Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 88013 March 19, 1990

SIMEX INTERNATIONAL (MANILA), INCORPORATED, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and TRADERS ROYAL BANK, respondents.

Don P. Porcuincula for petitioner.

San Juan, Gonzalez, San Agustin & Sinense for private respondent.

CRUZ, J.:

We are concerned in this case with the question of damages, specifically moral and exemplary damages. The
negligence of the private respondent has already been established. All we have to ascertain is whether the
petitioner is entitled to the said damages and, if so, in what amounts.

The parties agree on the basic facts. The petitioner is a private corporation engaged in the exportation of food
products. It buys these products from various local suppliers and then sells them abroad, particularly in the United
States, Canada and the Middle East. Most of its exports are purchased by the petitioner on credit.

The petitioner was a depositor of the respondent bank and maintained a checking account in its branch at Romulo
Avenue, Cubao, Quezon City. On May 25, 1981, the petitioner deposited to its account in the said bank the amount
of P100,000.00, thus increasing its balance as of that date to P190,380.74. 1 Subsequently, the petitioner issued
several checks against its deposit but was suprised to learn later that they had been dishonored for insufficient
funds.

The dishonored checks are the following:

1. Check No. 215391 dated May 29, 1981, in favor of California Manufacturing Company, Inc. for
P16,480.00:

2. Check No. 215426 dated May 28, 1981, in favor of the Bureau of Internal Revenue in the amount
of P3,386.73:

3. Check No. 215451 dated June 4, 1981, in favor of Mr. Greg Pedreño in the amount of P7,080.00;

4. Check No. 215441 dated June 5, 1981, in favor of Malabon Longlife Trading Corporation in the
amount of P42,906.00:

5. Check No. 215474 dated June 10, 1981, in favor of Malabon Longlife Trading Corporation in the
amount of P12,953.00:

6. Check No. 215477 dated June 9, 1981, in favor of Sea-Land Services, Inc. in the amount of
P27,024.45:

7. Check No. 215412 dated June 10, 1981, in favor of Baguio Country Club Corporation in the
amount of P4,385.02: and
 8. Check No. 215480 dated June 9, 1981, in favor of Enriqueta Bayla in the amount of P6,275.00. 2

As a consequence, the California Manufacturing Corporation sent on June 9, 1981, a letter of demand to the
petitioner, threatening prosecution if the dishonored check issued to it was not made good. It also withheld delivery
of the order made by the petitioner. Similar letters were sent to the petitioner by the Malabon Long Life Trading, on
June 15, 1981, and by the G. and U. Enterprises, on June 10, 1981. Malabon also canceled the petitioner's credit
line and demanded that future payments be made by it in cash or certified check. Meantime, action on the pending
orders of the petitioner with the other suppliers whose checks were dishonored was also deferred.

The petitioner complained to the respondent bank on June 10, 1981. 3 Investigation disclosed that the sum of
P100,000.00 deposited by the petitioner on May 25, 1981, had not been credited to it. The error was rectified on
June 17, 1981, and the dishonored checks were paid after they were re-deposited. 4

In its letter dated June 20, 1981, the petitioner demanded reparation from the respondent bank for its "gross and
wanton negligence." This demand was not met. The petitioner then filed a complaint in the then Court of First
Instance of Rizal claiming from the private respondent moral damages in the sum of P1,000,000.00 and exemplary
damages in the sum of P500,000.00, plus 25% attorney's fees, and costs.

After trial, Judge Johnico G. Serquinia rendered judgment holding that moral and exemplary damages were not
called for under the circumstances. However, observing that the plaintiff's right had been violated, he ordered the
defendant to pay nominal damages in the amount of P20,000.00 plus P5,000.00 attorney's fees and costs. 5 This
decision was affirmed in toto by the respondent court. 6

The respondent court found with the trial court that the private respondent was guilty of negligence but agreed that
the petitioner was nevertheless not entitled to moral damages. It said:

The essential ingredient of moral damages is proof of bad faith (De Aparicio vs. Parogurga, 150
SCRA 280). Indeed, there was the omission by the defendant-appellee bank to credit appellant's
deposit of P100,000.00 on May 25, 1981. But the bank rectified its records. It credited the said
amount in favor of plaintiff-appellant in less than a month. The dishonored checks were eventually
paid. These circumstances negate any imputation or insinuation of malicious, fraudulent, wanton and
gross bad faith and negligence on the part of the defendant-appellant.

It is this ruling that is faulted in the petition now before us.

This Court has carefully examined the facts of this case and finds that it cannot share some of the conclusions of the
lower courts. It seems to us that the negligence of the private respondent had been brushed off rather lightly as if it
were a minor infraction requiring no more than a slap on the wrist. We feel it is not enough to say that the private
respondent rectified its records and credited the deposit in less than a month as if this were sufficient repentance.
The error should not have been committed in the first place. The respondent bank has not even explained why it
was committed at all. It is true that the dishonored checks were, as the Court of Appeals put it, "eventually" paid.
However, this took almost a month when, properly, the checks should have been paid immediately upon
presentment.

As the Court sees it, the initial carelessness of the respondent bank, aggravated by the lack of promptitude in
repairing its error, justifies the grant of moral damages. This rather lackadaisical attitude toward the complaining
depositor constituted the gross negligence, if not wanton bad faith, that the respondent court said had not been
established by the petitioner.

We also note that while stressing the rectification made by the respondent bank, the decision practically ignored the
prejudice suffered by the petitioner. This was simply glossed over if not, indeed, disbelieved. The fact is that the
petitioner's credit line was canceled and its orders were not acted upon pending receipt of actual payment by the
suppliers. Its business declined. Its reputation was tarnished. Its standing was reduced in the business community.
All this was due to the fault of the respondent bank which was undeniably remiss in its duty to the petitioner.

Article 2205 of the Civil Code provides that actual or compensatory damages may be received "(2) for injury to the
plaintiff s business standing or commercial credit." There is no question that the petitioner did sustain actual injury
as a result of the dishonored checks and that the existence of the loss having been established "absolute certainty
as to its amount is not required." 7 Such injury should bolster all the more the demand of the petitioner for moral
damages and justifies the examination by this Court of the validity and reasonableness of the said claim.

We agree that moral damages are not awarded to penalize the defendant but to compensate the plaintiff for the
injuries he may have suffered. 8 In the case at bar, the petitioner is seeking such damages for the prejudice
sustained by it as a result of the private respondent's fault. The respondent court said that the claimed losses are
purely speculative and are not supported by substantial evidence, but if failed to consider that the amount of such
losses need not be established with exactitude precisely because of their nature. Moral damages are not
susceptible of pecuniary estimation. Article 2216 of the Civil Code specifically provides that "no proof of pecuniary
loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated."
That is why the determination of the amount to be awarded (except liquidated damages) is left to the sound
discretion of the court, according to "the circumstances of each case."

From every viewpoint except that of the petitioner's, its claim of moral damages in the amount of P1,000,000.00 is
nothing short of preposterous. Its business certainly is not that big, or its name that prestigious, to sustain such an
extravagant pretense. Moreover, a corporation is not as a rule entitled to moral damages because, not being a
natural person, it cannot experience physical suffering or such sentiments as wounded feelings, serious anxiety,
mental anguish and moral shock. The only exception to this rule is where the corporation has a good reputation that
is debased, resulting in its social humiliation. 9

We shall recognize that the petitioner did suffer injury because of the private respondent's negligence that caused
the dishonor of the checks issued by it. The immediate consequence was that its prestige was impaired because of
the bouncing checks and confidence in it as a reliable debtor was diminished. The private respondent makes much
of the one instance when the petitioner was sued in a collection case, but that did not prove that it did not have a
good reputation that could not be marred, more so since that case was ultimately settled. 10 It does not appear that,
as the private respondent would portray it, the petitioner is an unsavory and disreputable entity that has no good
name to protect.

Considering all this, we feel that the award of nominal damages in the sum of P20,000.00 was not the proper relief
to which the petitioner was entitled. Under Article 2221 of the Civil Code, "nominal damages are adjudicated in order
that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized,
and not for the purpose of indemnifying the plaintiff for any loss suffered by him." As we have found that the
petitioner has indeed incurred loss through the fault of the private respondent, the proper remedy is the award to it
of moral damages, which we impose, in our discretion, in the same amount of P20,000.00.

Now for the exemplary damages.

The pertinent provisions of the Civil Code are the following:

Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the
public good, in addition to the moral, temperate, liquidated or compensatory damages.

Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

The banking system is an indispensable institution in the modern world and plays a vital role in the economic life of
every civilized nation. Whether as mere passive entities for the safekeeping and saving of money or as active
instruments of business and commerce, banks have become an ubiquitous presence among the people, who have
come to regard them with respect and even gratitude and, most of all, confidence. Thus, even the humble wage-
earner has not hesitated to entrust his life's savings to the bank of his choice, knowing that they will be safe in its
custody and will even earn some interest for him. The ordinary person, with equal faith, usually maintains a modest
checking account for security and convenience in the settling of his monthly bills and the payment of ordinary
expenses. As for business entities like the petitioner, the bank is a trusted and active associate that can help in the
running of their affairs, not only in the form of loans when needed but more often in the conduct of their day-to-day
transactions like the issuance or encashment of checks.
In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account
consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down
to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the
amount of money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to
whomever he directs. A blunder on the part of the bank, such as the dishonor of a check without good reason, can
cause the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature of its functions, the bank is
under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary
nature of their relationship. In the case at bar, it is obvious that the respondent bank was remiss in that duty and
violated that relationship. What is especially deplorable is that, having been informed of its error in not crediting the
deposit in question to the petitioner, the respondent bank did not immediately correct it but did so only one week
later or twenty-three days after the deposit was made. It bears repeating that the record does not contain any
satisfactory explanation of why the error was made in the first place and why it was not corrected immediately after
its discovery. Such ineptness comes under the concept of the wanton manner contemplated in the Civil Code that
calls for the imposition of exemplary damages.

After deliberating on this particular matter, the Court, in the exercise of its discretion, hereby imposes upon the
respondent bank exemplary damages in the amount of P50,000.00, "by way of example or correction for the public
good," in the words of the law. It is expected that this ruling will serve as a warning and deterrent against the
repetition of the ineptness and indefference that has been displayed here, lest the confidence of the public in the
banking system be further impaired.

ACCORDINGLY, the appealed judgment is hereby MODIFIED and the private respondent is ordered to pay the
petitioner, in lieu of nominal damages, moral damages in the amount of P20,000.00, and exemplary damages in the
amount of P50,000.00 plus the original award of attorney's fees in the amount of P5,000.00, and costs.

SO ORDERED.

Narvasa, Gancayco, Grino-Aquino and Medialdea, JJ., concur.

Footnotes

1 Rollo, p. 4.

2 Exhibits 1-a to 1-h.

3 Rollo, p. 6.

4 Ibid., pp. 6-7.

5 Id., p. 24.

6 Victor, J., with Ejercito and Pe, JJ., concuring.

7 Cerrano v. Tan Chuco, 38 Phil 392.

8 Dee Hua Liong Electrical Equipment Corporation v. Reyes, 145 SCRA 713; San Andres v. Court of
Appeals, 116 SCRA 81.

9 Mambulao Lumber Co. v. Philippine National Bank, 22 SCRA 359.

10 Rollo, pp. 38-41.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-46208 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.

Agapito S. Fajardo and Marino E. Eslao for petitioner.

Leovillo C. Agustin Law Offices for private respondents.

REGALADO, J.:

The instant petition seeks the review, on pure questions of law, of the decision rendered by the Court of First
Instance of Manila (now Regional Trial Court), Branch XL, on December 3, 1976 in Civil Case No. 84800,1 ordering
herein petitioner to pay private respondents the following amounts:

(a) P90,000.00 with accrued interest in accordance with Exhibits A and B until fully paid;

(b) P30,000,00 as exemplary damages; and

(c) P10,000.00 as and for attorney's fees.

The payment by the defendant Fidelity Savings and Mortgage Bank of the aforementioned sums of money shall be
subject to the Bank Liquidation Rules and Regulations embodied in the Order of the Court of First Instance of
Manila, Branch XIII, dated October 3, 1972, Civil Case No. 86005, entitled, "IN RE: Liquidation of the Fidelity
Savings Bank versus Central Bank of the Philippines, Liquidator."

With costs against the defendant Fidelity Savings and Mortgage Bank.

SO ORDERED.

Private respondents instituted this present action for a sum of money with damages against Fidelity Savings and
Mortgage Bank, Central Bank of the Philippines, Eusebio Lopez, Jr., Arsenio M. Lopez, Sr., Arsenio S. Lopez, Jr.,
Bibiana E. Lacuna, Jose C. Morales, Leon P. Cusi, Pilar Y. Pobre-Cusi and Ernani A. Pacana. On motion of herein
private respondents, as plaintiffs, the amended complaint was dismissed without prejudice against defendants Jose
C. Morales, Leon P. Cusi, Pilar Y. Pobre-Cusi and Ernani A. Pacana. 2 In its aforesaid decision of December 3,
1976, the court a quo dismissed the complaint as against defendants Central Bank of the Philippines, Eusebio
Lopez, Jr., Arsenio S. Lopez, Jr., Arsenio M. Lopez, Sr. and Bibiana S. Lacuna.

Back on August 10, 1973, the plaintiffs (herein private respondents) and the defendants Fidelity Savings and
Mortgage Bank (petitioner herein), Central Bank of the Philippines and Bibiana E. Lacuna had filed in said case in
the lower court a partial stipulation of facts, as follows:

COME NOW herein plaintiffs, SPOUSES TIMOTEO M. SANTIAGO and OLIMPIA R. SANTIAGO, herein
defendants FIDELITY SAVINGS AND MORTGAGE BANK and the CENTRAL BANK OF THE
PHILIPPINES, and herein defendant BIBIANA E. LACUNA, through their respective undersigned counsel,
and before this Honorable Court most respectfully submit the following Partial Stipulation of Facts:
1. That herein plaintiffs are husband and wife, both of legal age, and presently residing at No. 480 C. de la
Paz Street, Sta. Elena, Marikina, Rizal;

2. That herein defendant Fidelity Savings and Mortgage Bank is a corporation duly organized and existing
under and by virtue of the laws of the Philippines; that defendant Central Bank of the Philippines is a
corporation duly organized and existing under and by virtue of the laws of the Philippines;

3. That herein defendant Bibiana E. Lacuna is of legal age and a resident of No. 42 East Lawin Street,
Philamlife Homes, Quezon City, said defendant was an assistant Vice-President of the defendant fidelity
Savings and Mortgage Bank,

4. That sometime on May 16, 1968, here in plaintiffs deposited with the defendant Fidelity Savings Bank the
amount of FIFTY THOUSAND PESOS (P50,000.00) under Savings Account No. 16-0536; that likewise,
sometime on July 6, 1968, herein plaintiff,- deposited with the defendant Fidelity Savings and Mortgage
Bank the amount of FIFTY THOUSAND PESOS (P50,000.00) under Certificate of Time Deposit No. 0210;
that the aggregate amount of deposits of the plaintiffs with the defendant Fidelity Savings and Mortgage
Bank is ONE HUNDRED THOUSAND PESOS (P100,000.00);

5. That on 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, among others, as follows:

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

6. That pursuant to the above-cited instructions of the Monetary Board, the Superintendent of Banks took
charge in the name of the Monetary Board, of the assets of defendant Fidelity Savings Bank on February 19,
1969; and that since that date up to this date, the Superintendent of Banks (now designated as Director,
Department of Commercial and Savings Banks) has been taking charge of the assets of defendant Fidelity
Savings and Mortgage Bank;

7. That sometime on October 10, 1969 the Philippine Deposit Insurance Corporation paid the plaintiffs the
amount of TEN THOUSAND PESOS (P10,000.00) on the aggregate deposits of P100,000.00 pursuant to
Republic Act No. 5517, thereby leaving a deposit balance of P90,000.00;

8. That on December 9, 1969, the Monetary Board issued its Resolution No. 2124 directing the liquidation of
the affairs of defendant Fidelity Savings Bank;

9. That on January 25, 1972, the Solicitor General of the Philippines filed a "Petition for Assistance and
Supervision in Liquidation" of the affairs of the defendant Fidelity Savings and Mortgage Bank with the Court
of First Instance of Manila, assigned to Branch XIII and docketed as Civil Case No. 86005;

10. That on October 3, 1972, 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;

11. That the liquidation proceedings has not been terminated and is still pending up to the present;

12. That herein plaintiffs, through their counsel, sent demand letters to herein defendants, demanding the
immediate payment of the aforementioned savings and time deposits.

WHEREFORE, it is respectfully prayed that the foregoing Partial Stipulation of Facts be approved by this
Honorable Court, without prejudice to the presentation of additional documentary or testimonial evidence by
herein parties.
 Manila, Philippines, August 10, 1973. 3

Assigning error in the judgment of the lower court quoted ab antecedents, petitioner raises two questions of law, to
wit:

1. Whether or not 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 without violating the provisions of
the Civil Code on preference of credits; and

2. Whether or not an insolvent bank like the Fidelity Savings and Mortgage Bank may be adjudged to pay moral and
exemplary damages, attorney's fees and costs when the insolvency is caused b the anomalous real estate
transactions without violating the provisions of the Civil Code on preference of credits.

There is merit in the petition.

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.

In The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, 4 we held that:

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.

This was reiterated in the subsequent case of The Overseas Bank of Manila vs. The Hon. Court of Appeals and
Julian R. Cordero. 5 and in the recent cases of Integrated Realty Corporation, et al. vs. Philippine National Bank, et
al. and the Overseas Bank of Manila vs. Court of appeals, et al. 6

From the aforecited authorities, 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.

The order, therefore, of the Central Bank as receiver/liquidator of petitioner bank allowing the claims of depositors
and creditors to earn interest up to the date of its closure on February 18, 1969, 7 in line with the doctrine laid down
in the jurisprudence above cited.

Although petitioner's formulation of the second issue that it poses is slightly inaccurate and defective, we likewise
find the awards of moral and exemplary damages and attorney's fees to be erroneous.

The trial court found, and it is not disputed, that there was no fraud or bad faith on the part of petitioner bank and the
other defendants in accepting the deposits of private respondents. Petitioner bank could not even be faulted in not
immediately returning the amount claimed by private respondents considering that the demand to pay was made
and Civil Case No. 84800 was filed in the trial court several months after the Central Bank had ordered petitioner's
closure. By that time, petitioner bank was no longer in a position to comply with its obligations to its creditors,
including herein private respondents. Even the trial court had to admit that petitioner bank failed to pay private
respondents because it was already insolvent. 8 Further, this case is not one of the specified or analogous cases
wherein moral damages may be recovered. 9
There is no valid basis for the award of exemplary damages which is supposed to serve as a warning to other banks
from dissipating their assets in anomalous transactions. It was not proven by private respondents, and neither was
there a categorical finding made by the trial court, that petitioner bank actually engaged in anomalous real estate
transactions. The same were raised only during the testimony of the bank examiner of the Central Bank, 10 but no
documentary evidence was ever presented in support thereof. Hence, it was error for the lower court to impose
exemplary damages upon petitioner bank since, in contracts, such sanction requires that the offending party acted
in a wanton, fraudulent, reckless, oppressive or malevolent manner. 11 Neither does this case present the situation
where attorney's fees may be awarded. 12

In the absence of fraud, bad faith, malice or wanton attitude, petitioner bank may, therefore, not be held responsible
for damages which may be reasonably attributed to the non-performance of the obligation. 13 Consequently, we
reiterate that under the premises and pursuant to the aforementioned provisions of law, it is apparent that private
respondents are not justifiably entitled to the payment of moral and exemplary damages and attorney's fees.

While we tend to agree with petitioner bank that private respondents' claims should he been filed in the liquidation
proceedings in Civil Case No. 86005, entitled "In Re: Liquidation of the Fidelity Savings and Mortgage Bank,"
pending before Branch XIII of the then Court of First Instance of Manila, we do not believe that the decision
rendered in the instant case would be violative of the legal provisions on preference and concurrence of credits. As
the trial court puts it:

. . . But this order of payment should not be understood as raising these deposits to the category of
preferred credits of the defendant Fidelity Savings and Mortgage Bank but shall be paid in accordance with
the Bank Liquidation Rules and Regulations embodied in the Order of the. Court of First Instance of Manila,
Branch XIII dated October 3, 1972 (Exh. 3). . . . 14

WHEREFORE, the judgment appealed from is hereby MODIFIED. Petitioner Fidelity Savings and Mortgage Bank is
hereby declared liable to pay private respondents Timoteo and Olimpia Santiago the sum of P90,000.00, with
accrued interest in accordance with the terms of Savings Account Deposit No. 16-0536 (Exhibit A) and Certificate of
Time Deposit No. 0210 (Exhibit B) until February 18, 1969. The awards for moral and exemplary damages, and
attorney's fees are hereby DELETED. No costs.

SO ORDERED.

Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

Footnotes

1
Annex A, Petition; Rollo, 42-67.

2
Rollo, 46.

3
Ibid., 52-53.

4
105 SCRA 49 (1981).

5
113 SCRA 778 (1982).

6
G.R. Nos. 60705 and 60907, jointly decided on June 28, 1989.

7
Rollo, 33.

8
Ibid., 61-64.
9
Art. 2219, Civil Code.

10
Ibid., 57.

11
Art. 2232, Civil Code.

12
Art. 2208, Id.

13
Art. 2201, Id.

14
Rollo, 65.
 Republic of the Philippines
SUPREME COURT
Manila

SPECIAL FORMER FIRST DIVISION

G.R. No. 73882 October 22, 1987

ROSA CANCIO, petitioner,

vs.
HON. COURT OF TAX APPEALS and HON. COMMISSIONER OF CUSTOMS, respondents.

MELENCIO-HERRERA, J.:

Before us is petitioner's Motion for Reconsideration of this Court's Resolution of August 11, 1986, which denied for
lack of merit her Petition for Review on certiorari of respondent Court of Tax Appeals' (CTA) Decision in C.T.A. Case
No. 3398.

During the pendency of this case, or on April 23, 1986, petitioner had passed away and her legal heirs were ordered
substituted in her stead and Jose Cancio, Jr., was appointed guardian ad-litem for the minors Ma. Irene and
Roberto, both surnamed Cancio, in this Court's Resolution of August 11, 1986.

There is no substantial dispute on the background facts and the evidentiary aspects Vol the controversy,
summarized in said

Decision as follows:

The records show that 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 One
Hundred Two Thousand Nine Hundred Dollars (US$102,900.00) in cash, six hundred dollars
(US$600.00) in two travelers checks, and one thousand five hundred (Pl,500.00) Pesos; that 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; that 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; hence,
this seizure proceedings.

At the hearing of this case, claimant, thru counsel, presented 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, dollar remittances in telegraphic transfers from abroad for deposits in her
account from May 13, 1981 to May 21, 1981, and withdrawal cards (Exhibit "l-A" to "1-E", inclusive),
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. And herein claimant 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; that 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; that 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. 1

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. The latter Court 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. 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. 2 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.

The primordial issue for resolution is whether or not respondent Court had committed reversible error in upholding
the forfeiture of the foreign currencies in question.

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:

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.

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 Philip
pines" (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.11 (Emphasis Ours).

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

(Emphaisis supplied)

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. 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.)
R.D.R
UIZ
 Directo
r

It is a fact that petitioner could not present a certificate of withdrawal at the Manila International Airport when she
was about to depart. As she had explained, however, she was unaware of this requirement. And if she had wrapped
her dollar currency inside a chocolate box it was for "security reasons." Besides, 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 book3 and her withdrawal cards.4 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.

ACCORDINGLY, the Decision of respondent Court of Tax Appeals is hereby 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. No costs.

SO ORDERED.

Yap, Actg. C.J., Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.

Footnotes

1 CTA Decision, pp. 2-3; Rollo, pp. 33-34.

2 Ibid., pp. 7-8.

3 Exhibit " I ".

4 Exhibits"I-A"to"I-E".
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 94723 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.:

In our predisposition to discover the "original intent" of a statute, courts become the unfeeling pillars of the status
quo. Ligle 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 provisions of the
Constitution, hence void; because its provision 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

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 antecedent 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
Bartelli's petition for bail the latter escaped from jail.

On February 28, 1989, the court granted the fiscal's 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 of 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 or 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. Osmena 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 country's 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

Director1

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 a 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 attorney's 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 respondent 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 witnesses the minor Karen E. Salvacion, her
father, Federico N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who gave
the following testimony:

Karen took her first year high school in St. Mary's 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 Karen's 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 it's 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 defendant's house along
Kalayaan Avenue. (Id., p. 6)

When they reached the apartment house, Karen noticed that defendant's 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 Karen's 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 Johnson's 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 o'clock the following morning. (Id., pp. 9-10)

The following day, February 5, 1989, a Sunday, after a 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 the 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 the 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 a 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 no po kayo so akin. Tulungan n'yo 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 o'clock 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 for 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 because the latter washed her dress. (Id., p. 16)

Afterwards, defendant arrived and he 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 as 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 the 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. Mary's 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 Bartelli's
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? 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?

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 in 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 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; 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 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; 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 foreign 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 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 of
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.

This Court has no original and exclusive jurisdiction over a petition for declaratory relief.2 However, exceptions to
this rule have been recognized. Thus, where the petition has far-reaching implications and raises questions that
should be resolved, it may be treated as one for mandamus.3

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 undoubtedly 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 xxx 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 a 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, . . . .4

If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom how the incentive for
foreign currency deposit could be more important than his child's rights to said award of damages; in this case, the
victim's claim for damages from this alien who had the gall to wrong a child of tender years of a country where he is
a 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 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.

It has thus been said that —

But 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 alien. More
specifically, the petition raises the question whether the protection against attachment, garnishment
or other court process accorded to foreign currency deposits by 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 or
tourist 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 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 the 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 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;

WHEREAS, making absolute the protective cloak of confidentiality over such foreign
currency deposits, exempting such deposits from tax, and guaranteeing the vested
rights 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 purposes
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 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.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 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.
(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 against 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. 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 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.

Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Francisco and Panganiban,
JJ., concur.

Padilla, J., took no part.

Mendoza and Hermosisima, Jr., JJ., are on leave.

Footnotes

1 Annex "R", Petition.

2 Alliance of Government Workers (AGW) v. Ministry of Labor and Employment, 124 SCRA 1

3 Nationalista Party vs. Angelo Bautista, 85 Phil. 101; Aquino vs. Comelec, 62 SCRA 275; and
Alliance of Government Workers vs. Minister of Labor and Employment, supra.

4 Decision, Regional Trial Court, Civil Case No. 89-3214, pp. 9 & 12, Rollo, pp. 66 & 69.

5 Thomas Jefferson, Democracy, ed. Saul K. Padover, (New York, Penguin, 1946) p. 171.

6 Comment of the Solicitor General, Rollo, pp. 128-129; 135-136.

 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

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.

DECISION

PEREZ, J.:

The subject of this petition for certiorari is the Decision1 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

SURETYBOND

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, 7th 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 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.

WITNESS OUR HANDS AND SEALS this 13th day of December 1996 at Pasay City, Philippines.

DOMSAT HOLDINGS, INC. GOVERNMENT SERVICE INSURANCE SYSTEM

Principal General Insurance Fund

By: By:

CAPT. RODRIGO A. SILVERIO AMALIO A. MALLARI

President 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 cashier’s/ manager’s 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 cashier’s/manager’s 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 in Intengan
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 Domsat’s 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 Domsat’s 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 Domsat’s
$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
cashier’s or manager’s 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 Domsat’s 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 Domsat’s 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 cashier’s or manager’s 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 Domsat’s 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 lauuphil

Yet, even if this procedural infirmity is discarded for the broader interest of justice, the petition sorely lacks merit.

GSIS insists that Domsat’s 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 Domsat’s 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 cashier’s or
manager’s 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,26 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. A
subpoena 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.

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 hereby AFFIRMED.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA
Chief Justice
Footnotes

1Penned by Associate Justice Agustin S. Dizon with Associate Justices Amelita G. Tolentino and Lucenito
N. Tagle, concurring. Rollo, pp. 32-44.

2 Id. at 48-91.

3 Id. at 55.

4 Id. at 92-93.

5 Id. at 9.

6 CA rollo, pp. 178-179.

7 Id. at 201-203.

8 Id. at 181.

9 Id. at 201-205.

10 Id. at 225.

11 Id. at 265.

12 Id. at 317.

13 427 Phil. 293 (2002).

14 CA rollo, pp. 16, 20 and 25.

15 Rollo, pp. 39-40.

16 Id. at 43-44.

17 Petition. Id. at 13.

18Bicol Agro-Industrial Producers Cooperative, Inc. v. Obias, G.R. No. 172077, 9 October 2009, 603 SCRA
173, 184-185 citing National Irrigation Administration v. Court of Appeals, 376 Phil. 362, 371 (1999).

National Power Corporation v. Laohoo, G.R. No. 151973, 23 July 2009, 593 SCRA 564, 588 citing Leca
19

Realty Corporation v. Republic, G.R. No. 155605, 27 September 2006, 503 SCRA 563, 571.

Sable v. People, G.R. No. 177961, 7 April 2009, 584 SCRA 619, 629-630 citing Mercado v. Court of
20

Appeals, 484 Phil. 438, 444 (2004); VMC Rural Electric Service Cooperative, Inc. v. Court of Appeals, G.R.
No. 153144, 16 October 2006, 504 SCRA 336, 352.

21 Section 4. Hearing of motion. — Except for motions which the court may act upon without prejudicing the
rights of the adverse party, every written motion shall be set for hearing by the applicant.

Every written motion required to be heard and the notice of the hearing thereof shall be served in such a
manner as to ensure its receipt by the other party at least three (3) days before the date of hearing, unless
the court for good cause sets the hearing on shorter notice.

22 Republic v. Eugenio, Jr., G.R. No. 174629, 14 February 2008, 545 SCRA 384, 415-416.
23 Sec. 1, Republic Act No. 1405.

24See China Banking Corporation v. Court of Appeals, G.R. No. 140687, 18 December 2006, 511 SCRA
110, 117.

Tomawis v. Balindong, G.R. No. 182434, 5 March 2010, 614 SCRA 354, 367-368 citing Agpalo, Statutory
25

Construction, p. 415 (2003).

26 Supra note 24.

27 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.
G.R. Nos. 157294-95 November 30, 2006

JOSEPH VICTOR G. EJERCITO, Petitioner,

vs.
SANDIGANBAYAN (Special Division) and PEOPLE OF THE PHILIPPINES, Respondents.

DECISION

CARPIO MORALES, J.:

The present petition for certiorari under Rule 65 assails the Sandiganbayan Resolutions dated February 7 and 12,
2003 denying petitioner Joseph Victor G. Ejercito’s Motions to Quash Subpoenas Duces Tecum/Ad Testificandum,
and Resolution dated March 11, 2003 denying his Motion for Reconsideration of the first two resolutions.

The three resolutions were issued in Criminal Case No. 26558, "People of the Philippines v. Joseph Ejercito
Estrada, et al.," for plunder, defined and penalized in R.A. 7080, "AN ACT DEFINING AND PENALIZING THE
CRIME OF PLUNDER."

In above-stated case of People v. Estrada, et al., the Special Prosecution Panel1 filed on January 20, 2003 before
the Sandiganbayan a Request for Issuance of Subpoena Duces Tecum for the issuance of a subpoena directing the
President of Export and Industry Bank (EIB, formerly Urban Bank) or his/her authorized representative to produce
the following documents during the hearings scheduled on January 22 and 27, 2003:

I. For Trust Account No. 858;

1. Account Opening Documents;

2. Trading Order No. 020385 dated January 29, 1999;

3. Confirmation Advice TA 858;

4. Original/Microfilm copies, including the dorsal side, of the following:

a. Bank of Commerce MC # 0256254 in the amount of ₱2,000,000.00;

b. Urban bank Corp. MC # 34181 dated November 8, 1999 in the amount of P10,875,749.43;

c. Urban Bank MC # 34182 dated November 8, 1999 in the amount of ₱42,716,554.22;

d. Urban Bank Corp. MC # 37661 dated November 23, 1999 in the amount of ₱54,161,496.52;

5. Trust Agreement dated January 1999:

Trustee: Joseph Victor C. Ejercito

Nominee: URBAN BANK-TRUST DEPARTMENT

Special Private Account No. (SPAN) 858; and

6. Ledger of the SPAN # 858.

II. For Savings Account No. 0116-17345-9

SPAN No. 858

 1. Signature Cards; and

2. Statement of Account/Ledger

III. Urban Bank Manager’s Check and their corresponding Urban Bank Manager’s Check Application Forms, as
follows:

1. MC # 039975 dated January 18, 2000 in the amount of ₱70,000,000.00;

2. MC # 039976 dated January 18, 2000 in the amount of ₱2,000,000.00;

3. MC # 039977 dated January 18, 2000 in the amount of ₱2,000,000.00;

4. MC # 039978 dated January 18, 2000 in the amount of ₱1,000,000.00;

The Special Prosecution Panel also filed on January 20, 2003, a 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 Sandiganbayan granted both requests by Resolution of January 21, 2003 and subpoenas were accordingly
issued.

The Special Prosecution Panel filed still another Request for Issuance of Subpoena Duces Tecum/Ad Testificandum
dated January 23, 2003 for the President of EIB or his/her authorized representative to produce the same
documents subject of the Subpoena Duces Tecum dated January 21, 2003 and to testify thereon on the hearings
scheduled on January 27 and 29, 2003 and subsequent dates until completion of the testimony. The request was
likewise granted by the Sandiganbayan. A Subpoena Duces Tecum/Ad Testificandum was accordingly issued on
January 24, 2003.

Petitioner, claiming to have learned from the media that the Special Prosecution Panel had requested for the
issuance of subpoenas for the examination of bank accounts belonging to him, attended the hearing of the case on
January 27, 2003 and filed before the Sandiganbayan a letter of even date expressing his concerns as follows,
quoted verbatim:

Your Honors:

It is with much respect that I write this court relative to the concern of subpoenaing the undersigned’s bank account
which I have learned through the media.

I am sure the prosecution is aware of our banking secrecy laws everyone supposed to observe. But, instead of
prosecuting those who may have breached such laws, it seems it is even going to use supposed evidence which I
have reason to believe could only have been illegally obtained.

The prosecution was not content with a general request. It even lists and identifies specific documents meaning
someone else in the bank illegally released confidential information.

If this can be done to me, it can happen to anyone. Not that anything can still shock our family. Nor that I have
anything to hide. Your Honors.

But, I am not a lawyer and need time to consult one on a situation that affects every bank depositor in the country
and should interest the bank itself, the Bangko Sentral ng Pilipinas, and maybe the Ombudsman himself, who may
want to investigate, not exploit, the serious breach that can only harm the economy, a consequence that may have
been overlooked. There appears to have been deplorable connivance.

xxxx
I hope and pray, Your Honors, that I will be given time to retain the services of a lawyer to help me protect my rights
and those of every banking depositor. But the one I have in mind is out of the country right now.

May I, therefore, ask your Honors, that in the meantime, the issuance of the subpoena be held in abeyance for at
least ten (10) days to enable me to take appropriate legal steps in connection with the prosecution’s request for the
issuance of subpoena concerning my accounts. (Emphasis supplied)

From the present petition, it is gathered that the "accounts" referred to by petitioner in his above-quoted letter
are Trust Account No. 858 and Savings Account No. 0116-17345-9.2

In open court, the Special Division of the Sandiganbayan, through Associate Justice Edilberto Sandoval, advised
petitioner that his remedy was to file a motion to quash, for which he was given up to 12:00 noon the following day,
January 28, 2003.

Petitioner, unassisted by counsel, thus filed on January 28, 2003 a Motion to Quash Subpoena Duces Tecum/Ad
Testificandum praying that the subpoenas previously issued to the President of the EIB dated January 21 and
January 24, 2003 be quashed.3

In his Motion to Quash, petitioner claimed that his bank accounts are covered by R.A. No. 1405 (The Secrecy of
Bank Deposits Law) and do not fall under any of the exceptions stated therein. He further claimed that the specific
identification of documents in the questioned subpoenas, including details on dates and amounts, could only have
been made possible by an earlier illegal disclosure thereof by the EIB and the Philippine Deposit Insurance
Corporation (PDIC) in its capacity as receiver of the then Urban Bank.

The disclosure being illegal, petitioner concluded, the prosecution in the case may not be allowed to make use of
the information.

Before the Motion to Quash was resolved by the Sandiganbayan, the prosecution filed another Request for the
Issuance of Subpoena Duces Tecum/Ad Testificandum dated 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 the Bank of Commerce MC #0256254 in the amount of
₱2,000,000 as Bank of Commerce MC #0256256 in the amount of ₱200,000,000 was instead requested. Moreover,
the request covered the following additional documents:

IV. For Savings Account No. 1701-00646-1:

1. Account Opening Forms;

2. Specimen Signature Card/s; and

3. Statements of Account.

The prosecution also filed 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 the
following documents on the scheduled hearings on February 3 and 5, 2003:

1. Letter of authority dated November 23, 1999 re: SPAN [Special Private Account Number] 858;

2. Letter of authority dated January 29, 2000 re: SPAN 858;

3. Letter of authority dated April 24, 2000 re: SPAN 858;

4. Urban Bank check no. 052092 dated April 24, 2000 for the amount of P36, 572, 315.43;

5. Urban Bank check no. 052093 dated April 24, 2000 for the amount of P107,191,780.85; and
 6. Signature Card Savings Account No. 0116-17345-9. (Underscoring supplied)

The subpoenas prayed for in both requests were issued by the Sandiganbayan on January 31, 2003.

On February 7, 2003, petitioner, this time assisted by counsel, filed an Urgent Motion to Quash Subpoenae Duces
Tecum/Ad Testificandum praying that the subpoena dated January 31, 2003 directed to Aurora Baldoz be quashed
for the same reasons which he cited in the Motion to Quash4 he had earlier filed.

On the same day, February 7, 2003, the Sandiganbayan issued a Resolution denying petitioner’s Motion to Quash
Subpoenae Duces Tecum/Ad Testificandum dated January 28, 2003.

Subsequently or on February 12, 2003, the Sandiganbayan issued a Resolution denying petitioner’s Urgent Motion
to Quash Subpoena Duces Tecum/Ad Testificandum dated February 7, 2003.

Petitioner’s Motion for Reconsideration dated February 24, 2003 seeking a reconsideration of the Resolutions of
February 7 and 12, 2003 having been denied by Resolution of March 11, 2003, petitioner filed the present petition.

Raised as issues are:

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.

Respondent People posits that Trust Account No. 8585 may be inquired into, not merely because it falls under the
exceptions to the coverage of R.A. 1405, but because it is not even contemplated therein. For, to respondent
People, the law applies only to "deposits" which strictly means the money delivered to the bank by which a creditor-
debtor relationship is created between the depositor and the bank.

The contention that trust accounts are not covered by the term "deposits," as used in R.A. 1405, by the mere fact
that they do not entail a creditor-debtor relationship between the trustor and the bank, does not lie. An examination
of the law shows that the term "deposits" used therein is to be understood broadly and not limited only to accounts
which give rise to a creditor-debtor relationship between the depositor and the bank.

The policy behind the law is laid down in Section 1:

SECTION 1. It is hereby declared to be the policy of the Government to give 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. (Underscoring supplied)

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.

Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between petitioner and Urban
Bank provides that the trust account covers "deposit, placement or investment of funds" by Urban Bank for and in
behalf of petitioner.6 The money deposited under Trust Account No. 858, was, therefore, intended not merely to
remain with the bank but to be invested by it elsewhere. To hold that this type of account is not protected by R.A.
1405 would encourage private hoarding of funds that could otherwise be invested by banks in other ventures,
contrary to the policy behind the law.
Section 2 of the same law in fact even more clearly shows that the term "deposits" was intended to be understood
broadly:

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. (Emphasis and underscoring
supplied)

The phrase "of whatever nature" proscribes any restrictive interpretation of "deposits." Moreover, it is clear from the
immediately quoted provision that, generally, the law applies not only to money which is deposited but also to those
which are invested. This further shows that the law was not intended to apply only to "deposits" in the strict sense of
the word. Otherwise, there would have been no need to add the phrase "or invested."

Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No. 858.

The protection afforded by the law is, however, not absolute, there being recognized exceptions thereto, as above-
quoted Section 2 provides. In the present case, two exceptions apply, to wit: (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.

Petitioner contends that since plunder is neither bribery nor dereliction of duty, his accounts are not excepted from
the protection of R.A. 1405. Philippine National Bank v. Gancayco7 holds otherwise:

Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these
two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one
cannot be different from the policy as to the other. This policy expresses the notion that a public office is a
public trust and any person who enters upon its discharge does so with the full knowledge that his life, so far as
relevant to his duty, is open to public scrutiny.

Undoubtedly, cases for plunder involve unexplained wealth. Section 2 of R.A. No. 7080 states so.

SECTION 2. Definition of the Crime of Plunder; Penalties. — Any public officer who, by himself or in connivance
with members of his family, relatives by affinity or consanguinity, business associates, subordinates or other
persons, amasses, accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal
acts as described in Section 1(d) hereof, in the aggregate amount or total value of at least Seventy-five million
pesos (P75,000,000.00), shall be guilty of the crime of plunder and shall be punished by life imprisonment with
perpetual absolute disqualification from holding any public office. Any person who participated with said public
officer in the commission of plunder shall likewise be punished. In the imposition of penalties, the degree of
participation and the attendance of mitigating and extenuating circumstances shall be considered by the court. The
court shall declare any and all ill-gotten wealth and their interests and other incomes and assets including the
properties and shares of stock derived from the deposit or investment thereof forfeited in favor of the State.
(Emphasis and underscoring supplied)

An examination of the "overt or criminal acts as described in Section 1(d)" of R.A. No. 7080 would make the
similarity between plunder and bribery even more pronounced since bribery is essentially included among these
criminal acts. Thus Section 1(d) states:

d) "Ill-gotten wealth" means any asset, property, business enterprise or material possession of any person within the
purview of Section Two (2) hereof, acquired by him directly or indirectly through dummies, nominees, agents,
subordinates and or business associates by any combination or series of the following means or similar schemes.

1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public
treasury;
 2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any
other form of pecuniary benefit from any person and/or entity in connection with any government
contract or project or by reason of the office or position of the public officer concerned;

3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or
any of its subdivisions, agencies or instrumentalities or government-owned or -controlled corporations and
their subsidiaries;

4) By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of
interest or participation including promise of future employment in any business enterprise or undertaking;

5) By establishing agricultural, industrial or commercial monopolies or other combinations and/or

implementation of decrees and orders intended to benefit particular persons or special interests; or

6) By taking undue advantage of official position, authority, relationship, connection or influence to unjustly
enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the
Republic of the Philippines. (Emphasis supplied)

Indeed, all the above-enumerated overt acts are similar to bribery such that, in each case, it may be said that "no
reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits
confidential."8

The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers, and in either
case the noble idea that "a public office is a public trust and any person who enters upon its discharge does so with
the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny" applies with equal force.

Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must also apply
to cases of plunder.

Respecting petitioner’s claim that the money in his bank accounts is not the "subject matter of the litigation," the
meaning of the phrase "subject matter of the litigation" as used in R.A. 1405 is explained in Union Bank of the
Philippines v. Court of Appeals,9 thus:

Petitioner contends that the Court of Appeals confuses the "cause of action" with the "subject of the action".
In Yusingco v. Ong Hing Lian, petitioner points out, this Court distinguished the two concepts.

x x x "The cause of action is the legal wrong threatened or committed, while the object of the action is to prevent or
redress the wrong by obtaining some legal relief; but the subject of the action is neither of these since it is not the
wrong or the relief demanded, the subject of the action is the matter or thing with respect to which the controversy
has arisen, concerning which the wrong has been done, and this ordinarily is the property or the contract and its
subject matter, or the thing in dispute."

The argument is well-taken. We note with approval the difference between the ‘subject of the action’ from the ‘cause
of action.’ We also find petitioner’s definition of the phrase ‘subject matter of the action’ is consistent with the term
‘subject matter of the litigation’, as the latter is used in the Bank Deposits Secrecy Act.

In Mellon Bank, N.A. v. Magsino, where the petitioner bank inadvertently caused the transfer of the amount of
US$1,000,000.00 instead of only US$1,000.00, the Court sanctioned the examination of the bank accounts where
part of the money was subsequently caused to be deposited:

‘x x x Section 2 of [Republic Act No. 1405] allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. Inasmuch as Civil Case No. 26899 is aimed at recovering the
amount converted by the Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the
illegally acquired amount extends to whatever is concealed by being held or recorded in the name of
persons other than the one responsible for the illegal acquisition."
Clearly, Mellon Bank involved a case where the money deposited was the subject matter of the litigation since the
money deposited was the very thing in dispute. x x x" (Emphasis and underscoring supplied)

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.

In a further attempt to show that the subpoenas issued by the Sandiganbayan are invalid and may not be enforced,
petitioner contends, as earlier stated, that the information found therein, given their "extremely detailed" character,
could only have been obtained by the Special Prosecution Panel through an illegal disclosure by the bank officials
concerned. Petitioner thus claims that, following the "fruit of the poisonous tree" doctrine, the subpoenas must be
quashed.

Petitioner further contends that even if, as claimed by respondent People, the "extremely-detailed" information was
obtained by the Ombudsman from the bank officials concerned during a previous investigation of the charges
against President Estrada, such inquiry into his bank accounts would itself be illegal.

Petitioner relies on Marquez v. Desierto10 where the Court held:

We rule that before an in camera inspection may be allowed there must be a pending case before a court of
competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of
the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be
notified to be present during the inspection, and such inspection may cover only the account identified in the
pending case. (Underscoring supplied)

As no plunder case against then President Estrada had yet been filed before a court of competent jurisdiction at the
time the Ombudsman conducted an investigation, petitioner concludes that the information about his bank accounts
were acquired illegally, hence, it may not be lawfully used to facilitate a subsequent inquiry into the same bank
accounts.

Petitioner’s attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405, it bears noting,
nowhere provides that an unlawful examination of bank accounts shall render the evidence obtained therefrom
inadmissible in evidence. Section 5 of R.A. 1405 only states that "[a]ny violation of this law will subject the offender
upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or
both, in the discretion of the court."

The case of U.S. v. Frazin,11 involving the Right to Financial Privacy Act of 1978 (RFPA) of the United States, is
instructive.

Because the statute, when properly construed, excludes a suppression remedy, it would not be appropriate for us to
provide one in the exercise of our supervisory powers over the administration of justice. Where Congress has both
established a right and provided exclusive remedies for its violation, we would "encroach upon the prerogatives" of
Congress were we to authorize a remedy not provided for by statute. United States v. Chanen, 549 F.2d 1306, 1313
(9th Cir.), cert. denied, 434 U.S. 825, 98 S.Ct. 72, 54 L.Ed.2d 83 (1977).

The same principle was reiterated in U.S. v. Thompson:12

x x x When Congress specifically designates a remedy for one of its acts, courts generally presume that it engaged
in the necessary balancing of interests in determining what the appropriate penalty should be. See Michaelian, 803
F.2d at 1049 (citing cases); Frazin, 780 F.2d at 1466. Absent a specific reference to an exclusionary rule, it is not
appropriate for the courts to read such a provision into the act.
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A. 1405, the
Court finds no reason to apply the same in this particular case.

Clearly, the "fruit of the poisonous tree" doctrine13 presupposes a violation of law. If there was no violation of R.A.
1405 in the instant case, then there would be no "poisonous tree" to begin with, and, thus, no reason to apply the
doctrine.

How the Ombudsman conducted his inquiry into the bank accounts of petitioner is recounted by respondent People
of the Philippines, viz:

x x x [A]s early as February 8, 2001, long before the issuance of the Marquez ruling, the Office of the Ombudsman,
acting under the powers granted to it by the Constitution and R.A. No. 6770, and acting on information obtained
from various sources, including impeachment (of then Pres. Joseph Estrada) related reports, articles and
investigative journals, issued a Subpoena Duces Tecum addressed to Urban Bank. (Attachment "1-b") It should be
noted that the description of the documents sought to be produced at that time included that of numbered accounts
727, 737, 747, 757, 777 and 858 and included such names as Jose Velarde, Joseph E. Estrada, Laarni Enriquez,
Guia Gomez, Joy Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin Garcia. The subpoena did not single
out account 858.

xxxx

Thus, on February 13, 2001, PDIC, as receiver of Urban Bank, issued a certification as to the availability of bank
documents relating to A/C 858 and T/A 858 and the non-availability of bank records as to the other accounts named
in the subpoena. (Attachments "2", "2-1" and "2-b)

Based on the certification issued by PDIC, the Office of the Ombudsman on February 16, 2001 again issued
a Subpoena Duces Tecum directed to Ms. Corazon dela Paz, as Interim Receiver, directing the production of
documents pertinent to account A/C 858 and T/C 858. (Attachment "3")

In compliance with the said subpoena dated February 16, 2001, Ms. Dela Paz, as interim receiver, furnished the
Office of the Ombudsman certified copies of documents under cover latter dated February 21, 2001:

1. Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-18-99, 11-22-99, 1-07-00, 04-03-00 and 04-24-
00;

2. Report of Unregularized TAFs & TDs for UR COIN A & B Placements of Various Branches as of February
29, 2000 and as of December 16, 1999; and

3. Trading Orders Nos. A No. 78102 and A No. 078125.

Trading Order A No. 07125 is filed in two copies – a white copy which showed "set up" information; and a yellow
copy which showed "reversal" information. Both copies have been reproduced and are enclosed with this letter.

We are continuing our search for other records and documents pertinent to your request and we will forward to you
on Friday, 23 February 2001, such additional records and documents as we might find until then. (Attachment "4")

The Office of the Ombudsman then requested for the manger’s checks, detailed in the Subpoena Duces
Tecum dated March 7, 2001. (Attachment "5")

PDIC again complied with the said Subpoena Duces Tecum dated March 7, 2001 and provided copies of the
manager’s checks thus requested under cover letter dated March 16, 2001. (Attachment "6")14 (Emphasis in the
original)

The Sandiganbayan credited the foregoing account of respondent People.15 The Court finds no reason to disturb
this finding of fact by the Sandiganbayan.
The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of petitioner’s bank
accounts, conducted before a case was filed with a court of competent jurisdiction, was lawful.

For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner about four
months beforeMarquez was promulgated on June 27, 2001.

While judicial interpretations of statutes, such as that made in Marquez with respect to R.A. No. 6770 or the
Ombudsman Act of 1989, are deemed part of the statute as of the date it was originally passed, the rule is not
absolute.

Columbia Pictures, Inc. v. Court of Appeals16 teaches:

It is consequently clear that a judicial interpretation becomes a part of the law as of the date that law was originally
passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view
is adopted, and more so when there is a reversal thereof, the new doctrine should be
applied prospectivelyand should not apply to parties who relied on the old doctrine and acted in good faith.
(Emphasis and underscoring supplied)

When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of Bank Deposits Law in Marquez,
that "before an in camera inspection may be allowed there must be a pending case before a court of competent
jurisdiction", it was, in fact, reversing an earlier doctrine found in Banco Filipino Savings and Mortgage Bank v.
Purisima17.

Banco Filipino involved subpoenas duces tecum issued by the Office of the Ombudsman, then known as the
Tanodbayan,18 in the course of its preliminary investigation of a charge of violation of the Anti-Graft and Corrupt
Practices Act.

While the main issue in Banco Filipino was whether R.A. 1405 precluded the Tanodbayan’s issuance of subpoena
duces tecum of bank records in the name of persons other than the one who was charged, this Court, citing P.D.
1630,19 Section 10, the relevant part of which states:

(d) He may issue a subpoena to compel any person to appear, give sworn testimony, or produce documentary or
other evidence the Tanodbayan deems relevant to a matter under his inquiry,

held that "The power of the Tanodbayan to issue subpoenae ad testificandum and subpoenae duces tecum
at the time in question is not disputed, and at any rate does not admit of doubt."20

As the subpoenas subject of Banco Filipino were issued during a preliminary investigation, in effect this Court
upheld the power of the Tandobayan under P.D. 1630 to issue subpoenas duces tecum for bank documents prior
to the filing of a case before a court of competent jurisdiction.

Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite the fact that the subpoena
power of the Ombudsman under R.A. 6770 was essentially the same as that under P.D. 1630. Thus Section 15 of
R.A. 6770 empowers the Office of the Ombudsman to

(8) Administer oaths, issue subpoena and subpoena duces tecum, and take testimony in any investigation or
inquiry, including the power to examine and have access to bank accounts and records;

A comparison of this provision with its counterpart in Sec. 10(d) of P.D. 1630 clearly shows that it is only more
explicit in stating that the power of the Ombudsman includes the power to examine and have access to bank
accounts and records which power was recognized with respect to the Tanodbayan through Banco Filipino.

The Marquez ruling that there must be a pending case in order for the Ombudsman to validly inspect bank records
in camera thus reversed a prevailing doctrine.21 Hence, it may not be retroactively applied.

The Ombudsman’s inquiry into the subject bank accounts prior to the filing of any case before a court of competent
jurisdiction was therefore valid at the time it was conducted.
Likewise, the Marquez 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. This ruling is not a judicial
interpretation either of R.A. 6770 or R.A. 1405, but a "judge-made" law which, as People v. Luvendino22 instructs,
can only be given prospective application:

x x x The doctrine that an uncounselled waiver of the right to counsel is not to be given legal effect was
initially a judge-made one and was first announced on 26 April 1983 in Morales v. Enrile and reiterated on 20
March 1985 in People v. Galit. x x x

While the Morales-Galit doctrine eventually became part of Section 12(1) of the 1987 Constitution, that doctrine
affords no comfort to appellant Luvendino for the requirements and restrictions outlined
in Morales and Galithave no retroactive effect and do not reach waivers made prior to 26 April 1983 the date
of promulgation of Morales. (Emphasis supplied)

In fine, the subpoenas issued by the Ombudsman in this case were legal, hence, invocation of the "fruit of the
poisonous tree" doctrine is misplaced.

At all events, even if the challenged subpoenas are quashed, the Ombudsman is not barred from requiring the
production of the same documents based solely on information obtained by it from sources independent of its
previous inquiry.

In particular, the Ombudsman, even before its inquiry, had already possessed information giving him grounds to
believe that (1) there are bank accounts bearing the number "858," (2) that such accounts are in the custody of
Urban Bank, and (3) that the same are linked with the bank accounts of former President Joseph Estrada who was
then under investigation for plunder.

Only with such prior independent information could it have been possible for the Ombudsman to issue the February
8, 2001 subpoena duces tecum addressed to the President and/or Chief Executive Officer of Urban Bank, which
described the documents subject thereof as follows:

(a) bank records and all documents relative thereto pertaining to all bank accounts (Savings, Current, Time
Deposit, Trust, Foreign Currency Deposits, etc…) under the account names of Jose Velarde, Joseph E. Estrada,
Laarni Enriquez, Guia Gomez, Joy Melendrez, Peach Osorio, Rowena Lopez, Kevin or Kelvin Garcia, 727, 737,
747, 757, 777 and 858. (Emphasis and underscoring supplied)

The information on the existence of Bank Accounts bearing number "858" was, according to respondent People of
the Philippines, obtained from various sources including the proceedings during the impeachment of President
Estrada, related reports, articles and investigative journals.23 In the absence of proof to the contrary, this explanation
proffered by respondent must be upheld. To presume that the information was obtained in violation of R.A. 1405
would infringe the presumption of regularity in the performance of official functions.

Thus, with the filing of the plunder case against former President Estrada before the Sandiganbayan, the
Ombudsman, using the above independent information, may now proceed to conduct the same investigation it
earlier conducted, through which it can eventually obtain the same information previously disclosed to it by the
PDIC, for it is an inescapable fact that the bank records of petitioner are no longer protected by R.A. 1405 for the
reasons already explained above. 1âw phi1

Since conducting such an inquiry would, however, only result in the disclosure of the same documents to the
Ombudsman, this Court, in avoidance of what would be a time-wasteful and circuitous way of administering
justice,24 upholds the challenged subpoenas.

Respecting petitioner’s claim that the Sandiganbayan violated his right to due process as he was neither notified of
the requests for the issuance of the subpoenas nor of the grant thereof, suffice it to state that the defects were cured
when petitioner ventilated his arguments against the issuance thereof through his earlier quoted letter addressed to
the Sandiganbayan and when he filed his motions to quash before the Sandiganbayan.
IN SUM, the Court finds that the Sandiganbayan did not commit grave abuse of discretion in issuing the challenged
subpoenas for documents pertaining to petitioner’s Trust Account No. 858 and Savings Account No. 0116-17345-9
for the following reasons:

1. 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.

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.

WHEREFORE, the petition is DISMISSED. The Sandiganbayan Resolutions dated February 7 and 12, 2003 and
March 11, 2003 are upheld.

The Sandiganbayan is hereby directed, consistent with this Court’s ruling in Marquez v. Desierto, to notify petitioner
as to the date the subject bank documents shall be presented in court by the persons subpoenaed.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice

REYNATO S. PUNO CONSUELO YNARES-SANTIAGO

Associate Justice Associate Justice

LEONARDO A. QUISUMBING ANGELINA SANDOVAL-GUTIERREZ

Associate Justice Associate Justice

ANTONIO T. CARPIO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice

RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice
 ROMEO J. CALLEJO, SR. DANTE O. TINGA
Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO CANCIO C. GARCIA

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court.

ARTEMIO V. PANGANIBAN
Chief Justice

Footnotes

1Composed of the Ombudsman, the Special Prosecutor, Deputy Special Prosecutor, Assistant
Ombudsman, Special Prosecution Officer III, and Special Prosecution Officer II, (Rollo, pp. 492-493).

2 "Petitioner is the owner of Trust Account No. 858 which was originally opened at Urban Bank but which is
now maintained at Export and Industry Bank, which is the purchaser and owner now of the former Urban
Bank and Urbancorp Investment, Inc. Petitioner is also the owner of Savings Account No. 0116-17345-9
which was originally opened at Urban Bank but which is now maintained at Export and Industry Bank, which
is the purchaser and owner of the former Urban Bank and Urbancorp Investment, Inc. x x x" (Petition, pp. 3-
4, rollo, pp. 10-11)

3 The first paragraph of the motion identifies the subpoenas sought to be quashed as those allegedly issued
on January 24, 2003 directed to the representative/s of the Urban Bank (now EIB) and to Ms. Aurora C.
Baldoz, Vice-President-CR-II of the Philippine Deposit Insurance Corporation. However, the second motion
to quash later filed by petitioner with the assistance of counsel stated that the subpoenas subject of the
previous motion to quash were those issued on January 21, 2003, addressed to the President of the EIB
and to the President of Equitable-PCI Bank, or their representatives.

Despite the apparent conflict, it may be inferred that the first motion to quash covered the subpoenas
directed to the President of the EIB dated January 21, 2003 and January 24, 2003, the January 24
subpoena being a mere reiteration of the January 21 subpoena.

As there is nothing in the records before this Court which show that a subpoena dated January 24,
2003 was ever issued to Ms. Baldoz, the Court will consider petitioner’s first Motion to Quash as
concerned only with the subpoenas directed to the President of the EIB.

The statement in the second motion to quash that the first motion covered the January 21
subpoenas issued to the President of EIB and to the President of Equitable-PCI Bank may only
be an error arising from the fact that a subpoena to each of these officers were granted by the
Sandiganbayan through the same Resolution dated January 21, 2003. The petitioner could not have
been referring to the subpoena directed to the President of Equitable-PCI Bank since the subject
thereof were the Jose Velarde accounts which he has never claimed to be his, even in the present
petition.
4 Rollo, p. 171

5Respondent People of the Philippines argue on the premise that Trust Account No. 858 covers Savings
Account No. 0116-17345-9.

6 Rollo, p. 708.

7 122 Phil. 503, 508 (1965).

8 Philippine National Bank v. Gancayco, supra at note 7.

9 378 Phil. 1177, 1182-1183 (1999).

10 412 Phil. 387, 397 (2001).

11 780 F.2d 1461 (1986).

12 936 F.2d 1249 (1991).

13"According to this rule, 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." [People v. Alicando,
321 Phil. 656, 690 (1995)].

14 Rollo, pp. 439- 442.

15"As clarified by the prosecution, the documents listed in the request were obtained in February 2001,
pursuant to the power conferred on the Ombudsman under Section 15(8) of R.A. 6770, long before the
Supreme Court promulgated the Marquez v. Desierto case." (Sandiganbayan Resolution dated February 7,
2003, rollo, p. 72)

16 G.R. No. 110318, August 28, 1996, 261 SCRA 144, 168.

17 G.R. No. L-56429. May 28, 1988, 161 SCRA 576.

18Section 2 of P.D. 1630 entitled "FURTHER REVISING PRESIDENTIAL DECREE NO. 1487, AS REVISED
BY PRESIDENTIAL DECREE NO. 1607, CREATING THE OFFICE OF THE TANODBAYAN" states: "An
independent Office of the Ombudsman, to be called the Office of the Tanodbayan, is hereby created. The
Chief of said Office of the Tanodbayan shall be called the Tanodbayan who shall have two (2) deputies for
Luzon, one for the Visayas and one for Mindanao." (Underscoring supplied)

19 Vide note 18.

20
Supra at 582.

21Vide Rafael A. Morales, The Philippine General Banking Law (Annotated), 2nd ed. (2004), page 145: "It
used to be believed too that the Secrecy of Bank Deposits Law did not apply to the Ombudsman, on account
of his authority, under Section 15(8) of the Ombudsman Act of 1989 (Republic Act No. 6770), to ‘examine
and have access to bank accounts and records.’ However, the Supreme Court in Marquez vs. Hon. Aniano
A. Desierto, et al., G.R. No. 135882, June 27, 2001, restricted the Ombudsman’s power x x x."
(Underscoring supplied)

22G.R. No. 69971, July 3, 1992, 211 SCRA 36, 49-50, reiterated in Filoteo v. Sandiganbayan, 331 Phil. 531,
573 (1996).

23 Rollo, p. 439.
 24Amunategue Vda. de Gentugao v. Court of Appeals (G.R. No. L-30340. June 30, 1976, 71 SCRA 565,
574); vide Ortigas and Co. Ltd. Partnership v. Velasco (G.R. No. 109645, July 25, 1994, 234 SCRA 455,
501).

The Lawphil Project - Arellano Law Foundation

CONCURRING OPINION

CALLEJO, SR., J.

I concur in the encompassing ponencia of our esteemed colleague Mme. Justice Conchita Carpio-Morales,
however, I find it imperative to submit my concurring opinion and elucidate on the basis thereof.

The basic factual and procedural antecedents of the case are restated as follows:

In connection with Criminal Cases Nos. 26558 (Plunder) and 26565 (Illegal Use of Alias) filed against former
President Joseph Ejercito Estrada, and upon the written requests of the Special Prosecution Panel, the
Sandiganbayan issued the subpoenae duces tecum/ad testificandum dated January 21 and 24, 2003 addressed to
the respective Presidents of the Export and Industry Bank (EIB, formerly Urban Bank and Urbancorp Investment,
Inc.) and Equitable-PCIBank. The subpoenas directed the said officers, or their authorized representatives, to
appear before the Sandiganbayan and bring with them documents, among others, pertaining to Trust Account No.
858 (with Urban Bank) and Savings Account No. 0116-17345-9 (also with Urban Bank), both in the name of
petitioner Joseph Victor (JV) G. Ejercito.

The written requests of the Special Prosecution Panel enumerated the following documents to be subpoenaed as
follows:

I. For Trust Account No. 858:

1. Account Opening Documents;

2. Trading Order No. 020385, dated January 29, 1999;

3. Confirmation Advice TA 858;

4. Original/Microfilm copies, including the dorsal side of the following:

a) Bank of Commerce MC#0256254 in the amount of ₱2,000,000;

b) Urban Bank Corp. MC#34181 dated November 8, 1999 in the amount of ₱10,875,749.43;

c) Urban Bank MC#34182 dated November 8, 1999 in the amount of ₱42,716,554.22;

d) Urban Bank MC#37661 dated November 23, 1999 in the amount of ₱54,161,496.52;

5. Trust Agreement dated January 1999

Trustee: Joseph Victor C. Ejercito

Nominee: URBAN BANK-TRUST DEPARTMENT

Special Private Account No. (SPAN) 858; and

 6. Ledger of the Span #858

II. For Savings Account No. 0116-17345-9

SPAN #858

1. signature cards; and

2. statement of account/ledger

III Urban Bank Manager’s Check and their corresponding Urban Bank’s Check Application Form as follows:

1. MC#039975 dated January 18, 2000 in the amount of ₱70,000,000.00;

2. MC#039976 dated January 18, 2000 in the amount of ₱2,000,000.00;

3. MC#039977 dated January 18, 2000 in the amount of ₱2,000,000.00; and

4. MC#039978 dated January 18, 2000 in the amount of ₱1,000,000.00.

Claiming to have learned about the subpoenae duces tecum/ad testificandum only through news reports, petitioner
JV Ejercito filed motions to quash them alleging that (a) they violated the bank secrecy laws (Republic Act No.
14051 as amended by Presidential Decree No. 1792 and Republic Act 8791); (b) his case is not one of the
recognized exceptions enumerated in the said laws as he is not an accused in the plunder and illegal use of alias
cases; (c) there appears to be a conspiracy between the bank officials and the prosecution to violate the bank
secrecy laws as the requests for the subpoenas contained particulars which could have been known only if the bank
had released in advance the information containing the details of his bank accounts; (d) under Republic Act No.
30192 inquiry by subpoena into bank deposits can only be had if it was established that: (1) the accused public
official has been found to have acquired during his incumbency an amount of property manifestly out of proportion to
his salary; (2) the ownership of the property unlawfully acquired is concealed by recording the same in the name of
friends or relatives; and (3) the acquisition through legitimate means of the money so deposited cannot be
satisfactorily shown.

Former President Estrada for himself likewise moved for the quashal of the subpoenas on the same grounds relied
upon by petitioner JV Ejercito and, additionally, that the documents sought were not relevant to the amended
information against him.

Acting thereon, the Sandiganbayan issued the assailed Resolution dated February 7, 2003, denying the motions to
quash the subpoenas holding that its issuance of the same properly falls under one of the exceptions to the bank
secrecy laws, particularly the clause in Section 2 of Republic Act (RA) 1405 thus: "upon order of a competent court
in cases of bribery or dereliction of duty of public officials." The Sandiganbayan reasoned that the crime of plunder
was analogous to the said cases. It opined that the fact that petitioner JV Ejercito was not an accused in the plunder
cases was of no moment because RA 3019 allows the inquiry into the bank deposits not only of the accused public
official but also those of his spouse and children. Further, whether or not the amount of deposits was manifestly out
of proportion to the income need not be proved first before inquiry could be had on the bank deposits, rather such
inquiry could be used in proving the case.

The Sandiganbayan also held that petitioner JV Ejercito’s reliance on Marquez v. Desierto3 was misplaced. In
Marquez, the Court disallowed the in camera inspection of accounts in connection with a case pending before the
Ombudsman. In the present case, however, the Sandiganbayan held that there was precisely a pending case before
it, a competent court within the meaning of the exception to the bank secrecy laws. The Sandiganbayan also pointed
out that there was nothing irregular in the issuance of the subpoenas because it was not required that the other
party be notified of such requests. No violation of due process resulted by such lack of notice since the other parties
would have ample opportunity to examine the witnesses and documents subpoenaed once they are presented in
court.
A similar motion was filed by petitioner JV Ejercito involving the subpoenae duces tecum/ad testificandum issued to
the representative of the Urban Bank and Mrs. Aurora Baldoz of the Philippine Deposit Insurance Commission
(PDIC). The said motion was denied by Sandiganbayan in the assailed Resolution dated February 12, 2003. The
motions for reconsideration were denied in the assailed Resolution dated March 11, 2003.

Petitioner JV Ejercito now comes to the Court assailing the Sandiganbayan’s resolutions denying his motions to
quash the subpoenae duces tecum/ad testificandum.

As the petitioner himself submits, the following are the issues for the Court’s resolution:

WHETHER OR NOT RESPONDENT COURT ACTED IN EXCESS OF ITS JURISDICTION OR WITH GRAVE
ABUSE OF DISCRETION IN RULING THAT THE SUBPOENA ON PETITIONER’S BANK ACCOUNTS FALLS
UNDER THE EXCEPTIONS PROVIDED UNDER R.A. NO. 1405

WHETHER OR NOT RESPONDENT COURT ACTED IN EXCESS OF ITS JURISDICTION OR WITH GRAVE
ABUSE OF DISCRETION IN RULING THAT THE CASES OF PNB VS. GANCAYCO AND BANCO FILIPINO VS.
PURISIMA ARE APPLICABLE TO THE INSTANT CASE

WHETHER OR NOT RESPONDENT COURT ACTED IN EXCESS OF ITS JURISDICTION OR WITH GRAVE
ABUSE OF DISCRETION IN RULING THAT THE MARQUEZ VS. DESIERTO CASE IS NOT APPLICABLE TO
THE INSTANT CASE.4

The petitioner does not deny his ownership of Trust Account No. 858 and Savings Account No. 0116-17345-9. In
fact, he expressly admits the same and even explains that these were originally opened at Urban Bank but are now
maintained at Export and Industry Bank.5

The petitioner argues that his accounts do not fall under any of the exceptions enumerated under Section 2 of RA
1405. The said provision reads:

Sec. 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, when the examination is made in the course of a special or general
examination of a bank and 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, or when the examination is 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, or upon written permission of the
depositor, or in case 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 litigation. (As amended
by PD No. 1792)

Based on this provision, it has been declared that bank deposits are absolutely confidential except in the following
instances:

(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 litigation.6

The petitioner points out that one of the exceptions mentioned is "upon order of a competent court in cases of
bribery or dereliction of duty of public officials." Since the cases filed against his father, former President Estrada,
are not for these crimes but for plunder and illegal use of alias, then the said exception does not allegedly apply.
Further, his accounts do not fall under exception (6) as they are not allegedly "subject matter of litigation."

This argument of the petitioner is not persuasive. Former President Estrada is being charged with plunder as
defined and penalized under Section 2 of RA 7080,7 to wit:

Definition of the Crime of Plunder, Penalties. – Any public officer who, by himself or in connivance with members of
his family, relatives by affinity or consanguinity, business associates, subordinates or other persons, amasses,
accumulates or acquires ill-gotten wealth through a combination or series of overt or criminal acts as described in
Section 1(d) hereof in the aggregate amount or total value of at least Fifty million pesos (₱50,000,000.00) shall be
guilty of the crime of plunder and shall be punished by reclusion perpetua to death. Any person who participated
with the said public officer in the commission of an offense contributing to the crime of plunder shall likewise be
punished for such offense. In the imposition of penalties, the degree of participation and the attendance of mitigating
and extenuating circumstances, as provided by the Revised Penal Code, shall be considered by the court. The court
shall declare any and all ill-gotten wealth and their interest and other incomes and assets including the properties
and shares of stocks derived from the deposit or investment thereof forfeited in favor of the State. (As amended by
Sec. 12, RA 7659).

Section 1(d) of the same law defines "ill-gotten wealth" as "any asset, property, business enterprise or material
possession of any person within the purview of Section 2 thereof, acquired by him directly or indirectly through
dummies, nominees, agents, subordinates, and/or business associates by any combination or series of the following
means or similar schemes:

1. Through misappropriation, conversion, misuse or malversation of public funds or raids on the public
treasury;

2. By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks or any other form of
pecuniary benefit from any person and/or entity in connection with any government contract or project or by
reason of the office or position of the public officer concerned;

3. By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or
any of its subdivisions, agencies or instrumentalities, or government-owned or controlled corporations and
their subsidiaries;

4. By obtaining, receiving or accepting directly or indirectly any shares of stock, equity or any other form of
interest or participation including the promise of future employment in any business enterprise or
undertaking;

5. By establishing agricultural, industrial or commercial monopolies or other combination and/or

implementation of decrees and others intended to benefit particular persons or special interests; or

6. By taking undue advantage of official position, authority, relationship, connection or influence to unjustly
enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the
Republic of the Philippines.

It can be readily gleaned that the gravamen of plunder is the amassing, accumulating or acquiring of ill-gotten
wealth by a public officer, his family or close associates. In Philippine National Bank v. Gancayco,8 the Court
explained that "cases of unexplained wealth are similar to cases of bribery or dereliction of public duty and no
reason is seen why these two classes of cases cannot be excepted from the rule making bank deposits confidential.
The policy as to one cannot be different from the policy as to the other. This policy expresses the notion that a public
office is a public trust and any person enters upon its discharge does so with full knowledge that his life, so far as
relevant to his duty, is open to public scrutiny."9

A plain reading of the definition of plunder and the manner by which it may be committed as provided in RA 7080
reveals that its policy also rests upon the fundamental tenet that "public office is a public trust."10 There is thus no
cogent reason to treat plunder any different from the cases of bribery or dereliction of public duty for purposes of RA
1405.

The petitioner next contends that Gancayco and Banco Filipino Savings v. Purisima,11 insofar as they expounded
Section 8 of RA 3019 are not applicable to his case. He reasons that in these cases, when the subpoenas subject
thereof were issued, the text of Section 8 of RA 3019 provided that: "x x x Properties in the name of the spouse and
unmarried children of such public official may be taken into consideration x x x. Bank deposits shall be taken into
consideration in the enforcement of this section, notwithstanding any provision of law to the contrary
notwithstanding."

On the other hand, Section 8 of RA 3019, as presently worded upon its amendment by Batas Pambansa Blg. 195
on March 16, 1986, reads:

SEC. 8. Prima facie evidence of and dismissal due to unexplained wealth. – If in accordance with the provisions of
Republic Act Numbered One thousand three hundred seventy-nine, a public official has been found to have
acquired during his incumbency, whether in his name or in the name of other persons, an amount of property and/or
money manifestly out of proportion to his salary and to his other lawful income, that fact shall be a ground for
dismissal or removal. Properties in the name of the spouse and dependents of such public official may be taken into
consideration, when their acquisition through legitimate means cannot be satisfactorily shown. Bank deposits in the
name of or manifestly excessive expenditures incurred by the public official, his spouse or any of their dependents
including but not limited to activities in any club or association or any ostentatious display of wealth including
frequent travel abroad of a non-official character by any public official when such activities entail expenses evidently
out of proportion to legitimate income, shall likewise be taken into consideration in the enforcement of this section,
notwithstanding any provision of law to the contrary. The circumstances hereinabove mentioned shall constitute
valid ground for the administrative suspension of the public official concerned for an indefinite period until the
investigation of the unexplained wealth is completed.

The petitioner theorizes that prior to the amendment, the following may be taken into consideration in the
enforcement of Section 8 of RA 3019:

c) properties in the name of the spouse and unmarried children of the public official; and

d) bank deposits (without any qualification by law).12

After its amendment on March 16, 1982, the following may allegedly be taken into consideration in the enforcement
of Section 8 of RA 3019:

c) properties in the name of the spouse and dependents of the public official; and

d) bank deposits in the name of the public official, his spouse or any of their dependents.13

According to the petitioner, although he is the son of former President Estrada, he is absolutely not his dependent.
Petitioner avers that he is in his own right a legitimate businessman having investments in several entities when he
opened the subject accounts in Urban Bank, now Export and Industry Bank. Further, he is also the Municipal Mayor
of San Juan, Manila. He thus urges the Court against applying the rulings in Gancayco and Banco Filipino in the
light of the amendment of Section 8 of RA 3019.

The petitioner’s contention is equally unpersuasive. It should be recalled that the petitioner in Banco Filipino posited
that the inquiry into illegally acquired property should be restricted to property held by or in the name of the
government official or employee or his spouses and unmarried children. The Court rejected this argument as it
pronounced that:
To sustain the petitioner’s theory, and restrict the inquiry only to property held by or in the name of the government
official or employee, or his spouse and unmarried children is unwarranted in the light of the provisions of the statutes
in question, and would make available to persons in government who illegally acquired property an easy and fool-
proof means of evading investigation and prosecution; all they would have to do would be to simply place the
property in the possession or name of persons other than their spouse and unmarried children. This is an absurdity
that we will not ascribe to the lawmakers.14

At this point, it is well to mention that based on the evidence presented by the prosecution before the
Sandiganbayan, hundreds of millions of pesos flowed from the petitioner’s Trust Account No. 858 to the alleged
Jose Velarde account purportedly maintained by former President Estrada at Equitable PCIBank. In fact, one
manager’s check, marked as Exhibit "L" for the prosecution, in the amount of ₱107,191,780.85 was drawn from, and
funded by the said trust account of petitioner JV Ejercito.

Considering the mind-boggling sums of money that flowed out of the petitioner’s Trust Account No. 858 and its
nexus to former President Estrada’s alleged Jose Velarde account, it is logical for the prosecution to pursue the
theory that the money in the said trust account forms part of the unexplained wealth of the latter. As such, the
money in the accounts of the petitioner may be properly considered as "subject matter" of the plunder cases falling
under number (6) of the enumerated exceptions to the absolute confidentiality of bank deposits.

Viewed in this context, the petitioner’s assertion that since he is no longer a dependent of his father, then the rulings
in Gancayco and Banco Filipino are not applicable to his case is, to say the least, quite lame. In fact, to sustain his
theory would, as the Court stated in Banco Filipino, "make available to persons in government who illegally acquired
property an easy and fool-proof means of evading investigation and prosecution; all they would have to do would be
to simply place the property in the possession or name of persons other than their spouse and unmarried children.
This is an absurdity that we will not ascribe to the lawmakers."15

The petitioner bewails the "extremely-detailed" information contained in the Special Prosecution Panel’s requests for
the subpoenae duces tecum/ad testificandum. The information upon which the requests were based was allegedly
illegally and improperly obtained.

The petitioner opines that there had been prior disclosure by the bank and its personnel of data and information
relative to his trust and savings accounts considering the very detailed information contained in the request for the
subpoenas, to wit:

a) Trading Order No. 020385 dated January 29, 1999;

b) Confirmation Advice TA 858;

c) Trust Agreement dated January 1999;

d) Special Private Account No. (SPAN) 858;

e) Savings Account No. 0116-17345-9;

f) Letter of authority dated November 23, 1999 re:SPAN 858;

g) Letter of authority dated January 29, 2000 re: SPAN 858;

h) Letter of authority dated April 24, 2000 re: SPAN 858;

i) Urban Bank check no. 052092 dated April 24, 2000 for the amount of ₱36,572,315.43;

j) Urban Bank check no. 052093 dated April 24, 2000 the amount of ₱107,191,780.85.

According to the petitioner, the bank officials and personnel are criminally liable for releasing, without his knowledge,
consent and authorization, information relative to his accounts to the prosecution. Further, since the information
used to support the requests for the subpoenas was not secured by court order, such information was illegally
acquired and the requests for subpoenas containing the said illegally acquired information are already a direct
violation of RA 1405. Consequently, such illegally acquired information cannot be used in any proceeding. He
invokes the constitutional provision on the right of the people to be secure in their persons, houses, papers and
effects against unreasonable searches and seizures of whatever nature and purpose and that any evidence
obtained in violation thereof shall be inadmissible in evidence.16

The petitioner cites the following pronouncement of the Court in Marquez:

Zones of privacy are recognized and protected in our laws. The Civil Code provides that "[e]very person shall
respect the dignity, personality, privacy and peace of mind of his neighbors and other persons" and punishes as
actionable torts several acts for meddling and prying into the privacy of another. It also holds a public officer or
employee or any private individual liable for damages for any violation of the rights and liberties of another person,
and recognizes the privacy of letters and other private communication. The Revised Penal Code makes a crime of
the violation of secrets by an officer, the revelation of trade and industrial secrets, and trespass to dwelling. Invasion
of privacy is an offense in special laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the
Intellectual Property Code.17

A review of the incidents related to the present case will show why the petitioner’s reliance on Marquez is
misplaced. In the said case, the Office of the Ombudsman issued a subpoena addressed to Marquez, a bank officer
of Union Bank, directing her to bring several bank documents for in camera inspection in connection with an
investigation being conducted by the Office of the Ombudsman.

Marquez refused to comply with the said directive and sought recourse to the Court by filing a petition and raising
therein the issue of whether the order of the Office of the Ombudsman to have an in camera inspection of the
questioned account was allowed as an exception to the law on secrecy of bank deposits.

According to the Court, notwithstanding Section 15(8) 18 of RA 6770 (The Ombudsman Act), "before an in camera
inspection may be allowed, there must be a pending case before a court of competent jurisdiction. Further, the
account must be clearly identified, the inspection limited to the subject matter of the pending case before the court of
competent jurisdiction. The bank personnel and the account holder must be notified to be present during the
inspection, and such inspection may cover only the account identified in the pending case."19

Marquez was promulgated by the Court on June 27, 2001. However, as early as February 8, 2001 or before the
promulgation of Marquez, the Office of the Ombudsman, relying on Section 15(8) of RA 6770 and on the basis of
information obtained during the impeachment proceedings of former President Estrada, issued a subpoena
addressed to Urban Bank. The documents sought under the subpoena pertained to numbered accounts 727, 737,
747, 757 and 858 allegedly in the names of Jose Velarde, Joseph E. Estrada, Laarni Enriquez, Guia Gomez, Joy
Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin Garcia.

In compliance with the said subpoena, the PDIC, as then receiver of Urban Bank, issued a certification on February
13, 2001, as to the availability of bank documents relating to A/C 858 and T/A 858 and the non-availability of bank
records as to the other accounts named in the subpoena. Based on the PDIC certification, the Office of the
Ombudsman issued on February 16, 2001 another subpoena directing the production of documents pertinent to
accounts A/C 858 and T/C 858. The PDIC again complied and furnished the Office of the Ombudsman on February
21, 2001 certified copies of the following documents:

1. Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-18-99, 11-22-99,1-07-00, 01-17-00, 04-03-00
and 04-24-00;

2. Report of Unregularized TAFs & DTs For UR COIN A & B Placements of Various Branches as of
February 29, 2000 and as of December 16, 1999; and

3. Trading Orders Nos. A No. 78102 and A No. 078125.

Trading Order A No. 07125 is filed in two copies – a white copy which showed "set up" information; and a yellow
copy which showed "reversal" information. Both copies have been reproduced and are enclosed with this letter.
We are continuing our search for other records and documents pertinent to your request and we will forward to you
on Friday, 23 February 2001, such additional records and documents as we might find until then. (Attachment "4")20

Upon the request of the Office of the Ombudsman, the PDIC furnished the said office copies of the manager’s
checks. With respect to the other documents described by petitioner JV Ejercito as "extremely-detailed," the Special
Prosecution Panel explains how they came to know about these documents in this manner:

What is more, Attachment "2-a," the compliance letter from the PDIC, specifically mentioned, as among the
documents transmitted thereby, a LIST (Attachment "2-B") pertaining to the documents available in connection with
Account No. 858, which list and documents (listed therein) were furnished the Office of the Ombudsman:

In compliance with the Subpoena Duces Tecum dated February 8, 2001 issued by the Office of the Ombudsman,
transmitted are:

1. Certification on available bank documents relating to A/C 858 and T/A 858 contained in a list attached thereto xxx
(emphasis supplied)

There is a list, therefor, apart from the documents themselves (furnished the Office of the Ombudsman) to which
said list is attached, from which details can be lifted. Thus, as to Trading Order No. 020385 dated January 29, 1999,
it must be noted that it is the second item in the list (Attachment "2-b" hereof) under document no. A-2. It is also
among the documents furnished by the PDIC.

As to Confirmation Advice TA 858, it must be noted that this is a specific but not detailed document being sought in
the subpoena regarding Account No. 858, in general. For those familiar with banking practice, such is an expected
document of course, or one issued in the course of placements since it has been previously established that
Account No. 858 is a Trust Account. A confirmation advice, therefore, is a reasonable and expected document to be
found in trust accounts to evidence participation in specific amounts. A sample of said confirmation advice, in the
amount of ₱200 Million, and which is among the documents officially furnished the Office of the Ombudsman during
the investigation leading to the charge for plunder against former President Joseph Estrada, et al., is attached as
Attachment "36."

Further, the list (Attachment "2-b" hereof) enumerates a number of confirmation advices sufficient for the plaintiff to
ask for the same in the instant subpoena. However, as earlier explained, even in the absence of such a list, any
person could reasonably expect such a document in Trust Account No. 858 to evidence participation.

As to the Trust Agreement dated January 1999, since the account had been established as a Trust Account, it is
reasonable to presume and expect that there is such a Trust Agreement on or about January 1999, coinciding with
the date of the Trading Order, existing in the records.

Surely, this needs no stretch of imagination to reckon that such a document should exist in a truth account.

As to Special Private Account No. (SPAN) 858, SPAN 858 is yet another detail derived from a study of the
documents and list furnished by the PDIC to the Office of the Ombudsman. For example, document no. C-2 in the
list would yield a Trading Order No. 046352 for ₱40 Million with the customer being identified as SPAN 858.

As to Savings Account No. 0116-17345-9, again, among the documents furnished by the receiver of Urban Bank to
the Office of the Ombudsman pursuant to its constitutional powers is a copy of the Specimen Signature Card for
SPAN 858, opened on March 9, 1999 under Account No. 0116-17345-9. It must be emphasized that Account No.
0116-17345-9 is an entry in the said document.

As to the Letter of Authority dated November 23, 1999 re: SPAN 858, it is document no. E-3 in the list.

It must be emphasized that this letter of authority dated November 23, 1999 authorized the release of more than
₱100 Million worth of manager’s checks, where the ultimate recipient, for its deposit to the Jose Velarde account
was, Baby Ortaliza. It must be recalled that prosecution witnesses Teresa Barcelona and Glyzelyn H. Bejec testified
that it was Ortaliza who deposited the manager’s checks subject of the letter of authority dated November 23, 1999
to the Jose Velarde account via Equitable PCIBank Greenhills Branch.
It must be recalled that plaintiff has presented voluminous evidence to establish beyond any doubt that Lucena
"Baby" Ortaliza worked for accused Joseph Estrada in the Office of the Vice President, as testified to by prosecution
witness Remedios Aguilar of the Office of the Vice President. The same fact is also shown by Exhibits "Y5," "Z5," "A6"
(Ortaliza’s appoint papers designating her as Vice-Presidential Staff Officer II signed by then Vice President Jose
Estrada), "B6" (Certification of Employment), "C6" (Oath of Office), "D6" (Position Description Form), "E6" (Notice of
Salary Adjustment) "F6" (Certification) and "G6" (Personal Data Sheet). Ortaliza also worked for accused Joseph
Estrada at the Office of the President as testified to by witness Lita Sison of the Office of the President and as
proved by Exhibits "I6" (Master Personnel Records File), "H6" (Registration letter of Ortaliza from the Office of the
President), "J6" (Personnel Assessment Form), "K6" (appointment papers designating her as Presidential Staff
Officer VI, Internal House, signed by then President Joseph Estrada), "L6" (Oath of Office), "M6" (Certification of
Employment), "N6" (Position Description Form), "O6" (Personal Data Sheet) and "P6" (Ortaliza’s public service
record). The same "Baby" Ortaliza also transacted on behalf of former President Joseph Estrada with respect to his
personal bank accounts. Indeed, Baby Ortaliza, as testified to by numerous prosecution witnesses and as shown by
the documents they identified, is also the same person who transacted with Equitable PCIBank in connection with
the Jose Velarde account and with Citibank in connection with the conjugal bank account of former President
Joseph Estrada and Sen. Luisa Ejercito wherein the ₱8 Million check of Gov. Luis "Chavit" Singson was deposited.
In addition to the foregoing and the testimonies of Clarissa Ocampo and Manuel Curato of Equitable PCIBank, the
documents relating to Trust Account No. 858, thus, constitute further proof that accused Joseph Estrada is Jose
Velarde.

Indeed, the surfacing of the name Baby Ortaliza in this Account No. 858 and her participation herein, coupled with
the previous evidence presented as to who she worked for, all the more make Trust Account No. 858 not only
relevant and material, but also the very subject matter of litigation in the instant case. Indeed, her participation
herein more than establishes a pattern of behavior, a custom, a modus operandi among accused Joseph Estrada,
herself and the other co-accused in appearing for, representing, accused Joseph Estrada and transacting with
respect to his bank accounts.

As to Letter of Authority dated January 17, 2000 re SPAN 858, it is document no. E-4 in the list.

As to Letter of Authority dated April 24, 2000 re: SPAN 858, it is document no. E-5 in the list.

As to Urban Bank Check No. 052093 dated April 24, 2000 in the amount of P36,572,315.43 and Urban Bank Check
No. 052093 dated April 24, 2000 in the amount of ₱107,191,780.85, the foregoing details were culled from the
contents of the letter of authority dated April 24, 2000. Indeed, said letter of authority authorizes the issuance of
manager’s checks in accordance with the details therein provided:

1) AMOUNT :PHP107,191,780.85

DATE :APRIL 24, 2000

PAYEE :CASH

MC # :052093

2) AMOUNT :PHP36,572,315.43

DATE :APRIL 24, 2000

PAYEE :CASH

MC# :052092

It must be emphasized that the foregoing details were adopted in seeking for the production of the two (2) Urban
Bank manager’s checks.21
As shown by the Special Prosecution Panel, some of the details about the accounts of petitioner JV Ejercito were
obtained from various sources gathered during the impeachment proceedings against former President Estrada.
The various sources included reports, articles and investigative journals, which are legitimate sources.

The other details were gathered upon compliance by the PDIC and/or Urban Bank with the subpoenas issued by the
Office of the Ombudsman prior to the promulgation by the Court of Marquez. The Office of the Ombudsman, in
issuing the subpoenas relied on Section 15(8) of RA 6770 giving it the power "to issue subpoena and subpoena
duces tecum and take testimony in any investigation or inquiry, including the power to examine and have access to
bank accounts and records."

The Marquez ruling, it bears reiterating, came after the subpoenas were issued by the Office of the Ombudsman
and the PDIC and Urban Bank had already complied therewith by furnishing it the necessary information. The said
information cannot thus be considered "illegal" because Marquez, which applied and interpreted the power of the
Office of the Ombudsman under Section 15(8) of RA 6770, cannot be given retroactive application. In Filoteo, Jr. v.
Sandiganbayan,22 the Court emphasized that "judge-made" laws are to be applied prospectively:

The prospective application of "judge-made" laws was underscored in Co v. Court of Appeals where the Court ruled
thru Chief Justice Andres R. Narvasa that in accordance with Article 8 of the Civil Code which provides that
"(j)udicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the
Philippines," and Article 4 of the same Code which states that "(l)aws shall have no retroactive effect unless the
contrary is provided," the principle of prospectivity of statutes, original or amendatory, shall apply to judicial
decisions, which, although in themselves are not laws, are nevertheless evidence of what the law means.23

Contrary to the petitioner’s contention, therefore, the "extremely-detailed" information of the Office of the
Ombudsman on which it based its requests for subpoenae duces tecum/ad testificandum can hardly be
characterized as "illegal." In any case, even if Marquez were to be given retroactive application, still, the crux of the
Court’s ruling in the said case has no application to the present case. In Marquez, the Court disallowed the
Ombudsman from conducting an in camera inspection of the bank account because "there was no pending case in
court which would warrant the opening of the bank account for inspection."

On the other hand, it is indubitable that in the present case, the plunder and illegal use of alias cases against former
President Estrada are pending before the Sandiganbayan and, unlike in Marquez, the Special Prosecution Panel
has asked leave of court in accordance with RA 1405 for the production of the said documents. Consequently, the
subpoenae duces tecum/ad testificandum issued by the Sandiganbayan are allowable exceptions to the bank
secrecy laws as they properly fall under the following categories in Section 2 thereof:

(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 litigation.24

Finally, the petitioner has sought to suppress the "extremely-detailed" information that the Special Prosecution
Panel has requested. He invokes his constitutional right against unreasonable search and seizures and that any
evidence obtained in violation thereof shall be inadmissible in evidence. In her concurring and dissenting opinion,
Mme. Justice Angelina Sandoval-Gutierrez agrees with petitioner JV Ejercito as she supports his plea to quash the
subpoenae duces tecum/ad testificandum issued by the Sandiganbayan characterizing them as "unreasonable and
oppressive" for being based on information allegedly obtained in violation of his constitutional right to privacy.

To my mind, the application of the exclusionary rule or the "fruit of the poisonous tree" doctrine is not warranted in
the present case not only because, as discussed earlier, there is no "illegally obtained evidence" to speak of but
also because nowhere is it stated in RA 1405, and even in Marquez, that a violation thereof warrants application of
the exclusionary rule. Section 5 of RA 1405 provides that "[a]ny violation of this law will subject the offender upon
conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both,
in the discretion of the court."

Interestingly, the United States has the Bank Secrecy Act (BSA).25 However, unlike RA 1405, the US BSA was
precisely enacted by the US Congress as a means of providing federal law investigators with an effective tool to
fight criminal financial activity:
The conclusion reached by Congress in the early hearings was summarized by Robert Morgenthau, U.S. Attorney,
Southern District of New York, "Secret numbered foreign bank accounts have become an ever increasing
widespread and versatile tool for the evasion of our laws and regulations and for the commission of crimes by
American citizens and for hiding the fruits of crimes already committed.

This wave of criminal activity is fostered by the failure of fairly complete criminal investigations to ripen into
prosecutions because there has been no disclosure of the real parties in interest; investigators cannot point to any
particular individual. Even if identity is revealed, the evidence remains inadmissible hearsay. Most modern secrecy
law prohibits the banker from coming forth with the disclosure. Thus, the prosecution lacks the competent and
qualified business representative who could state evidence of account information as a business records exception
to the hearsay rule.

In response to the public outcry over this reported criminal activity and as a means of providing federal law
investigators with an effective investigative tool, Congress enacted the Bank Secrecy Act (BSA).26

The important feature of the BSA is its regulatory structure that is designed to be used as an investigative tool in the
fight against white collar crime, and its passage is a broad delegation of commerce power to the Treasury
Department. Title I thereof authorizes the Secretary of the Treasury Department to require financial institutions to
record vast amounts of information on financial transactions. Title II provides a regulatory access to information via
required reporting by the financial institutions and expressly authorized governmental interagency exchange of the
accessed information.27

In California Bankers Association v. Schulz,28 the US Supreme Court held that the BSA is a constitutionally valid and
proper regulatory device. In United States v. Miller,29 the US Supreme Court reaffirmed its stance by holding that
government access to a customer account records is not an unreasonable search and seizure even if realized
through defective legal process and without customer notification.

Miller was convicted of operating an illegal still, functioning as a distiller without having posted bond, and committing
tax evasion. The convictions were based on evidence subpoenaed pursuant to the BSA. Miller moved to suppress
the bank records on the grounds that they were obtained by means of a defective subpoena duces tecum which
resulted in a seizure violative of the fourth amendment.

The US Supreme Court held that Miller had no "protectable" fourth amendment interest in the subpoenaed
documents. Justice Powell, speaking for the US Supreme Court, reasoned that the subpoenaed documents were
not Miller’s "private papers" and that he could assert neither ownership nor possession. Rather, these were the
business records of the bank.

The said Court also debunked Miller’s claim that he had a legitimate "expectation of privacy" concerning the
contents of the bank documents, e.g., checks and deposit slips:

Even if we direct our attention to the original checks and deposit slips, rather than to the microfilm copies actually
viewed and obtained by means of the subpoena, we perceive no legitimate "expectation of privacy" in their contents.
The checks are not confidential communications but negotiable instruments to be used in commercial transactions.
All of the documents obtained, including financial statements and deposit slips, contain only information voluntarily
conveyed to the banks and exposed to their employees in the ordinary course of business. The lack of any
legitimate expectation of privacy concerning the information kept in bank records was assumed by Congress in
enacting the Bank Secrecy Act, the express purpose of which is to require records to be maintained because they
"have a high degree of usefulness in criminal tax, and regulatory investigations and proceedings."

The depositor takes the risk, in revealing his affairs to another, that the information will be conveyed by that person
to the Government. The Court has held repeatedly that the Fourth Amendment does not prohibit the obtaining of
information revealed to a third party and conveyed by him to Government authorities, even if the information is
revealed on the assumption that it will be used only for a limited purpose and the confidence placed in the third party
will not be betrayed.30

Because the customer had no "protectable" fourth amendment rights, according to the US Supreme Court, the case
was controlled by the general rule that a subpoena issued to a third party, for that party’s records, does not violate
the rights of the third party’s client.
Largely in response to Miller and California Bankers, the US Congress enacted the Right to Financial Privacy Act of
1978 (RFPA).31 It enumerates the legal processes available for federal agency access to customer’s account
information. Access is conditioned upon one of the following procedures: customer authorization,32 administrative
subpoena or summons,33 search warrant,34 judicial subpoena,35 grand jury subpoena,36 or formal written agency
request.37

Case law provides, however, that a violation of the procedures set forth in RFPA does not warrant exclusion of the
evidence obtained because courts should not imply a suppression remedy unless the statute expressly refers to the
exclusionary rule. The RFPA states that civil penalties are the only authorized remedy for its violation.38 In United
States v. Frazin,39 for example, Frazin and Miller were charged with mail and wire fraud. During its investigation,
banks furnished the Federal Bureau of Investigation (FBI) information about the account of Frazin without his
knowledge or consent and without warrant. Frazin sought to suppress the bank records and other information
obtained in violation of RFPA. The United States Court of Appeals, Ninth Circuit, held against Frazin ratiocinating
that had Congress intended to authorize a suppression remedy, it surely would have included it among the remedies
it expressly authorized. The said US appellate court likewise refused to suppress the financial evidence pursuant to
its supervisory powers over the administration of justice. It opined that "because the statute, when properly
construed, excludes a suppression remedy, it would not be appropriate for us to provide one in the exercise of our
supervisory powers over the administration of justice. Where Congress has both established a right and provided
exclusive remedies for its violation, we would encroach upon the prerogatives of Congress where we to authorize a
remedy not provided for by the statute."

The said ruling in Frazin was reiterated by the US Court of Appeals, Second Circuit, in United States v. Daccarett,40a
civil forfeiture proceeding instituted by the United States Government against monies of Cali cartel, a Colombian
conglomerate headed by Jose Santacruz-Londono, which allegedly imported 3000 kilograms of cocaine a month
into the US. The cartel allegedly used bank accounts throughout the US, Europe, Central and South America to
store and move its narcotic proceeds. Funds were moved through various international banks by means of
electronic fund transfers for ultimate deposit into Colombian bank accounts.

Several associates of Santacruz-Londono were arrested in Luxembourg. Anticipating that the arrests would trigger
an effort by the cartel to move its monies to Colombia, the Luxembourg law enforcement authorities requested the
assistance of several countries to freeze monies related to the cartel. The US Drug Enforcement Agency (DEA)
instructed intermediary banks in New York to attach "all funds" on deposit in the names of entities and individuals
connected with Santacruz-Londono. The DEA also subpoenaed from the intermediary banks financial records of
related accounts.

The entities and individuals who claimed to be the beneficiaries of the seized funds argued, among others, that their
fourth amendment rights against unreasonable searches and seizures were violated when the government gained
access to their financial records from the intermediary banks without a warrant. They contended that evidence
obtained from the subpoenas should have been suppressed at trial. The US appellate court, in rejecting this
argument, cited Frazin and succinctly held that "because the RFPA states that civil penalties are the only authorized
remedy for its violation, it would be inappropriate for the courts to imply a suppression remedy as well."

Also in United States v. Thompson,41 the US Court of Appeals, Eleventh Circuit, made the following disquisition:

x x x [T]he defendant would have to show that Congress had provided such a remedy for a violation of the statute,
either specifically or by inference. Clearly Congress intended to place limits on the Government’s ability to monitor
the private activities of individuals when it passed this statute. Congress did not, however, suggest that any
information obtained in violation of the statute’s provisions should be excluded. Instead the statute only provides for
fines and possible imprisonment for knowing violations. When Congress specifically designates a remedy for one of
its acts, courts generally presume that it engaged in the necessary balancing of interests in determining what the
appropriate penalty should be. Absent a specific reference to the exclusionary rule, it is not appropriate for the
courts to read such a provision into the act.42

Under prevailing jurisprudence in the United States therefore, violations of the RFPA do not warrant the application
of the exclusionary rule with respect to the evidence obtained.

Nonetheless, in the present case, there is no violation of RA 1405 precisely because petitioner JV Ejercito’s case
properly falls under the recognized exceptions to the rule on confidentiality of bank deposits. Further, the Special
Prosecution Panel has properly requested the Sandiganbayan for the issuance of the subpoenae duces tecum/ad
testificandum for the production of documents relating to the bank accounts of petitioner JV Ejercito in connection
with the plunder and illegal use of alias cases against former President Estrada. The Sandiganbayan, in issuing the
assailed resolutions, clearly committed no grave abuse of discretion.

ACCORDINGLY, I vote to DISMISS the petition.

ROMEO J. CALLEJO, SR.

Associate Justice

Footnotes

1 The Secrecy of Bank Deposits Act.

2 The Anti-Graft and Corrupt Practices Act.

3 412 Phil. 387 (2001).

4 Memorandum of the petitioner, p. 17.

5 Id. at 3.

6 Union Bank of the Philippines v. Court of Appeals, 378 Phil. 1177 (1999).

7 An Act Defining and Penalizing the Crime of Plunder.

8 122 Phil. 503 (1965).

9 Id. at 96.

10 Section 1, Article XI of the 1987 Constitution.

11 L-56429, May 28, 1988, 161 SCRA 576.

12 Supra note 4, at 44-45.

13 Id.

14 Supra note 11, at 582.

15 Id.

16 Sections 2 and 3, Article III of the Constitution read;

SEC. 2. The right of the people to be secure in their persons, houses, papers, and effects against
unreasonable searches and seizures of whatever nature and for any purpose shall be inviolable, and
no search warrant or warrant of arrest shall issue except upon probable cause to be determined
personally by the judge after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons
and things to be seized.
 SEC. 3. (1) The privacy of communication and correspondence shall be inviolable except upon
lawful order of the court, or when public safety or order requires otherwise as prescribed by law.

(2) Any evidence obtained in violation of this or the preceding section shall be inadmissible for any
purpose in any proceeding.

17 Supra note 3, at 398-399.

18 Section 15 (8) of RA 6770 reads:

SEC. 15. Powers, Functions and Duties. – The Office of the Ombudsman shall have the following
powers, functions and duties:

xxxx

(8) Administer oaths, issue subpoena and subpoena duces tecum and take testimony in any
investigation or inquiry, including the power to examine and have access to bank accounts and
records;

19 Supra note 3, at 397.

20 Memorandum of respondent People, pp. 63-64.

21 Memorandum of respondent People, pp. 66-72.

22 331 Phil. 531 (1996).

23 Id. at 573-574. Citations omitted.

24 Supra note 6.

2512 U.S.C. §§ 1730d, 1829b, 1951-1959 (1982); 31 U.S.C. §§ 5311-5322 (1982), as amended by 31
U.S.C.A. §§ 5316 (a), 5317(c), 5323 (West Supp. 1985).

Eldridge, The Bank Secrecy Act; Privacy, Comity, and the Politics of Contraband, 11 N.C.J Int’l L. & Com.
26

Reg. 667 (Summer, 1986).

27 Id. at 672.

28 416 US 21 (1974).

29 425 US 435 (1976).

30 Id. at 442-443.

31 12 U.S.C. §§ 3401-3422.

32 Id. § 3404.

33 Id. § 3405.

34 Id. § 3406.

35 Id. § 3407.
 36 Id. § 3420.

37 Id. § 3408.

38 12 U.S.C. § 3417(d).

39 780 F.2d 1461 (1986).

40 6 F.3d 37 (1993).

41 936 F.2d 1249 (1991).

42 Id. at 1251.

The Lawphil Project - Arellano Law Foundation

DISSENTING OPINION

SANDOVAL-GUTIERREZ, J.:

I regret I cannot give my assent to the ponencia of Madame Justice Conchita Carpio Morales. To my mind, no
member of a democratic society can honestly argue that there is nothing wrong in an examination of a bank account
to the complete ignorance of its holder. This is the kind of conduct referred to in Rochin v. California,1 as one that
"shocks the conscience," "one that is bound to offend hardened sensibilities." This abusive conduct must be stricken
if we are to maintain decency, fair play, and fairness in our judicial system. Nothing can destroy a government more
quickly than its failure to observe its own laws, its disregard of the character of its own existence. The government
should not demean but protect the Bill of Rights, because the highest function of authority is to exalt liberty. Here,
petitioner Joseph Victor G. Ejercito’s right to privacy has been violated. I cannot, in my conscience, tolerate such
violation.

Zones of privacy are recognized and protected by our laws.2 Within these zones, any form of intrusion is
impermissible unless excused by law and in accordance with customary legal process. The meticulous regard this
Court accord to these zones arises not only from the conviction that the right to privacy is a "constitutional right" and
"the right most valued by civilized men,"3 but also from our adherence to the Universal Declaration of Human Rights
which mandates that "no one shall be subjected to arbitrary interference with his privacy" and "everyone has the
right to the protection of the law against such interference or attacks."4

For easy reference, a narration of the factual and legal antecedents is imperative.

This petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, seeks to annul and set
aside Sandiganbayan (a) Resolutions, dated February 75 and February 12, 2003, 6 denying Joseph Victor G.
Ejercito’s two succeeding motions to quash three (3) subpoenae duces tecum/ad testificandum; and (b) Resolution
dated March 11, 20037 denying his motion for reconsideration all issued in Criminal Case No. 26558 for plunder
against former President Joseph Ejercito Estrada, et al.

Joseph Victor G. Ejercito (petitioner herein) is the holder of two (2) bank accounts with the Urban Bank and
Urbancorp Investment, Inc., now Export and Industry Bank (EIB); one is Trust Account No. 858 and the other is
Savings Account No. 0116-17345-9.

On January 26, 2003, petitioner learned from the media that the Special Prosecution Panel in Criminal Case No.
26558,8 entitled "People vs. Joseph Ejercito Estrada, et al." for plunder, pending before the Sandiganbayan
(respondent herein), had requested the said court to issue subpoenae duces tecum/ad testificandum to the EIB for
the production and examination of his two (2) bank accounts.

Alarmed, petitioner attended the hearing of the plunder case set the next day and submitted to respondent
Sandiganbayan a letter expressing his deep concern on his bank accounts being the subject of a "subpoena duces
tecum/ad testificandum." He also requested that he be given time to retain the services of a lawyer, thus:

"Your Honors:

It is with much respect that I write this court relative to the concern of subpoenaing the undersigned’s bank account
which I have learned through the media.

I am sure the prosecution is aware of our banking secrecy laws everyone supposed to observe. But, instead of
prosecuting those who may have breached such laws, it seems it is even going to use supposed evidence which I
have reason to believe could only have been illegally obtained.

The prosecution was not content with a general request. It even lists and identifies specific documents meaning
someone else in the bank illegally released confidential information.

If this can be done to me, it can happen to anyone. Not that anything can still shock our family. Nor that I have
anything to hide. Your Honors.

But, I am not a lawyer and need time to consult one on a situation that affects every bank depositor in the country
and should interest the bank itself, the Bangko Sentral ng Pilipinas, and maybe the Ombudsman himself, who may
want to investigate, not exploit, the serious breach that can only harm the economy, a consequence that may have
been overlooked. There appears to have been deplorable connivance

xxxxxx

I hope and pray, Your Honors, that I will be given time to retain the services of a lawyer to help me protect my rights
and those of every banking depositor. But the one I have in mind is out of the country right now.

May I, therefore, ask your Honors, that in the meantime, the issuance of the subpoena be held in abeyance for at
least ten (10) days to enable me to take appropriate legal steps in connection with the prosecution’s request for the
issuance of subpoena concerning my accounts." 9 (Emphasis supplied)

To petitioner’s surprise, respondent Sandiganbayan advised him "to file a motion to quash" not later than 12:00
noon of January 28, 2003, or the following day. It dawned upon petitioner that respondent court had already issued
a "subpoena duces tecum/ad testificandum."

Upon verification of the records, petitioner found that the Special Prosecution Panel had filed with respondent
Sandiganbayan two (2) requests for the issuance of subpoenae duces tecum/ad testificandum, one dated January
2010 and the other January 23,11 2003 for the EIB President or his authorized representative to appear and testify on
certain dates and to bring the original or certified true copies of the following documents:

I. For Trust Account No. 858:

1. Account Opening Documents;

2. Trading Order No. 020385, dated January 29, 1999;

3. Confirmation Advice TA 858;

4. Original/Microfilm copies, including the dorsal side of the following:

a) Bank of Commerce MC#0256254 in the amount of ₱2,000,000.00;

 b) Urban Bank Corp. MC# 34181 dated November 8, 1999 in the amount of ₱10,875,749.43;

c) Urban Bank MC# 34182 dated November 8, 1999 in the amount of ₱42,716,554.22;

d) Urban Bank Corp. MC#37661 dated November 23, 1999 in the amount of
₱54,161,496.52;

5. Trust Agreement dated January 1999;

Trustee: Joseph Victor G. Ejercito

Nominee: URBAN BANK-TRUST DEPARTMENT

Special Private Account No. (SPAN) 858; and

6. Ledger of the Span #858

II. For Savings Account No. 0116-17345-9

SPAN # 858

1. Signature Cards; and

2. Statement of Account/Ledger

III. Urban Bank Manager’s Checks and their corresponding Urban Bank Manager’s Checks Application
Form, as follows:

1. MC # 039975 dated January 18, 2000 in the amount of ₱70,000,000.00;

2. MC # 039976 dated January 18, 2000 in the amount of ₱2,000,000.00;

3. MC # 039977 dated January 18, 2000 in the amount of ₱2,000,000.00; and

4. MC# 039978 dated January 18, 2000 in the amount of ₱1,000,000.00;

Petitioner also came to know that respondent court had granted both requests12 and issued the corresponding
subpoenae duces tecum/ad testificandum dated January 2113 and 24,14 2003.

Immediately, or on January 29, 2003, petitioner filed a motion to quash the two (2) subpoenae.15

Meanwhile, on January 31, 2003, the Special Prosecution Panel filed another request for the issuance of a
subpoena duces tecum/ad testificandum pertaining to the same documents.16 On the same day, respondent
Sandiganbayan granted the request and issued the corresponding subpoena. Again, petitioner filed a motion to
quash.17

In both motions to quash, petitioner bewailed the "extremely-detailed" information contained in the Special
Prosecution Panel’s requests, alleging that a prior illegal disclosure of his bank accounts took place.

During the exchange of pleadings, petitioner learned that there was indeed a prior disclosure of his bank accounts.
In fact, as early as February 8, 2001, the Office of the Ombudsman had issued a subpoena duces tecum addressed
to the "President or Chief Executive Officer of Urban Bank" requiring him to produce "bank records and all
documents relative thereto pertaining to all bank accounts (Savings, Current, Time Deposit, Trust, Foreign Currency
Deposits, etc…) under the account names of Jose Velarde, Joseph E. Estrada, Laarni Enriquez, Guia Gomez, Joy
Melendrez, Peachy Osorio, Rowena Lopez, Kevin or Kelvin Garcia, 727, 737, 747, 757 and 858."18
On February 13, 2001, the Philippine Deposit Insurance Corporation (PDIC), as receiver of Urban Bank, responded
to the subpoena and certified the availability of bank documents relating to "T/A 858 and A/C 858" and the non-
availability of bank records as to the other accounts, thus:

We certify that from the gathering and research we have conducted to date into the records of the closed Urban
Bank under the custody and control of the Philippine Deposit Insurance Corporation (PDIC), as Receiver of said
bank, the documents enumerated in the attached list refer to "A/C 858" and "T/A 858."

We further certify that Accounts "A/C 858" and "T/A 858" do not appear in the Registry of Deposits of Urban Bank
and therefore said accounts are not part of the deposit liabilities of said bank.19

Based on the foregoing certification, the Office of the Ombudsman again issued a subpoena duces tecum dated
February 16, 2001 directing the production of documents pertinent to accounts "T/C 858 and A/C 858."20 In
compliance, the PDIC furnished the Office of the Ombudsman certified copies of the following documents:

1. Transaction registers dated 7-02-99, 8-16-99, 9-17-99, 10-18-99, 11-22-99, 1-07-00, 01-17-00, 04-03-00
and 04-24-00;

2. Report of Unregularized TAF & DTS For UR COIN A & B Placements of Various Branches as of February
29, 2000 and as of December 16, 1999; and

3. Trading Orders Nos. A No. 78102 and A No. 078125.

Trading Order A No. 07125 is filed in two copies – a white copy which showed "set up" information; and a yellow
copy which showed "reversal" information. Both copies have been reproduced and are enclosed with this letter.21

The Office of the Ombudsman, in another subpoena duces tecum22 dated March 7, 2001, directed the production of
Manager’s/Cashier’s Checks in the following amounts:

a. ₱10,875,749.43 dated November 8, 1999

b. ₱ 2,000,000.00 dated January 18, 2000

c. ₱ 2,000,000.00 dated January 18, 2000

d. ₱ 1,000,000.00 dated January 18, 2000

e. ₱70,000,000.00 dated January 18, 200023

The PDIC complied with the said subpoena.

On the basis of the foregoing documents released by the PDIC to the Office of the Ombudsman, the Special
Prosecution Panel filed with respondent Sandiganbayan its own requests for the issuance of subpoenae duces
tecum/ad testificandum.

On February 7, 2003, respondent Sandiganbayan denied petitioner’s motion to quash subpoenae duces tecum/ad
testificandum dated January 21 and 24, 2003.24 Thus:

"At the threshold, we state that we are not in accord with the stand of the prosecution that a trust account is not
included in the term "deposit of whatever nature." A "bank deposit" is defined as a contractual relationship ensuing
from the delivery, by one known as the depositor of money, funds or even things into the possession of the bank,
which receives the same upon the agreement to pay, repay or return, upon the order or demand of the depositor,
the money, funds, or equivalent amount. This agreement on the part of the bank is usually a tacit one and implied,
and it may include an implied promise to pay interest upon the deposit, depending upon the nature of the deposit
and the account into which it is placed (10 Am Jur 2d Banks 337, cited in page 121, Ballentine’s Law Dictionary,
Third Edition). x x x The Court is inclined to adopt the broader or expanded definition of the word "deposit" in R.A.
1405 as to encompass trust accounts consistently with the state policy declared in Section 1 thereof which is "to
give encouragement to the people to deposit their money in banking institution 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." In fact, the law itself adverts to "deposit of whatever nature."

xxxxxx

The Bank Secrecy Laws which prohibit the disclosure of or inquiry into deposits with any banking institution provides
for exceptions as follows:

xxxxxx

3. Upon order of a competent court in cases of (a) bribery or dereliction of duty or (b) where the money deposited or
invested is the subject matter of litigation;

xxxxxx

We now agree with the prosecution that the issuance of the subpoena to Export and Industry bank (formerly Urban
Bank) and PDIC falls under the exception. The questioned subpoena was issued by this Court in relation to the
instant cases against former President Joseph Estrada for Plunder and Illegal Use of Alias. The case for plunder
which involves betrayal of public trust, undeniably, is analogous to the cases enumerated by law for the exception to
apply. As expressed by the Supreme Court in the cases of Philippine National Bank v. Gancayco (ibid) and
Philippine National Bank v. Dionisio (9 SCRA 10), "cases of unexplained wealth are similar to cases of bribery or
dereliction of duty and no reason is seen why these two classes of cases cannot be excepted from the rule making
bank deposits confidential. The policy as to one cannot be different as to the other. This policy expresses the notion
that a public office is a public trust and any person who enters upon its discharge does so with the full knowledge
that his life, so far as relevant to his duty, is open to public scrutiny." x x x

xxxxxx

Further, movant’s claim that the subpoena must be quashed in view of the apparent conspiracy between the
prosecution panel, officials of Export and Industry Bank, and Ms. Aurora Baldoz of the Philippine Deposit Insurance
Corporation as revealed by the fact that the prosecution panel knows the documents which are supposedly very
internal to the bank and its clients, deserves scant consideration. Aside from it being not recognized as one of the
grounds to quash the subpoena, the mere fact that the request for subpoena specified the documents which are to
be brought to court, cannot, by itself proved that there was conspiracy on the part of the prosecution, the officials of
Export and Industry Bank as well as of the officials of the PDIC to violate the bank secrecy law. As clarified by the
prosecution, the documents listed in the request were obtained in February, 2001, pursuant to the power conferred
on the Ombudsman under Section 15 (8) of R.A. 6770, long before the Supreme Court promulgated the Marquez v.
Desierto case. Conspicuously, since the investigation was conducted in February, 2001, these cases are already
pending, hence, the Marquez ruling will not likewise apply. Besides, as already discussed, we declare that this case
falls under the exception of the aforecited law, hence, the premise on which this argument proceeds, does not any
more exist.

xxxxxx

x x x The allegation that movant’s constitutional right to due process was violated by the failure of the prosecution to
give notice to him and accused Estrada is devoid of merit. In the case of Adorio v. Bersamin (273 SCRA 217), the
Supreme Court ruled that:

‘Contrary to petitioner’s allegations, there was nothing irregular in the issuance of the subpoenas duces tecum.
Requests by a party for the issuance of subpoenas do not require notice to other parties to the action. No violation
of due process results by such lack of notice since the other parties would have ample opportunity to examine the
witnesses and documents subpoenaed once they are presented in court.’"

On February 12, 2003, respondent Sandiganbayan likewise denied petitioner’s motion to quash subpoena duces
tecum/ad testificandum dated January 31, 2003.
Petitioner filed a motion for reconsideration but was denied in the Resolution dated March 11, 2003.

Hence, the present petition for certiorari anchored on the following arguments:

(1) Whether the inquiry by subpoenae into the bank accounts of petitioner falls under the exceptions
provided for by R.A. No. 1405; and

(2) Whether petitioner should have been notified by respondent court, by furnishing him copies of the
subpoenae, that his bank accounts are subject of the litigation therein.

Petitioner maintains that the inquiry into his bank accounts does not fall under the exceptions provided by Republic
Act No. 1405 (Secrecy of Bank Deposits Act), i.e., "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 litigation." He
stresses that plunder is neither bribery nor dereliction of duty and that his bank accounts are not the "subject
matter"25 of the plunder case. In this regard, he contends that the rulings of this Court in Philippine National Bank v.
Gancayco26 and Banco Filipino Savings and Mortgage Bank v. Purisima27 are not applicable to the instant case.
Finally, he insists that the "extremely-detailed" information in the Special Prosecution Panel’s requests for
subpoenae duces tecum/ad testificandum shows prior illegal disclosure of his bank accounts, in violation of his
constitutional right to due process and privacy.

On the other hand, respondent People contends that petitioner’s bank deposits are actually proceeds of a "trust
account," hence, subject of inquiry under R.A. No. 1405.

I find the petition impressed with merit.

The case at bar brings to fore R.A. No. 1405 or the Secrecy of Bank Deposits Act. A glimpse at its history provides
an adequate backdrop for our ensuing discussion.

On September 9, 1955, the Philippine Legislature enacted R.A. No. 1405. Its rationale is to discourage private
hoarding and encourage people to deposit money in banks to be utilized in authorized loans. It happened that after
World War II, capital and credit facilities for agricultural and industrial development in the country were lacking.
Rehabilitation of the banking system became a major government thrust. However, private hoarding of money was
rampant because people feared government inquiry into their bank deposits and bond investments for tax collection
purposes. Thus, even if the members of Congress at that time recognized the possible danger of R.A. No. 1405,
such as providing a climate conducive to tax evasion, still, they passed the law with the belief that the benefits
accruing to the economy with the influx of deposits and bond investments would counterbalance immeasurably the
losses of the Government from such tax evasion.28 Section 2, the core of R.A. No. 1405, then reads:

Sec. 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.

In 1981, Former President Ferdinand E. Marcos issued Presidential Decree (P.D.) No. 1792 to provide for additional
exceptions to the "absolutely confidential nature" of bank deposits. These additional exceptions are: (1) when the
examination is made in the course of a special or general examination of a bank; or (2) when the examination is
made by an independent auditor hired by the bank to conduct its regular audit. Section 2 of R.A. No. 1405, as
amended, thus reads:

SEC.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, when the examination is made in the course of a special or general
examination of a bank and 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, or when the examination is 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, or upon written permission of the
depositor, or in case 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 litigation. (Emphasis
supplied)

The foregoing amendment was premised on the realization that the old provision adversely limited the examining
authority of the Central Bank. Allegedly, such limitation was contrary to the effective supervision of banks and
endangered the safety of deposits.

However, in 1992, P.D. No. 1792 was expressly repealed by Republic Act (R.A.) No. 7653, otherwise known as the
New Central Bank Act.29 Aside from encouraging domestic savings, R.A. No. 7653 sought to uphold the right of
citizens to privacy. Also, the then members of Congress were of the consensus that relaxed disclosure rules are not
conducive to healthy competition among banks and other financial institutions.30

Thus, we go back to the original provision of Section 2 of R.A. No. 1405 allowing deposits to be "examined, inquired
or looked into" under the following exceptions: (1) upon written permission of the depositor; (2) in cases of
impeachment; (3) upon order of a competent court in cases of bribery or dereliction of duty of public officials; or (4)
in cases where the

money deposited or invested is the subject matter of the litigation.31

I shall now resolve both issues.

Inquiry Falls Under the Exceptions

to the Confidentiality Rule and, therefore,
may be Inquired into by Respondent Sandiganbayan.

Petitioner contends that plunder is neither bribery nor dereliction of duty, hence, the inquiry on his bank accounts
cannot be considered an exception under R.A. No. 1405.

The argument is utterly without merit.

In the 1965 Philippine National Bank v. Gancayco32 case, this Court held for the first time that the exception "upon
order of a competent court in cases of bribery or dereliction of duty of public officials" is not exclusive, and that
analogous cases may be considered as falling within the same exception. There, "cases of unexplained wealth"
were considered analogous to "cases of bribery or dereliction of duty." The Court’s instructive pronouncement is
quoted hereunder:

"With regard to the claim that disclosure would be contrary to the policy making bank deposits confidential, it is
enough to point out that while section 2 of Republic Act 1405 declares bank deposits to be "absolutely confidential,"
it nevertheless allows such disclosure in the following instances: (1) Upon written permission of the depositor; (2) In
cases of impeachment; (3) Upon order of a competent court in cases of bribery or dereliction of duty of public
officials; (4) In cases where the money deposited is the subject matter of the litigation. Cases of unexplained wealth
are similar to cases of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be
excepted from the rule making bank deposits confidential. The policy as to one cannot be different from the policy as
to the other. This policy expresses the notion that a public office is a public trust and any person who enters upon its
discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to public scrutiny.

Twenty-three (23) years thereafter, in 1988, the Court echoed the same principle in the Banco Filipino Savings and
Mortgage Bank v. Purisima.33 Incidentally, both cases involve Republic Act No. 3019, the Anti-Graft and Corrupt
Practices Act.

Today, this Court is faced with this important query – is plunder analogous to bribery, dereliction of duty or cases of
unexplained wealth? I need not indulge in a lengthy disquisition to show that plunder belongs to the same genre of
cases. Under Republic Act No. 7080, An Act Penalizing the Crime of Plunder, this crime is committed by a public
officer who, by himself or in connivance with others, amasses, accumulates or acquires ill-gotten wealth, the
aggregate amount or total value of which is at least Fifty Million Pesos (₱50,000,000.00), through a combination or
series of overt or criminal acts. The essence of plunder lies in the phrase "combination or series of overt or criminal
acts." Bribery and violations of R.A. No. 3019 are only some of the criminal acts that comprise the more serious
crime of plunder. In other words, these are some of the predicate crimes of plunder.34 All the criminal acts are
enumerated hereunder:

(1) Through misappropriation, conversion, misuse, or malversation of public funds or raids on the public
treasury;

(2) By receiving, directly or indirectly, any commission, gift, share, percentage, kickbacks, or any other form
of pecuniary benefit from any person and/or entity in connection with any government contract or project or
by reason of the office or position of the public officer concerned;

(3) By the illegal or fraudulent conveyance or disposition of assets belonging to the National Government or
any of its subdivision, agencies or instrumentalities or government–owned or controlled corporations and
their subsidiaries;

(4) By obtaining, receiving or accepting directly, or indirectly any shares of stock, equity or any other form of
interest or participation including the promise of future employment in any business enterprise or
undertaking;

(5) By establishing agricultural, industrial or commercial monopolies or other combinations and/or

implementation of decrees and orders intended to benefit particular person or special interests; or

(6) By taking undue advantage of official position, authority, relationship, connection, or influence to unjustly
enrich himself or themselves at the expense and to the damage and prejudice of the Filipino people and the
Republic of the Philippines.

A reading of the provisions of the Revised Penal Code concerning bribery35 and dereliction of duty,36 as well as
corrupt practices under R.A. 3019, readily shows the striking resemblance between them and the predicate crimes
of plunder. Paragraph 2 actually constitutes indirect bribery while paragraphs 4 and 5 constitute corrupt practices
under R.A. No. 3019.37 Logically, if the criminal acts that make up the crime of plunder are categorized as
exceptions to the confidentiality rule, with more reason that the more serious crime of plunder should be considered
as falling within the same exception. All involve dishonesty and lack of integrity in public service. There is no reason
why plunder should be treated differently.

Petitioner now avers that this Court’s rulings in Philippine National Bank and Banco Filipino do not apply to the
present case because the subpoenae duces tecum/ad testificandum in said cases were issued prior to the
amendment of Section 8, R.A. No. 3019. He stresses that under the old provision, the properties that may be
considered, when a public official’s acquisition of properties through legitimate means cannot be satisfactory shown,
are only those of his "spouse and unmarried children."38 However, under the new provision, the phrase "spouse and
unmarried children" was changed to "spouse and dependents."39 Thus, he contends that while he is a "son" of the
accused in the plunder case, he is not his "dependent."40

Petitioner’s argument lacks merit.

The amendment of Section 8 could not have the effect of limiting the government’s inquiry only to the properties of
the "spouse and dependents" of a public official. This is in light of this Court’s broad pronouncement in Banco
Filipino that the inquiry extends to "any other persons," and that "restricting the inquiry only to property held by or in
the name of the government official or employee, or his spouse and unmarried children" is "unwarranted" and "an
absurdity that we cannot ascribe to our lawmakers." Thus:

The inquiry into legally acquired property – or property NOT "legitimately acquired" – extends to cases where such
property is concealed by being held by or recorded in the name of other persons. This proposition is made clear by
R.A. No. 301941 which quite categorically states that the term, legitimately acquired property of a public office or
employee shall not include x x x property unlawfully acquired by the respondent, but its ownership is concealed by
its being recorded in the name of, or held by, respondent’s spouse, ascendants, descendants, relatives or any other
persons.

To sustain the petitioner’s theory, and restrict the inquiry only to property held by or in the name of the government
official or employee, or his spouse and unmarried children is unwarranted in the light of the provisions of the statutes
in question, and would make available to persons in government who illegally acquire property an easy and fool-
proof means of evading investigation and prosecution; all they would have to do would be to simply place the
property in the possession or name of persons other than their spouse and unmarried children. This is an absurdity
that we will not ascribe to the lawmakers.

Undoubtedly, the policy enunciated is to prevent a public official from evading prosecution or investigation by
allowing government inquiry even to properties in the name of his "spouse, ascendants, descendants, relatives or
any other persons." The Court’s pronouncement renders insignificant the personal circumstance of the public
official’s child, i.e. whether he is a dependent or independent, married or unmarried. This is entirely logical. Section
8 itself starts with the statement: "If in accord with the provisions of Republic Act numbered One thousand three
hundred seventy–nine, a public official has been found to have acquired during his incumbency, whether in his
name or in the name of other persons, an amount of property and/or money manifestly out of proportion to his salary
and to his other lawful income, that fact shall be a ground for dismissal or removal." Likewise, Republic Act No.
1379,42 excludes the following properties from the definition of "other legitimately acquired property:"

"1. Property unlawfully acquired by the respondent, but its ownership is concealed by its being recorded in the name
of, or held by, the respondent’s spouse, ascendants, descendants, relatives or any other person.

3. Property unlawfully acquired by the respondent, but transferred by him to another person or persons on or after
the effectivity of this Act."

How can the government establish the nexus between a public official and his property in the name of other persons
if this Court will limit the inquiry only to his "spouse and dependents"? Indeed, there is truth in respondent People’s
statement that "the extension of inquiry into property held by, or in the name of another persons other than the
public official, is sustained by a recognized legislative and public policy adhered to by the courts."

Accordingly, the fact that petitioner is not an accused in the plunder case does not insulate his bank accounts from
inquiry. Such inquiry is justified by the fact that the Special Prosecution Panel is establishing a nexus between his
bank accounts and their alleged owner, Former President Estrada, an accused in the plunder case. Furthermore, as
pointed out by respondent Sandiganbayan, there is nothing in the exception "upon order or a competent court in
cases of bribery or dereliction of duty of public officials" "which would suggest that in order for the exception to
apply, the owner of the deposit or of the account must be an accused in the case where the information relative to
the account is sought to be adduced."

Petitioner also contends that the money deposited in his bank accounts cannot be considered the "subject matter" of
the plunder case.

I am not persuaded.

The "subject matter of litigation" as used in R.A. No. 1405 is expounded in Union Bank of the Philippines v. Court of
Appeals,43 where the Court held:

"Union Bank is now before this Court insisting that the money deposited in Account No. 0111-01854-8 is the subject
matter of the litigation. Petitioner cites the case of Mathay vs. Consolidated Bank and Trust Company, where we
defined ‘subject matter’ of the action," thus:

‘By the phrase ‘subject matter of the action’ is meant ‘the physical facts, the things real or personal, the money,
lands, chattels, and the like, in relation to which the suit is prosecuted, and not the delict or wrong committed by the
defendant."

Petitioner contends that the Court of Appeals confuses the ‘cause of action’ with the ‘subject of the action.’ In
Yusingco v. Ong Hing Lian, petitioner points out, this Court distinguished the two concepts.
x x x "The cause of action is the legal wrong threatened or committed, while the object of the action is to prevent or
redress the wrong by obtaining some legal relief; but the subject of the action is neither of these since it is not the
wrong or the relief demanded, the subject of the action is the matter or thing with respect to which the controversy
has arisen, concerning which the wrong has been done, and this ordinarily is the property, or the contract and its
subject matter, or the thing in dispute."

The argument is well-taken. We note with approval the difference between the ‘subject of the action’ from the ‘cause
of action.’ We also find petitioner’s definition of the phrase "subject matter of the action" is consistent with the term
‘subject matter of the litigation,’ as the latter is used in the Bank Deposits Secrecy Act.

In Mellon Bank, N.A. v. Magsino, where the petitioner bank inadvertently caused the transfer of the amount of
US$1,000,000.00 instead of only US$1,000.00, the Court sanctioned the examination of the bank accounts where
part of the money was subsequently caused to be deposited:

‘x x x Section 2 of [Republic Act No. 1405] allows the disclosure of bank deposits in cases where the money
deposited is the subject matter of the litigation. Inasmuch as Civil Case No. 26899 is aimed at recovering the
amount converted by the Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the illegally
acquired amount extends to whatever is concealed by being held or recorded in the name of persons other than the
one responsible for the illegal acquisition.’

Clearly, Mellon Bank involved a case where the money deposited was the subject matter of the litigation since the
money so deposited was the very thing in dispute."

There is no denying that the subject matter of a plunder case is the ill-gotten wealth accumulated, amassed or
acquired by a public officer either by himself or in connivance with members of his family, relatives by affinity or
consanguinity, business associates, subordinates or other persons,

the aggregate or total value of which is at least ₱50,000,000.00.44 Since the money deposited in petitioner’s bank
accounts is being proven to be a portion of former President Estrada’s ill-gotten wealth, it follows that it is the "thing
or matter with respect to which the crime of plunder has arisen." Without the ill-gotten wealth, there can be no
plunder. Correspondingly, R.A. No. 7080 penalizing plunder mandates that courts shall declare any and all ill-gotten
wealth forfeited in favor of the State.45 Government recovery of the ill-gotten wealth being a consequence of plunder,
necessarily an inquiry into the whereabouts of the ill-gotten wealth extends to properties being held or recorded in
the name of persons other than the one responsible for the crime of plunder.

"Extremely-Detailed" Information contained

in the Special Prosecution Panel’s Requests for
Subpoena Duces Tecum/Ad Testificandum - Violative of
Petitioner’s Right to Due Process and Privacy

Petitioner also asserts that the "extremely-detailed" information in the Special Prosecution Panel’s requests shows
prior illegal disclosure of his bank accounts.

I agree.

In Grisworld v. Connecticut,46 the United States Supreme Court announced for the first time that the right to privacy
is an independent constitutional right; and that: "Specific guarantees in the Bill of Rights have penumbras, formed by
emanation from those guarantees that help give them life and substance. Various guarantees create zones of
privacy." Our Bill of Rights, enshrined in Article III of the Constitution, provides at least two guarantees that explicitly
create zones of privacy. They highlight a person’s "right to be let alone" or the "right to determine what, how much,
to whom and when information about himself shall be disclosed."47 Section 2 guarantees "the right of the people to
be secure in their persons, houses, papers and effects against unreasonable searches and seizures of whatever
nature and for any purpose." Section 3 renders inviolable the "privacy of communication and correspondence" and
further cautions that "any evidence obtained in violation of this or the preceding section shall be inadmissible for any
purpose in any proceeding."
These zones of privacy are also recognized and protected in our laws,48 such as civil and criminal laws. Article 26 of
the Civil Code mandates that "every person shall respect the dignity, personality, privacy and peace of mind of his
neighbors and other persons" and punishes as actionable torts acts such as "prying into the privacy of another’s
residence; and meddling with or disturbing the private life or family relations of another." Article 32 states that "any
public officer or employee, or any private individual, who directly obstructs, defeats, violates or in any manner
impedes or impairs x x x the right to be secure in one’s person, house, papers, and effects against unreasonable
searches and seizures; x x x the privacy of communication and correspondence" shall be liable for damages. On the
other hand, Article 209,49 Articles 290-292,50 and Articles 280-28151 of the Revised Penal Code treat as crimes (a)
revelation of secrets by an attorney-at-law or solicitor, (b) discovery and revelation of industrial secrets, and (c)
trespass to dwelling, respectively.

Aside from the foregoing, invasion of privacy is considered an offense in special laws such as the Anti-Wiretapping
Law,52 the Intellectual Property Code of the Philippines53 and, of course, R.A. No. 1405, the Secrecy of Bank
Deposits Act.

The myriad of laws enumerated only show that there are certain areas in a person’s life which even if accessible to
the public, may be constitutionally and legally protected as "private."

Now, in evaluating a claim for violation of the right to privacy, a court must determine whether a person has
exhibited a reasonable expectation of privacy and, if so, whether that expectation has been violated by
unreasonable government intrusion.54 Applying these to the case at bar, the important inquiries are: first, did
petitioner exhibit a reasonable expectation of privacy over his bank accounts?; and second, did the government
violate such expectation?

The answers to both are in the affirmative.

It cannot be gainsaid that the customer of a bank expects that the documents which he transmits to the bank in the
course of his business operations, will remain private, and that such an expectation is reasonable.55 Financial
transactions can reveal much about a person’s affairs, activities, beliefs, habits and associations. Indeed, the totality
of bank records provides a virtual current biography.56 Checks, for instance, in a sense, define a person. By
examining them, the agents get to know his doctors, lawyers, creditors, political allies, social connections, religious
affiliations, educational interests, the papers and magazines he reads, and so on ad infinitum.57 In other words,
one’s bank account mirrors not only his finances, but also his debts, his way of life, his family and his civic
commitment. Such reality places a customer’s bank account within the "expectations of privacy" category. In the
Philippines, the expectation is heightened by the enactment of R.A. No. 1405 which mandates that all deposits of
whatever nature are considered as of an "absolutely confidential nature" and "may not be examined, inquired or
looked into by any person" except under the instances therein.

Admittedly, a bank customer knowingly and voluntarily divulges his financial affairs with the bank, but such is
immaterial. The fact that one has disclosed private papers to the bank within the context of confidential customer-
bank relationship, does not mean that one has waived all right to the privacy of the papers. Like the user of the pay
phone in Katz v. United States,58 who, having paid the toll, was entitled to "assume that the words he utters into the
mouthpiece will not be broadcast to the world," so the customer of a bank, having written or deposited a check, has
a reasonable expectation that his check will be examined for bank purposes only. Practically speaking, a customer’s
disclosure of his financial affairs is not entirely volitional, since it is impossible to participate in the economic life of
contemporary society without maintaining a bank account.59 Consequently, the customer’s reasonable expectation is
that, absent customary legal process, the matter he reveals to the bank will be utilized by the bank only for internal
banking purposes.60

In the instant case, while admittedly, respondent Sandiganbayan’s inquiry into petitioner’s bank accounts falls under
the two exceptions mentioned in R.A. No. 1405,61 however, this Court observes that the manner of inquiry violates
petitioner’s rights to due process and privacy. At this juncture, it is worthy to note that petitioner’s bank accounts
were inquired into twice, first was through subpoenae duces tecum issued by the Office of the Ombudsman and
second was through subpoenae duces tecum/ad testificandum issued by respondent Sandiganbayan. Under both
instances, petitioner was completely unaware of the issuances of such subpoenae.

Petitioner persistently bewailed before respondent Sandiganbayan the prior disclosure of his bank accounts
pursuant to the subpoenae issued by the Office of the Ombudsman absent any pending case in court and personal
notice to him. He sought the quashal of respondent Sandiganbayan’s subpoenae duces tecum/ad testificandum on
the ground that the Special Prosecution Panel’s requests for the issuance of the said subpoenae were based on
information illegally acquired by the Office of the Ombudsman.

I am swayed with the merit of petitioner’s grievance.

In Marquez v. Desierto,62 Ombudsman Aniano A. Desierto ordered petitioner Lourdes Marquez, a Branch Manager
of Union Bank, to produce for purposes of an in camera inspection certain bank documents relative to a case
pending before the Office of the Ombudsman. Ombudsman Desierto cited the Constitution and Section 15 (8) of
R.A. No. 6770 as bases of his authority. Petitioner Marquez initially refused but, after having been threatened with a
contempt proceeding, she filed a petition for declaratory relief seeking a clarification of the 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 secrecy of bank deposits." The Court’s ruling is enlightening, thus:

"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 v. Gancayco.

The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the
Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the Ombudsman against
Amado Lagdameo, et al. for violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement
between the Public Estates Authority and AMARI.

We rule that before an in camera inspection may be allowed there must be a pending case before a court of
competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of
the pending case before the court of competent jurisdiction. The bank personnel and the account holder must be
notified to be present during the inspection, and such inspection may cover only the account identified in the
pending case."

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

(1) In an examination made in the course of a special or general examination of a bank that is specifically
authorized by the Monetary Board after being satisfied that there is reasonable ground to believe that a bank
fraud or serious irregularity has been or is being committed and that 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, at al., with the Sandiganbayan. Clearly, there was
no pending case in court which would warrant the opening of the bank account for inspection."

Thus, as held by the Court, before an in camera inspection of bank documents maybe allowed, there must be a
pending case before a court of competent jurisdiction. The Information for plunder against Former President Estrada
was filed with respondent Sandiganbayan on April 4, 2001. On the other hand, the Ombudsman issued the
subpoenae duces tecum on February 8, 16, and March 7, 2001. Clearly, there was yet no pending litigation before
any court when such subpoenae were issued. Following the Court’s ruling in Marquez, what the Office of the
Ombudsman would wish to do was to "fish for evidence" in order to formally charge former President Estrada before
respondent Sandiganbayan.

At this point, it should be emphasized that the authority of the Ombudsman "to examine and have access to bank
accounts and records" must be read in conjunction with Section 2 of R.A. No. 1405 providing that deposits of
whatever nature shall be considered confidential except in several instances already mentioned. This is because
bank deposits belong to a protected zone where government intrusion could infringe legitimate expectation of
privacy. An opposite course is unwarranted.

In United States v. United States District Court,63 the US Supreme Court held that the potential for abuse is
particularly acute where the legislative scheme permits access to information without invocation of the judicial
process. In such instances, the important responsibility for balancing societal and individual interests is left to
unreviewed executive discretion, rather than the scrutiny of a neutral magistrate. In Katz v. United States,64 the
same Court ruled that, "[t[he prosecutors’ duty and responsibility is to enforce the laws, to investigate and to
prosecute. Those charged with the investigative and prosecutorial duty should not be the sole judges of when to
utilize constitutionally sensitive means in pursuing their tasks. The historical judgment is that unreviewed executive
discretion may yield too readily to pressures to obtain incriminating evidence and overlook potential invasions of
privacy." Between the government and the citizen, there must be a neutral entity that should balance the former’s
claim of authority vis-à-vis the latter’s assertion of rights.

By the natural scheme of things, the Office of the Ombudsman can hardly be characterized as detached,
disinterested and neutral. Its mandate is to investigate and prosecute any act or omission of any public officer or
employee, office or agency that appears to be illegal, unjust, improper or inefficient.65 In carrying out such mandate,
it is expected to act with vigor and aggressiveness. But to permit such office to have access to bank records without
any judicial control as to relevancy or other traditional requirements of due process and to allow the evidence to be
used in any subsequent prosecution, opens the door to a vast and unlimited range of very real abuses of police
power.66 True, there are administrative summonses for documents67 recognized in other jurisdictions, but there is a
requirement that their enforcement receives a judicial scrutiny and a judicial order.68 In this regard, I am appalled by
the "whole sale" subpoena duces tecum issued by the Ombudsman directing the "President or Chief Executive
Officer of Urban Bank" to produce "bank records and all documents relative thereto pertaining to all bank accounts
(Savings, Current, Time Deposit, Trust, Foreign Currency Deposits, etc…) under the account names of Jose
Velarde, Joseph E. Estrada, Laarni Enriquez, Guia Gomez, Joy Melendrez, Peachy Osorio, Rowena Lopez, Kevin
or Kelvin Garcia, 727, 737, 747, 757 and 858." Indubitably, such blanket subpoena provides occasions for "fishing
expedition."

Above everything else, however, what strikes us most is the patent unfairness of the process. First in the Bill of
Rights is the mandate that no person shall be deprived of his life, liberty or property without due process of law.
Courts have held that the right of personal privacy is one aspect

of the "liberty" protected by the Due Process Clause.69 Basic due process demands that the Office of the
Ombudsman furnish petitioner a copy of the subpoenae duces tecum it issued. In Marquez v. Desierto,70 this Court
held: "The bank personnel and the account holder must be notified to be present during the inspection, and such
inspection may cover only the account identified in the pending case." Such notice is not too much to ask for, after
all, an accountholder bears the risk not only of losing his privacy but, also, his property.71 Of course, not to mention
the procedural impasse that is encountered by such accountholder who cannot contest the propriety of the issuance
of a subpoena.
In this case, petitioner was completely unaware of the issuance of subpoenae duces tecum, hence, he never had
the opportunity to challenge them. As a matter of fact, almost two years had passed before he learned of such
issuance and the resulting disclosure. Indeed, the ugly truth here is that neither the Office of the Ombudsman nor
the PDIC notified petitioner of the impending and actual disclosure of his bank accounts. Such absence of notice is
a fatal constitutional defect that inheres in a process that omits provision for notice to the bank customer of an
invasion of his protected right.72

Now, let us take a glimpse at the proceedings before respondent Sandiganbayan.

The proceedings before respondent Sandiganbayan also leave much to be desired. Neither respondent
Sandiganbayan nor the Special Prosecution Panel nor PDIC furnished petitioner copies of the subpoenae duces
tecum/ad testificandum or of the requests for their issuance. It bears reiterating that it was only through the media
that petitioner learned about such requests. Definitely, something is inherently wrong in a public proceeding that
allows a holder of bank account, subject of litigation, to be completely uninformed. Also not to be overlooked is the
respondent Sandiganbayan’s oral directive to petitioner to file his motion to quash not later than 12:00 noon of
January 28, 2003. This notwithstanding the fact that it was only the day before, or on January 27, 2003, that
petitioner learned about the requests and that he was yet to procure the services of a counsel. Every civilized state
adheres to the principle that when a person’s life and liberty are jeopardized by government action, it behooves a
democratic government to see to it that this jeopardy is fair, reasonable and according to time-honored tradition. The
importance of this principle is eloquently underscored by one observer who said: "The quality of a civilization is
largely determined by the fairness of its criminal trials."73

Respondent Sandiganbayan cannot justify its omission by relying on Adorio v. Bersamin,74 which held that:
"Requests by a party for the issuance of subpoenas do not require notice to other parties to the action. No violation
of due process results by such lack of notice since the other parties would have ample opportunity to examine the
witnesses and documents subpoenaed once they are presented in court." Suffice it to say that petitioner was not a
party to the plunder case, hence, he could not have the opportunity to examine the witnesses and the documents
subpoenaed.

True, bank accounts at times harbor criminal plans. But this is not a reason to declare an open season for inquiry.
Customers have a constitutionally justifiable expectation of privacy in the documentary details of the financial
transactions reflected in their bank accounts. That wall of privacy, however, is not impregnable. Our Constitution, as
well as our laws, provides procedures whereby the confidentiality of one’s financial affairs may be disclosed. In other
words, access to bank records is controlled by adequate legal process. Here, the subpoenae issued by respondent
Sandiganbayan, tainted as they are by the vices that afflict the proceedings before the Office of the Ombudsman,
cannot be considered to have been issued pursuant to such adequate legal process. Petitioner, therefore, has
reason to feel aggrieved.

Section 4, Rule 21 of the 1997 Rules of Civil Procedure, as amended, provides that the court may quash a
subpoenae duces tecum upon motion if it is "unreasonable and oppressive."75 Here, the three (3) subpoenae duces
tecum/ad testificandum issued by respondent Sandiganbayan are "unreasonable and oppressive" for the reasons
earlier mentioned. I thus find respondent Sandiganbayan to have committed grave abuse of discretion in issuing
them.

One last word. The violation of petitioner’s right to privacy could have been obviated had respondent court complied
with its duty to be watchful for the constitutional rights of the citizens and against any stealthy encroachments
thereon. The motto should always be obsta principiis.76

IN VIEW OF THE FOREGOING, I vote to GRANT the Petition. The assailed Resolutions dated February 7,
February 12 and March 11, 2003 issued by respondent Sandiganbayan in Criminal Case No. 26558, "People of the
Philippines v. Former President Joseph Ejercito Estrada, et al." being tainted with grave abuse of discretion, should
be SET ASIDE. The subpoenae duces tecum/ad testificandum dated January 21, 24 and 31, 2003, should be
QUASHED for being unreasonable and oppressive.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice
Footnotes

1 342 U.S. 165 (1952), p. 172.

2 Marquez v. Desierto, G.R. No. 135882, June 27, 2001, 359 SCRA 772.

3 See Morfe v. Mutuc No. L-20387, January 31, 1968, 22 SCRA 424.

4Article 12 of the Universal Declaration of Human Rights. See also Article 17 (1) and (2) of the International
Covenant on Civil and Political Rights.

5 Annex "A" of the Petition, Rollo, p. 64.

6 Annex "B" of the Petition, id., p. 74.

7 Annex "C" of the Petition, id., p. 76.

8It appears that petitioner’s subpoenaed bank accounts were also presented and testified to by prosecution
witnesses in Criminal Case No. 26565 for illegal use of alias against Former President Estrada.

9 Annex "D" of the Petition, Rollo, p. 81.

10 Annex "E" of the Petition, id., pp. 82-84. For the hearing dated January 22 and 27, 2003.

11 Annex "F" of the Petition, id., pp. 86-88. For the hearing dated January 27 and 29, 2003.

12 See Resolution dated January 21, 2003, Annex "G" of the Petition, id., p. 90.

13 Attachment "9" of the Comment, id., p. 489.

14 Attachment "11" of the Comment, id., p. 494.

15Annex "H" of the Petition, id., pp. 91-96. Petitioner’s motion to quash erroneously stated that
the subpoenae duces tecum/ad testificandum were issued both on January 24, 2003.

16 Annex "I" of the Petition, id., pp. 97-99.

17 Annex "O" of the Petition, id. pp.170-174.

18 Attachment "2" of the Comment, id., p. 469.

19 Attachment "2-a" of the Comment, id., p. 470.

20 Attachment "3" of the Comment, id., p. 477.

21 Attachment "4" of the Comment, id., p. 478.

22 Attachment "5" of the Comment, id., p. 480.

23 See Attachment "6" of the Comment, id., p. 481.

24Annex "H" of the Petition, at 91-96. Petitioner’s motion to quash erroneously stated that the subpoenae
duces tecum/ad testificandum were both issued on January 24, 2003.

25By the phrase "subject matter of the action" is meant the physical facts, the thing real or personal, the
money, lands, chattels, and the like, in relation to which the suit is presented, and not the delict or wrong
committed by the defendant." Union Bank of the Philippines v. Court of Appeals, G.R. No. 134699,
December 23, 1999, 321 SCRA 563, citing Mathay v. Consolidated Bank and Trust Co., 58 SCRA 559
(1974).

26 No. L-18343, September 30, 1965, 15 SCRA 91.

27 No. L- 56429, May 28, 1988, 161 SCRA 576.

28 Viray 1998.

29 Section 135.

30 Suratos and Sale, Jr. 1994.

31 Additional exceptions are provided in other laws, such as:

(a) Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act, where bank deposits of a
public official’s "spouse and unmarried children" maybe "taken into consideration" (Section 8) See
also Philippine National Bank v. Gancayco, supra. and Banco Filipino Savings and Mortgage Bank v.
Purisima, supra;

(b) Republic Act No. 6770, the Ombudsman Act of 1990, where the Ombudsman is authorized to
"examine and have access to bank accounts and records" of government officers and employees
(Section 15 (8); and

(c) Republic Act No. 9160, the Anti-Money Laundering Law of 2001, where the Anti-Money
Laundering Council is allowed to examine deposit or investment with any banking institution or non-
bank financial institution upon order of any competent court, when it has been established that there
is probable cause that the deposits or investments are in any way related to a money laundering
offense (Section 11).

32 Supra.

33 Supra.

34Senator Paterno. I envision that this bill or this kind of plunder would cover a discovered interconnection of
certain acts, particularly, violations of Anti-Graft and Corrupt Practices Act when, after the different acts are
looked at, a scheme of conspiracy can be detected, such scheme or conspiracy consummated by the
different criminal acts or violations of Anti-Graft and Corrupt Practices Act, such that the scheme or
conspiracy becomes a sin, as a large scheme to defraud the public or rob the public treasury. It is parang
robo and banda. It is considered as that. And, the bill seeks to define or says that ₱100 million is that level
ay which ay talagang sobra na dapat nang parusahan ng husto. Would it be a correct interpretation or
assessment of the intent of the bill?

Senator Tanada. Yes, Mr. President. The fact that under existing law, there can be only one offense
charged in the information, that makes it very cumbersome and difficult to go after these grafters if
we would not come out with this bill. That is what is happening now; because of that rule that there
can be only one offense charged per information, then we are having difficulty in charging all the
public officials who would seem to have committed these corrupt practices. With this bill, we could
come out with just one information, and that would cover all the series of criminal acts that may have
been committed by him. (Record of the Senate, June 5, 1989, Vol. IV, No. 140, p. 1315) See also
Record of the Senate, June 6, 1989, Vol. IV, No. 141, p. 1399.
35Article 211. Indirect bribery. — The penalties of prision correccional in its medium and maximum periods,
suspension and public censure shall be imposed upon any public officer who shall accept gifts offered to him
by reason of his office.

36 The following crimes fall under the heading "Dereliction of Duty":

Article 204. Knowingly rendering unjust judgment. — Any judge who shall knowingly render an
unjust judgment in any case submitted to him for decision shall be punished by prision mayor and
perpetual absolute disqualification.

Article 205. Judgment rendered through negligence. — Any judge who, by reason of inexcusable
negligence or ignorance, shall render a manifestly unjust judgment in any case submitted to him for
decision shall be punished by arresto mayor and temporary special disqualification.

Article 206. Unjust interlocutory order. — Any judge who shall knowingly render an unjust
interlocutory order or decree shall suffer the penalty of arresto mayor in its minimum period and
suspension; but if he shall have acted by reason of inexcusable negligence or ignorance and the
interlocutory order or decree be manifestly unjust, the penalty shall be suspension.

Article 207. Malicious delay in the administration of justice. — The penalty of prision correccional in
its minimum period shall be imposed upon any judge guilty of malicious delay in the administration of
justice.

Article 209. Betrayal of trust by an attorney or solicitor. — Revelation of secrets. — In addition to the
proper administrative action, the penalty of prision correccional in its minimum period, or a fine
ranging from 200 to 1,000 pesos, or both, shall be imposed upon any attorney-at-law or solicitor
(procurador judicial) who, by any malicious breach of professional duty or of inexcusable negligence
or ignorance, shall prejudice his client, or reveal any of the secrets of the latter learned by him in his
professional capacity.

The same penalty shall be imposed upon an attorney-at-law or solicitor (procurador judicial) who,
having undertaken the defense of a client or having received confidential information from said client
in a case, shall undertake the defense of the opposing party in the same case, without the consent
of his first client.

See Separate Concurring Opinion by Justice Panganiban in Estrada v. Sandiganbayan, G.R. No. 148560,
37

November 19, 2001, 369 SCRA 394.

38Sec. 8. Dismissal due to unexplained wealth. – If in accordance with the provisions of Republic Act
Numbered One thousand three hundred seventy-nine, a public official has been found to have acquired
during his incumbency, whether in his name or in the name of other persons, an amount of property and/or
money manifestly out of proportion to this salary and to his other lawful income, that fact shall be a ground
for dismissal and removal. Properties in the name of the spouse and unmarried children of such public
official maybe taken into consideration, when their acquisition through legitimate means cannot be
satisfactorily shown. Bank deposits shall be taken into consideration in the enforcement of this section,
notwithstanding any provision of law to the contrary.

39Section 8. Prima facie evidence and dismissal due to unexplained wealth. – If in accord with the provisions
of Republic Act numbered One thousand three hundred seventy –nine, a public official has been found to
have acquired during his incumbency, whether in his name or in the name of other persons, an amount of
property and/or money manifestly out of proportion to his salary and to his other lawful income, that fact shall
be a ground for dismissal or removal. Properties in the name of the spouse and dependents of such public
official may be taken into consideration, when their acquisition through legitimate means cannot be
satisfactorily shown. Bank deposits in the name of or manifestly excessive expenditures incurred by the
public official, his spouse or any of their dependents including but not limited to activities in any club or
association or any ostentatious display of wealth including frequent travel abroad of a non-official character
by any public officials when such activities entail expenses evidently out of proportion to legitimate income,
shall likewise be taken into consideration in the enforcement of this section, notwithstanding any provision of
law to the contrary. The circumstances herein above mentioned shall constitute valid ground for the
administrative suspension of the public official concerned for an indefinite period until the investigation of the
unexplained wealth is completed. (As amended by BP. Blg. 195, March 16, 1982.)

40A dependent is defined as "one who derives his or her main support from another; means relying on, or
subject to, someone else for support; not able to exist or sustain oneself, or to perform anything without the
will, power, or aid of someone else." (Black’s Law Dictionary, 5th Edition. 1979).

41 This should be Republic Act No. 1379.

Otherwise known as "An Act Declaring Forfeiture in Favor of the State any Property Found to Have Been
42

Unlawfully Acquired by any Public Officer or Employee and Providing for the Proceeding Therefor."

43 G.R. No. 134699, December 23, 1999, 321 SCRA 563.

44 Section 2 of R.A. No. 7080.

45 Id.

46 381 U.S. 479 (1965). See also Puno, Legislative Investigations and the Right to Privacy, 2005.

47Constitutional and Legal Systems of ASEAN Countries, Sison, Academy of ASEAN Law and
Jurisprudence, 1990, at 221, citing I.R. Cortes, The Constitutional Foundations of Privacy, 7 (1970).

48 Marquez v. Desierto, supra.

49 Article 209. Betrayal of trust by an attorney or solicitor. — Revelation of secrets. — In addition to the
proper administrative action, the penalty of prision correccional in its minimum period, or a fine ranging from
200 to 1,000 pesos, or both, shall be imposed upon any attorney-at-law or solicitor (procurador judicial) who,
by any malicious breach of professional duty or of inexcusable negligence or ignorance, shall prejudice his
client, or reveal any of the secrets of the latter learned by him in his professional capacity.

The same penalty shall be imposed upon an attorney-at-law or solicitor (procurador judicial) who,
having undertaken the defense of a client or having received confidential information from said client
in a case, shall undertake the defense of the opposing party in the same case, without the consent
of his first client.

50Article 290. Discovering secrets through seizure of correspondence. — The penalty of prision
correccionalin its minimum and medium periods and a fine not exceeding 500 pesos shall be imposed upon
any private individual who in order to discover secrets of another, shall seize his papers or letters and reveal
the contents thereof. x x x.

Article 291. Revealing secrets with abuse of office. — The penalty of arresto mayor and a fine not
exceeding 500 pesos shall be imposed upon any manager, employee, or servant who, in such
capacity, shall learn the secrets of his principal or master and shall reveal such secrets.

Article 292. Revelation of industrial secrets. — The penalty of prision correccional in its minimum
and medium periods and a fine not exceeding 500 pesos shall be imposed upon the person in
charge, employee or workman of any manufacturing or industrial establishment who, to the prejudice
of the owner thereof, shall reveal the secrets of the industry of the latter.

51Article 280. Qualified trespass to dwelling. — Any private person who shall enter the dwelling of another
against the latter's will shall be punished by arresto mayor and a fine not exceeding 1,000 pesos. x x x.

Article 281. Other forms of trespass. — The penalty of arresto menor or a fine not exceeding 200
pesos, or both, shall be imposed upon any person who shall enter the closed premises or the fenced
 estate of another, while either of them are uninhabited, if the prohibition to enter be manifest and the
trespasser has not secured the permission of the owner or the caretaker thereof.

52Republic Act No. 4200, An Act to Prohibit and Penalize Wire Tapping and other Related Violations of the
Privacy of Communications, and for other Purposes.

53Republic Act No. 8293, "An Act Prescribing the Intellectual Property Code and Establishing the Intellectual
Property Office, Providing for its Powers and Functions, and for other Purposes." January 1, 1998.

54Burrows v. Superior Court of San Bernardino County, 13 Cal. 3d 238, 529 P 2d 590 (1974). See Katz v.
United states (1967), 389 U.S. 347, 350-352, 88 S. Ct. 507, 19 L. Ed. 2d 576; People v. Krivda (1971) 5 Cal.
3d 357, 364, 96 Cal. Rptr. 62, 486 P. 2d 1262; 8 Cal. 3d 623-624,105 Cal. Rptr. 521, 504 P. 2d 457.

55 Burrows v. Superior Court of San Bernardino County, supra.

56 United States v. Miller, 425 U.S. 435 (1976). See dissenting opinion of Justice Brennan,

57 California Bankers Ass’n v. Shultz, 416 U.S. i-1,85 (1974), See dissenting opinion of Justice Douglas.

58 Supra.

59 Burrows v. Superior Court of San Bernardino County, supra.

60 Supra.

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

2) In cases where the money deposited or invested is the subject matter of the litigation.

62 Supra.

63 407 U.S. 297, 316-317, 92 S Ct. 2125, 32 L. Ed. 2d 752, (416 U.S., pp. 78-79, 94 S.Ct. at 1526).

64 389 U.S. 347, 19 L. Ed 2d 576, 88 S Ct 507.

65 Section 15 of R.A. No. 6770.

66 See Burrows v. Superior Court of San Bernardino County, supra.

Cf. Camara v. Municipal Court, 387 U.S. District Court, 407 U.S. 297, 313-318 cited in the Dissenting
67

Opinion of Justice Douglas in California Bankers Ass’n v. Shultz

68 United States v. United States District Court, supra.

6916B Am Jur 2d § 604, citing Washington v. Gluckberg, 117 S.Ct. 2258, 138 L. Ed. 2d 772 (U.S. 1997), for
concurring opinion, see, 117 S. Ct. 2302 (U.S. 1997); Carey v. Population Services, Intern., 431 U.S. 678,
97 S.Ct. 2010, 52 L. Ed. 2d 675, 2 Media L. Rep. (BNA) 1935 (1977); Roe v. Wade, 410 U.S. 113, 93 S.Ct.
705, 35 L. Ed. 2d 147 (1973), for concurring opinion, see, 410 U.S. 179, 93 S.Ct. 755, 35 L. Ed. 2d 147
(1973) and for dissenting opinion, see, 410 U.S. 179, 93 S. Ct. 762, 35 L. Ed. 2d 147 (1973) and reh’q
denied, 410 U.S. 959, 93 S.Ct. 1409, 35 L. Ed. 2d 694 (1973); Vanderlinden v. State of Kan., 874 F Supp.
1210 (D. Kan 1995), judgment aff’d, 103 F. 3d 940 (10th cir. 1996).

70 Supra.
71The court shall declare any and all ill-gotten wealth and their interests and other incomes and assets
including the properties and shares of stocks derived from the deposit or investment thereof forfeited in favor
of the State. (As amended by Sec. 12, R.A. No. 7659).

72See Marquez v. Desierto, G.R. No.135882, June 27, 2001, 359 SCRA 773, stating that "the bank
personnel and the account holder must be notified to be present during the inspection, and such inspection
may cover only the account identified in the pending case."

73Eugene v. Rostow, Introduction to Edward Bennet Williams, One’s Man’s Freedom (New York, N.Y.:
Atheneum, 1962) p. ix.

74 Supra.

75A subpoena duces tecum can be invalid for variety of reasons, as when it is unduly burdensome, violates
the right against self-incrimination, or calls for privileged documents. 81 Am Jur § 25 citing United States v
Roberts (CA2 NY) 852 F2d 671, cert den 488 US 993, 102 L ed 2d 583, 109 S Ct 556.

76 Boyd v. United States, 116 U.S. 616 (1886).

G.R. No. 140687 December 18, 2006

CHINA BANKING CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and JOSE "JOSEPH" GOTIANUY as substituted by ELIZABETH
GOTIANUY LO, respondents.

DECISION

CHICO-NAZARIO, J.:

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, Branch 58.

Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar deposits
with Citibank N.A. amounting to not less than P35,000,000.00 and US$864,000.00. Mary Margaret Dee received
these amounts from Citibank N.A. through checks which she allegedly deposited at China Banking Corporation
(China Bank). He likewise accused his son-in-law, George Dee, husband of his daughter, Mary Margaret, of
transferring his real properties and shares of stock in George Dee's name without any consideration. Jose Gotianuy,
died during the pendency of the case before the trial court.1 He was substituted by his daughter, Elizabeth Gotianuy
Lo. The latter presented the US Dollar checks withdrawn by Mary Margaret Dee from his US dollar placement with
Citibank. The details of the said checks are:

1) CITIBANK CHECK NO. 69003194405412 dated September 29 1997 in the amount of US$5,937.52
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

2) CITIBANK CHECK NO. 69003194405296 dated September 29 1997 in the amount of US$7,197.59
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

3) CITIBANK CHECK NO. 69003194405414 dated September 29 1997 in the amount of US$1,198.94
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

4) CITIBANK CHECK NO. 69003194405413 dated September 29 1997 in the amount of US$989.04
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET;

5) CITIBANK CHECK NO. 69003194405297 dated October 01 1997 in the amount of US$766,011.97
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET; and

6) CITIBANK CHECK NO. 69003194405339 dated October 09 1997 in the amount of US$83,053.10
payable to GOTIANUY: JOSE AND/OR DEE: MARY MARGARET.2

Upon motion of Elizabeth Gotianuy Lo, the trial court3 issued a subpoena to Cristota Labios and Isabel Yap,
employees of China Bank, to testify on the case. The Order of the trial court dated 23 February 1999, states:

Issue a subpoena ad testificandum requiring MS. ISABEL YAP and CRISTOTA LABIOS of China Banking
Corporation, Cebu Main Branch, corner Magallanes and D. Jakosalem Sts., Cebu City, to appear in person
and to testify in the hearing of the above entitled case on March 1, 1999 at 8:30 in the morning, with regards
to Citibank Checks (Exhs. "AAA" to "AAA-5") and other matters material and relevant to the issues of this
case.4
China Bank moved for a reconsideration. Resolving the motion, the trial court issued an Order dated 16 April 1999
and held:

The Court is of the view that as the foreign currency fund (Exhs. "AAA" to "AAA-5") is deposited with the
movant China Banking Corporation, Cebu Main Branch, Cebu City, the disclosure only as to the name or in
whose name the said fund is deposited is not violative of the law. Justice will be better served if the name or
names of the depositor of said fund shall be disclosed because such a disclosure is material and important
to the issues between the parties in the case at bar.

Premises considered, the motion for reconsideration is denied partly and granted partly, in the sense that
Isabel Yap and/or Cristuta Labios are directed to appear before this Court and to testify at the trial of this
case on April 20, 1999, May 6 & 7, 1999 at 10:00 o'clock in the morning and only for the purpose of
disclosing in whose name or names is the foreign currency fund (Exhs. "AAA" to "AAA-5") deposited with the
movant Bank and not to other matters material and relevant to the issues in the case at bar.5

From this Order, China Bank filed a Petition for Certiorari6 with the Court of Appeals. In a Decision7 dated 29
October 1999, the Court of Appeals denied the petition of China Bank and affirmed the Order of the RTC.

In justifying its conclusion, the Court of Appeals ratiocinated:

From the foregoing, it is pristinely clear the law specifically encompasses only the money or funds in foreign
currency deposited in a bank. Thus, the coverage of the law extends only to the foreign currency deposit in
the CBC account where Mary Margaret Dee deposited the Citibank checks in question and nothing more.

It has to be pointed out that the April 16, 1999 Order of the court of origin modified its previous February 23,
1999 Order such that the CBC representatives are directed solely to divulge "in whose name or names is the
foreign currency fund (Exhs. "AAA" to "AAA-5") deposited with the movant bank." It precluded inquiry on
"other materials and relevant to the issues in the case at bar." We find that the directive of the court below
does not contravene the plain language of RA 6426 as amended by P.D. No. 1246.

The contention of petitioner that the [prescription] on absolute confidentiality under the law in question
covers even the name of the depositor and is beyond the compulsive process of the courts is palpably
untenable as the law protects only the deposits itself but not the name of the depositor. To uphold the theory
of petitioner CBC is reading into the statute "something that is not within the manifest intention of the
legislature as gathered from the statute itself, for to depart from the meaning expressed by the words, is to
alter the statute, to legislate and not to interpret, and judicial legislation should be avoided. Maledicta
expositio quae corrumpit textum – It is a dangerous construction which is against the words. Expressing the
same principle is the maxim: Ubi lex non distinguit nec nos distinguere debemos, which simply means that
where the law does not distinguish, we should not make any distinction." (Gonzaga, Statutes and their
Construction, p. 75.)8

From the Decision of the Court of Appeals, China Bank elevated the case to this Court based on the following
issues:

THE HONORABLE COURT OF APPEALS HAS INTERPRETED THE PROVISION OF SECTION 8 OF R.A.
6426, AS AMENDED, OTHERWISE KNOWN AS THE FOREIGN CURRENCY DEPOSIT ACT, IN A
MANNER CONTRARY TO THE LEGISLATIVE PURPOSE, THAT IS, TO PROVIDE ABSOLUTE
CONFIDENTIALITY OF WHATEVER INFORMATION RELATIVE TO THE FOREIGN CURRENCY
DEPOSIT.

II

PRIVATE RESPONDENT IS NOT THE OWNER OF THE QUESTIONED FOREIGN CURRENCY

DEPOSIT. THUS, HE CANNOT INVOKE THE AID OF THE COURT IN COMPELLING THE DISCLOSURE
 OF SOMEONE ELSE'S FOREIGN CURRENCY DEPOSIT ON THE FLIMSY PRETEXT THAT THE
CHECKS (IN FOREIGN CURRENCY) HE HAD ISSUED MAY HAVE ENDED UP THEREIN.

III

PETITIONER CAN RIGHTLY INVOKE THE PROVISION OF SEC. 8, R.A. 6426, IN BEHALF OF THE
FOREIGN CURRENCY DEPOSITOR, OWING TO ITS SOLEMN OBLIGATION TO ITS CLIENT TO
EXERCISE EXTRAORDINARY DILIGENCE IN THE HANDLING OF THE ACCOUNT.9

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. (As amended by
PD No. 1035, and further amended by PD No. 1246, prom. Nov. 21, 1977) (Emphasis supplied.)

Under the above provision, the law provides that all foreign currency deposits authorized under Republic Act No.
6426, as amended by Sec. 8, Presidential Decree No. 1246, Presidential Decree No. 1035, as well as foreign
currency deposits authorized under Presidential Decree No. 1034 are considered absolutely confidential in nature
and may not be inquired into. There is only one exception to the secrecy of foreign currency deposits, that is,
disclosure is allowed upon the written permission of the depositor.

This much was pronounced in the case of Intengan v. Court of Appeals,10 where it was held that the only exception
to the secrecy of foreign currency deposits is in the case of a written permission of the depositor.

It must be remembered that under the whereas clause of Presidential Decree No. 1246 which amended Sec. 8 of
Republic Act No. 6426, the Foreign Currency Deposit System including the Offshore Banking System under
Presidential Decree 1034 were intended to draw deposits from foreign lenders and investors, and we quote:

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;

Whereas, making absolute the protective cloak of confidentiality over such foreign currency deposits,
exempting such deposits from tax, and guaranteeing the vested rights 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.

As to the deposit in foreign currencies entitled to be protected under the confidentiality rule, Presidential Decree No.
1034,11 defines deposits to mean funds in foreign currencies which are accepted and held by an offshore banking
unit in the regular course of business, with the obligation to return an equivalent amount to the owner thereof, with or
without interest.12

It is in this light that the court in the case of Salvacion v. Central Bank of the Philippines,13 allowed the inquiry of the
foreign currency deposit in question mainly due to the peculiar circumstances of the case such that a strict
interpretation of the letter of the law would result to rank injustice. Therein, Greg Bartelli y Northcott, an American
tourist, was charged with criminal cases for serious illegal detention and rape committed against then 12 year-old
Karen Salvacion. A separate civil case for damages with preliminary attachment was filed against Greg Bartelli. The
trial court issued an Order granting the Salvacions' application for the issuance of a writ of preliminary attachment. A
notice of garnishment was then served on China Bank where Bartelli held a dollar account. China Bank refused,
invoking the secrecy of bank deposits. The Supreme Court ruled: "In fine, the application of the law depends on the
extent of its justice x x x It would be unthinkable, that the questioned law exempting foreign currency deposits from
attachment, garnishment, or any other order or process of any court, legislative body, government agency or any
administrative body whatsoever would be used as a device by an accused x x x for wrongdoing, and in so doing,
acquitting the guilty at the expense of the innocent.14

With the foregoing, we are now tasked to determine the single material issue of whether or not petitioner China
Bank is correct in its submission that the Citibank dollar checks with both Jose Gotianuy and/or Mary Margaret Dee
as payees, deposited with China Bank, may not be looked into under the law on secrecy of foreign currency
deposits. As a corollary issue, sought to be resolved is whether Jose Gotianuy may be considered a depositor who
is entitled to seek an inquiry over the said deposits.

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.

The following facts are established: (1) Jose Gotianuy and Mary Margaret Dee are co-payees of various Citibank
checks;15 (2) Mary Margaret Dee withdrew these checks from Citibank;16 (3) Mary Margaret Dee admitted in her
Answer to the Request for Admissions by the Adverse Party sent to her by Jose Gotianuy17 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.

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.

A depositor, in cases of bank deposits, is one who pays money into the bank in the usual course of business, to be
placed to his credit and subject to his check or the beneficiary of the funds held by the bank as trustee.18

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 (Exhibits "AAA" to "AAA-5") readily demonstrate (sic) 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. The April 16, 1999 Order perforce must be
sustained.19(Emphasis supplied.)

One more point. It must be remembered that in the complaint of Jose Gotianuy, he alleged that his US dollar
deposits with Citibank were illegally taken from him. On the other hand, China Bank employee Cristuta Labios
testified that Mary Margaret Dee came to China Bank and deposited the money of Jose Gotianuy in Citibank US
dollar checks to the dollar account of her sister Adrienne Chu.20 This fortifies our conclusion that an inquiry into the
said deposit at China Bank is justified. At the very least, Jose Gotianuy as the owner of these funds is entitled to a
hearing on the whereabouts of these funds.
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.21 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,22 the upholding of fairness in our judicial system and would
be an avoidance of delay and time-wasteful and circuitous way of administering justice.23

WHEREFORE, premises considered, the Petition is DENIED. The Decision of the Court of Appeals dated 29
October 1999 affirming the Order of the RTC, Branch 58, Cebu City dated 16 April 1999 is AFFIRMED and this case
is ordered REMANDED to the trial court for continuation of hearing with utmost dispatch consistent with the above
disquisition. No costs.

SO ORDERED.

Ynares-Santiago, (Working Chairperson), Austria-Martinez, and Callejo Sr., JJ., concur.

Panganiban, C.J., Retired as of December 7, 2006.

Footnotes

1 CA rollo, p. 50

2 Rollo, p. 86.

3 CA rollo, p. 21; Presided by Judge Jose P. Soberano, Jr.

4 Rollo, p. 47.

5 Id. at 49.

6 Docketed as CA-G.R. SP No. 52661.

7Penned by then Associate Justice Presbitero J. Velasco, Jr. (now Associate Justice of this Court) with
Associate Justices B. A. Adefuin-De La Cruz and Eloy R. Bello, Jr., concurring; rollo, pp. 36-46.

8 Id. at 41-45.

9 Id. at 21.

10 G.R. No. 128996, 15 February 2002, 377 SCRA 74.

11 Entitled "Authorizing the Establishment of an Offshore Banking System in the Philippines."

12 Presidential Decree No. 1034, Section 1 Definition of Terms, subsection C.

13 343 Phil. 539 (1997).

14 Estrada v. Desierto, G.R. No. 156160, 9 December 2004, 445 SCRA 655, 672.

15 CA rollo, pp. 17-20.

16 Id.

17 Id. at 92.
 Wright v. Holmes, 62 A. 507, 508, 100 Me. 508, 3 L.R. A., N.S. , 769, 4 Ann. Cas. 583. WORDS AND
18

PHRASES, Permanent Edition, Vol. 12, p. 262.

19 Rollo, pp. 44-45.

Cristuta Labios was compelled to testify in view of the failure of China Bank to secure a Temporary
20

Restraining Order from the trial court. (Comment, p. 3.)

21x x x for this turn; for this one particular occasion" only. (Rafael Reyes Trucking Corporation v. People,
386 Phil. 41, 79 (2000); Mijares v. Rañada, G.R. No. 139325, 12 April 2005, 455 SCRA 397, 405).

22Alcarazen v. Univet Agricultural Products, Inc., G.R. No. 149628, 22 November 2005, 475 SCRA 636,
655; Litonjua, Jr. v. Litonjua, Sr., G.R. Nos. 166299-300, 13 December 2005, 477 SCRA 576, 594.

23Jesus Is Lord Christian School Foundation, Inc. v. Municipality (now City) of Pasig, Metro Manila, G.R. No.
152230, 9 August 2005, 466 SCRA 235, 255; Teston v. Development Bank of the Philippines, G.R. No.
144374, 11 November 2005, 474 SCRA 597, 607.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-47757 April 7, 1942

ANA RIVERA, plaintiff-appellant,

vs.
PEOPLES BANK AND TRUST CO., defendant-appellee.
MINNIE STEPHENSON, in her capacity as administratix of the intestate estate of EDGAR
Stephenson,intervenor-appellee.

Cecilio I. Lim, Chief Public Defender, for appellant.

Antonio M. Opisso for intervenor-appellee.
No appearance for appellee Peoples Bank & Trust Co.

OZAETA, J.:

The question raised in this appeal is the validity of the survivorship agreement made by and between Edgar
Stephenson, now deceased, and Ana Rivera, appellant herein, which read as follows:

SURVIVORSHIP AGREEMENT

Know All Men by These Presents:

That we hereby agree with each other and with the PEOPLES BANK AND TRUST COMPANY, Manila,
Philippine Islands (hereinafter called the Bank), that all moneys now or hereafter deposited by us or either of
us with the Bank in our savings account shall be deposited in and received by the Bank with the
understanding and upon the condition that said money be deposited without consideration of its previous
ownership, and that said money and all interest thereon, if any there be, shall be the property of both of us
joint tenants, and shall be payable to and collectible by either of us during our joint lives, and after the death
of one of us shall belong to and be the sole property of the survivor, and shall be payable to and collectible
by such survivor.

And we further covenant and agree with each other and the Bank, its successors or assigns, that the receipt
or check of either of us during our joint lives, or the receipt or check of the survivor, for any payment made
from this account, and shall be valid and sufficient and discharge to the Bank for such payment.

The Bank is hereby authorized to accept and deposit to this account all checks made payable to either or
both of us, when endorsed by either or both of us or one for the other.

This is a joint and several agreement and is binding upon each of us, our heirs, executors, administrators,
and assigns.

In witness whereof we have signed our names here to this 17th day of October, 1931.

(Sgd.) EDGAR STEPHENSON

(Sgd.) Ana Rivera
Address: 799 Sta. Mesa, Manila

Witness:
(Sgd.) FRED W. BOHLER
(Sgd.) Y. E. Cox
S. A. #4146
Ana Rivera was employed by Edgar Stephenson as housekeeper from the year 1920 until his death on June 8,
1939. On December 24, Stephenson opened an account in his name with the defendant Peoples Bank by
depositing therein the sum of P1,000. On October 17, 1931, when there was a balance of P2,072 in said account,
the survivorship agreement in question was executed and the said account was transferred to the name of "Edgar
Stephenson and/or Ana Rivera." At the time of Stephenson's death Ana Rivera held the deposit book, and there was
a balance in said account of P701. 43, which Ana Rivera claimed but which the bank refused to pay to her upon
advice of its attorneys who gave the opinion that the survivorship agreement was of doubtful validity. Thereupon
Ana Rivera instituted the present action against the bank, and Minnie Stephenson, administratix of the estate of the
deceased, intervened and claimed the amount for the estate, alleging that the money deposited in said account was
and is the exclusive property of the deceased.

The trial court held that the agreement in question, viewed from its effect during the lives of the parties, was a mere
power of attorney authorizing Ana Rivera to withdraw the deposit, which power terminated upon the death of the
principal, Edgar Stephenson; but that, viewed from its effect after the death of either of the parties, the agreement
was a donation mortis causa with reference to the balance remaining at the death of one of them, which, not having
been executed with the formalities of a testamentary disposition as required by article 620 of the Civil Code, was of
no legal effect.

The defendant bank did not appear in this Court. Counsel for the intervenor-appellee in his brief contends that the
survivorship agreement was a donation mortis causa from Stephenson to Ana Rivera of the bank account in
question and that, since it was not executed with the formalities of a will, it can have no legal effect.

We find no basis for the conclusion that the survivorship agreement was a mere power of attorney from Stephenson
to Ana Rivera, or that it is a gift mortis causa of the bank account in question from him to her. Such conclusion is
evidently predicated on the assumption that Stephenson was the exclusive owner of the funds deposited in the
bank, which assumption was in turn based on the facts (1) that the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased." But it not infrequently
happens that a person deposits money in the bank in the name of another; and in the instant case it also appears
that Ana Rivera served her master for about nineteen years without actually receiving her salary from him. The fact
that subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and executed with
the latter the survivorship agreement in question although there was no relation of kinship between them but only
that of master and servant, nullifies the assumption that Stephenson was the exclusive owner of the bank account.
In the absence, then, of clear proof of the contrary, we must give full faith and credit to the certificate of deposit,
which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera; that they were joint
owners thereof; and that either of them could withdraw any part or the whole of said account during the lifetime of
both, and the balance, if any, upon the death of either, belonged to the survivor.

Is the survivorship agreement valid? Prima facie, we think it is valid. It is an aleatory contract supported by law a
lawful consideration — the mutual agreement of the joint depositors permitting either of them to withdraw the whole
deposit during their lifetime, and transferring the balance to the survivor upon the death of one of them. The trial
court said that the Civil Code "contains no provisions sanctioning such an agreement" We think it is covered by
article 1790 of the Civil Code, which provides as follows:

ART. 1790. By an aleatory contract one of the parties binds himself, or both reciprocally bind themselves, to
give or to do something as an equivalent for that which the other party is to give or do in case of the
occurrence of an event which is uncertain or will happen at an indeterminate time.

(See also article 1255.)

The case of Macam vs. Gatmaitan (decided March 11, 1937), 36 Off. Gaz., 2175, is in point. Two friends Juana
Gatmaitan and Leonarda Macam, who had lived together for some time, agreed in writing that the house of strong
materials which they bought with the money belonging to Leonarda Macam and the Buick automobile and certain
furniture which belonged to Juana Gatmaitan shall belong to the survivor upon the death of one of them and that
"this agreement shall be equivalent to a transfer of the rights of the one who dies first and shall be kept by the
survivor." After the death of Leonarda Macam, her executrix assailed that document on the ground that with respect
to the house the same constituted a donation mortis causa by Leonarda Macam in favor of Juana Gatmaitan. In
affirming the judgment of the trial court absolving the defendants from the complaint this Court, speaking through
Chief Justice Avaceña, said:
 This court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the
civil Code, one of the parties or both reciprocally bind themselves to give or do something as an equivalent
for that which the other party is to give or do in case of the occurrence of an event which is uncertain or will
happen at an indeterminate time. As already stated, Leonarda was the owner of the house and Juana of the
Buick automobile and most of the furniture. By virtue of Exhibit C, Juana would become the owner of the
house in case Leonarda died first, and Leonarda would become the owner of the automobile and the
furniture if Juana were to die first. In this manner Leonarda and Juana reciprocally assigned their respective
property to one another conditioned upon who might die first, the time of death determining the event upon
which the acquisition of such right by the one or the other depended. This contract, as any other contract, is
binding upon the parties thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon
acquired the ownership of the house, in the same manner as Leonarda would have acquired the ownership
of the automobile of the furniture if Juana had died first. (36 Off. Gaz., 2176.)

Furthermore, "it is well established that a bank account may be so created that two persons shall be joint owners
thereof during their mutual lives, and the survivor take the whole on the death of the other. The right to make such
joint deposits has generally been held not to be done with by statutes abolishing joint tenancy and survivorship
generally as they existed at common law." (7 Am. Jur., 299.)

But although the survivorship agreement is per se not contrary to law, its operation or effect may be violative of the
law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation,
to transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds. No such vice has been imputed and established against the agreement involved in the case.

The agreement appealed from is reversed and another judgment will be entered in favor of the plaintiff ordering the
defendant bank to pay to her the sum of P701.43, with legal interest thereon from the date of the complaint, and the
costs in both instances. So ordered.

Yulo, C.J., Moran, Paras, and Bocobo, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-47757 April 7, 1942

ANA RIVERA, plaintiff-appellant,

vs.
PEOPLES BANK AND TRUST CO., defendant-appellee.
MINNIE STEPHENSON, in her capacity as administratix of the intestate estate of EDGAR
Stephenson,intervenor-appellee.

Cecilio I. Lim, Chief Public Defender, for appellant.

Antonio M. Opisso for intervenor-appellee.
No appearance for appellee Peoples Bank & Trust Co.

OZAETA, J.:

The question raised in this appeal is the validity of the survivorship agreement made by and between Edgar
Stephenson, now deceased, and Ana Rivera, appellant herein, which read as follows:

SURVIVORSHIP AGREEMENT

Know All Men by These Presents:

That we hereby agree with each other and with the PEOPLES BANK AND TRUST COMPANY, Manila,
Philippine Islands (hereinafter called the Bank), that all moneys now or hereafter deposited by us or either of
us with the Bank in our savings account shall be deposited in and received by the Bank with the
understanding and upon the condition that said money be deposited without consideration of its previous
ownership, and that said money and all interest thereon, if any there be, shall be the property of both of us
joint tenants, and shall be payable to and collectible by either of us during our joint lives, and after the death
of one of us shall belong to and be the sole property of the survivor, and shall be payable to and collectible
by such survivor.

And we further covenant and agree with each other and the Bank, its successors or assigns, that the receipt
or check of either of us during our joint lives, or the receipt or check of the survivor, for any payment made
from this account, and shall be valid and sufficient and discharge to the Bank for such payment.

The Bank is hereby authorized to accept and deposit to this account all checks made payable to either or
both of us, when endorsed by either or both of us or one for the other.

This is a joint and several agreement and is binding upon each of us, our heirs, executors, administrators,
and assigns.

In witness whereof we have signed our names here to this 17th day of October, 1931.

(Sgd.) EDGAR STEPHENSON

(Sgd.) Ana Rivera
Address: 799 Sta. Mesa, Manila

Witness:
(Sgd.) FRED W. BOHLER
(Sgd.) Y. E. Cox
S. A. #4146
Ana Rivera was employed by Edgar Stephenson as housekeeper from the year 1920 until his death on June 8,
1939. On December 24, Stephenson opened an account in his name with the defendant Peoples Bank by
depositing therein the sum of P1,000. On October 17, 1931, when there was a balance of P2,072 in said account,
the survivorship agreement in question was executed and the said account was transferred to the name of "Edgar
Stephenson and/or Ana Rivera." At the time of Stephenson's death Ana Rivera held the deposit book, and there was
a balance in said account of P701. 43, which Ana Rivera claimed but which the bank refused to pay to her upon
advice of its attorneys who gave the opinion that the survivorship agreement was of doubtful validity. Thereupon
Ana Rivera instituted the present action against the bank, and Minnie Stephenson, administratix of the estate of the
deceased, intervened and claimed the amount for the estate, alleging that the money deposited in said account was
and is the exclusive property of the deceased.

The trial court held that the agreement in question, viewed from its effect during the lives of the parties, was a mere
power of attorney authorizing Ana Rivera to withdraw the deposit, which power terminated upon the death of the
principal, Edgar Stephenson; but that, viewed from its effect after the death of either of the parties, the agreement
was a donation mortis causa with reference to the balance remaining at the death of one of them, which, not having
been executed with the formalities of a testamentary disposition as required by article 620 of the Civil Code, was of
no legal effect.

The defendant bank did not appear in this Court. Counsel for the intervenor-appellee in his brief contends that the
survivorship agreement was a donation mortis causa from Stephenson to Ana Rivera of the bank account in
question and that, since it was not executed with the formalities of a will, it can have no legal effect.

We find no basis for the conclusion that the survivorship agreement was a mere power of attorney from Stephenson
to Ana Rivera, or that it is a gift mortis causa of the bank account in question from him to her. Such conclusion is
evidently predicated on the assumption that Stephenson was the exclusive owner of the funds deposited in the
bank, which assumption was in turn based on the facts (1) that the account was originally opened in the name of
Stephenson alone and (2) that Ana Rivera "served only as housemaid of the deceased." But it not infrequently
happens that a person deposits money in the bank in the name of another; and in the instant case it also appears
that Ana Rivera served her master for about nineteen years without actually receiving her salary from him. The fact
that subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and executed with
the latter the survivorship agreement in question although there was no relation of kinship between them but only
that of master and servant, nullifies the assumption that Stephenson was the exclusive owner of the bank account.
In the absence, then, of clear proof of the contrary, we must give full faith and credit to the certificate of deposit,
which recites in effect that the funds in question belonged to Edgar Stephenson and Ana Rivera; that they were joint
owners thereof; and that either of them could withdraw any part or the whole of said account during the lifetime of
both, and the balance, if any, upon the death of either, belonged to the survivor.

Is the survivorship agreement valid? Prima facie, we think it is valid. It is an aleatory contract supported by law a
lawful consideration — the mutual agreement of the joint depositors permitting either of them to withdraw the whole
deposit during their lifetime, and transferring the balance to the survivor upon the death of one of them. The trial
court said that the Civil Code "contains no provisions sanctioning such an agreement" We think it is covered by
article 1790 of the Civil Code, which provides as follows:

ART. 1790. By an aleatory contract one of the parties binds himself, or both reciprocally bind themselves, to
give or to do something as an equivalent for that which the other party is to give or do in case of the
occurrence of an event which is uncertain or will happen at an indeterminate time.

(See also article 1255.)

The case of Macam vs. Gatmaitan (decided March 11, 1937), 36 Off. Gaz., 2175, is in point. Two friends Juana
Gatmaitan and Leonarda Macam, who had lived together for some time, agreed in writing that the house of strong
materials which they bought with the money belonging to Leonarda Macam and the Buick automobile and certain
furniture which belonged to Juana Gatmaitan shall belong to the survivor upon the death of one of them and that
"this agreement shall be equivalent to a transfer of the rights of the one who dies first and shall be kept by the
survivor." After the death of Leonarda Macam, her executrix assailed that document on the ground that with respect
to the house the same constituted a donation mortis causa by Leonarda Macam in favor of Juana Gatmaitan. In
affirming the judgment of the trial court absolving the defendants from the complaint this Court, speaking through
Chief Justice Avaceña, said:
 This court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790 of the
civil Code, one of the parties or both reciprocally bind themselves to give or do something as an equivalent
for that which the other party is to give or do in case of the occurrence of an event which is uncertain or will
happen at an indeterminate time. As already stated, Leonarda was the owner of the house and Juana of the
Buick automobile and most of the furniture. By virtue of Exhibit C, Juana would become the owner of the
house in case Leonarda died first, and Leonarda would become the owner of the automobile and the
furniture if Juana were to die first. In this manner Leonarda and Juana reciprocally assigned their respective
property to one another conditioned upon who might die first, the time of death determining the event upon
which the acquisition of such right by the one or the other depended. This contract, as any other contract, is
binding upon the parties thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon
acquired the ownership of the house, in the same manner as Leonarda would have acquired the ownership
of the automobile of the furniture if Juana had died first. (36 Off. Gaz., 2176.)

Furthermore, "it is well established that a bank account may be so created that two persons shall be joint owners
thereof during their mutual lives, and the survivor take the whole on the death of the other. The right to make such
joint deposits has generally been held not to be done with by statutes abolishing joint tenancy and survivorship
generally as they existed at common law." (7 Am. Jur., 299.)

But although the survivorship agreement is per se not contrary to law, its operation or effect may be violative of the
law. For instance, if it be shown in a given case that such agreement is a mere cloak to hide an inofficious donation,
to transfer property in fraud of creditors, or to defeat the legitime of a forced heir, it may be assailed and annulled
upon such grounds. No such vice has been imputed and established against the agreement involved in the case.

The agreement appealed from is reversed and another judgment will be entered in favor of the plaintiff ordering the
defendant bank to pay to her the sum of P701.43, with legal interest thereon from the date of the complaint, and the
costs in both instances. So ordered.

Yulo, C.J., Moran, Paras, and Bocobo, JJ., concur.

 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 82027 March 29, 1990

ROMARICO G. VITUG, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and ROWENA FAUSTINO-CORONA, respondents.

Rufino B. Javier Law Office for petitioner.

Quisumbing, Torres & Evangelista for private respondent.

SARMIENTO, J.:

This case is a chapter in an earlier suit decided by this Court 1 involving the probate of the two wills of the late
Dolores Luchangco Vitug, who died in New York, U. S.A., on November 10, 1980, naming private respondent
Rowena Faustino-Corona executrix. In our said decision, we upheld the appointment of Nenita Alonte as co-special
administrator of Mrs. Vitug's estate with her (Mrs. Vitug's) widower, petitioner Romarico G. Vitug, pending probate.

On January 13, 1985, Romarico G. Vitug filed a motion asking for authority from the probate court to sell certain
shares of stock and real properties belonging to the estate to cover allegedly his advances to the estate in the sum
of P667,731.66, plus interests, which he claimed were personal funds. As found by the Court of Appeals, 2 the
alleged advances consisted of P58,147.40 spent for the payment of estate tax, P518,834.27 as deficiency estate
tax, and P90,749.99 as "increment thereto." 3 According to Mr. Vitug, he withdrew the sums of P518,834.27 and
P90,749.99 from savings account No. 35342-038 of the Bank of America, Makati, Metro Manila.

On April 12, 1985, Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn from
savings account No. 35342-038 were conjugal partnership properties and part of the estate, and hence, there was
allegedly no ground for reimbursement. She also sought his ouster for failure to include the sums in question for
inventory and for "concealment of funds belonging to the estate." 4

Vitug insists that the said funds are his exclusive property having acquired the same through a survivorship
agreement executed with his late wife and the bank on June 19, 1970. The agreement provides:

We hereby agree with each other and with the BANK OF AMERICAN NATIONAL TRUST AND
SAVINGS ASSOCIATION (hereinafter referred to as the BANK), that all money now or hereafter
deposited by us or any or either of us with the BANK in our joint savings current account shall be the
property of all or both of us and shall be payable to and collectible or withdrawable by either or any
of us during our lifetime, and after the death of either or any of us shall belong to and be the sole
property of the survivor or survivors, and shall be payable to and collectible or withdrawable by such
survivor or survivors.

We further agree with each other and the BANK that the receipt or check of either, any or all of us
during our lifetime, or the receipt or check of the survivor or survivors, for any payment or withdrawal
made for our above-mentioned account shall be valid and sufficient release and discharge of the
BANK for such payment or withdrawal. 5

The trial courts 6 upheld the validity of this agreement and granted "the motion to sell some of the estate of Dolores
L. Vitug, the proceeds of which shall be used to pay the personal funds of Romarico Vitug in the total sum of
P667,731.66 ... ." 7
On the other hand, the Court of Appeals, in the petition for certiorari filed by the herein private respondent, held that
the above-quoted survivorship agreement constitutes a conveyance mortis causa which "did not comply with the
formalities of a valid will as prescribed by Article 805 of the Civil Code," 8 and secondly, assuming that it is a mere
donation inter vivos, it is a prohibited donation under the provisions of Article 133 of the Civil Code. 9

The dispositive portion of the decision of the Court of Appeals states:

WHEREFORE, the order of respondent Judge dated November 26, 1985 (Annex II, petition) is
hereby set aside insofar as it granted private respondent's motion to sell certain properties of the
estate of Dolores L. Vitug for reimbursement of his alleged advances to the estate, but the same
order is sustained in all other respects. In addition, respondent Judge is directed to include
provisionally the deposits in Savings Account No. 35342-038 with the Bank of America, Makati, in
the inventory of actual properties possessed by the spouses at the time of the decedent's death.
With costs against private respondent. 10

In his petition, Vitug, the surviving spouse, assails the appellate court's ruling on the strength of our decisions
in Rivera v. People's Bank and Trust Co. 11 and Macam v. Gatmaitan 12 in which we sustained the validity of
"survivorship agreements" and considering them as aleatory contracts. 13

The petition is meritorious.

The conveyance in question is not, first of all, one of mortis causa, which should be embodied in a will. A will has
been defined as "a personal, solemn, revocable and free act by which a capacitated person disposes of his property
and rights and declares or complies with duties to take effect after his death." 14 In other words, the bequest or
device must pertain to the testator. 15 In this case, the monies subject of savings account No. 35342-038 were in the
nature of conjugal funds In the case relied on, Rivera v. People's Bank and Trust Co., 16 we rejected claims that a
survivorship agreement purports to deliver one party's separate properties in favor of the other, but simply, their joint
holdings:

xxx xxx xxx

... Such conclusion is evidently predicated on the assumption that Stephenson was the exclusive
owner of the funds-deposited in the bank, which assumption was in turn based on the facts (1) that
the account was originally opened in the name of Stephenson alone and (2) that Ana Rivera "served
only as housemaid of the deceased." But it not infrequently happens that a person deposits money
in the bank in the name of another; and in the instant case it also appears that Ana Rivera served
her master for about nineteen years without actually receiving her salary from him. The fact that
subsequently Stephenson transferred the account to the name of himself and/or Ana Rivera and
executed with the latter the survivorship agreement in question although there was no relation of
kinship between them but only that of master and servant, nullifies the assumption that Stephenson
was the exclusive owner of the bank account. In the absence, then, of clear proof to the contrary, we
must give full faith and credit to the certificate of deposit which recites in effect that the funds in
question belonged to Edgar Stephenson and Ana Rivera; that they were joint (and several) owners
thereof; and that either of them could withdraw any part or the whole of said account during the
lifetime of both, and the balance, if any, upon the death of either, belonged to the survivor. 17

xxx xxx xxx

In Macam v. Gatmaitan, 18 it was held:

xxx xxx xxx

This Court is of the opinion that Exhibit C is an aleatory contract whereby, according to article 1790
of the Civil Code, one of the parties or both reciprocally bind themselves to give or do something as
an equivalent for that which the other party is to give or do in case of the occurrence of an event
which is uncertain or will happen at an indeterminate time. As already stated, Leonarda was the
owner of the house and Juana of the Buick automobile and most of the furniture. By virtue of Exhibit
 C, Juana would become the owner of the house in case Leonarda died first, and Leonarda would
become the owner of the automobile and the furniture if Juana were to die first. In this manner
Leonarda and Juana reciprocally assigned their respective property to one another conditioned upon
who might die first, the time of death determining the event upon which the acquisition of such right
by the one or the other depended. This contract, as any other contract, is binding upon the parties
thereto. Inasmuch as Leonarda had died before Juana, the latter thereupon acquired the ownership
of the house, in the same manner as Leonarda would have acquired the ownership of the
automobile and of the furniture if Juana had died first. 19

xxx xxx xxx

There is no showing that the funds exclusively belonged to one party, and hence it must be presumed to be
conjugal, having been acquired during the existence of the marita. relations. 20

Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it was to take effect after
the death of one party. Secondly, it is not a donation between the spouses because it involved no conveyance of a
spouse's own properties to the other.

It is also our opinion that the agreement involves no modification petition of the conjugal partnership, as held by the
Court of Appeals, 21 by "mere stipulation" 22 and that it is no "cloak" 23 to circumvent the law on conjugal property
relations. Certainly, the spouses are not prohibited by law to invest conjugal property, say, by way of a joint and
several bank account, more commonly denominated in banking parlance as an "and/or" account. In the case at bar,
when the spouses Vitug opened savings account No. 35342-038, they merely put what rightfully belonged to them in
a money-making venture. They did not dispose of it in favor of the other, which would have arguably been
sanctionable as a prohibited donation. And since the funds were conjugal, it can not be said that one spouse could
have pressured the other in placing his or her deposits in the money pool.

The validity of the contract seems debatable by reason of its "survivor-take-all" feature, but in reality, that contract
imposed a mere obligation with a term, the term being death. Such agreements are permitted by the Civil Code. 24

Under Article 2010 of the Code:

ART. 2010. By an aleatory contract, one of the parties or both reciprocally bind themselves to give or
to do something in consideration of what the other shall give or do upon the happening of an event
which is uncertain, or which is to occur at an indeterminate time.

Under the aforequoted provision, the fulfillment of an aleatory contract depends on either the happening of an event
which is (1) "uncertain," (2) "which is to occur at an indeterminate time." A survivorship agreement, the sale of a
sweepstake ticket, a transaction stipulating on the value of currency, and insurance have been held to fall under the
first category, while a contract for life annuity or pension under Article 2021, et sequentia, has been categorized
under the second. 25 In either case, the element of risk is present. In the case at bar, the risk was the death of one
party and survivorship of the other.

However, as we have warned:

xxx xxx xxx

But although the survivorship agreement is per se not contrary to law its operation or effect may be
violative of the law. For instance, if it be shown in a given case that such agreement is a mere cloak
to hide an inofficious donation, to transfer property in fraud of creditors, or to defeat the legitime of a
forced heir, it may be assailed and annulled upon such grounds. No such vice has been imputed and
established against the agreement involved in this case. 26

xxx xxx xxx

There is no demonstration here that the survivorship agreement had been executed for such unlawful purposes, or,
as held by the respondent court, in order to frustrate our laws on wills, donations, and conjugal partnership.
The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired
upon her death a vested right over the amounts under savings account No. 35342-038 of the Bank of America.
Insofar as the respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the
court was in error. Being the separate property of petitioner, it forms no more part of the estate of the deceased.

WHEREFORE, the decision of the respondent appellate court, dated June 29, 1987, and its resolution, dated
February 9, 1988, are SET ASIDE.

No costs.

SO ORDERED.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado JJ., concur.

Footnotes

1 Corona v. Court of Appeals, No. 59821, August 30, 1982, 116 SCRA 316.

2 Kapunan, Santiago, M., J., ponente; Puno Reynato S. and Marigomen Alfredo, JJ., concurring.

3 Rollo, 21.

4 Id., 22.

5 Id.

6 Judge (now Justice of the Court of Appeals) Asaali S. Isnani presiding.

7 Rollo, 23.

8 Id., 26.

9 Now, Article 87 of the Family Code.

10 Rollo, 28-29.

11 73 Phil. 546 (1942).

12 64 Phil. 187 (1937).

13 CIVIL CODE, Art. 2010.

14 III TOLENTINO, CIVIL CODE OF THE PHILIPPINES 26 (1973 ed.), citing 1 GOMEZ 53.

15 See CIVIL CODE, supra., arts. 793, 794, 930.

16 Supra.

17 Supra., 547.

18 Supra.

19 Supra., 190-191.
20 CIVIL CODE, supra, art. 160.

21 In the words of the Appellate Court: "Since private respondent and his late wife did not enter into
a marriage settlement before marriage, their property relationship was that of conjugal partnership
governed by the Civil Code. The system of conjugal partnership prohibits, as already mentioned,
donation between the spouses during the marriage, except that which takes effect after the death of
the donor, in which case, the donation shall comply with the formalities of a will (Arts. 133, 728, 805).
To allow the prohibited donation by giving it a cloak of aleatory contract would sanction a
(modification) of a marriage settlement during marriage by a mere stipulation. As mandated by Art.
52, the nature, consequences and incidents of marriage, which is not a mere contract but an
inviolable social institution are governed by law, and not subject to stipulation."

22 Id.

23 Id.

24 CIVIL CODE, supra., art. 1193.

25 V PARAS, CIVIL CODE OF THE PHILIPPINES, 782 (1986 ed.)

26 Rivera, supra, 548.