appeals addressed these issues in seriatim.
The Court of Appeals resorted to a liberal interpretation of the rules to avoid miscarriage of justice
when it allowed the filing and acceptance of the second motion for reconsideration. The appellate court
also underscored the fact that GSIS did not raise the defect of lack of notice in its opposition to the second
motion for reconsideration. The appellate court held that failure to timely object to the admission of a
defective motion is considered a waiver of its right to do so.
The Court of Appeals declared that Domsats deposit in Westmont Bank is covered by Republic Act
No. 6426 or the Bank Secrecy Law. We quote the pertinent portion of the Decision:
It is our considered opinion that Domsats deposit of $11,000,000.00 in Westmont
Bank is covered by the Bank Secrecy Law, as such it cannot be examined, inquired or
looked into without the written consent of its owner. The ruling in Van Twest vs. Court of
Appeals was rendered during the effectivity of CB Circular No. 960, Series of 1983,
under Sec. 102 thereof, transfer 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.
CB Circular No. 960 has since been superseded by CB Circular 1318 and later by
CB Circular 1389. Section 102 of Circular 960 has not been re-enacted in the later
Circulars. What is applicable now is the decision in Intengan vs. Court of Appeals where
the Supreme Court has ruled that the under R.A. 6426 there is only a single exception to
the secrecy of foreign currency deposits, that is, disclosure is allowed only upon the
written permission of the depositor. Petitioner, therefore, had inappropriately invoked the
provisions of Central Bank (CB) Circular Nos. 343 which has already been superseded
by more recently issued CB Circulars. CB Circular 343 requires the surrender to the

banking system of foreign exchange, including proceeds of foreign borrowings. This

requirement, however, can no longer be found in later circulars.
In its Reply to respondent banks comment, petitioner appears to have conceded
that what is applicable in this case is CB Circular 1389. Obviously, under CB 1389,
proceeds of foreign borrowings are no longer required to be surrendered to the banking
system.
Undaunted, petitioner now argues that paragraph 2, Section 27 of CB Circular
1389 is applicable because Domsats $11,000,000.00 loan from respondent banks was
intended to be paid to a foreign supplier Intersputnik and, therefore, should have been
paid directly to Intersputnik and not deposited into Westmont Bank. The fact that it was
deposited to the local bank Westmont Bank, petitioner claims violates the circular and
makes the deposit lose its confidentiality status under R.A. 6426. However, a reading of
the entire Section 27 of CB Circular 1389 reveals that the portion quoted by the petitioner
refers only to the procedure/conditions of drawdown for service of debts using foreign
exchange. The above-said provision relied upon by the petitioner does not in any manner
prescribe the conditions before any foreign currency deposit can be entitled to the
confidentiality provisions of R.A. 6426.[15]
Anent the third issue, the Court of Appeals ruled that the testimony of the incumbent president of
Westmont Bank is not the written consent contemplated by Republic Act No. 6426.
The Court of Appeals however upheld the issuance of subpoena praying for the production of
applications for cashiers or managers checks by Domsat through Westmont Bank, as well as a copy of
an Agreement and/or Contract and/or Memorandum between Domsat and/or Philippine Agila Satellite
and Intersputnik for the acquisition and/or lease of a Gorizon Satellite. The appellate court believed that
the production of these documents does not involve the examination of Domsats account since it will
never be known how much money was deposited into it or withdrawn therefrom and how much remains
therein.
On 29 February 2008, the Court of Appeals rendered the assailed Decision, the decretal portion of
which reads:
WHEREFORE, the petition is partially GRANTED. Accordingly, the assailed
Order dated December 30, 2003 is hereby modified in that the quashal of the subpoena
for the production of Domsats bank ledger in Westmont Bank is upheld while respondent
court is hereby ordered to issue subpoena duces tecum ad testificandum directing the
records custodian of Westmont Bank to bring to court the following documents:
a)

applications for cashiers or managers checks by respondent Domsat through

Westmont Bank from January 1997 to December 2002;

b)

bank transfers by respondent Domsat through Westmont Bank from January 1997
to December 2002; and

c)

copy of an agreement and/or contract and/or memorandum between respondent

Domsat and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or
lease of a Gorizon satellite.

No pronouncement as to costs.[16]
GSIS filed a motion for reconsideration which the Court of Appeals denied on 19 June
2009. Thus, the instant petition ascribing grave abuse of discretion on the part of the Court of Appeals in
ruling that Domsats deposit with Westmont Bank cannot be examined and in finding that the banks
second motion for reconsideration in Civil Case No. 99-1853 is procedurally acceptable. [17]
This Court notes that GSIS filed a petition for certiorari under Rule 65 of the Rules of Court to
assail the Decision and Resolution of the Court of Appeals. Petitioner availed of the improper remedy as
the appeal from a final disposition of the Court of Appeals is a petition for review under Rule 45 and not a
special civil action under Rule 65. [18] Certiorari under Rule 65 lies only when there is no appeal, nor
plain, speedy and adequate remedy in the ordinary course of law. That action is not a substitute for a lost
appeal in general; it is not allowed when a party to a case fails to appeal a judgment to the proper forum.
[19]
Where an appeal is available, certiorari will not prosper even if the ground therefor is grave abuse of
discretion. Accordingly, when a party adopts an improper remedy, his petition may be dismissed outright.
[20]

Yet, even if this procedural infirmity is discarded for the broader interest of justice, the petition
sorely lacks merit.
GSIS insists that Domsats deposit with Westmont Bank can be examined and inquired into. It
anchored its argument on Republic Act No. 1405 or the Law on Secrecy of Bank Deposits, which
allows the disclosure of bank deposits in cases where the money deposited is the subject matter of the
litigation. GSIS asserts that the subject matter of the litigation is the U.S. $11 Million obtained by
Domsat from the Banks to supposedly finance the lease of a Russian satellite from Intersputnik. Whether
or not it should be held liable as a surety for the principal amount of U.S. $11 Million, GSIS contends, is
contingent upon whether Domsat indeed utilized the amount to lease a Russian satellite as agreed in the
Surety Bond Agreement. Hence, GSIS argues that the whereabouts of the U.S. $11 Million is the subject
matter of the case and the disclosure of bank deposits relating to the U.S. $11 Million should be allowed.
GSIS also contends that the concerted refusal of Domsat and the banks to divulge the
whereabouts of the U.S. $11 Million will greatly prejudice and burden the GSIS pension fund considering
that a substantial portion of this fund is earmarked every year to cover the surety bond issued.

Lastly, GSIS defends the acceptance by the trial court of the second motion for reconsideration
filed by the banks on the grounds that it is pro forma and did not conform to the notice requirements of
Section 4, Rule 15 of the Rules of Civil Procedure.[21]
Domsat denies the allegations of GSIS and reiterates that it did not give a categorical or affirmative
written consent or permission to GSIS to examine its bank statements with Westmont Bank.
The Banks maintain that Republic Act No. 1405 is not the applicable law in the instant case
because the Domsat deposit is a foreign currency deposit, thus covered by Republic Act No. 6426. Under
said law, only the consent of the depositor shall serve as the exception for the disclosure of his/her
deposit.
The Banks counter the arguments of GSIS as a mere rehash of its previous arguments before the
Court of Appeals. They justify the issuance of the subpoena as an interlocutory matter which may be
reconsidered anytime and that the pro forma rule has no application to interlocutory orders.
It appears that only GSIS appealed the ruling of the Court of Appeals pertaining to the quashal of
the subpoena for the production of Domsats bank ledger with Westmont Bank. Since neither Domsat nor
the Banks interposed an appeal from the other portions of the decision, particularly for the production of
applications for cashiers or managers checks by Domsat through Westmont Bank, as well as a copy of
an agreement and/or contract and/or memorandum between Domsat and/or Philippine Agila Satellite and
Intersputnik for the acquisition and/or lease of a Gorizon satellite, the latter became final and executory.
GSIS invokes Republic Act No. 1405 to justify the issuance of the subpoena while the banks cite
Republic Act No. 6426 to oppose it. The core issue is which of the two laws should apply in the instant
case.
Republic Act No. 1405 was enacted in 1955. Section 2 thereof was first amended by Presidential
Decree No. 1792 in 1981 and further amended by Republic Act No. 7653 in 1993. It now reads:
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.
Section 8 of Republic Act No. 6426, which was enacted in 1974, and amended by Presidential
Decree No. 1035 and later by Presidential Decree No. 1246, provides:

Section 8. Secrecy of Foreign Currency Deposits. All foreign currency deposits

authorized under this Act, as amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential Decree No. 1034, are hereby
declared as and considered of an absolutely confidential nature and, except upon the
written permission of the depositor, in no instance shall foreign currency deposits be
examined, inquired or looked into by any person, government official, bureau or office
whether judicial or administrative or legislative or any other entity whether public or
private; Provided, however, That said foreign currency deposits shall be exempt from
attachment, garnishment, or any other order or process of any court, legislative body,
government agency or any administrative body whatsoever. (As amended by PD No.
1035, and further amended by PD No. 1246, prom. Nov. 21, 1977.)

On the one hand, Republic Act No. 1405 provides for four (4) 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 (AMLA), the Anti-Money
Laundering Council (AMLC) may inquire into a bank account upon order of any competent court. [22] On
the other hand, the lone exception to the non-disclosure of foreign currency deposits, under Republic Act
No. 6426, is disclosure upon the written permission of the depositor.
These two laws both support the confidentiality of bank deposits. There is no conflict between
them. Republic Act No. 1405 was enacted for the purpose of giving 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. [23] It
covers all bank deposits in the Philippines and no distinction was made between domestic and foreign
deposits. Thus, Republic Act No. 1405 is considered a law of general application. On the other hand,
Republic Act No. 6426 was intended to encourage deposits from foreign lenders and investors. [24] It is a
special law designed especially for foreign currency deposits in the Philippines. A general law does not
nullify a specific or special law. Generalia specialibus non derogant.[25] Therefore, it is beyond cavil that
Republic Act No. 6426 applies in this case.
Intengan v. Court of Appeals affirmed the above-cited principle and categorically declared that for
foreign currency deposits, such as U.S. dollar deposits, the applicable law is Republic Act No. 6426.
In said case, Citibank filed an action against its officers for persuading their clients to transfer
their dollar deposits to competitor banks. Bank records, including dollar deposits of petitioners,
purporting to establish the deception practiced by the officers, were annexed to the complaint. Petitioners
now complained that Citibank violated Republic Act No. 1405. This Court ruled that since the accounts

in question are U.S. dollar deposits, the applicable law therefore is not Republic Act No.
1405 but Republic Act No. 6426.
The above pronouncement was reiterated in China Banking Corporation v. Court of Appeals,
where respondent accused his daughter of stealing his dollar deposits with Citibank. The latter
allegedly received the checks from Citibank and deposited them to her account in China Bank. The
subject checks were presented in evidence. Asubpoena was issued to employees of China Bank to testify
on these checks. China Bank argued that the Citibank dollar checks with both respondent and/or her
daughter as payees, deposited with China Bank, may not be looked into under the law on secrecy of
foreign currency deposits. This Court highlighted the exception to the non-disclosure of foreign currency
deposits, i.e., in the case of a written permission of the depositor, and ruled that respondent, as owner of
the funds unlawfully taken and which are undisputably now deposited with China Bank, he has the right
to inquire into the said deposits.
[26]

Applying Section 8 of Republic Act No. 6426, absent the written permission from Domsat,
Westmont Bank cannot be legally compelled to disclose the bank deposits of Domsat, otherwise, it might
expose itself to criminal liability under the same act. [27]
The basis for the application of subpoena is to prove that the loan intended for Domsat by the
Banks and guaranteed by GSIS, was diverted to a purpose other than that stated in the surety bond. The
Banks, however, argue that GSIS is in fact liable to them for the proper applications of the loan proceeds
and not vice-versa. We are however not prepared to rule on the merits of this case lest we pre-empt the
findings of the lower courts on the matter.
The third issue raised by GSIS was properly addressed by the appellate court. The appellate court
maintained that the judge may, in the exercise of his sound discretion, grant the second motion for
reconsideration despite its being pro forma. The appellate court correctly relied on precedents where this
Court set aside technicality in favor of substantive justice. Furthermore, the appellate court accurately
pointed out that petitioner did not assail the defect of lack of notice in its opposition to the second motion
of reconsideration, thus it can be considered a waiver of the defect.
WHEREFORE, the petition for certiorari is DISMISSED. The Decision dated 29 February
2008 and 19 June 2009 Resolution of the Court of Appeals are herebyAFFIRMED.
SO ORDERED.

G.R. No. 189206 June 8, 2011

GOVERNMENT SERVICE INSURANCE SYSTEM,

Petitioner,vs.
THE HONORABLE 15th DIVISION OF THE COURT OF APPEALS and INDUSTRIAL BANK OF KOREA,TONG YANG
MERCHANT BANK, HANAREUM BANKING CORP., LAND BANK OF THE PHILIPPINES,WESTMONT BANK and
DOMSAT HOLDINGS, INC.,
Respondents.FACTS:On December 13, 1996, a surety bond was agreed with DOMSAT HOLDINGS, INC.
as the
principal
and the GSIS as
administrator
and the
obligees
are Land Bank of the Philippines, Tong Yang Merchant
Bank, Industrial Bank of Korea and First Merchant Banking Corporation collectively known as The Banks with
the loan granted to DOMSAT of US $ 11,000,000.00 to be used for the financing of the two-year lease of
aRussian Satellite from INTERSPUTNIK.Domsat failed to pay the loan and GSIS refused to comply with
its obligation reasoning that Domsat didnot use the loan proceeds for the payment of rental for the
satellite. GSIS alleged that Domsat, with WestmontBank as the conduit, transferred the U.S. $11 Million
loan proceeds from the Industrial Bank of Korea toCitibank New York account of Westmont Bank and
from there to the Binondo Branch of Westmont Bank. TheBanks filed a complaint before the RTC of
Makati against Domsat and GSIS.GSIS requested for the issuance of a subpoena duces tecum to the
custodian of records of WestmontBank to produce bank ledger covering the account of Domsat with the
Westmont Bank (now United OverseasBank) and other pertinent documents. The RTC issued the
subpoena but nonetheless, the RTC then granted
the second motion for reconsideration by The Banks to quash the subpoena granted to GSIS.
GSIS assailed its case to the CA and CA partially granted its petition allowing it to look into documents
but not the bank ledger because the US $ 11,000,000.00 deposited by Domsat to Westmont Bank is
coveredby R.A. 6426 or the Bank Secrecy Law.GSIS now filed a petition for certiorari in the Supreme
Court for the decision of CA allowing the quashalby the RTC of a subpoena for the production of bank
ledger.
ISSUE:
Whether or not the deposited US $ 11,000,000.00 by Domsat, Inc. to Westmont Bank is covered by R.A.
6426
as what The Banks contend or it is covered by R.A. 1405 as what GSIS contends.
RULING:
The Supreme Court ruled in favor of R.A. 6426 and thereby AFFIRMING the decision of Court of
Appeals.R.A. 1405 was enacted on 1955 while R.A. 6426 was enacted on 1974. These two laws both
support theconfidentiality of bank deposits. There is no conflict between them. Republic Act No. 1405 was
enacted for thepurpose of giving encouragement to the people to deposit their money in banking
institutions and to discourageprivate hoarding so that the same may be properly utilized by banks in
authorized loans to assist in theeconomic development of the country. It covers all bank deposits in the
Philippines and no distinction wasmade between domestic and foreign deposits. Thus, Republic Act No.
1405 is considered a law of generalapplication. On the other hand, Republic Act No. 6426 was intended
to encourage deposits from foreignlenders and investors. It is a special law designed especially for
foreign currency deposits in the Philippines. Ageneral law does not nullify a specific or special law.
Generalia specialibus non derogant. Therefore, it isbeyond cavil that Republic Act No. 6426 applies in this
case.Intengan v. Court of Appeals affirmed the above-cited principle and categorically declared that for
foreigncurrency deposits, such as U.S. dollar deposits, the applicable law is Republic Act No. 6426.In said
case, Citibank filed an action against its officers for persuading their clients to transfer their dollar deposits
to competitor banks. Bank records, including dollar deposits of petitioners, purporting to establish
thedeception practiced by the officers, were annexed to the complaint. Petitioners now complained that
Citibankviolated Republic Act No. 1405. Supreme Court ruled that since the accounts in question are U.S.
dollar deposits, the applicable law therefore is not Republic Act No. 1405 but Republic Act No. 6426

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION

G.R. No. 84526 January 28, 1991

PHILIPPINE COMMERCIAL & INDUSTRIAL BANK and JOSE HENARES, petitioners,
vs.
THE HON. COURT OF APPEALS and MARINDUQUE MINING AND INDUSTRIAL
CORPORATION,respondents.
Bengzon, Zarraga, Narciso, Cudala, Pecson & Bengson for petitioners.
Rexes V. Alejano for private respondent.

SARMIENTO, J.:p
This is a petition for review on certiorari which assails both the resolution 1 dated June 27, 1988 of the
Court of Appeals 2 which reconsidered and set aside its earlier decisions 3 dated February 26, 1988
reversing the decision 4 of the trial court and the subsequent resolution 5 dated August 3, 1988 which
denied the petitioners' motion for reconsideration. The dispositive portion of the resolution in question
dated June 27, 1988 reads as follows:
xxx xxx xxx
For the reasons above adduced, We are constrained to reconsider Our aforesaid
decision and to set it aside and in lieu thereof hereby enter another decision
AFFIRMING the decision dated January 15, 1985 of the Regional Trial Court of
Manila, Branch 11, in Civil Case No. 103100 entitled "Marinduque Mining and
Industrial Corporation (MMIC) vs. Philippine Commercial and Industrial Bank, et al."

The undisputed facts 7 as gathered from the findings of the trial court are as follows:
The instant case originated from an action 8 filed with the National Labor Relations Commission (NLRC)
by a group of laborers who obtained therefrom a favorable judgment for the payment of backwages
amounting to P205,853.00 against the private respondent.
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. The pertinent
portion of the said writ reads as follows:
xxx xxx xxx
Further, you are to collect from same respondent the total amount of P205,853.00 as
their backwage (sic) for twelve (12) months and then turn over said amount to this

commission for further disposition. In case you fail to collect said amount in cash, you
are to cause the satisfaction of the same on the movable or immovable properties of
the respondent not exempt from execution. (Exhs. G, G-1 and G-3, also Exh. 3;
Emphasis supplied). 9
Accordingly, on April 28, 1976, the aforenamed deputy sheriff went to the mining site of the private
respondent and served the writ of execution on the persons concerned, but nothing seemed to have
happened thereat.
Thereafter, the Sheriff prepared on his own a Notice of Garnishment dated April 29, 1976 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 private respondent, 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, April 29,
1976, and later confirmed in a formal letter received by the petitioner 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 of 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.
The petitioner 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, April 30, 1976, 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 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.
Both the petitioners and the Deputy Sheriff filed their respective answers denying the material
averments of the said complaint and alleged that their actuations were all in accordance with law
and likewise filed counterclaims for damages, including a cross-claim of the former against the latter.
The third-party complaint of the petitioners against the forty-nine (49) laborers in the NLRC case
was, however, dismissed for failure of the sheriff to serve summons upon the latter.

On January 23, 1982, after several postponements, the pre-trial was finally conducted and
terminated with only the petitioners and the private respondent participating, through their respective
counsel.
On January 15, 1985, the trial court rendered its judgment in favor of the private respondent, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
three (3) defendants by ordering the latter to pay, jointly and severally, the plaintiff the
following amounts, to wit:
(a) the sum of P37,466.18, with interest thereon at the rate of 12% per annum from
date of first demand on April 29, 1976 until the amount shall have been fully and
completely restored and paid;
(b) the sum of P10,000.00 as attorney's fees.
Defendants are ordered to pay, jointly and severally, double costs.

10

xxx xxx xxx

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.
Hence, this petition.
The petitioners raise two issues, 11 to wit:
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.
The petition is impressed with merit.
The crux of the instant controversy boils down to the question of 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).
The respondent court in its questioned resolution dated June 27, 1988, held that the petitioners were
liable, in this wise:
In the case at bar, defendant-appellant PCIB, despite vigorous objections from
plaintiff-appellee, with indecent haste disclosed and released the deposit of plaintiffappellee on the strength of a mere notice of garnishment which the Honorable
Supreme Court ruled upon is no authority for the release of the deposit, thus:

In the second place, the mere garnishment of funds belonging to a

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 outcome of the attachment or 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. (5 Am. Jur. 14)
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 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. (De la Rama vs. Villarosa, et al., L-17927,
June 29, 1963, 8 SCRA 413, 418-419; Emphasis supplied). 12
The above-mentioned contention citing De la Rama is not exactly on all fours with the facts of the
case at bar. InDe la Rama, the amount garnished was not actually taken possession of by the sheriff,
even from the time of garnishment, because the judgment debtor was able to appeal to the Court of
Appeals and obtain from the Court an injunction prohibiting execution of the judgment.
On the other hand, 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.
The cases more in point to the present controversy are the recent decisions in Engineering
Construction Inc. v. National Power Corporation 13 and Rizal Commercial Banking Corporation (RCBC)
vs. De Castro 14 where the Court absolved both garnishees, MERALCO and RCBC, respectively, from any
liability for their prompt compliance in the release of garnished funds,
The rationale behind Engineering Construction, Inc. and which was quoted in Rizal Commercial
Banking Corporation is persuasive
xxx xxx xxx

But while partial restitution is warranted in favor of NPC, we find that the Appellate
Court erred in not absolving MERALCO, the garnishee, from its obligations to NPC
with respect to the payment to ECI of P1,114,543.23, thus in effect subjecting
MERALCO to double liability. MERALCO should not have been faulted for its prompt
obedience to a writ of garnishment. Unless there are compelling reasons such as: a
defect on the face of the writ or actual knowledge on the part of the garnishee of lack
of entitlement on the part of the garnisher, it is not incumbent upon the garnishee to
inquire or to judge for itself whether or not the order for the advance execution of a
judgment is valid.
Section 8, Rule 57 of the Rules of Court provides:
Effect of attachment of debts and credits. All persons having in
their possession or under their control any credits or other similar
personal property belonging to the party against whom attachment is
issued, or owing any debts to the same, at the time of service upon
them of a copy of the order of attachment and notice as provided in
the last preceding section, shall be liable to the applicant of the
amount of such credits, debts or other property, until the attachment
be discharged, or any judgment recovered by him be satisfied, unless
such property be delivered or transferred, or such debts be paid, to
the clerk, sheriff or other proper officer of the court issuing the
attachment.
Garnishment is considered as a specie of attachment for reaching credits belonging
to the judgment debtor and owing to him from a stranger to the litigation. Under the
above-cited rule, the garnishee [the third person] is obliged to deliver the credits, etc.
to the proper officer issuing the writ and "the law exempts from liability the person
having in his possession or under his control any credits or other personal property
belonging to the defendant, . . . if such property be delivered or transferred, . . . to the
clerk, sheriff, or other officer of the court in which the action is pending."
Applying the foregoing to the case at bar, MERALCO, as garnishee, after having
been judicially compelled to pay the amount of the judgment represented by funds in
its possession belonging to the judgment debtor or NPC, should be released from all
responsibilities over such amount after delivery thereof to the sheriff. The reason for
the rule is self evident. To expose garnishees to risks for obeying court orders and
processes would only undermine the administration of justice. (Emphasis ours.) 15
xxx xxx xxx

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." 17
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, sufficiently supported by Sec. 41, Rule 39 of the Rules of Court which
reads:

xxx xxx xxx

After an execution against property has issued, a person indebted to the judgment
debtor, may pay to the officer holding the execution the amount of his debt or so
much thereof as may be necessary to satisfy the execution, and the officer's receipt
shall be a sufficient discharge for the amount so paid or directed to be credited by the
judgment creditor on the execution.
xxx xxx xxx
Finally, we likewise take cognizance of the subject of the judgment sought to be enforced in the writ
of execution in question, namely, laborers' backwages. We believe that the petitioners should rather
be commended for having acted with urgent dispatch despite attempts by the private respondent, as
with so many scheming employers, to frustrate or unjustifiably delay the prompt satisfaction of final
judgments which often result in undue prejudice to the legitimate claims of labor.
With regard to the second issue, we find no violation whatsoever by the petitioners of Republic Act
No. 1405, otherwise known as the Secrecy of Bank Deposits Act. The Court in China Banking
Corporation vs. Ortega 18 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.
While the general rule is that the findings of fact of the appellate court are binding on this Court, the
said rule however admits of exceptions, such as when the Court of Appeals clearly misconstrued
and misapplied the law, drawn from the incorrect conclusions of fact established by evidence and
otherwise at certain conclusions which are based on misapprehension of facts, 19 as in the case at bar.
The petitioners are therefore absolved from any liability for the disclosure and release of the private
respondent's deposit to the custody of the deputy sheriff in satisfaction of the final judgment for the
laborers' backwages.
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.
SO ORDERED.

Melencio-Herrera, Padilla and Regalado, JJ., concur.

Paras, J., ** took no part.

Republic of the Philippines

Supreme Court
Manila
THIRD DIVISION
BSB GROUP, INC., represented by its President,
Mr. RICARDO BANGAYAN,
Petitioner,

G.R. No. 168644

Present:

-versus-

SALLY GO a.k.a. SALLY GO-BANGAYAN,

Respondent.

CORONA, J., Chairperson,

VELASCO, JR.,
NACHURA,
PERALTA, and
MENDOZA, JJ.
Promulgated:

February 16, 2010

x-----------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:

This is a Petition for Review under Rule 45 of the Rules of Court assailing the Decision of the
Court of Appeals in CA-G.R. SP No. 87600[1] dated April 20, 2005, which reversed and set aside the
September 13, 2004[2] and November 5, 2004[3] Orders issued by the Regional Trial Court of Manila,
Branch 36[4] in Criminal Case No. 02-202158 for qualified theft. The said orders, in turn, respectively
denied the motion filed by herein respondent Sally Go for the suppression of the testimonial and
documentary evidence relative to a Security Bank account, and denied reconsideration.
The basic antecedents are no longer disputed.

Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided by its herein
representative, Ricardo Bangayan (Bangayan). Respondent Sally Go, alternatively referred to as Sally
Sia Go and Sally Go-Bangayan, is Bangayans wife, who was employed in the company as a cashier, and
was engaged, among others, to receive and account for the payments made by the various customers of
the company.
In 2002, Bangayan filed with the Manila Prosecutors Office a complaint for estafa and/or
qualified theft[5] against respondent, alleging that several checks [6]representing the aggregate amount
of P1,534,135.50 issued by the companys customers in payment of their obligation were, instead of being
turned over to the companys coffers, indorsed by respondent who deposited the same to her personal
banking account maintained at Security Bank and Trust Company (Security Bank) in Divisoria, Manila
Branch.[7] Upon a finding that the evidence adduced was uncontroverted, the assistant city prosecutor
recommended the filing of the Information for qualified theft against respondent. [8]
Accordingly, respondent was charged before the Regional Trial Court of Manila, Branch 36, in an
Information, the inculpatory portion of which reads:
That in or about or sometime during the period comprised (sic) between January
1988 [and] October 1989, inclusive, in the City of Manila, Philippines, the said accused
did then and there willfully, unlawfully and feloniously with intent [to] gain and without
the knowledge and consent of the owner thereof, take, steal and carry away cash money
in the total amount ofP1,534,135.50 belonging to BSB GROUP OF COMPANIES
represented by RICARDO BANGAYAN, to the damage and prejudice of said owner in
the aforesaid amount of P1,534,135.50, Philippine currency.
That in the commission of the said offense, said accused acted with grave abuse
of confidence, being then employed as cashier by said complainant at the time of the
commission of the said offense and as such she was entrusted with the said amount of
money.
Contrary to law.[9]

Respondent entered a negative plea when arraigned. [10] The trial ensued. On the premise that
respondent had allegedly encashed the subject checks and deposited the corresponding amounts thereof to
her personal banking account, the prosecution moved for the issuance of subpoena duces tecum /ad
testificandum against the respective managers or records custodians of Security Banks Divisoria Branch,
as well as of the Asian Savings Bank (now Metropolitan Bank & Trust Co. [Metrobank]), in Jose Abad
Santos, Tondo, Manila Branch.[11] The trial court granted the motion and issued the corresponding
subpoena.[12]

Respondent filed a motion to quash the subpoena dated November 4, 2003, addressed to
Metrobank, noting to the court that in the complaint-affidavit filed with the prosecutor, there was no
mention made of the said bank account, to which respondent, in addition to the Security Bank account
identified as Account No. 01-14-006, allegedly deposited the proceeds of the supposed checks.
Interestingly, while respondent characterized the Metrobank account as irrelevant to the case, she, in the
same

motion,

nevertheless waived her objection to the irrelevancy of the Security

Bank account mentioned in the same complaint-affidavit, inasmuch as she was admittedly willing
to address the allegations with respect thereto. [13]
Petitioner, opposing respondents move, argued for the relevancy of the Metrobank account on
the ground that the complaint-affidavit showed that there were two checks which respondent allegedly
deposited in an account with the said bank. [14] To this, respondent filed a supplemental motion to quash,
invoking the absolutely confidential nature of the Metrobank account under the provisions of Republic
Act (R.A.) No. 1405.[15] The trial court did not sustain respondent; hence, it denied the motion to quash
for lack of merit.[16]
Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan
(Marasigan), the representative of Security Bank. In a nutshell, Marasigans testimony sought to prove
that between 1988 and 1989, respondent, while engaged as cashier at the BSB Group, Inc., was able to
run away with the checks issued to the company by its customers, endorse the same, and credit the
corresponding amounts to her personal deposit account with Security Bank. In the course of the
testimony, the subject checks were presented to Marasigan for identification and marking as the same
checks received by respondent, endorsed, and then deposited in her personal account with Security Bank.
[17]

But before the testimony could be completed, respondent filed a Motion to Suppress, [18] seeking the

exclusion of Marasigans testimony and accompanying documents thus far received, bearing on the
subject Security Bank account. This time respondent invokes, in addition to irrelevancy, the privilege of
confidentiality under R.A. No. 1405.
The trial court, nevertheless, denied the motion in its September 13, 2004 Order. [19] A motion for
reconsideration was subsequently filed, but it was also denied in the Order dated November 5, 2004.
[20]

These two orders are the subject of the instant case.

Aggrieved, and believing that the trial court gravely abused its discretion in acting the way it did,

respondent elevated the matter to the Court of Appeals via a petition forcertiorari under Rule 65. Finding

merit in the petition, the Court of Appeals reversed and set aside the assailed orders of the trial court in its
April 20, 2005 Decision.[21] The decision reads:
WHEREFORE, the petition is hereby GRANTED. The assailed orders dated
September 13, 2004 and November 5, 2004 are REVERSED and SET ASIDE. The
testimony of the SBTC representative is ordered stricken from the records.
SO ORDERED.[22]
With the denial of its motion for reconsideration, [23] petitioner is now before the Court pleading the
same issues as those raised before the lower courts.
In this Petition[24] under Rule 45, petitioner averred in the main that the Court of Appeals had
seriously erred in reversing the assailed orders of the trial court, and in effect striking out Marasigans
testimony dealing with respondents deposit account with Security Bank. [25] It asserted that apart from the
fact that the said evidence had a direct relation to the subject matter of the case for qualified theft and,
hence, brings the case under one of the exceptions to the coverage of confidentiality under R.A. 1405.
[26]

Petitioner believed that what constituted the subject matter in litigation was to be determined by the

allegations in the information and, in this respect, it alluded to the assailed November 5, 2004 Order of
the trial court, which declared to be erroneous the limitation of the present inquiry merely to what was
contained in the information.[27]
For her part, respondent claimed that the money represented by the Security Bank account was
neither relevant nor material to the case, because nothing in the criminal information suggested that the
money therein deposited was the subject matter of the case. She invited particular attention to that
portion of the criminal Information which averred that she has stolen and carried away cash money in the
total amount of P1,534,135.50. She advanced the notion that the term cash money stated in the
Information was not synonymous with the checks she was purported to have stolen from petitioner and
deposited in her personal banking account. Thus, the checks which the prosecution had Marasigan
identify, as well as the testimony itself of Marasigan, should be suppressed by the trial court at least for
violating respondents right to due process.[28] More in point, respondent opined that admitting the
testimony of Marasigan, as well as the evidence pertaining to the Security Bank account, would violate
the secrecy rule under R.A. No. 1405.[29]
In its reply, petitioner asserted the sufficiency of the allegations in the criminal Information for
qualified theft, as the same has sufficiently alleged the elements of the offense charged. It posits that
through Marasigans testimony, the Court would be able to establish that the checks involved, copies of

which were attached to the complaint-affidavit filed with the prosecutor, had indeed been received by
respondent as cashier, but were, thereafter, deposited by the latter to her personal account with Security
Bank. Petitioner held that the checks represented the cash money stolen by respondent and, hence, the
subject matter in this case is not only the cash amount represented by the checks supposedly stolen by
respondent, but also the checks themselves.[30]
We derive from the conflicting advocacies of the parties that the issue for resolution is whether the
testimony of Marasigan and the accompanying documents are irrelevant to the case, and whether they are
also violative of the absolutely confidential nature of bank deposits and, hence, excluded by operation of
R.A. No. 1405. The question of admissibility of the evidence thus comes to the fore. And the Court,
after deliberative estimation, finds the subject evidence to be indeed inadmissible.
Prefatorily, fundamental is the precept in all criminal prosecutions, that the constitutive acts of the
offense must be established with unwavering exactitude and moral certainty because this is the critical
and only requisite to a finding of guilt. [31] Theft is present when a person, with intent to gain but without
violence against or intimidation of persons or force upon things, takes the personal property of another
without the latters consent. It is qualified when, among others, and as alleged in the instant case, it is
committed with abuse of confidence.[32] The prosecution of this offense necessarily focuses on the
existence of the following elements: (a) there was taking of personal property belonging to another; (b)
the taking was done with intent to gain; (c) the taking was done without the consent of the owner; (d) the
taking was done without violence against or intimidation of persons or force upon things; and (e) it was
done with abuse of confidence. [33] In turn, whether these elements concur in a way that overcomes the
presumption of guiltlessness, is a question that must pass the test of relevancy and competency in
accordance with Section 3[34] Rule 128 of the Rules of Court.
Thus, whether these pieces of evidence sought to be suppressed in this case the testimony of
Marasigan, as well as the checks purported to have been stolen and deposited in respondents Security
Bank account are relevant, is to be addressed by considering whether they have such direct relation to
the fact in issue as to induce belief in its existence or non-existence; or whether they relate collaterally to
a fact from which, by process of logic, an inference may be made as to the existence or non-existence of
the fact in issue.[35]
The fact in issue appears to be that respondent has taken away cash in the amount
of P1,534,135.50 from the coffers of petitioner. In support of this allegation, petitioner seeks to establish
the existence of the elemental act of taking by adducing evidence that respondent, at several times
between 1988 and 1989, deposited some of its checks to her personal account with Security

Bank. Petitioner addresses the incongruence between the allegation of theft of cash in the Information, on
the one hand, and the evidence that respondent had first stolen the checks and deposited the same in her
banking account, on the other hand, by impressing upon the Court that there obtains no difference
between cash and check for purposes of prosecuting respondent for theft of cash. Petitioner is mistaken.
In theft, the act of unlawful taking connotes deprivation of personal property of one by another
with intent to gain, and it is immaterial that the offender is able or unable to freely dispose of the property
stolen because the deprivation relative to the offended party has already ensued from such act of
execution.[36] The allegation of theft of money, hence, necessitates that evidence presented must have a
tendency to prove that the offender has unlawfully taken money belonging to another. Interestingly,
petitioner has taken pains in attempting to draw a connection between the evidence subject of the instant
review, and the allegation of theft in the Information by claiming that respondent had fraudulently
deposited the checks in her own name. But this line of argument works more prejudice than favor,
because it in effect, seeks to establish the commission, not of theft, but rather of some other crime
probably estafa.
Moreover, that there is no difference between cash and check is true in other
instances. In estafa by conversion, for instance, whether the thing converted is cash or check, is
immaterial in relation to the formal allegation in an information for that offense; a check, after all, while
not regarded as legal tender, is normally accepted under commercial usage as a substitute for cash, and the
credit it represents in stated monetary value is properly capable of appropriation. And it is in this respect
that what the offender does with the check subsequent to the act of unlawfully taking it becomes material
inasmuch as this offense is a continuing one. [37] In other words, in pursuing a case for this offense, the
prosecution may establish its cause by the presentation of the checks involved. These checks would then
constitute the best evidence to establish their contents and to prove the elemental act of conversion in
support of the proposition that the offender has indeed indorsed the same in his own name. [38]
Theft, however, is not of such character. Thus, for our purposes, as the Information in this case
accuses respondent of having stolen cash, proof tending to establish that respondent has actualized her
criminal intent by indorsing the checks and depositing the proceeds thereof in her personal account,
becomes not only irrelevant but also immaterial and, on that score, inadmissible in evidence.
We now address the issue of whether the admission of Marasigans testimony on the particulars
of respondents account with Security Bank, as well as of the corresponding evidence of the checks
allegedly deposited in said account, constitutes an unallowable inquiry under R.A. 1405.

It is conceded that while the fundamental law has not bothered with the triviality of specifically
addressing privacy rights relative to banking accounts, there, nevertheless, exists in our jurisdiction
a legitimate expectation of privacy governing such accounts. The source of this right of expectation is
statutory, and it is found in R.A. No. 1405,[39]otherwise known as the Bank Secrecy Act of 1955. [40]
R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and at the same
time encourage the people to deposit their money in banking institutions, so that it may be utilized by way
of authorized loans and thereby assist in economic development. [41] Owing to this piece of legislation, the
confidentiality of bank deposits remains to be a basic state policy in the Philippines. [42] Section 2 of the
law institutionalized this policy by characterizing as absolutely confidential in general all deposits of
whatever nature with banks and other financial institutions in the country. It declares:
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.

Subsequent statutory enactments[43] have expanded the list of exceptions to this policy yet the
secrecy of bank deposits still lies as the general rule, falling as it does within the legally recognized zones
of privacy.[44] There is, in fact, much disfavor to construing these primary and supplemental exceptions in
a manner that would authorize unbridled discretion, whether governmental or otherwise, in utilizing these
exceptions as authority for unwarranted inquiry into bank accounts. It is then perceivable that the present
legal order is obliged to conserve the absolutely confidential nature of bank deposits. [45]
The measure of protection afforded by the law has been explained in China Banking Corporation
v. Ortega.[46] That case principally addressed the issue of whether the prohibition against an examination
of bank deposits precludes garnishment in satisfaction of a judgment. Ruling on that issue in the
negative, the Court found guidance in the relevant portions of the legislative deliberations on Senate Bill
No. 351 and House Bill No. 3977, which later became the Bank Secrecy Act, and it held that the absolute
confidentiality rule in R.A. No. 1405 actually aims at protection from unwarranted inquiry or
investigation if the purpose of such inquiry or investigation is merely to determine the existence and
nature, as well as the amount of the deposit in any given bank account. Thus,

x x x The lower court did not order an examination of or inquiry into the deposit of B&B
Forest Development Corporation, as contemplated in the law. It merely required Tan
Kim Liong to inform the court whether or not the defendant B&B Forest Development
Corporation had a deposit in the China Banking Corporation only for purposes of the
garnishment issued by it, so that the bank would hold the same intact and not allow any
withdrawal until further order. It will be noted from the discussion of the conference
committee report on Senate Bill No. 351 and House Bill No. 3977which later became
Republic Act No. 1405, that it was not the intention of the lawmakers to place banks
deposits beyond the reach of execution to satisfy a final judgment. Thus:
x x x Mr. Marcos: Now, for purposes of the record, I should like the
Chairman of the Committee on Ways and Means to clarify this
further. Suppose an individual has a tax case. He is being held liable by
the Bureau of Internal Revenue [(BIR)] or, say, P1,000.00 worth of tax
liability, and because of this the deposit of this individual [has been]
attached by the [BIR].
Mr. Ramos: The attachment will only apply after the court has
pronounced sentence declaring the liability of such person. But where
the primary aim is to determine whether he has a bank deposit in
order to bring about a proper assessment by the [BIR], such inquiry
is not allowed by this proposed law.
Mr. Marcos: But under our rules of procedure and under the
Civil Code, the attachment or garnishment of money deposited is
allowed. Let us assume for instance that there is a preliminary
attachment which is for garnishment or for holding liable all moneys
deposited belonging to a certain individual, but such attachment or
garnishment will bring out into the open the value of such deposit. Is
that prohibited by... the law?
Mr. Ramos: It is only prohibited to the extent that the inquiry...
is made only for the purpose of satisfying a tax liability already declared
for the protection of the right in favor of the government; but when the
object is merely to inquire whether he has a deposit or not for
purposes of taxation, then this is fully covered by the law. x x x
Mr. Marcos: The law prohibits a mere investigation into the
existence and the amount of the deposit.
Mr. Ramos:

Into the very nature of such deposit. x x x[47]

In taking exclusion from the coverage of the confidentiality rule, petitioner in the instant case
posits that the account maintained by respondent with Security Bank contains the proceeds of the checks
that she has fraudulently appropriated to herself and, thus, falls under one of the exceptions in Section 2
of R.A. No. 1405 that the money kept in said account is the subject matter in litigation. To highlight
this thesis, petitioner avers, citing Mathay v. Consolidated Bank and Trust Co., [48] that the subject matter

of the action refers to the physical facts; the things real or personal; the money, lands, chattels and the
like, in relation to which the suit is prosecuted, which in the instant case should refer to the money
deposited in the Security Bank account. [49] On the surface, however, it seems that petitioners theory is
valid to a point, yet a deeper treatment tends to show that it has argued quite off-tangentially. This,
because, while Mathay did explain what the subject matter of an action is, it nevertheless did so only to
determine whether the class suit in that case was properly brought to the court.
What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405
has been pointedly and amply addressed in Union Bank of the Philippines v. Court of Appeals,[50] in which
the Court noted that the inquiry into bank deposits allowable under R.A. No. 1405 must be premised on
the fact that the money deposited in the account is itself the subject of the action. [51] Given this
perspective, we deduce that the subject matter of the action in the case at bar is to be determined from the
indictment that charges respondent with the offense, and not from the evidence sought by the prosecution
to be admitted into the records. In the criminal Information filed with the trial court, respondent,
unqualifiedly and in plain language, is charged with qualified theft by abusing petitioners trust and
confidence and stealing cash in the amount ofP1,534,135.50. The said Information makes no factual
allegation that in some material way involves the checks subject of the testimonial and documentary
evidence sought to be suppressed. Neither do the allegations in said Information make mention of the
supposed bank account in which the funds represented by the checks have allegedly been kept.
In other words, it can hardly be inferred from the indictment itself that the Security Bank account
is the ostensible subject of the prosecutions inquiry. Without needlessly expanding the scope of what is
plainly alleged in the Information, the subject matter of the action in this case is the money amounting
to P1,534,135.50 alleged to have been stolen by respondent, and not the money equivalent of the checks
which are sought to be admitted in evidence. Thus, it is that, which the prosecution is bound to prove
with its evidence, and no other.
It comes clear that the admission of testimonial and documentary evidence relative to
respondents Security Bank account serves no other purpose than to establish the existence of such
account, its nature and the amount kept in it. It constitutes an attempt by the prosecution at an
impermissible inquiry into a bank deposit account the privacy and confidentiality of which is protected by
law. On this score alone, the objection posed by respondent in her motion to suppress should have indeed
put an end to the controversy at the very first instance it was raised before the trial court.
In sum, we hold that the testimony of Marasigan on the particulars of respondents supposed bank
account with Security Bank and the documentary evidence represented by the checks adduced in support

thereof, are not only incompetent for being excluded by operation of R.A. No. 1405. They are likewise
irrelevant to the case, inasmuch as they do not appear to have any logical and reasonable connection to
the prosecution of respondent for qualified theft. We find full merit in and affirm respondents objection
to the evidence of the prosecution. The Court of Appeals was, therefore, correct in reversing the assailed
orders of the trial court.
A final note. In any given jurisdiction where the right of privacy extends its scope to include an
individuals financial privacy rights and personal financial matters, there is an intermediate or heightened
scrutiny given by courts and legislators to laws infringing such rights. [52] Should there be doubts in
upholding the absolutely confidential nature of bank deposits against affirming the authority to inquire
into such accounts, then such doubts must be resolved in favor of the former. This attitude persists unless
congress lifts its finger to reverse the general state policy respecting the absolutely confidential nature of
bank deposits.[53]
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP
No. 87600 dated April 20, 2005, reversing the September 13, 2004 and November 5, 2004 Orders of the
Regional Trial Court of Manila, Branch 36 in Criminal Case No. 02-202158, is AFFIRMED.
SO ORDERED.
BSB v. Sally GoFacts
: Petitioner, the BSB Group, Inc., is a duly organized domestic corporationpresided by its herein
representative, Ricardo Bangayan (Bangayan). RespondentSally Go, alternatively referred to as
Sally Sia Go and Sally Go-Bangayan, isBangayan's wife, who was employed in the company
as a cashier, and was engaged,among others, to receive and account for the payments made
by the variouscustomers of the company.In 2002, Bangayan filed with the Manila Prosecutor's
Office a complaint for estafaand/or qualified theft against respondent, alleging that several
checks representingthe aggregate amount of P1,534,135.50 issued by the company's
customers inpayment of their obligation were, instead of being turned over to the
company'scoffers, indorsed by respondent who deposited the same to her personal
bankingaccount maintained at Security Bank and Trust Company (Security Bank) in
Divisoria,Manila Branch. Upon a finding that the evidence adduced was uncontroverted,
theassistant city prosecutor recommended the filing of the Information for qualifiedtheft against
respondent.Accordingly, respondent was charged before the Regional Trial Court of
Manila. Shewas found guilty; that in the commission of the said offense, said accused acted
withgrave abuse of confidence, being then employed as cashier by said complainant atthe time
of the commission of the said offense and as such she was entrusted withthe said amount of
money.Respondent entered a negative plea when arraigned. The trial ensued. On thepremise
that respondent had allegedly encashed the subject checks and depositedthe corresponding
amounts thereof to her personal banking account.Petitioner, opposing respondent's move,
argued for the relevancy of the Metrobankaccount on the ground that the complaint-affidavit
showed that there were twochecks which respondent allegedly deposited in an account with the

said bank. Tothis, respondent filed a supplemental motion to quash, invoking the
absolutelyconfidential nature of the Metrobank account under the provisions of Republic
Act(R.A.) No. 1405. The trial court did not sustain respondent; hence, it denied themotion to
quash for lack of merit.Meanwhile, the prosecution was able to present in court the testimony of
ElenitaMarasigan (Marasigan), the representative of Security Bank. In a nutshell,Marasigan's
testimony sought to prove that between 1988 and 1989, respondent,while engaged as cashier
at the BSB Group, Inc., was able to run away with thechecks issued to the company by
its customers, endorse the same, and credit thecorresponding amounts to her personal deposit
account with Security Bank. In thecourse of the testimony, the subject checks were presented to
Marasigan foridentification and marking as the same checks received by respondent,
endorsed,and then deposited in her personal account with Security Bank. CA affirmed
RTCsdecision.
Issue
: WON there is no difference between cash and check for purposes of prosecuting respondent
for theft of cash
Held
: In theft, the act of unlawful taking connotes deprivation of personal propertyof one by another
with intent to gain, and it is immaterial that the offender is able orunable to freely dispose of the
property stolen because the deprivation relative tothe offended party has already ensued from
such act of execution. The allegation of theft of money, hence, necessitates that evidence
presented must have a tendencyto prove that the offender has unlawfully taken money
belonging to another.
Interestingly, petitioner has taken pains in attempting to draw a connection betweenthe evidence
subject of the instant review, and the allegation of theft in theInformation by claiming that
respondent had fraudulently deposited the checks inher own name. But this line of argument
works more prejudice than favor, because itin effect, seeks to establish the commission, not of
theft, but rather of some othercrime probably estafa.Moreover, that there is no difference
between cash and check is true in otherinstances. In estafa by conversion, for instance, whether
the thing converted is cashor check, is immaterial in relation to the formal allegation in an
information for thatoffense; a check, after all, while not regarded as legal tender, is normally
acceptedunder commercial usage as a substitute for cash, and the credit it represents instated
monetary value is properly capable of appropriation. And it is in this respectthat what the
offender does with the check subsequent to the act of unlawfullytaking it becomes material
inasmuch as this offense is a continuing one. In otherwords, in pursuing a case for this offense,
the prosecution may establish its cause bythe presentation of the checks involved. These
checks would then constitute the bestevidence to establish their contents and to prove
the elemental act of conversion insupport of the proposition that the offender has
indeed indorsed the same in his ownname. Theft, however, is not of such character. Thus, for
our purposes, as the Information inthis case accuses respondent of having stolen cash,
proof tending to establish thatrespondent has actualized her criminal intent by indorsing the
checks and depositingthe proceeds thereof in her personal account, becomes not only irrelevant
but alsoimmaterial and, on that score, inadmissible in evidence.We now address the issue
of whether the admission of Marasigan's testimony on theparticulars of respondent's account
with Security Bank, as well as of thecorresponding evidence of the checks allegedly deposited
in said account,constitutes an unallowable inquiry under R.A. 1405.It is conceded that while
the fundamental law has not bothered with the triviality of specifically addressing privacy rights
relative to banking accounts, there,nevertheless, exists in our jurisdiction a legitimate
expectation of privacy governingsuch accounts. The source of this right of expectation is
statutory, and it is found inR.A. No. 1405, otherwise known as the Bank Secrecy Act of 1955

R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and atthe same
time encourage the people to deposit their money in banking institutions,so that it may
be utilized by way of authorized loans and thereby assist in economicdevelopment. Owing to
this piece of legislation, the confidentiality of bank depositsremains to be a basic state policy in
the Philippines. Section 2 of the lawinstitutionalized this policy by characterizing as absolutely
confidential in general alldeposits of whatever nature with banks and other financial institutions
in thecountry. It declares:Section 2.All deposits of whatever nature with banks or banking
institutions in thePhilippines including investments in bonds issued by the Government of
thePhilippines, its political subdivisions and its instrumentalities, are hereby consideredas of an
absolutely confidential nature and may not be examined, inquired or lookedinto by any person,
government official, bureau or office, except upon writtenpermission of the depositor, or in cases
of impeachment, or upon order of acompetent court in cases of bribery or dereliction of duty of
public officials, or incases where the money deposited or invested is the subject matter of the
litigation
Subsequent statutory enactments have expanded the list of exceptions to this policyyet the
secrecy of bank deposits still lies as the general rule, falling as it does withinthe legally
recognized zones of privacy. There is, in fact, much disfavor to construingthese primary and
supplemental exceptions in a manner that would authorizeunbridled discretion, whether
governmental or otherwise, in utilizing theseexceptions as authority for unwarranted inquiry into
bank accounts. It is thenperceivable that the present legal order is obliged to conserve the
absolutelyconfidential nature of bank deposits. The measure of protection afforded by the law
has been explained in China BankingCorporation v. Ortega. That case principally addressed the
issue of whether theprohibition against an examination of bank deposits precludes garnishment
insatisfaction of a judgment. Ruling on that issue in the negative, the Court foundguidance in the
relevant portions of the legislative deliberations on Senate Bill No.351 and House Bill No. 3977,
which later became the Bank Secrecy Act, and it heldthat the absolute confidentiality rule in
R.A. No. 1405 actually aims at protectionfrom unwarranted inquiry or investigation if the purpose
of such inquiry orinvestigation is merely to determine the existence and nature, as well as the
amountof the deposit in any given bank account.What indeed constitutes the subject matter
in litigation in relation to Section 2 of R.A. No. 1405 has been pointedly and amply addressed in
Union Bank of thePhilippines v. Court of Appeals, in which the Court noted that the inquiry into
bankdeposits allowable under R.A. No. 1405 must be premised on the fact that the
moneydeposited in the account is itself the subject of the action. Given this perspective,
wededuce that the subject matter of the action in the case at bar is to be determinedfrom the
indictment that charges respondent with the offense, and not from theevidence sought by the
prosecution to be admitted into the records. In the criminalInformation filed with the trial court,
respondent, unqualifiedly and in plain language,is charged with qualified theft by abusing
petitioner's trust and confidence andstealing cash in the amount of P1,534,135.50. The said
Information makes no factualallegation that in some material way involves the checks subject of
the testimonialand documentary evidence sought to be suppressed. Neither do the allegations
insaid Information make mention of the supposed bank account in which the fundsrepresented
by the checks have allegedly been kept.In other words, it can hardly be inferred from the
indictment itself that the SecurityBank account is the ostensible subject of the prosecution's
inquiry. Withoutneedlessly expanding the scope of what is plainly alleged in the Information,
thesubject matter of the action in this case is the money amounting to P1,534,135.50alleged to
have been stolen by respondent, and not the money equivalent of thechecks which are sought
to be admitted in evidence. Thus, it is that, which theprosecution is bound to prove with
its evidence, and no other.It comes clear that the admission of testimonial and documentary
evidence relativeto respondent's Security Bank account serves no other purpose than to
establish theexistence of such account, its nature and the amount kept in it. It

constitutes anattempt by the prosecution at an impermissible inquiry into a bank deposit

accountthe privacy and confidentiality of which is protected by law. On this score alone,
theobjection posed by respondent in her motion to suppress should have indeed put anend to
the controversy at the very first instance it was raised before the trial court.In sum, we hold
that the testimony of Marasigan on the particulars of respondent'ssupposed bank account with
Security Bank and the documentary evidencerepresented by the checks adduced in support
thereof, are not only incompetent forbeing excluded by operation of R.A. No. 1405. They are
likewise irrelevant to thecase, inasmuch as they do not appear to have any logical and
reasonable connection to the prosecution of respondent for qualified theft. We find full merit in
and affirmrespondent's objection to the evidence of the prosecution. The Court of Appeals
was,therefore, correct in reversing the assailed orders of the trial court.A final note. In any given
jurisdiction where the right of privacy extends its scope toinclude an individual's financial privacy
rights and personal financial matters, there isan intermediate or heightened scrutiny given by
courts and legislators to lawsinfringing such rights. Should there be doubts in upholding the
absolutelyconfidential nature of bank deposits against affirming the authority to inquire intosuch
accounts, then such doubts must be resolved in favor of the former. Thisattitude persists unless
congress lifts its finger to reverse the general state policyrespecting the absolutely confidential
nature of bank deposits. Petition denied
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.
DECISION
TORRES, JR., J.:
In our predisposition to discover the original intent of a statute, courts become the
unfeeling pillars of the status quo. Little do we realize that statutes or even constitutions are
bundles of compromises thrown our way by their framers. Unless we exercise vigilance, the
statute may already be out of tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing of this petition, an Order be issued restraining the respondents
from applying and enforcing Section 113 of Central Bank Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respective rights and duties of petitioners and respondents;
2.) Adjudging Section 113 of Central Bank Circular No. 960 as contrary to the
provision of the Constitution, hence void; because its provision that Foreign
currency deposits shall be exempt from attachment, garnishment, or any other order
to process of any court, legislative body, government agency or any administrative
body whatsoever

i.) has taken away the right of petitioners to have the bank deposit of defendant
Greg Bartelli y Northcott garnished to satisfy the judgment rendered in
petitioners favor in violation of substantive due process guaranteed by the
Constitution;
ii.) has given foreign currency depositors an undue favor or a class privilege in
violation of the equal protection clause of the Constitution;
iii.) has provided a safe haven for criminals like the herein respondent Greg
Bartelli y Northcott since criminals could escape civil liability for their wrongful
acts by merely converting their money to a foreign currency and depositing it in a
foreign currency deposit account with an authorized bank.
The antecedents facts:
On February 4, 1989, Greg Bartelli y Northcott, an American tourist, coaxed and lured
petitioner Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg
Bartelli detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape
the child once on February 4, and three times each day on February 5, 6, and 7, 1989. On
February 7, 1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US
3,903.20; 2.) COCOBANK Bank Book No. 104-108758-8 (Peso Acct.); 3.) Dollar Account
China Banking Corp., US $/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money
(P234.00) cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the
complainant.
On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg
Bartelli, Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803,
804, and 805 for four (4) counts of Rape. On the same day, petitioners filed with the Regional
Trial Court of Makati Civil Case No. 89-3214 for damages with preliminary attachment against
Greg Bartelli. On February 24, 1989, the day there was a scheduled hearing for Bartellis
petition for bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscals Urgent Ex-Parte Motion for the
Issuance of Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused
Greg Bartelli y Northcott, the criminal cases were archived in an Order dated February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989
granting the application of herein petitioners, for the issuance of the writ of preliminary
attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the
amount P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on February
28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China
Banking Corporation. In a letter dated March 13, 1989 to the Deputy Sheriff of Makati, China
Banking Corporation invoked Republic Act No. 1405 as its answer to the notice of garnishment
served on it. On March 15, 1989, Deputy Sheriff of Makati Armando de Guzman sent his reply
to China Banking Corporation saying that the garnishment did not violate the secrecy of bank
deposits since the disclosure is merely incidental to a garnishment properly and legally made by

virtue of a court order which has placed the subject deposits in custodia legis. In answer to this
letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20,
1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits
of defendant Greg Bartelli are exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any administrative body,
whatsoever.
This prompted the counsel for petitioners to make an inquiry with the Central Bank in a
letter dated April 25, 1989 on whether Section 113 of CB Circular No. 960 has any exception or
whether said section has been repealed or amended since said section has rendered nugatory
the substantive right of the plaintiff to have the claim sought to be enforced by the civil action
secured by way of the writ of preliminary attachment as granted to the plaintiff under Rule 57 of
the Revised Rules of Court. The Central Bank responded as follows:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmea Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989 regarding your inquiry on Section 113, CB
Circular No. 960 (1983).
The cited provision is absolute in application. It does not admit of any exception, nor has the
same been repealed nor amended.
The purpose of the law is to encourage dollar accounts within the countrys banking system
which would help in the development of the economy. There is no intention to render futile the
basic rights of a person as was suggested in your subject letter. The law may be harsh as some
perceive it, but it is still the law. Compliance is, therefore, enjoined.
Very truly yours,
(SGD) AGAPITO S.
FAJARDO
Director[1]
Meanwhile, on April 10, 1989, the trial court granted petitioners motion for leave to serve
summons by publication in the Civil Case No. 89-3214 entitled Karen Salvacion. et al. vs. Greg
Bartelli y Northcott. Summons with the complaint was published in the Manila Times once a
week for three consecutive weeks. Greg Bartelli failed to file his answer to the complaint and

was declared in default on August 7, 1989. After hearing the case ex-parte, the court rendered
judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant,
ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion
the amount of P150,000.00 each or a total of P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorneys fees in an amount equivalent to 25% of the total amount of damages
herein awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondents Greg Bartelli which gave rise to the award were related in
graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of Makati but was able
to escape therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the
Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch
136, where he was charged with four counts of Rape and Serious Illegal Detention (Crim. Cases
Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, summons was served
upon defendant by publication in the Manila Times, a newspaper of general circulation as
attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said
newspaper. Defendant, however, failed to file his answer to the complaint despite the lapse of
the period of sixty (60) days from the last publication; hence, upon motion of the plaintiffs
through counsel, defendant was declared in default and plaintiffs were authorized to present their
evidence ex parte.
In support of the complaint, plaintiffs presented as witness the minor Karen E. Salvacion, her
father, Federico N. Salacion, Jr., a certain Joseph Aguilar and a certain Liberato Mandulio, who
gave the following testimony:
Karen took her first year high school in St. Marys Academy in Pasay City but has recently transferred to
Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with her friend
Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing her snack on a
concrete bench in front of Plaza Fair, an American approached her. She was then alone because Edna
Tangile had already left, and she was about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)

The American asked her name and introduced himself as Greg Bartelli. He sat beside her when he
talked to her. He said he was a Math teacher and told her that he has a sister who is a nurse in New
York. His sister allegedly has a daughter who is about Karens age and who was with him in his house
along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5).
The American asked Karen what was her favorite subject and she told him its Pilipino. He then invited
her to go with him to his house where she could teach Pilipino to his niece. He even gave her a stuffed
toy to persuade her to teach his niece. (Id., pp.5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendants house along
Kalayaan Avenue. (Id., p.6)
When they reached the apartment house, Karen notices that defendants alleged niece was not outside
the house but defendant told her maybe his niece was inside. When Karen did not see the alleged niece
inside the house, defendant told her maybe his niece was upstairs, and invited Karen to go upstairs. (Id.,
p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen became nervous because his
niece was not there. Defendant got a piece of cotton cord and tied Karens hands with it, and then he
undressed her. Karen cried for help but defendant strangled her. He took a packing tape and he covered
her mouth with it and he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied her feet
and hands spread apart to the bed posts. He knelt in front of her and inserted his finger in her sex
organ. She felt severe pain. She tried to shout but no sound could come out because there were tapes on
her mouth. When defendant withdrew his finger it was full of blood and Karen felt more pain after the
withdrawal of the finger. (Id., p.8)
He then got a Johnsons Baby Oil and he applied it to his sex organ as well as to her sex organ. After that
he forced his sex organ into her but he was not able to do so. While he was doing it, Karen found it
difficult to breathe and she perspired a lot while feeling severe pain. She merely presumed that he was
able to insert his sex organ a little, because she could not see. Karen could not recall how long the
defendant was in that position. (Id., pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower and he
untied her hands. Karen could only hear the sound of the water while the defendant, she presumed, was
in the bathroom washing his sex organ. When she took a shower more blood came out from her. In the
meantime, defendant changed the mattress because it was full of blood. After the shower, Karen was
allowed by defendant to sleep. She fell asleep because she got tired crying. The incident happened at
about 4:00 p.m. Karen had no way of determining the exact time because defendant removed her
watch. Defendant did not care to give her food before she went to sleep. Karen woke up at about 8:00
oclock the following morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after breakfast of biscuit and coke at about 8:30 to 9:00
a.m. defendant raped Karen while she was still bleeding. For lunch, they also took biscuit and coke. She
was raped for the second time at about 12:00 to 2:00 p.m. In the evening, they had rice for dinner which
defendant had stored downstairs; it was he who cooked the rice that is why it looks like lugaw. For the
third time, Karen was raped again during the night. During those three times defendant succeeded in
inserting his sex organ but she could not say whether the organ was inserted wholly.

Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and feet nor
put a tape on her mouth anymore but she did not cry for help for fear that she might be killed; besides, all
those windows and doors were closed. And even if she shouted for help, nobody would hear her. She
was so afraid that if somebody would hear her and would be able to call a police, it was still possible that
as she was still inside the house, defendant might kill her. Besides, the defendant did not leave that
Sunday, ruling out her chance to call for help. At nighttime he slept with her again. (TSN, Aug. 15, 1989,
pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty minutes after
breakfast of biscuits; again in the afternoon; and again in the evening. At first, Karen did not know that
there was a window because everything was covered by a carpet, until defendant opened the window for
around fifteen minutes or less to let some air in, and she found that the window was covered by styrofoam
and plywood. After that, he again closed the window with a hammer and he put the styrofoam, plywood,
and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although defendant left but kept the door
closed. She went to the bathroom and saw a small window covered by styrofoam and she also spotted a
small hole. She stepped on the bowl and she cried for help through the hole. She cried: Maawa na po
kayo sa akin. Tulungan nyo akong makalabas dito. Kinidnap ako! Somebody heard her. It was a
woman, probably a neighbor, but she got angry and said she was istorbo. Karen pleaded for help and
the woman told her to sleep and she will call the police. She finally fell asleep but no policeman
came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 oclock the following morning, and she saw defendant in bed, this time
sleeping. She waited for him to wake up. When he woke up, he again got some food but he always kept
the door locked. As usual, she was merely fed with biscuit and coke. On that day, February 7, 1989, she
was again raped three times. The first at about 6:30 to 7:00 a.m., the second at about 8:30 9:00, and the
third was after lunch at 12:00 noon. After he had raped her for the second time he left but only for a short
while. Upon his return, he caught her shouting for help but he did not understand what she was shouting
about. After she was raped the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again
went to the bathroom and shouted for help. After shouting for about five minutes, she heard many
voices. The voices were asking for her name and she gave her name as Karen Salvacion. After a while,
she heard a voice of a woman saying they will just call the police. They were also telling her to change
her clothes. She went from the bathroom to the room but she did not change her clothes being afraid that
should the neighbors call the police and the defendant see her in different clothes, he might kill her. At
that time she was wearing a T-shirt of the American bacause the latter washed her dress. (Id., p. 16)
Afterwards, defendant arrived and opened the door. He asked her if she had asked for help because there
were many policemen outside and she denied it. He told her to change her clothes, and she did change to
the one she was wearing on Saturday. He instructed her to tell the police that she left home and willingly;
then he went downstairs but he locked the door. She could hear people conversing but she could not
understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were conversing downstairs, she knocked repeatedly at
the door as hard as she could. She heard somebody going upstairs and when the door was opened, she
saw a policeman. The policeman asked her name and the reason why she was there. She told him she
was kidnapped. Downstairs, he saw about five policemen in uniform and the defendant was talking to
them. Nakikipag-areglo po sa mga pulis, Karen added. The policeman told him to just explain at the
precinct. (Id., p. 20)

They went out of the house and she saw some of her neighbors in front of the house. They rode the car
of a certain person she called Kuya Boy together with defendant, the policeman, and two of her neighbors
whom she called Kuya Bong Lacson and one Ate Nita. They were brought to Sub-Station I and there she
was investigated by a policeman. At about 2:00 a.m., her father arrived, followed by her mother together
with some of their neighbors. Then they were brought to the second floor of the police
headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator. The written statement she gave
to the police was marked Exhibit A. Then they proceeded to the National Bureau of Investigation
together with the investigator and her parents. At the NBI, a doctor, a medico-legal officer, examined her
private parts. It was already 3:00 in early morning, of the following day when they reached the NBI,
(TSN, Aug. 15, 1989, p. 22) The findings of the medico-legal officer has been marked as Exhibit B.
She was studying at the St. Marys Academy in Pasay City at the time of the Incident but she
subsequently transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue, because
she was ashamed to be the subject of conversation in the school. She first applied for transfer to Jose
Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit Station but she was
denied admission after she told the school the true reason for her transfer. The reason for their denial was
that they might be implicated in the case. (TSN, Aug. 15, 1989, p. 46)
xxx xxx

xxx

After the incident, Karen has changed a lot. She does not play with her brother and sister anymore, and
she is always in a state of shock; she has been absent-minded and is ashamed even to go out of the
house. (TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad. (Id., p. 11) The father prays
for P500,000.00 moral damages for Karen for this shocking experience which probably, she would always
recall until she reaches old age, and he is not sure if she could ever recover from this experience. (TSN,
Sept. 24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice was published
in the Manila Bulletin once a week for three consecutive weeks. After the lapse of fifteen (15)
days from the date of the last publication of the notice of judgment and the decision of the trial
court had become final, petitioners tried to execute on Bartellis dollar deposit with China
Banking Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960.
Thus, petitioners decided to seek relief from this Court.
The issues raised and the arguments articulated by the parties boil down to two:
May this Court entertain the instant petition despite the fact that original jurisdiction in
petitions for declaratory relief rests with the lower court? She Section 113 of Central Bank
Circular No. 960 and Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise known as the
Foreign Currency Deposit Act be made applicable to a foreign transient?
Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960
providing that Foreign currency deposits shall be exempt from attachment, garnishment, or any
other order or process of any court, legislative body, government agency or any administrative
body whatsoever. should be adjudged as unconstitutional on the grounds that: 1.) it has taken
away the right of petitioners to have the bank deposit of defendant Greg Bartelli y Northcott
garnished to satisfy the judgment rendered in petitioners favor in violation of substantive due

process guaranteed by the Constitution; 2.) it has given foreign currency depositors an undue
favor or a class privilege n violation of the equal protection clause of the Constitution; 3.) it has
provided a safe haven for criminals like the herein respondent Greg Bartelli y Northcott since
criminal could escape civil liability for their wrongful acts by merely converting their money to a
foreign currency and depositing it in a foreign currency deposit account with an authorized bank;
and 4.) The Monetary Board, in issuing Section 113 of Central Bank Circular No. 960 has
exceeded its delegated quasi- legislative power when it took away: a.) the plaintiffs
substantive right to have the claim sought to be enforced by the civil action secured by way of
the writ of preliminary attachment as granted by Rule 57 of the Revised Rules of Court; b.) the
plaintiffs substantive right to have the judgment credit satisfied by way of the writ of execution
out of the bank deposit of the judgment debtor as granted to the judgment creditor by Rule 39 of
the Revised Rules of Court, which is beyond its power to do so.
On the other hand, respondent Central Bank, in its Comment alleges that the Monetary
Board in issuing Section 113 of CB Circular No. 960 did not exceed its power or authority
because the subject Section is copied verbatim from a portion of R.A. No. 6426 as amended by
P.D. 1246. Hence, it was not the Monetary Board that grants exemption from attachment or
garnishment to foreign currency deposits, but the law (R.A. 6426 as amended) itself; that it does
not violate the substantive due process guaranteed by the Constitution because a.) it was
based on a law; b.) the law seems to be reasonable; c.) it is enforced according to regular
methods of procedure; and d.) it applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign currency
deposits from attachment, garnishment or any other order process of any court, is to assure the
development and speedy growth of the Foreign Currency Deposit System and the Offshore
Banking System in the Philippines; that another reason is to encourage the inflow of foreign
currency deposits into the banking institutions thereby placing such institutions more in a
position to properly channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country; that the subject section is being
enforced according to the regular methods of procedure; and that it applies to all currency
deposits made by any person and therefore does not violate the equal protection clause of the
Constitution.
Respondent Central Bank further avers that the questioned provision is needed to promote
the public interest and the general welfare; that the State cannot just stand idly by while a
considerable segment of the society suffers from economic distress; that the State had to take
some measures to encourage economic development; and that in so doing persons and
property may be subjected to some kinds of restraints or burdens to secure the general welfare
or public interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the
Revised Rules of Court provide that some properties are exempted from execution/attachment
especially provided by law and R.A. No. 6426 as amended is such a law, in that it specifically
provides, among others, that foreign currency deposits shall be exempted from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or
any administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons similar to
that of respondent Central Bank, also stated that respondent China Bank is not unmindful of the
inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of
Greg Bartelli; that it is not only too willing to release the dollar deposit of Bartelli which may
perhaps partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so

in view of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the
harsh effect to these laws on petitioners, CBC has no other alternative but to follow the same.
This court finds the petition to be partly meritorious.
Petitioner deserves to receive the damages awarded to her by the court. But this petition
for declaratory relief can only be entertained and treated as a petition for mandamus to require
respondents to honor and comply with the writ of execution in Civil Case No. 89-3214.
The Court has no original and exclusive jurisdiction over a petition for declatory relief.
However, exceptions to this rule have been recognized. Thus, where the petition has farreaching implications and raises questions that should be resolved, it may be treated as one for
mandamus.[3]
[2]

Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her
gesture of kindness by teaching his alleged niece the Filipino language as requested by the
American, trustingly went with said stranger to his apartment, and there she was raped by said
American tourist Greg Bartelli. Not once, but ten times. She was detained therein for four (4)
days. This American tourist was able to escape from the jail and avoid punishment. On the
other hand, the child, having received a favorable judgment in the Civil Case for damages in the
amount of more than P1,000,000.00, which amount could alleviate the humiliation, anxiety, and
besmirched reputation she had suffered and may continue to suffer for a long, long time; and
knowing that this person who had wronged her has the money, could not, however get the
award of damages because of this unreasonable law. This questioned law, therefore makes
futile the favorable judgment and award of damages that she and her parents fully deserve. As
stated by the trial court in its decision,
Indeed, after hearing the testimony of Karen, the Court believes that it was indoubtedly a
shocking and traumatic experience she had undergone which could haunt her mind for a long,
long time, the mere recall of which could make her feel so humiliated, as in fact she had been
actually humiliated once when she was refused admission at the Abad Santos High School,
Arellano University, where she sought to transfer from another school, simply because the
school authorities of the said High School learned about what happened to her and allegedly
feared that they might be implicated in the case.
xxx
The reason for imposing exemplary or corrective damages is due to the wanton and bestial
manner defendant had committed the acts of rape during a period of serious illegal detention of
his hapless victim, the minor Karen Salvacion whose only fault was in her being so naive and
credulous to believe easily that defendant, an American national, could not have such a bestial
desire on her nor capable of committing such heinous crime. Being only 12 years old when that
unfortunate incident happened, she has never heard of an old Filipino adage that in every forest
there is a snake, xxx.[4]
If Karens sad fate had happened to anybodys own kin, it would be difficult for him to
fathom how the incentive for foreign currency deposit could be more important than his childs
right to said award of damages; in this case, the victims claim for damages from this alien who
had the gall to wrong a child of tender years of a country where he is mere visitor. This further
illustrates the flaw in the questioned provisions.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the
countrys economy was in a shambles; when foreign investments were minimal and presumably,
this was the reason why said statute was enacted. But the realities of the present times show
that the country has recovered economically; and even if not, the questioned law still denies
those entitled to due process of law for being unreasonable and oppressive. The intention of
the questioned law may be good when enacted. The law failed to anticipate the inquitous
effects producing outright injustice and inequality such as as the case before us.
It has thus been said thatBut I also know,[5] that laws and institutions must go hand in hand with the progress of the
human mind. As that becomes more developed, more enlightened, as new discoveries are made,
new truths are disclosed and manners and opinions change with the change of circumstances,
institutions must advance also, and keep pace with the times We might as well require a man
to wear still the coat which fitted him when a boy, as civilized society to remain ever under the
regimen of their barbarous ancestors.
In his comment, the Solicitor General correctly opined, thus:
"The present petition has far-reaching implications on the right of a national to obtain redress for
a wrong committed by an alien who takes refuge under a law and regulation promulgated for a
purpose which does not contemplate the application thereof envisaged by the allien. More
specifically, the petition raises the question whether the protection against attachment,
garnishment or other court process accorded to foreign currency deposits PD No. 1246 and CB
Circular No. 960 applies when the deposit does not come from a lender or investor but from a
mere transient who is not expected to maintain the deposit in the bank for long.
The resolution of this question is important for the protection of nationals who are victimized in
the forum by foreigners who are merely passing through.
xxx
xxx Respondents China Banking Corporation and Central Bank of the Philippines refused to
honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the following
provision of Central Bank Circular No. 960:
Sec. 113 Exemption from attachment. Foreign currency deposits shall be exempt
from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever.
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:
Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall
promulgate such rules and regulations as may be necessary to carry out the provisions
of this Act which shall take effect after the publication of such rules and regulations
in the Official Gazette and in a newspaper of national circulation for at least once a
week for three consecutive weeks. In case the Central Bank promulgates new rules
and regulations decreasing the rights of depositors, the rules and regulations at the
time the deposit was made shall govern.

The aforecited Section 113 was copied from Section 8 of Republic Act No. 6426. As amended
by P.D. 1246, thus:
Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreign currency deposits
authorized under this Act, as amended by Presidential Decree No. 1035, as well as
foreign currency deposits authorized under Presidential Decree No. 1034, are hereby
declared as and considered of an absolutely confidential nature and, except upon the
written permission of the depositor, in no instance shall such foreign currency
deposits be examined, inquired or looked into by any person, government official,
bureau or office whether judicial or administrative or legislative or any other entity
whether public or private: Provided, however, that said foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body whatsoever.
The purpose of PD 1246 in according protection against attachment, garnishment and other
court process to foreign currency deposits is stated in its whereases, viz.:
WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No.
1035, certain Philippine banking institutions and branches of foreign banks are
authorized to accept deposits in foreign currency;
WHEREAS, under provisions of Presidential Decree No. 1034 authorizing the
establishment of an offshore banking system in the Philippines, offshore banking
units are also authorized to receive foreign currency deposits in certain cases;
WHEREAS, in order to assure the development and speedy growth of the Foreign
Currency Deposit System and the Offshore Banking System in the Philippines,
certain incentives were provided for under the two Systems such as confidentiality
subject to certain exceptions and tax exemptions on the interest income of depositors
who are nonresidents and are not engaged in trade or business in the Philippines;
WHEREAS, making absolute the protective cloak of confidentiality over such
foreign currency deposits, exempting such deposits from tax, and guaranteeing the
vested right of depositors would better encourage the inflow of foreign currency
deposits into the banking institutions authorized to accept such deposits in the
Philippines thereby placing such institutions more in a position to properly channel
the same to loans and investments in the Philippines, thus directly contributing to the
economic development of the country;
Thus, one of the principal purposes of the protection accorded to foreign currency deposits is to
assure the development and speedy growth of the Foreign Currency Deposit system and the
Offshore Banking in the Philippines (3rd Whereas).
The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD
No. 1034 are as follows:
WHEREAS, conditions conducive to the establishment of an offshore banking
system, such as political stability, a growing economy and adequate communication
facilities, among others, exist in the Philippines;

WHEREAS, it is in the interest of developing countries to have as wide access as

possible to the sources of capital funds for economic development;
WHEREAS, an offshore banking system based in the Philippines will be
advantageous and beneficial to the country by increasing our links with foreign
lenders, facilitating the flow of desired investments into the Philippines, creating
employment opportunities and expertise in international finance, and contributing to
the national development effort.
WHEREAS, the geographical location, physical and human resources, and other
positive factors provide the Philippines with the clear potential to develop as another
financial center in Asia;
On the other hand, the Foreign Currency Deposit system was created by PD No. 1035. Its
purpose are as follows:
WHEREAS, the establishment of an offshore banking system in the Philippines has
been authorized under a separate decree;
WHEREAS, a number of local commercial banks, as depository bank under the
Foreign Currency Deposit Act (RA No. 6426), have the resources and managerial
competence to more actively engage in foreign exchange transactions and participate
in the grant of foreign currency loans to resident corporations and firms;
WHEREAS, it is timely to expand the foreign currency lending authority of the said
depository banks under RA 6426 and apply to their transactions the same taxes as
would be applicable to transaction of the proposed offshore banking units;
It is evident from the above [Whereas clauses] that the Offshore Banking System and the
Foreign Currency Deposit System were designed to draw deposits from
foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD No.
1035). It is these depositors that are induced by the two laws and given protection and
incentives by them.
Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of
deposit encourage by PD Nos. 1034 and 1035 and given incentives and protection by said laws
because such depositor stays only for a few days in the country and, therefore, will maintain his
deposit in the bank only for a short time.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with
respondent China Banking Corporation only for safekeeping during his temporary stay in the
Philippines.
For the reasons stated above, the Solicitor General thus submits that the dollar deposit of
respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular
No. 960 and PD No. 1246 against attachment, garnishment or other court processes. [6]
In fine, the application of the law depends on the extent of its justice. Eventually, if we rule
that the questioned Section 113 of Central Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or process of any court. Legislative body,

government agency or any administrative body whatsoever, is applicable to a foreign transient,

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

FACTS: Greg Bartelli, an American tourist, was arrested for committing four counts of rape and
serious illegal detention against Karen Salvacion. Police recovered from him several dollar
checks and a dollar account in the China Banking Corp. He was, however, able to escape from
prison. In a civil case filed against him, the trial court awarded Salvacion moral, exemplary and
attorneys fees amounting to almost P1,000,000.00.
Salvacion tried to execute the judgment on the dollar deposit of Bartelli with the China Banking
Corp. but the latter refused arguing that Section 11 of Central Bank Circular No. 960 exempts
foreign currency deposits from attachment, garnishment, or any other order or process of any

court, legislative body, government agency or any administrative body whatsoever. Salvacion
therefore filed this action for declaratory relief in the Supreme Court.
ISSUE: Should Section 113 of Central Bank Circular No. 960 and Section 8 of Republic Act No.
6426, as amended by PD 1246, otherwise known as the Foreign Currency Deposit Act be made
applicable to a foreign transient?
HELD: NO.
The provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of Republic Act No. 6426, are hereby held to be INAPPLICABLE to this case
because of its peculiar circumstances. Respondents are hereby required to comply with the writ
of execution issued in the civil case and to release to petitioners the dollar deposit of Bartelli in
such amount as would satisfy the judgment.
Supreme Court ruled that the questioned law makes futile the favorable judgment and award of
damages that Salvacion and her parents fully deserve. It then proceeded to show that the
economic basis for the enactment of RA No. 6426 is not anymore present; and even if it still
exists, the questioned law still denies those entitled to due process of law for being unreasonable
and oppressive. The intention of the law may be good when enacted. The law failed to anticipate
the iniquitous effects producing outright injustice and inequality such as the case before us.
The SC adopted the comment of the Solicitor General who argued that the Offshore Banking
System and the Foreign Currency Deposit System were designed to draw deposits from foreign
lenders and investors and, subsequently, to give the latter protection. However, the foreign
currency deposit made by a transient or a tourist is not the kind of deposit encouraged by PD
Nos. 1034 and 1035 and given incentives and protection by said laws because such depositor
stays only for a few days in the country and, therefore, will maintain his deposit in the bank only
for a short time. Considering that Bartelli is just a tourist or a transient, he is not entitled to the
protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment,

garnishment or other court processes.

Further, the SC said: In fine, the application of the law depends on the extent of its justice.
Eventually, if we rule that the questioned Section 113 of Central Bank Circular No. 960 which
exempts from attachment, garnishment, or any other order or process of any court, legislative
body, government agency or any administrative body whatsoever, is applicable to a foreign
transient, injustice would result especially to a citizen aggrieved by a foreign guest like accused
Greg Bartelli. This would negate Article 10 of the New Civil Code which provides that in case of
doubt in the interpretation or application of laws, it is presumed that the lawmaking body
intended right and justice to prevail.