Intengan v. CA (G.R. No. 128996)

Facts:

Citibank filed a complaint for violation of the Corporation Code against 2 of its officers. The complaint was attached with the affidavit of Vic Lim, VP of Citibank, who was then instructed by the higher management of the bank to investigate the anomalous/highly irregular activities of the said officers. As evidence, Lim annexed bank records purporting to establish the deception practiced by the officers. Some of the documents pertained to the dollar deposits of petitioners. As an incident to the foregoing, petitioners filed respective motions for the exclusion and physical withdrawal of their bank records that were attached to Lim’s affidavit. The filing of Informations against private respondents was recommended for alleged violation of Republic Act No. 1405. Private respondents appealed before the DOJ which ruled in their favor. Resort to the Court, referred the matter to the CA which then held that the disclosure was proper and falls under the exception under R.A. No. 1405.

Issue:

Whether or not the disclosure falls under the exception under R.A. No. 1405.

Ruling: NO.

Actually, this case should have been studied more carefully by all concerned. The finest legal minds in the country – from the parties’ respective counsel, the Provincial Prosecutor, the Department of Justice, the Solicitor General, and the Court of Appeals – all appear to have overlooked a single fact which dictates the outcome of the entire controversy. A circumspect review of the record shows us the reason. The accounts in question are U.S. dollar deposits; consequently, the applicable law is not Republic Act No. 1405 but Republic Act (RA) No. 6426, known as the “Foreign Currency Deposit Act of the Philippines.”

Thus, under R.A. No. 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. Incidentally, the acts of private respondents complained of happened before the enactment on September 29, 2001 of R.A. No. 9160 otherwise known as the Anti-Money Laundering Act of 2001.

A case for violation of Republic Act No. 6426 should have been the proper case brought against private respondents. Private respondents Lim and Reyes admitted that they had disclosed details of petitioners’ dollar deposits without the latter’s written permission. It does not matter if that such disclosure was necessary to establish Citibank’s case against Dante L. Santos and Marilou Genuino. Lim’s act of disclosing details of petitioners’ bank records regarding their foreign currency deposits, with the authority of Reyes, would appear to belong to that species of criminal acts punishable by special laws, called malum prohibitum.

*The decision however was still unfavorable to the petitioners since there is an issue as to prescription. The action to assail the disclosure of herein private respondents for them to be liable for violating RA 6426 had already prescribed.

Union Bank of the Philippines v. CA (G.R. No. 134699)

Facts:

A check in the amount of P1M was drawn against an account with private respondent Allied Bank payable to the order of one Jose Ch. Alvarez. The payee deposited the check with petitioner Union Bank who credited the P1M to the account of Mr. Alvarez. Petitioner sent the check for clearing and when the check was presented for payment, a clearing discrepancy was committed by Union Bank’s clearing staff when the amount P1M was erroneously “under-encoded” to P1,000 only. Petitioner only discovered the under-encoding almost a year later. Thus, Union Bank notified Allied Bank of the discrepancy by way of a charge slip for P999,000.00 for automatic debiting against Allied Bank. The latter, however, refused to accept the charge slip “since [the] transaction was completed per your [Union Bank’s] original instruction and client’s account is now insufficiently funded.” Union Bank filed a complaint against Allied Bank before the PCHC Arbitration Committee (Arbicom). Thereafter, Union Bank filed before the RTC a petition for the examination of the account with respondent bank. Judgment on the arbitration case was held in abeyance pending the resolution of said petition. The RTC dismissed Union Bank’s petition. CA affirmed the dismissal ruling that the case was not one where the money deposited is the subject matter of the litigation.

Issue:

Whether the discrepancy amount is the subject matter of litigation.

Ruling: NO.

The petition before this Court reveals that the true purpose for the examination is to aid petitioner in proving the extent of Allied Bank’s liability. In other words, only a disclosure of the pertinent details and information relating to the transactions involving subject account will enable petitioner to prove its allegations in the pending Arbicom case. Petitioner is fishing for information so it can determine the culpability of private respondent and the amount of damages it can recover from the latter. It does not seek recovery of the very money contained in the deposit. The subject matter of the dispute may be the amount of P999,000.00 that petitioner seeks from private respondent as a result of the latter’s alleged failure to inform the former of the discrepancy; but it is not the P999,000.00 deposited in the drawer’s account. By the terms of R.A. No. 1405, the “money deposited” itself should be the subject matter of the litigation. That petitioner feels a need for such information in order to establish its case against private respondent does not, by itself, warrant the examination of the bank deposits. The necessity of the inquiry, or the lack thereof, is immaterial since the case does not come under any of the exceptions allowed by the Bank Deposits Secrecy Act.

Salvacion v. Central Bank of the Philippines (G.R. No. 94723)

Facts:

Greg Bartelli y Northcott, an American tourist, was charged with serious Illegal detention and Rape of herein petitioner Karen Salvacion. Upon his arrest, it was recovered from him among others, bank books and a dollar account with China Bank Corp. On the day of the hearing of his petition for bail, he was able to escape from jail. Pending his arrest the criminal cases were archived. Meanwhile, in the Civil Case against Bartelli, the Judge granted the prayer of attachment and a notice of garnishment was served on China Bank. China Bank invoked R.A. No. 1405 and later on, Section 113 Central Bank Circular No. 960 to the effect that the dollar deposits of 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 petitioner’s counsel to inquire herein respondent whether the said circular has any exception or has been repealed/amended. Respondent cited that the provision is absolute in application. Meanwhile, the court has rendered judgment in favor of petitioners. Petitioners tried to execute on Bartelli’s dollar deposit with China Bank but the bank invoked the CB Circular. Thus, petitioners decided to seek relief from this Court.

Issue:

Whether or not the secrecy of foreign currency deposits should be made applicable to a foreign transient?

Ruling: NO.

This Court finds the petition to be partly meritorious.

It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country’s economy was in a shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But the realities of the present times show that the country has recovered economically; and even if not, the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality such as the case before us.

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

It is evident 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.

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.

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 tortizeramente con dano de otro.” Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that would respond to the vehement urge of conscience.

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.

Dona Adela Export International v. Trade and Investment Development Corp (G.R. No. 201931)

Facts:

Petitioner Dona Adela filed a Petition for Voluntary Insolvency before the RTC. After finding the petition sufficient in form and substance, RTC declared petitioner herein as insolvent and stayed all civil proceedings against it. Thereafter, Atty. Arlene Gonzales was appointed as a receiver and proceeded to make the necessary report, to engage appraisers and require the creditors to submit proof of their respective claims. Atty. Gonzales then filed a Motion for Parties to Enter Into Compromise Agreement incorporating therein her proposed terms of compromise. Then, TIDCORP and BPI also filed a Joint Motion to Approve Agreement which was approved. Petitioner filed a motion for partial reconsideration claiming that TIDCORP and BPI’s agreement imposes upon it several obligations such as payment of expenses and taxes and waiver of confidentiality of bank deposits when it is not a party and signatory to the said agreement. RTC denied the motion.

Issue:

Whether or not petitioner is bound by the provision in the BPI-TIDCORP Joint Motion to Approve Agreement to waive its rights to confidentiality of its bank deposits under R.A. No. 1405.

Ruling: NO.

R.A. No. 1405 provides for exceptions when records of deposits may be disclosed. These are under any of the following instances: (a) upon written permission of the depositor, (b) in cases of impeachment, (c) upon order of a competent court in the case of bribery or dereliction of duty of public officials or, (d) when the money deposited or invested is the subject matter of the litigation, and (e) in cases of violation of the Anti-Money Laundering Act, the Anti-Money Laundering Council may inquire into a bank account upon order of any competent court.

In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP only. There was no written consent given by petitioner or its representative, Epifanio Ramos, Jr., that petitioner is waiving the confidentiality of its bank deposits. The provision on the waiver of the confidentiality of petitioner’s bank deposits was merely inserted in the agreement. It is clear therefore that petitioner is not bound by the said provision since it was without the express consent of petitioner who was not a party and signatory to the said agreement.

Clearly, the waiver of confidentiality of petitioner’s bank deposits in the BPI-TIDCORP Joint Motion to Approve Agreement lacks the required written consent of petitioner and conformity of the receiver. We, thus, hold that petitioner is not bound by the said provision.

Onate v. Abrogar (G.R. No. 107303)

Facts:

Sun Life filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners Onate and Dino. Respondent Judge granted the prayer and the writ was correspondingly issued. After the summons were eventually served upon petitioners, the latter filed motions to discharge/dissolve the attachment. Meanwhile, Sun Life filed motions for examination of petitioners’ bank accounts. Respondent judge ruled in all the motions in favor of Sun Life. Petitioners moved for reconsideration but were denied.

Issue:

Whether or not respondent judge erred in allowing the examination of the bank accounts of herein petitioners.

Ruling:

We find both petitions unmeritorious.

It is clear from the foregoing provision that notice need only be given to the garnishee, but the person who is holding property or credits belonging to the defendant. The provision does not require that notice be furnished the defendant himself, except when there is a need to examine said defendant “for the purpose of giving information respecting his property.

Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, “An Act Prohibiting Disclosure or Inquiry Into, Deposits With Any Banking Institution and Providing Penalty Therefore,” for Section 2 therefore provides an exception “in cases where the money deposited or invested is the subject matter of the litigation.”

The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the proceeds of the check it paid to petitioners.

BSB Group v. Sally Go (G.R. No. 168644)

Facts:

Petitioner is a duly organized domestic corporation presided by its representative, Ricardo Bangayan, husband of herein respondent Sally Go. Respondent was employed as a cashier, and was engaged, among others, to receive and account for the payments made by the various customers of the company. Bangayan filed with the Manila Prosecutor’s Office a complaint for estafa/qualified theft against respondent alleging that several checks issued by the company’s customers in payment of their obligation were, instead of being turned over to the company’s coffers, indorsed by respondent who deposited the same to her personal banking account maintained at Security Bank. Accordingly, respondent was charged and the prosecution moved for the issuance of subpoena duces tecum/ad testificandum against the respective managers or records custodians of Security Bank and Asian Savings Bank. Respondent opposed and meanwhile, prosecution was able to present in court the testimony of one Security Bank representative. Petitioner moved to exclude the testimony but was denied by the trial court. CA reversed and set aside the order.

Issue:

Whether or not the testimony on the particulars of respondent’s 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.

Ruling: YES.

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.

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, 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. 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 petitioner’s trust and confidence and stealing cash. 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 prosecution’s 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 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 respondent’s 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.

China Bank v. CA (G.R. No. 140687)

Facts:

Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar deposits with Citibank N.A. Mary Margaret Dee received these amounts from Citibank through checks which she allegedly deposited at petitioner China Bank. Jose Gotianuy, died during the pendency of the case and was substituted by his daughter, Elizabeth Gotianuy Lo. The latter presented the US Dollar checks withdrawn by Mary Margaret Dee from his US dollar placement with Citibank. Upon motion of Elizabeth Gotianuy Lo, the trial court issued a subpoena to employees of China Bank to testify on the case. China Bank moved for reconsideration. The trial court resolved by directing the employees to appear at the trial of the case only for the purpose of disclosing in whose name/s is the foreign currency fund deposited with. CA affirmed the order of the trial court.

Issue:

Whether or not a co-depositor may inquire into the deposit without a written consent of the other co-depositor?

Ruling: YES. [Pro Hac Vice Ruling]

The Court of Appeals, in allowing the inquiry, considered Jose Gotianuy, a co-depositor of Mary Margaret Dee. It reasoned that since Jose Gotianuy is the named co-payee of the latter in the subject checks, which checks were deposited in China Bank, then, Jose Gotianuy is likewise a depositor thereof. On that basis, no written consent from Mary Margaret Dee is necessitated.

We agree in the conclusion arrived at by the Court of Appeals.

Thus, with this, there is no issue as to the source of the funds. Mary Margaret Dee declared the source to be Jose Gotianuy. There is likewise no dispute that these funds in the form of Citibank US dollar Checks are now deposited with China Bank. 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.

On this score, the observations of the Court of Appeals are worth reiterating:

Furthermore, it is indubitable that the Citibank checks were drawn against the foreign currency account with Citibank, NA. The monies subject of said checks originally came from the late Jose Gotianuy, the owner of the account. Thus, he also has legal rights and interests in the CBC account where said monies were deposited. More importantly, the Citibank checks readily demonstrate that the late Jose Gotianuy is one of the payees of said checks. Being a co-payee thereof, then he or his estate can be considered as a co-depositor of said checks. Ergo, since the late Jose Gotianuy is a co-depositor of the CBC account, then his request for the assailed subpoena is tantamount to an express permission of a depositor for the disclosure of the name of the account holder.

All things considered and in view of the distinctive circumstances attendant to the present case, we are constrained to render a limited pro hac vice ruling. Clearly it was not the intent of the legislature when it enacted the law on secrecy on foreign currency deposits to perpetuate injustice. This Court is of the view that the allowance of the inquiry would be in accord with the rudiments of fair play, the upholding of fairness in our judicial system and would be an avoidance of delay and time-wasteful and circuitous way of administering justice.