April 5, 1990

FIDELITY SAVINGS AND MORTGAGE BANK, petitioner, 

vs.
HON. PEDRO D. CENZON, in his capacity as Presiding Judge of the Court of First Instance of Manila (Branch XL)
and SPOUSES TIMOTEO AND OLIMPIA SANTIAGO, respondents.
REGALADO, J.:
NATURE: action for a sum of money with damages
SUMMARY: Sps. Santiago deposited a total of 100k with Fidelity Savings Bank. The bank became insolvent and
underwent liquidation proceedings. The Sps instituted an action for a sum of money and damages. CFI awarded the
unpaid 90k with accrued interest until fully paid, as well as moral and exemplary damages and atty’s fees. SC
reversed and held that cannot be held liable to pay interest on bank deposits which accrued during the period when
the bank is actually closed and non-operational. Thus the bank was only liable for interests up to Feb 19, 1969 when
the bank was prohibited to continue with banking operations
DOCTRINE: Unless a bank can lend money, engage in international transactions, acquire foreclosed mortgaged
properties or their proceeds and generally engage in other banking and financing activities from which it can derive
income, it is inconceivable how it can carry on as a depository obligated to pay stipulated interest…The obligation to
pay interest on the deposit ceases the moment the operation of the bank is completely suspended by the duly
constituted authority, the Central Bank.
FACTS:
 May 16, 1968, Sps. Santiago deposited with Fidelity Savings Bank P50,000.00. Sometime on July 6, 1968,
Sps. Santiago,- deposited P50,000.00. total deposits = 100k
 February 18, 1969, the Monetary Board, after finding the report of the Superintendent of Banks, that the
condition of the defendant Fidelity Savings and Mortgage Bank is one of insolvency, to be true, issued
Resolution No. 350 deciding:
1) To forbid the Fidelity Savings Bank to do business in the Philippines;
2) To instruct the Acting Superintendent of Banks to take charge, in the name of the Monetary
Board, of the Bank's assets
 The Superintendent of Banks took charge in the name of the Monetary Board, of the assets of the banks on
February 19, 1969;
 Philippine Deposit Insurance Corporation paid the plaintiffs the amount P10k on the aggregate deposits of
P100k pursuant to RA 5517, thereby leaving a deposit balance of P90k
 The Monetary Board issued its Resolution No. 2124 directing the liquidation of the affairs of defendant
Fidelity Savings Bank;
 The SolGen filed a "Petition for Assistance and Supervision in Liquidation" of the affairs of the bank with the
CFI
 The Liquidation Court promulgated the Bank Rules and Regulations to govern the liquidation of the
affairs of defendant Fidelity Savings and Mortgage Bank, prescribing the rules on the conversion of the
Bank's assets into money, processing of claims against it and the manner and time of distributing the
proceeds from the assets of the Bank. The liquidation proceedings is still pending;
 The Sps. sent demand letters to herein defendants, demanding the immediate payment of the
aforementioned savings and time deposits.
 Sps. Santiago instituted this present action for a sum of money with damages against Fidelity Savings and
Mortgage Bank, Central Bank of the Philippines, et al. (the case vs et al were eventually dismissed )
 CFI the bank to pay subject to the Bank Liquidation Rules and Regulations:
(a) P90,000.00 with accrued interest until fully paid;
(b) P30,000,00 as exemplary damages; and
(c) P10,000.00 as and for attorney's fees.

ISSUE 1: WON an insolvent bank like the Fidelity Savings and Mortgage Bank may be adjudged to pay
INTEREST on unpaid deposits even after its closure by the Central Bank by reason of insolvency (NO)
RATIO 1:
 It is settled jurisprudence that a banking institution which has been declared insolvent and subsequently
ordered closed by the Central Bank of the Philippines cannot be held liable to pay interest on bank
deposits which accrued during the period when the bank is actually closed and non-operational.
 The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia:
o It is a matter of common knowledge, which We take judicial notice of, that what enables a bank to
pay stipulated interest on money deposited with it is that thru the other aspects of its operation it is
able to generate funds to cover the payment of such interest. Unless a bank can lend money,
engage in international transactions, acquire foreclosed mortgaged properties or their proceeds
and generally engage in other banking and financing activities from which it can derive income, it is
inconceivable how it can carry on as a depository obligated to pay stipulated interest. Conventional
 wisdom dictates this inexorable fair and just conclusion. And it can be said that all who deposit
money in banks are aware of such a simple economic proposition. Consequently, it should be
deemed read into every contract of deposit with a bank that the obligation to pay interest on the
deposit ceases the moment the operation of the bank is completely suspended by the duly
constituted authority, the Central Bank.
 It is manifest that petitioner cannot be held liable for interest on bank deposits which accrued from
the time it was prohibited by the Central Bank to continue with its banking operations, that is, when
Resolution No. 350 to that effect was issued on February 18, 1969.

DISPOSITIVE: Decision MODIFIED. Bank to pay private respondents Timoteo and Olimpia Santiago the sum of
P90,000.00, with accrued interest until February 18, 1969. Award for damages DELETED.
Cancio vs. CA| Karl
October 22, 1987
ROSA CANCIO, petitioner, vs.
HON. COURT OF TAX APPEALS and HON. COMMISSIONER OF CUSTOMS, respondents.
MELENCIO-HERRERA, J.:

NATURE: MR of August 11 1986 Resolution

SUMMARY:
Cancio was leaving the Philippines with undeclared foreign currency. These were confiscated due to her failure to
present a Central Bank Authority to transfer these funds. The CTA upheld the seizure. However, the Supreme
Court, finding that Cancio is a foreign currency depositor, reversed the CTA in so far as the money which was
seized, given that the Foreign Currency Deposit Act grants the depositor unrestricted transferability of his/her
funds. Therefore, in this case, Cancio did not have to present any Central Bank Authority.

DOCTRINE (related to topic):

 The transferability abroad of foreign currency deposits is unrestricted. Only one exception is provided for
therein, which is, any restriction " from the contract between the depositor and the bank." Neither is a
Central Bank authority required for the transferability abroad of foreign currency deposits.
 Indeed, given the underlying objective of the Foreign Currency Deposit Act, as amended, which is to
attract and invite the deposit of foreign currencies which are acceptable as part of the international
reserve in duly authorized banks in order that they may be put into the stream of the banking system, it
would be to defeat the very purpose of the law to place undue restrictions on the transferability of such
funds.
 The countervailing effect would be to discourage prospective foreign currency depositors to the detriment
of the banking system.
 In fine, Central Bank Circulars Nos. 265 and 534 requiring prior Central Bank authority for the taking out of
the country of foreign currency should not be made to encompass foreign currency depositors whose
rights are expressly defined and guaranteed in a special law, the Foreign Currency Deposit Act (RA 6426,
as amended). As a foreign currency depositor, therefore, petitioner cannot be adjudged to have violated
the aforestated Central Bank Circulars.

FACTS:
 Claimant Mrs. Rosa Cancio bearing Philippine Passport No. 11797799 while clearing through the Pre-
Boarding (AVSECOM) Area of MIA with her husband and three (3) children to board PR 306 for Hongkong
in the morning of June 12, 1981, was apprehended with
o One Hundred Two Thousand Nine Hundred Dollars (US$102,900.00) in cash,
o six hundred dollars (US$600.00) in two travelers checks, and
o one thousand five hundred (Pl,500.00) Pesos;
 Such apprehension was effected only thru an alarm sounded by the scanner (metal detecting device) of
the AVSECOM men, when Mrs. Cancio who did not declare her currency had already passed the Customs
inspection area;
 Subject currencies were placed and concealed inside the two fairly-sized carton boxes for local chocolates,
securely wrapped and taped with tin foil-back paper; and, that in view of claimant's failure, upon being
required, to present the Central Bank Authority, the said currencies were accordingly confiscated and a
seizure Receipt No. 013 was issued to her;
o Hence, this seizure proceedings.
 At the hearing of this case, Cancio, thru counsel, presented the following, attesting to the fact that
claimant Rosa Cancio had withdrawn from her FCDU Account a certain amount of United States currency
which tended to show that claimant herein was a foreign currency depositor pursuant to the provisions of
Republic Act No. 6426, as implemented by Central Bank Circular No. 343.
o certified xerox copy of her Bank Book (Exhibit "I") for foreign currency deposit with the Philippine
Commercial and Industrial Bank under Account FCDU No. 0265,
 o dollar remittances in telegraphic transfers from abroad for deposits in her account from May 13,
1981 to May 21, 1981, and
o withdrawal cards (Exhibit "l-A" to "1-E", inclusive),
 Cancio testified that because her foreign currency deposit could not be withdrawn at one time, she made
her withdrawal on several occasions starting from May 14, 1981 up to May 27, 1981 when she closed her
account preparatory to her departure which was scheduled in the morning of June 12, 1981 for
Hongkong;
o From Hongkong, she and her family intended to proceed to the United States for medical
treatment of her heart ailment as advised by her two attending physicians from the UST Hospital;
o The US currency that they were carrying and confiscated from them on June 12, 1981 was
intended principally for such medical purpose and for other miscellaneous and necessary
expenses, and, that the subject currencies were concealed and hidden by them inside the two
chocolate boxes solely for security reasons.

 By reason of the forfeiture decreed by respondent Commissioner of Customs of both the foreign and local
currencies due to petitioner's failure to present a Central Bank (CB) authority to bring said currencies out
of the country, petitioner appealed to respondent Court of Tax Appeals.

 CTA: affirmed the forfeiture of the US$102,900.00 in cash, and US$600.00 in travellers' checks for having
been in violation of Central Bank Circulars Nos. 265 and 534, in relation to Section 2530(f) of the Tariff and
Customs Code, as amended.

o It reversed, however, the forfeiture of P1,500.00 on the ground that since petitioner was
travelling with her husband and three (3) children, the said amount did not exceed the P500.00
at that each traveller is allowed to bring out of the country without a CB permit pursuant to
paragraph 4 of CB Circular No. 383.

 Petitioner's unimpugned evidence shows that she was a foreign currency depositor at the Philippine
Commercial and Industrial Bank at Makati, Metro Manila, and that the subject foreign currency was part
of the total amount of US$116,000.00 she had withdrawn from said bank from May 14 to 27, 1981 for her
travel and medical expenses in the United States via Hongkong. 

 Admitted, too, is the fact that petitioner failed to present to the apprehending customs authorities a
Central Bank authority to bring out of the country the said currencies while at the pre-boarding area of
the Manila International Airport on June 12, 1981 on her scheduled flight to Hongkong together with her
husband and three children.

ISSUE :

Whether or not respondent Court had committed reversible error in upholding the forfeiture of the foreign
currencies in question.--YES

RATIO:
 A second look at the facts and the equity of the case, the pertinent laws, and the CB Circulars involved
constrains us to rule in the affirmative and, accordingly, to grant reconsideration of our Resolution of
August 11, 1986 denying review.
 It is true that in so far as the exportation or taking out of foreign currency from the country is concerned,
Central Bank Circular No. 265, issued on November 20, 1968, particularly paragraph 3 thereof, mandates:
“3. No person shall take out or export from the Philippines foreign currency or any other foreign exchange except
as otherwise authorized by the Central Bank.”
  Similarly, Central bank Circular No. 534, issued on July 19, 1976, reiterates and provides in Sec. 3 thereof
as follows:
o “Sec. 3. Unless specifically authorized by the Central Bank or allowed under existing international
agreements or Central Bank regulations, no person shall take or transmit or attempt to take or
transmit foreign exchange, in any form out of the Philippines only, through other persons,
through the mails, or through international carriers.
o The provisions of this Section shall not apply to tourists and non-resident temporary visitors who
are taking or sending out of the Philippines their own foreign exchange brought in by them.”
 However, peculiar to the present controversy is the fact that, as stated previously, petitioner is a
foreign currency depositor. Relevant and applicable to her is the following provision of the "Foreign
Currency Deposit Act of the Philippines" (Republic Act No. 6426, as amended), which took effect upon its
approval on April 4,1972:
SEC. 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.

 Under the foregoing provision, the transferability abroad of foreign currency deposits is unrestricted.
Only one exception is provided for therein, which is, any restriction " from the contract between the
depositor and the bank." Neither is a Central Bank authority required for the transferability abroad of
foreign currency deposits.
 Attention is called, however, to the implementing rules and regulations to said Republic Act 6426, as
embodied in CB Circular No. 343 issued on April 24, 1972, which provides:

SEC. 11. Withdrawability and Liquidity of Deposits.

a. x x x x x x x x x
b. Subject only to the terms of the contract between the bank and the depositor, the latter shall have a general
license to withdraw his deposit, notwithstanding any change in policy or regulations.
xxx xxx xxx

 Respondent Court has taken the position that the foregoing provision its the right of the depositor to that
of withdrawal and withholds from him the right of transferability abroad.

o That is not so. Circular-Letter, dated August 3, 1978, issued by the Central Bank reads in explicit
terms:

TO: ALL BANKS AUTHORIZED TO ACCEPT FOREIGN CURRENCY DEPOSITS UNDER THE PROVISIONS OF RA 6426, AS
AMENDED AND PRESIDENTIAL DECREE NO. 1035.
Effective immediately, the banks authorized to accept foreign currency deposits under the provisions of RA 6426,
as amended, and PD 1035 and as implemented by Central Bank Circular 343 and 547, are hereby instructed to
advise their foreign currency depositors who are withdrawing funds for travel purposes to carry with them the
certificate of withdrawal that the banks shall issue. The travellers shall present the certifications to the Customs
and Central Bank personnel at the MIA, if requested.
The banks shall issue a uniform certification, as follows:
___________________
Date
TO WHOM IT MAY CONCERN:
This certifies that ________________________whose signature appears below has withdrawn today, the amount
of ____________in cash (US$ _______________) and Travellers Check (US$___________________________)
against his/her foreign currency account maintained with us.
The funds herein withdrawn are represented to be used in connection with the depositor's foreign travel
scheduled on or about ____________________197_________.
___________________________
(Signature of Authorized
Official OverPrinted Name)
_______________________
(Signature of Depositor)
Please be guided accordingly.
(SGD

 As instructed in the Circular-Letter abovequoted, it is the authorized depository bank which should advise
its depositors to carry with them the certificate of withdrawal. At any rate, respondent Court has found
that petitioner has presented in evidence her foreign currency bank book and her withdrawal cards.
o These may be considered as substantial compliance for purposes of this case.
 Indeed, given the underlying objective of the Foreign Currency Deposit Act, as amended, which is to
attract and invite the deposit of foreign currencies which are acceptable as part of the international
reserve in duly authorized banks in order that they may be put into the stream of the banking system, it
would be to defeat the very purpose of the law to place undue restrictions on the transferability of such
funds.
 The countervailing effect would be to discourage prospective foreign currency depositors to the detriment
of the banking system.
 In fine, Central Bank Circulars Nos. 265 and 534 requiring prior Central Bank authority for the taking out
of the country of foreign currency should not be made to encompass foreign currency depositors whose
rights are expressly defined and guaranteed in a special law, the Foreign Currency Deposit Act (RA 6426,
as amended). As a foreign currency depositor, therefore, petitioner cannot be adjudged to have
violated the aforestated Central Bank Circulars.
 It follows that neither is there room for the application of Section 2530(f) of the Tariff and Customs Code,
as amended, which provides for the forfeiture of any article and other objects, the exportation of which is
effected or attempted contrary to law.
 This is not to condone petitioner's failure to declare the foreign currency she was carrying out of the
country but just to stress that the Foreign Currency Deposit Act grants petitioner the right of
transferability of her funds abroad except that she was not advised by her bank to secure, and
consequently was unable to present, the necessary certificate of withdrawal from said bank.

DISPOSITION: CTA Decision is set aside in so far as it upheld the forfeiture by respondent Commissioner of
Customs of the sums of US$102,900.00 in cash, and US$600.00 in traveller's checks, which amounts should now be
returned to petitioner's heirs, but AFFIRMED in so far as it reversed the forfeiture by the same official of the sum of
P1,500.00.
Salvacion v. Central Bank / Ish

August 21, 1997

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.

TORRES, JR., J.

NATURE: Declaratory relief

SUMMARY: Karen Salvacion, then 12 years old, was raped by Greg Bartelli, an American. A criminal case
was filed against him, but as Bartelli escaped from detention, it was archived. Salvacion filed a civil case
for damages. In that case, the court issued a writ of preliminary attachment covering certain foreign
currency deposits with Chinabank. The writ of attachment was unsatisfied because foreign currency
deposits are exempt from attachment under CB Circular No. 960. The trial court eventually ruled in
favor of Salvacion. The writ of execution also remained unsatisfied in view of the CB Circular. The SC
ruled in favor of Salvacion, holding that the CB Circular does not apply to transient depositors like
Bartelli.

DOCTRINE:

 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.
 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.
 Obviously, the foreign currency deposit made by a transient or tourist is not the kind of deposit
given incentives and protection by our 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.
FACTS:

 On February 4, 1989, Karen Salvacion (Salvacion) was at the Plaza Fair Makati Cinema Square,
with her friend Edna Tangile whiling away her free time.
 She was approached by an American, Greg Bartelli (Bartelli), who told her that he had a niece
about her age back at his house along Kalayaan Ave.
 Bartelli gave Salvacion a stuffed toy in order to convince her to go back to his house with him,
purportedly to teach his niece Filipino.
 When they arrived at his home, there was no niece. Bartelli tied Salvacion’s hands and covered
her mouth with packing tape. He first inserted his finger into her sex organ and later proceeded
to have carnal knowledge with her, using Johnson’s Baby Oil as lubricant.
  For the following three days, following breakfast consisting of biscuits and coke, Bartelli raped
Salvacion. The rapes took place thrice a day.
 On February 6, Salvacion was able to cry for help through a window in the bathroom of Bartelli’s
house. However, the neighbor who heard her got angry and called her “istorbo.”
 Finally, on February 7, 1989, policemen came to Bartelli’s house and Karen was finally rescued.
Bartelli was arrested and taken to the police station. Among the items recovered from Bartelli
was a Chinabank passbook for a dollar account.
 Karen’s sworn statement was taken by the police and made the basis of a criminal complaint for
four (4) counts of rape filed against Bartelli. An Information for Serious Illegal Detention was also
filed against him.
 Simultaneously with the criminal cases, herein petitioners also filed a civil case for damages with
the RTC of Makati with prayer for preliminary attachment.
 Bartelli escaped from jail. As a result, the criminal cases were archived.
 Meanwhile, in the civil case, the judge issued an Order dated February 22, 1989 granting the
application of herein petitioners, for the issuance of the writ of preliminary attachment.
 On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China
Banking Corporation.
o Chinabank resisted the same invoking Act No. 1405 (The Secrecy of Bank Deposits Law).
o Later, it invoked 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.
o The Circular provides:

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.

 The Salvacions wrote to the Central Bank (CB) seeking clarification on whether Section 113 of CB
Circular No. 960 has any exception or whether said section has been repealed or amended.
o In reply, the CB stated that the cited provision is absolute in application. It does not
admit of any exception, nor has the same been repealed nor amended.
 Meanwhile, on April 10, 1989, the trial court granted petitioners’ motion for leave to serve
summons by publication in the civil case.
 Bartelli was declared in default and judgment was rendered in favor of Salvacion, awarding a
total of P1 million in moral damages, P100k in exemplary damages, 25% attorney’s fees,
litigation expenses of P10,000 and the costs of the suit.
 The Salvacions petitioners tried to execute on Bartelli’s dollar deposit with China Banking
Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960.
 Hence, this petition.

ISSUE #1 (MAIN):

 W/N Section 113 of Central Bank Circular No. 960 may be invoked to defeat the garnishment
of Bartelli’s foreign currency deposits (NO)
RATIO #1 (MAIN):

 The Circular is inapplicable to a transient or tourist.

 §113 was copied from §8 of RA 6426, as amended by PD 1426, which authorized certain banks
to accept foreign currency deposits.
 The exemption [from garnishment] as well as certain incentives were provided for under RA
6426, as amended by PD 1426, and PD 1034 (authorizing the establishment of an offshore
banking system in the PH), in order order to assure the development and speedy growth of the
Foreign Currency Deposit System and the Offshore Banking System in the Philippines.
 As stated in the WHEREAS clauses of said laws, the purposes of according protection to foreign
currency deposits against court processes are:
o To 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;
o To have as wide access as possible to the sources of capital funds for economic
development;
o To develop the Philippines as another financial center in Asia, among others.
 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.
o 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.
 If the Court rules that the Circular is applicable to a foreign transient, injustice would result
especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli.
o 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.”
GSIS v. CA | Nice
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.
PEREZ, J.

NATURE: Petition for certiorari of CA decision

SUMMARY: Domsat Holdings (Domsat) obtained a USD 11 M loan from several banks to lease or purchase a
Gorizon Satellite. To facilitate said loan, the GSIS executed a surety bond on the condition that the loan proceeds
would be used as payment for said lease/purchase. When Domsat failed to pay, the Banks sued Domsat and GSIS
for the money. GSIS refused to pay, alleging that Domsat deposited the amount with Westmont Bank (one of the
creditor banks) and its obligation was contingent upon the use of the money to lease/purchase the satellite. During
trial, GSIS requested for the issuance of subpoenas duces tecum covering Domsat’s accounts with Westmont.
Domsat and the Banks opposed, alleging that the secrecy of said deposits were protected under the Foreign
Currency Deposit Act. The RTC at first issued the subpoenas, but then reversed itself. CA upheld. SC affirmed CA,
holding that the deposits were covered by the Foreign Currency Deposit Act as a special law, and the Bank Secrecy
Act did not apply.
DOCTRINE (related to topic):
 These two laws both support the confidentiality of bank deposits. RA 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. It covers all bank deposits in the Philippines and no distinction was made
between domestic and foreign deposits. Thus, RA 1405 is considered a law of general application.
 On the other hand, RA 6426 was intended to encourage deposits from foreign lenders and investors.
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. Therefore, it is beyond
cavil that RA 6426 applies in this case.
FACTS:
 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 (the Banks) against Domsat Holdings, Inc. (Domsat) and
the GSIS.
 The collection case stemmed from a Loan Agreement, whereby the Banks agreed to lend USD 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).
 To secure the payment of the loan, Domsat obtained a surety bond from GSIS. Said surety bond provided:
THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS:

WHEREAS, the above bounden PRINCIPAL, on the 12th 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.
 When Domsat failed to pay, GSIS refused pay as well, arguing that Domsat did not use the loan proceeds
for the payment of rental for the satellite. GSIS alleged that:
o Domsat, with Westmont Bank as the conduit, transferred the USD 11 M 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.
 The Banks filed a complaint before the RTC of Makati against Domsat and GSIS.
 During hearing, GSIS requested for the issuance of a subpoena duces tecum to the custodian of records of
Westmont Bank to produce the following documents:
o Ledger covering the account of DOMSAT 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 with or through Westmont from January 1997 to
December 2002;
o All applications for cashier’s/ manager’s checks and bank transfers funded by the account of
DOMSAT with or through Westmont from January 1997 to December 2002, and all other data and
materials covering said applications;
o Ledger covering the account of Philippine Agila Satellite, Inc. with Westmont, 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 Westmont for the same
period;
o All applications for cashier’s/manager’s checks funded by the account of Philippine Agila Satellite,
Inc. with or through Westmont for the same period, and all other data and materials covering said
applications.
 The RTC issued a subpoena decus tecum on 21 November 2002.
 A motion to quash was filed by the banks (and joined by Domsat) on three grounds:
o 1) the subpoena is unreasonable, oppressive and does not establish the relevance of the
documents sought;
o 2) request for the documents will violate the Law on Secrecy of Bank Deposits; and
o 3) GSIS failed to advance the reasonable cost of production of the documents.
 9 April 2003: the RTC issued an Order denying the motion to quash, ruling that the case was for the
collection of a sum of money initiated by the banks against Domsat and GSIS, the latter being surety. The
RTC considered the contention of GSIS that the proceeds of the loan was deviated to purposes other than
to what the loan was extended, hence, it ruled that quashal of the subpoena would deny GSIS its right to
prove its defenses.
 The Banks filed first MR; denied. The Banks filed 2nd MR, which the RTC granted, quashing the subpoenas.
The RTC invoked the ruling in Intengan v. Court of Appeals, 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.
 GSIS filed MR; denied.
 Upon appeal, the CA partially ruled in favor of the Banks, ruling that that Domsat’s deposit in Westmont
Bank is covered by Republic Act No. 6426 (Foreign Currency Deposit Act of the Philippines) or the Bank
Secrecy Law. It held that:
o the ruling in Van Twest vs. Court of Appeals (relied upon by GSIS) was rendered during the
effectivity of CB Circular 960, and 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.
o However, said CB Circular has already been superseded by CB Circular 1318 and later by CB
Circular 1389, and CB Circular 960 has not been re-enacted. Hence, the ruling in Intengan v. CA
(the case used by the RTC and relied upon by the Banks) is the applicable case.
o Moreover, GSIS had inappropriately invoked the provisions of CB Circular 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.
o As to GSIS’ argument that “assuming CB Circular 1389 was the applicable circular, Domsat
violated it since under Section 27 thereof, the USD 11 M should have been paid directly to
Intersputnik and not deposited to Westmont,” the CA held that Section 27 does not prescribe the
conditions before any foreign currency deposit can be entitled to the confidentiality provisions of
R.A. 6426.
o Lastly, as to the argument of GSIS that “since the President of Westmont Bank had already
testified during trial as to the USD 11 M deposit, hence, it was no longer confidential,” the CA ruled
that it was not the written consent contemplated by R.A. 6426.
 However, the CA upheld the issuance of subpoena praying for the production of applications for cashier’s or
manager’s checks by Domsat through Westmont, as well as a copy of an the agreements between Domsat
and/or Philippine Agila Satellite and Intersputnik for the acquisition and/or lease of a Gorizon Satellite. The
CA held that the production of these documents does not involve the examination of Domsat’s account since
it will never be known how much money was deposited into it or withdrawn therefrom and how much
remains therein.
  GSIS filed MR; denied. In its petition to the SC, it argues that:
o Domsat’s deposit with Westmont Bank can be examined and inquired into, since the Bank
Secrecy Act allows the disclosure of bank deposits in cases where the money deposited is
the subject matter of the litigation.
o the subject matter of the litigation is the USD 11 M obtained by Domsat from the Banks to
supposedly finance the lease of a Russian satellite from Intersputnik, and whether or not it should
be held liable as a surety is contingent upon whether Domsat indeed utilized the amount to lease a
Russian satellite as agreed upon.
o the whereabouts of the USD 11 M is the subject matter of the case and the disclosure of bank
deposits relating to the USD 11 M should be allowed.
o the concerted refusal of Domsat and the banks to divulge the whereabouts of the USD 11 M 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.
ISSUE #1 (MAIN):
 W/N the subpoena for the bank ledger of Domsat’s account should issue (NO)
RATIO #1:
 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.
 RA 1405 was enacted in 1955. Section 2 thereof was first amended by PD 1792 in 1981 and further
amended by RA 7653 in 1993. It 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 RA 6426, enacted in 1974, and amended by PD 1035 and later by PD1246, 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.
 RA 1405 provides for four exceptions (actually 5, pero 4 yung sabi ng SC) when records of deposits may be
disclosed. These are under any of the following instances:
o a) upon written permission of the depositor,
o (b) in cases of impeachment,
o (c) upon order of a competent court in the case of bribery or dereliction of duty of public officials or,
o (d) when the money deposited or invested is the subject matter of the litigation, and
o 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.
 The lone exception to the non-disclosure of foreign currency deposits, under RA 6426, is disclosure
upon the written permission of the depositor.
 These two laws both support the confidentiality of bank deposits. RA 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. It covers all bank deposits in the Philippines
and no distinction was made between domestic and foreign deposits. Thus, RA 1405 is considered a
law of general application.
 On the other hand, RA 6426 was intended to encourage deposits from foreign lenders and investors.
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. Therefore, it is beyond
cavil that RA 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 RA 6426.
o 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 RA 1405. The SC ruled that since the accounts in
question are U.S. dollar deposits, the applicable law therefore is not RA 1405 but RA 6426.
 Applying Section 8 of RA 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.
DISPOSITION
 Petition for certiorari is DISMISSED. The Decision dated 29 February 2008 and 19 June 2009 Resolution of
the Court of Appeals are hereby AFFIRMED.