Salvacion vs. Central Bank of the Philippines, 278 SCRA 27, G.R. No.

94723 August 21, 1997

Doctrine:

Section 8 of R.A. No. 6426 is hereby held to be INAPPLICABLE to this case because of its peculiar
circumstances.

Facts:

The petitioner is a 12-year-old rape and serious illegal detention victim of Greg Bartelli, an American
tourist who deposited his dollar account with China Banking Corporation. The fiscal filed a case for
serious illegal detention and four counts of rape, on the same day the petitioners filed damages with
preliminary attachment with the trial court of Makati. Bartelli escaped from jail on the day of the
scheduled hearing for bail, while a warrant of arrest and hold departure order was issued, the criminal
case was archived.

The judge on the civil case, on the other hand, issued an order for the issuance of the writ of preliminary
attachment which prompted the sheriff to serve Notice of Garnishment on China Banking Corporation,
which invoked Republic Act No. 1405 as its answer to the notice of garnishment served on it, the sheriff
responded 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, and that Section 113 of Central Bank Circular No. 960
provides for an exemption to the dollar deposit such as in this case. The petitioner then inquired with
the Central Bank, and in its reply it stated that Section 113, CB Circular No. 960 (1983) does not admit
any exception. Meanwhile, the civil action proceeded after the petitioner served the summon through
publication, Bartelli was on default hence the trial court, after hearing the case ex-parte ordered the
payment of award due to damages in favor of Salvacion. This decision was published in Manila Bulletin
but it could not be executed which prompted the case to be filed with the Supreme Court due to Section
113 of Central Bank Circular No. 960.

Petitioner avers that the provision was unconstitutional because 1. It has taken away the right of the
petitioner to satisfy the order of the court a violation of due process; 2. It gave dollar deposit an undue
privilege which violates equal protection; 3. It created a safe heaven for criminals because they can
escape civil liability; 4. That issuance of Monetary Board exceeded quasi-legislative authority in issuing
Section 113 of Central Bank Circular No. 960. Central Bank responded that it was the law that provides
no exception and that one reason for exempting the foreign currency deposits from attachment,
garnishment, or any other order or 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

Issue:

Should 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?

Ruling: (the court ruled that the questioned provision shall not apply in the case, pro hac vice)

No, the dollar deposit of Gregg Bartelli is not among those that the law intends to protect.
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.

“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, 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 of deposits 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;

“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 deposits that are induced by
the two laws and given protection and incentives by them.

“Obviously, the foreign currency deposit made by a transient or a tourist is not the kind of deposit
encouraged by PD 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.

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.

IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its
peculiar circumstances.
Union Bank of the Philippines vs. Court of Appeals, 321 SCRA 563, G.R. No. 134699 December 23, 1999

Doctrine:

By the terms of Republic Act No. 1405, the “money deposited” itself should be the subject matter of the
litigation.

Facts:

A discrepancy in the withdrawal of the check was committed by Union Bank’s clearing staff, due to
under-encoding the right amount, this was discovered only a year later thus the petitioner notified Allied
Bank by way of a charge slip to debit the account of Allied Bank, which was refused on the ground or
original instruction and insufficiency of the client’s fund.

This prompted the petitioner to file a case against Allied bank before the Philippine clearing House
Arbitration due to the failure to inform of the under-encoding resulting in actual losses, then the
petitioner filed a petition for examination of Account No. 111-01854-8 before the trial court which
suspended the resolution of the case before Arbicom. RTC dismissed the petition on the ground that the
case does not fall under any exception to warrant a disclosure of or inquiry into the ledgers/books of
account of Allied Checking Account No. 111-01854 as it is not one for bribery or dereliction of duty of
public officials much less is there any showing that the subject matter thereof is the money deposited in
the account in question. Petitioner’s complaint primarily hing[e]s on the alleged deliberate violation by
Allied Bank Corporation of the provisions of the PCHC Rule Book, Sec. 25[.]3, and as principal reliefs, it
seeks for [sic] the recovery of amounts of money as a consequence of an alleged under-coding of check
amount to P1,000,000.00 and damage[s] by way of loss of interest income. This was affirmed by the CA.

Issue:

Whether or not the bank account in question is the subject matter of the case falls within the exception
of the Bank Secrecy Law.

Ruling:

No, the ruling is proper because the deposited money is not in dispute in this case. While the definition
provided by the petitioner is not disputed. The action here involves the failure in the duty to inform the
petitioner of under-encoding pursuant to the provisions of Section 25.3.1 of the PCHC Handbook,
petitioner holds the private respondent directly liable for the P999,000.00 and other damages. It does
not appear that the petitioner is seeking reimbursement from the account of the drawer. This much is
evident in the petitioner’s complaint before the Arbicom. Also, the petition before this Court reveals
that the true purpose of the examination is to aid the petitioner in proving the extent of Allied Bank’s
liability, based on its pleading seeking to review the account for the purpose of knowing the difference
between the amount of the check and the amount credited to petitioner, that is, P999,000.00, which
has remained deposited in aforesaid account, which is equivalent to a fishing expedition.
Marquez vs. Desierto, 359 SCRA 772, G.R. No. 135882 June 27, 2001

Doctrine:

Before an in camera inspection by the Ombudsman may be allowed, there must be a pending case
before a court of competent jurisdiction.

Facts:

Aniano Disierto, in his capacity as the Ombudsman, ordered Lourdes Marquez the bank manager of
Union Bank in Julia Vargas to produce several bank documents for purposes of inspection in camera
relative to various accounts that are involved in the Fact-Finding and Intelligence Bureau (FFIB) v. Amado
Lagdameo, et al. The basis of the in-camera inspection order is a trail of 51 managers checks purchased
by one George Trivinio worth P272.1 Million at Traders Royal Bank, a respondent in OMB-0-97-0411,
pending with the office of the Ombudsman.

The FFIB through Atty. Macalinao met with Marquez to convince her of the veracity of the check, she
was then asked to comply with the order, which later told FFIB that she could not yet respond to the
order as the accounts are issued in cash or bearer, that the account has long been dormant, hence they
have to check with interbank records archive for the whereabouts of the account, but the request was
frowned by the Ombudsman on the ground that Union Bank is the depositary bank of Trader’s Royal
Bank, being a payable to cash or bearer is immaterial since the account number where the checks are
deposited are identified in the order, they have an obligation to maintain, that the inspection has been
delayed twice which gives them sufficient time to comply, the Ombudsman also warned that failure to
follow the order is punishable as indirect contempt.

This prompted the filing of a petition for TRO, declaratory relief, and prohibition. The petitioners
contends that there is a clear conflict between Section 15 of the Ombudsman Act of 1989 and Sections 2
and 3 of the Bank Secrecy Act among others. But the TRO was denied on the ground that there was no
great or irreparable injury that the petitioner may suffer, an MR was then filed raising that the TRO was
not only of the contempt power of the Ombudsman but also to stop them from implementing the order.
The Ombudsman also filed a motion to dismiss the declaratory relief which was denied by the trial court.
The Ombudsman then pursued to hear the contempt charges against the petitioner, hence this petition.

Issue:

Whether the order of the Ombudsman to have an in-camera inspection of the questioned account is
allowed as an exception to the law on the secrecy of bank deposits (R.A. No. 1405).

Ruling: (SC granted the petition)

No, an actual case filed before the Sandiganbayan is required before the Ombudsman is allowed to have
an in-camera inspection of the bank record.

An examination of the secrecy of bank deposits law (R.A. No. 1405) would reveal the following
exceptions:

1.Where the depositor consents in writing;

2.Impeachment case;
3.By court order in bribery or dereliction of duty cases against public officials;
4.Deposit is subject of litigation;
5.Sec 8, R.A. No. 3019, in cases of unexplained wealth as held in the case of PNB vs. Gancayco.

Also, in Union Bank of the Philippines v. Court of Appeals, we held that “Section 2 of the Law on Secrecy
of Bank Deposits, as amended, declares bank deposits to be ‘absolutely confidential’ except:

(1) In an examination made in the course of a special or general examination of a bank that is specifically
authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that
a bank fraud or serious irregularity has been or is being committed and that it is necessary to look into
the deposit to establish such fraud or irregularity;

(2) In an examination made by an independent auditor hired by the bank to conduct its regular audit
provided that the examination is for audit purposes only and the results thereof shall be for the
exclusive use of the bank;

(3) Upon written permission of the depositor;

(4) In cases of impeachment;

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

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

In the case at bar, there is yet no pending litigation before any court of competent authority. What is
existing is an investigation by the Office of the Ombudsman. In short, what the Office of the
Ombudsman would wish to do is to fish for additional evidence to formally charge Amado Lagdameo, et
al., with the Sandiganbayan. Clearly, there was no pending case in court which would warrant the
opening of the bank account for inspection.
Ejercito vs. Sandiganbayan (Special Division), 509 SCRA 190, G.R. Nos. 157294-95 November 30, 2006

Doctrine:

 An examination of Republic Act No. 1405 shows that the term “deposits” used therein is to be
understood broadly and not limited only to accounts that give rise to a creditor-debtor relationship
between the depositor and the bank; If the money deposited under an account may be used by
banks for authorized loans to third persons, then such account, regardless of whether it creates a
creditor-debtor relationship between the depositor and the bank, falls under the category of
accounts which the law precisely seeks to protect for the purpose of boosting the economic
development of the country.
 Exceptions to the protection afforded by the Secrecy of Bank Deposits Act:

(1) the examination of bank accounts is upon order of a competent court in cases of bribery or
dereliction of duty of public officials, and

(2) the money deposited or invested is the subject matter of the litigation.

 Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason why
these two classes of cases cannot be excepted from the rule making bank deposits confidential—
and, undoubtedly, cases for plunder involve unexplained wealth.
 The Marquez v. Desierto, 359 SCRA 772 (2001), ruling that “the account holder must be notified to
be present during the inspection” may not be applied retroactively to the inquiry of the
Ombudsman subject of this case since said ruling is not a judicial interpretation either of R.A. 6770
or R.A. 1405, but a “judge-made” law which can only be given prospective application.

Facts:

Plunder case was filed against the petitioner by the Ombudsman before the Sandiganbayan, in line with
the case filed the Special Prosecution Panel filed three Request for Issuance of Subpoena Duces Tecum
for the issuance of a subpoena for the banks accounts related to the case:

1st request on January 20, 2003 with, President of Export and Industry Bank (EIB, formerly Urban Bank)
in relation to trust account 858, savings account No. 0116-17345-9, and four Urban Bank Manager’s
Check and their corresponding Urban Bank Manager’s Check Application.

2nd on the same date, request for Issuance of Subpoena Duces Tecum/Ad Testificandum directed to the
authorized representative of Equitable-PCI Bank to produce statements of account pertaining to certain
accounts in the name of "Jose Velarde" and to testify thereon.

The first two were requested to be held in abeyance while the petitioner is looking for counsel he also
claims that the accounts are protected by the Bank Secrecy Law, which later filed a Motion to Quash
without the assistance of a counsel, this was denied by the Sandiganbayan and granted the request of
the Special Prosecuting Panel.

The third was on January 31, 2003, again to direct the President of the EIB to produce, on the hearings
scheduled on February 3 and 5, 2003, the same documents subject of the January 21 and 24, 2003
subpoenas with the exception of some accounts, and a Request for the Issuance of Subpoena Duces
Tecum/Ad Testificandum bearing the same date, January 31, 2003, directed to Aurora C. Baldoz, Vice
President-CR-II of the PDIC for her to produce six bank account related documents for the same
scheduled hearing.

The petitioner again filed a Motion to Quash this time assisted by a counsel, praying for an order to
quash the subpoenas for the same reason. This was denied by the Sandiganbayan, hence this petition.

Issue:

1. Whether petitioner’s Trust Account No. 858 is covered by the term "deposit" as used in R.A. 1405;

2. Whether petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9 are excepted
from the protection of R.A. 1405; and

3. Whether the "extremely-detailed" information contained in the Special Prosecution Panel’s requests
for subpoena was obtained through a prior illegal disclosure of petitioner’s bank accounts, in violation of
the "fruit of the poisonous tree" doctrine.

Ruling: ( SC dismissed the petition)

1. No, these accounts are no longer protected by the Secrecy of Bank Deposits Law, there being
two exceptions to the said law applicable in this case, namely: (1) the examination of bank
accounts is upon order of a competent court in cases of bribery or dereliction of duty of public
officials, and (2) the money deposited or invested is the subject matter of the litigation.
Exception (1) applies since the plunder case pending against former President Estrada is
analogous to bribery or dereliction of duty, while exception (2) applies because the money
deposited in petitioner’s bank accounts is said to form part of the subject matter of the same
plunder case.

The cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no
reason why these two classes of cases cannot be excepted from the rulemaking bank deposits
confidential—and, undoubtedly, cases for plunder involve unexplained wealth.

The plunder case now pending with the Sandiganbayan necessarily involves an inquiry into the
whereabouts of the amount purportedly acquired illegally by former President Joseph Estrada.
In light then of this Court’s pronouncement in Union Bank, the subject matter of the litigation
cannot be limited to bank accounts under the name of President Estrada alone, but must
include those accounts to which the money purportedly acquired illegally or a portion thereof
was alleged to have been transferred. Trust Account No. 858 and Savings Account No. 0116-
17345-9 in the name of petitioner fall under this description and must thus be part of the
subject matter of the litigation.

2. The "fruit of the poisonous tree" principle, which states that once the primary source (the "tree") is
shown to have been unlawfully obtained, any secondary or derivative evidence (the "fruit") derived
from it is also inadmissible, does not apply in this case. In the first place, R.A. 1405 does not provide for
the application of this rule. Moreover, there is no basis for applying the same in this case since the
primary source for the detailed information regarding petitioner’s bank accounts – the investigation
previously conducted by the Ombudsman – was lawful.
3. At all events, even if the subpoenas issued by the Sandiganbayan were quashed, the Ombudsman
may conduct on its own the same inquiry into the subject bank accounts that it earlier conducted last
February-March 2001, there being a plunder case already pending against former President Estrada. To
quash the challenged subpoenas would, therefore, be pointless since the Ombudsman may obtain the
same documents by another route. Upholding the subpoenas avoids an unnecessary delay in the
administration of justice.

Additionally, the Marquez ruling cannot be retroactively applied in this case, for the Ombudsman issued
the subpoenas bearing on the bank accounts of the petitioner about four months before Marquez was
promulgated on June 27, 2001.
China Banking Corporation vs. Court of Appeals, 511 SCRA 110, G.R. No. 140687 December 18, 2006

Doctrine:

The only exception to the secrecy of foreign currency deposits is in the case of a written permission of
the depositor.

The co-payee of a foreign currency depositor in checks deposited in the account of the latter may be
deemed a depositor thereof for purposes of allowing inquiry into said foreign currency account upon
consent of such co-payee.

Facts:

A Complaint for recovery of sums of money and annulment of sales of real properties and shares of
stock docketed as CEB-21445 was filed by Jose “Joseph” Gotianuy against his son-in-law, George Dee,
and his daughter, Mary Margaret Dee, before the Regional Trial Court (RTC) of Cebu City.

Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US
dollar deposits with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00. He
likewise accused his son-in-law, George Dee, husband of his daughter, Mary Margaret, of transferring
his real properties and shares of stock in George Dee’s name without any consideration. Jose Gotianuy,
died during the pendency of the case before the trial court. He was substituted by his daughter,
Elizabeth Gotianuy Lo. The latter presented the US Dollar six checks withdrawn by Mary Margaret Dee
from his US dollar placement with Citibank.

Then upon the motion of the private respondent, the trial court issued a subpoena to Cristota Labios
and Isabel Yap, employees of China Bank, to testify on the case, a Motion for Reconsideration from the
assailed grant of subpoena was filed by the petitioner but denied. Then they elevated the case before
the CA which affirmed the RTC decision following the doctrine of Maledicta expositio quae corrumpit
textumi, due to prohibition on judicial legislation, and Ubi lex non distinguit nec nos distinguere
debemos, which simply means that where the law does not distinguish, we should not make any
distinction because the petitioner is raising the absolute confidentiality of the foreign bank deposit.

Issue:

Whether or not the petitioner is correct in invoking the provision of Sec. 8 of RA 6426, and whether Jose
Gotianuy may be considered a depositor who is entitled to seek an inquiry over the said deposits.

Ruling:

The petitioner is wrong, because Jose Gotianuy is a co-depositor in the account, hence he can validly
seek an inquiry of his own money.

As amended by Presidential Decree No. 1246, the law reads:

“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.

Here, the law only provides for only one exception to the secrecy of foreign currency deposits, that is,
disclosure is allowed upon the written permission of the depositor, now the following facts are
established: (1) Jose Gotianuy and Mary Margaret Dee are co-payees of various Citibank checks; (2)
Mary Margaret Dee withdrew these checks from Citibank; (3) Mary Margaret Dee admitted in her
Answer to the Request for Admissions by the Adverse Party sent to her by Jose Gotianuy that she
withdrew the funds from Citibank upon the instruction of her father Jose Gotianuy and that the funds
belonged exclusively to the latter; (4) these checks were endorsed by Mary Margaret Dee at the dorsal
portion; and (5) Jose Gotianuy discovered that these checks were deposited with China Bank as shown
by the stamp of China Bank at the dorsal side of the checks.

Wherefore, as the owner of the funds unlawfully taken and which are undisputably now deposited with
China Bank, Jose Gotianuy has the right to inquire into the said deposits.