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TABLE OF CONTENTS
1. China Banking Corporation and Tan Kim Liong vs. Hon. Wenceslao Ortega et. al ................................................... 1
G.R. No. L-34964 31 January 1973 ......................................................................................................................... 1
Makalintal, J.: ............................................................................................................................................................ 1
2. Bańas et. al. vs. Asia Pacific Finance Corporation .................................................................................................... 1
G.R. No. 128703 18 October 2000 ........................................................................................................................... 1
Bellosillo, J.: .............................................................................................................................................................. 1
3. Simex International Incorporated vs. CA and Traders Royal Bank ............................................................................ 1
G.R. No. 88013 - 19 March 1990 .............................................................................................................................. 1
Cruz, J.:..................................................................................................................................................................... 1
4. Fultron Iron Works Co. vs. China Banking Corporation ............................................................................................. 2
G.R. No. 32576 November 6, 1930 ............................................................................................................... 2
Street, J.:................................................................................................................................................................... 2
5. Teofisto Guingona vs. The City Fiscal of Manila ....................................................................................................... 2
G.R. No. L-60033 4 April 1984 ............................................................................................................................. 2
Makasiar, Actg. C.J, .................................................................................................................................................. 2
6. Paulino Gullas vs. Philippine National Bank .............................................................................................................. 3
G.R. No. L-43191 13 November 1935 ................................................................................................................. 3
Malcolm, J.: ............................................................................................................................................................... 3
7. Romarico G. Vitug ..................................................................................................................................................... 3
G.R. No. 82027 March 29, 1990 ............................................................................................................................... 3
Sarmiento, J.: ............................................................................................................................................................ 3
8. Banco Filipino vs. Purisima ....................................................................................................................................... 4
G.R. No. L-56429 May 28, 1988 ............................................................................................................................... 4
Narvasa, J.: ............................................................................................................................................................... 4
9. Joseph Victor Ejercito vs. Sandiganbayan ................................................................................................................ 4
G.R. Nos. 157294-95 - 30 November 2006............................................................................................................... 4
Carpio-Morales, J.: .................................................................................................................................................... 4
10. BSB Group Inc. vs. Sally Go ................................................................................................................................... 4
G.R. No. 168644 February 16, 2010 ........................................................................................................................ 4
Peralta, J.: ................................................................................................................................................................. 4
11. Intengan vs. Court of Appeals ................................................................................................................................. 5
G.R. No. 128996 February 15, 2002 ....................................................................................................................... 5
De Leon, Jr., J.:......................................................................................................................................................... 5
12. PCIB vs. Court of Appeals ....................................................................................................................................... 5
G.R. No. 121413 January 29, 2001 ......................................................................................................................... 5
Quisumbing, J.: ......................................................................................................................................................... 5
13. Philippine Deposit Insurance Corporation vs. Citibank ............................................................................................ 6
GR NO.170290 April 11, 2012 .................................................................................................................................. 6
Mendoza, J.: ............................................................................................................................................................. 6
14. Philippine Deposit Insurance Corporation vs. Court of Appeals .............................................................................. 7
G.R. No. 118917 - December 22, 1997..................................................................................................................... 7
Kapunan, J.: .............................................................................................................................................................. 7
15. Philippine Deposit Insurance Corporation vs. Court of Appeals .............................................................................. 8
G.R. No. 126911 April 30, 2003 ................................................................................................................................ 8
Carpio-Morales, J.: .................................................................................................................................................... 8

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1. China Banking Corporation and Tan Kim Liong vs. Hon.
Wenceslao Ortega et. al
G.R. No. L-34964 31 January 1973
Makalintal, J.:
FACTS: Tan Kim Liong was ordered to inform the Court whether
or not there is a deposit in the China Banking Corporation of
defendant B & B Forest Development Corporation, and if there is
any deposit, to hold the same intact and not allow any withdrawal
until further order from the Court. Petitioners in this case refuse to
comply with a court process garnishing the bank deposit of a
judgment debtor by invoking the provisions of Republic Act No.
1405 ( Secrecy of Bank Deposits Act) which allegedly prohibits the
disclosure of any information concerning to bank deposits.
ISSUE: Whether or not a banking institution may validly refuse to
comply with a court processes garnishing the bank deposit of a
judgment debtor, by invoking the provisions of Republic Act No.
1405.
HELD: No. The lower court did not order an examination of or
inquiry into deposit of B & B Forest Development Corporation, as
contemplated in the law. It merely required Tan Kim Liong to inform
the court whether or not the defendant B & B Forest Development
Corporation had a deposit in the China Banking Corporation only
for the purposes of the garnishment issued by it, so that the bank
would hold the same intact and not allow any withdrawal until
further order. It is sufficiently clear that the prohibition against
examination of or inquiry into bank deposit under RA 1405 does
not preclude its being garnished to insure satisfaction of a
judgment. Indeed there is no real inquiry in such a case, and the
existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. WHEREFORE, the orders of
the lower court dated March 4 and 27, 1972, respectively, are
hereby affirmed, with costs against the petitioners-appellants.
2. Bańas et. al. vs. Asia Pacific Finance Corporation
G.R. No. 128703 18 October 2000
Bellosillo, J.:
FACTS: Sometime in August 1980, Bañas executed a Promissory
Note in favor of C. G.Dizon Construction whereby for value
received he promised to pay to the order of C. G. Dizon
Construction the sum of P390,000.00 in installments of
"P32,500.00every 25th day of the month starting from September
25, 1980 up to August 25,1981". Later, C. G. Dizon Construction
endorsed with recourse the Promissory Note to Asia Pacific
Finance Corporation (Asia Pacific), and to secure its payment, it,
through its corporate officers, Dizon, President, executed a Deed
of Chattel Mortgage covering three (3) heavy equipment units of
Caterpillar Bulldozer Crawler Tractors in favor of Asia Pacific.
Dizon also executed a Continuing Undertaking wherein he bound
himself to pay the obligation jointly and severally with C. G. Dizon
Construction.
In compliance with the provisions of the Promissory Note,
C. G. Dizon Construction made the installment payments to Asia
Pacific totaling P130,000, but thereafter defaulted in the payment
of the remaining installments, prompting Asia Pacific to send a
Statement of Account to Dizon for the unpaid balance. As the
demand was unheeded, Asia Pacific sued Bañas, C. G. Dizon
Construction and Dizon.
While they admitted the genuineness and due execution
of the Promissory Note, the Deed of Chattel Mortgage and the
Continuing Undertaking, they nevertheless maintained that these
documents were never intended by the parties to be legal, valid
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and binding but a mere subterfuge to conceal the loan with
usurious interests and claimed that since Asia Pacific could not
directly engage in banking business, it proposed to them a scheme
wherein it could extend a loan to them without violating banking
laws.
The RTC issued writ of replevin against C. G. Dizon
Construction for the surrender of the bulldozer crawler tractors
subject of the Deed of Chattel Mortgage, which of the 3, only 2 were
actually turned over and were subsequently foreclosed by Asia
Pacific to satisfy the obligation. The RTC ruled in favor of Asia
Pacific holding them to pay jointly and severally the unpaid
balance. On appeal, the CA affirmed in toto the decision.
ISSUE: Whether or not they can be held liable under the said
documents
HELD: They CAN BE HELD LIABLE UNDER THE SAID
DOCUMENTS BUTTHE COURT MITIGATED THE AMOUNT OF
DAMAGES AS IT WASSHOWN THAT THERE WAS A PARTIAL
COMPLIANCE ON THEIR PART. Indubitably, what is prohibited by
law is for investment companies to lend funds obtained from the
public through receipts of deposit, which is a function of
banking institutions. But here, the funds supposedly "lent" to
petitioners have not been shown to have been obtained from the
public by way of deposits, hence, the inapplicability of banking
laws.
On their submission that the true intention of the parties
was to enter into a contract of loan, the Court examined the
Promissory Note and failed to discern anything therein that would
support such theory. On the contrary, the terms and conditions of
the instrument clear, free from any ambiguity, and expressive of
the real intent and agreement of the parties. Likewise, the Deed of
Chattel Mortgage and Continuing Undertaking were duly
acknowledged before a notary public and, as such, have in their
favor the presumption of regularity. To contradict them there must
be clear, convincing and more than merely preponderant evidence.
In the instant case, the records do not show even a preponderance
of evidence in their favor that the Deed of Chattel Mortgage and
Continuing Undertaking were never intended by the parties to be
legal, valid and binding .
With regard to the computation of their liability, the records
show that they actually paid a total sum of P130,000.00 in addition
to the P180,000.00 proceeds realized from the sale of the bulldozer
crawler tractors at public auction. Deducting these amounts from
the principal obligation of P390,000.00 leaves a balance
of P80,000.00, to which must be added P7,637.50 accrued
interests and charges, or a total unpaid balance of P87,637.50 for
which they are jointly and severally liable. Furthermore, the unpaid
balance should earn 14% interest per annum as stipulated in the
Promissory Note, computed from 20 March 1981 until fully paid.
3. Simex International Incorporated vs. CA and Traders Royal
Bank
G.R. No. 88013 - 19 March 1990
Cruz, J.:
FACTS: Simex International 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. Simex is a depositor of TRB
and maintained a checking account in its Cubao branch. Simex
maintained an account in the amount ofP100,000.00, thus
increasing its balance as of that date to P190,380.74.
Subsequently, the petitioner issued several (8) checks against
its deposit but was surprised to learn later that they had been
dishonored for insufficient funds. As a consequence, actions on the
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pending orders of SIMEX with the other suppliers (California
Manufacturing Comp., Malabon Longlife Trading Corp., etc.)
whose checks were dishonored were deferred. And thus made
these companies send demand letters to SIMEX threatening
prosecution if the checks were not made good. SIMEX complained
to TRB and found out that the sum of P100,000.00 deposited had
not been credited. The error was rectified on June 17, 1981, and
the dishonored checks were paid after they were re-deposited.
SIMEX sent demand letter for reparation against TRB, which was
not met, thus a complaint was filed in CFI Rizal by SIMEX. The
court denied the moral & exemplary damages but upheld and
ordered TRB to pay for nominal damages in the amount
of P20,000.00 plus attys fees & costs, which was then affirmed by
the CA. The CA 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'sdeposit 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.
ISSUE: Whether or not TRB is guilty of negligence which warrants
SIMEX reparation for damages.
HELD: YES. Award SIMEX with moral damages (P20,000) and
exemplary damages (P50,000). 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. There was
also prejudice suffered by SIMEX in the fact 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.
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.
4. Fultron Iron Works Co. vs. China Banking Corporation
G.R. No. 32576 November 6, 1930
Street, J.:
FACTS: In the month of March, 1921, the plaintiff the Fulton Iron
Works Co., of St. Louis, Missouri, sold to the Binalbagan Estate,
Inc. for which the purchaser executed three notes amounting to
about $80,000. The consequently delay in the payments of the
notes caused the plaintiff to employ a firm of lawyers in Manila, of
which S. C. Schwarzkopf was then a member. Schwarzkopf
opened a new account with the defendant bank, known as "No. 2
account." Meanwhile, the No. 2 account became depleted, but the
manager of the bank, in view, of the funds to Schwarzkopf's credit
in the third account conceded to him a credit in No. 2 account of
P25,000. By June 15, 1922, said account became overdrawn to the
Page 2 of 10
extend of P22, 144.39, and it was obvious that the limit of the
conceded credit would soon be reached. The manager of the bank
then intervened and requested Schwarzkopf to settle the overdraft.
To accomplish this Schwarkopf merely transferred, by check, the
money to his credit in his special account as plaintiff's attorney-in-
fact to the No. 2 account. The amount thus transferred was
P61,360.81, and the effect of the transfer was to absorb the
overdraft and place a credit balance of nearly P40,000 in No. 2
account. Schwarzkopf then purchased a draft on New York in the
amount of $15,000, and after some delay transmitted the same by
mail to the plaintiff. This draft cost Schwarzkopf the sum of
P30,375.02, and it was the only remittance ever made by him to his
client.On June 23, 1926, an action was instituted in the Court of
First Instance of the City of Manila by the Fulton Iron Works Co.
against Schwarzkopf and China Banking for misappropriation of its
funds with the full knowledge and consent of the defendant bank.
Upon hearing the cause, His Honor gave judgment in favor of the
plaintiff, the Fulton Iron Works Co.
ISSUE: Whether or not the defendant bank is liable to the plaintiff
for the sum of P22, 144.39 which was thus applied to the payment
of Schwarzkopf's personal indebtedness resulting from his
overdraft in the No. 2 account?
HELD: The appealed judgment must be modified by reducing the
amount of the judgment against the bank to the sum of
P22,144.39.When the bank became a party to the application of
part of the plaintiff's money to the satisfaction of the overdraft in No.
2 account, it was directly chargeable with knowledge of the
misappropriation of the fund to the extent of the overdraft and that
fact, as we have already said, made the bank liable. But this rule
cannot be extented to subsequent acts of malversation and
misappropriation committed by the fiduciary against the real owner
of the fund. Furthermore, it is undeniable that a bank may incur
liability by assisting the fiduciary to accomplish a misappropriation,
although the bank does not actually profit by the
misappropriation.The liability of the defendant bank, to the extent
recognized in this decision proceeds upon the fundamental idea
that a creditor cannot apply to the obligation of his debtor money
which as he knows belongs to another, without the consent of the
latter, — a principle implicit in all law.
5. Teofisto Guingona vs. The City Fiscal of Manila
G.R. No. L-60033 4 April 1984
Makasiar, Actg. C.J,
FACTS: From March 1979 to March 1981, Clement David made
several investments with the National Savings and Loan
Association. On March 21, 1981, the bank was placed under
receivership by the Bangko Sentral. Upon David’s request,
petitioners Guingona and Martin issued a joint promissory note,
absorbing the obligations of the bank. On July 17, 1981, they
divided the indebtedness. David filed a complaint for estafa and
violation of Central Bank Circular No. 364 and related regulations
regarding foreign exchange transactions before the Office of the
City Fiscal of Manila. Petitioners filed the herein petition for
prohibition and injunction with a prayer for immediate issuance of
restraining order and/or writ of preliminary injunction to enjoin the
public respondents to proceed with the preliminary investigation on
the ground that the petitioners’ obligation is civil in nature.
ISSUES:
(1) Whether the contract between NSLA and David is a contract of
depositor a contract of loan, which answer determines whether the
City Fiscal has the jurisdiction to file a case for estafa
(2) Whether there was a violation of Central Bank Circular No. 364
HELD:
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(1) When private respondent David invested his money on nine.
and savings deposits with the aforesaid bank, the contract that was
perfected was a contract of simple loan or mutuum and not a
contract of deposit. Hence, the relationship between the private
respondent and the Nation Savings and Loan Association is that of
creditor and debtor; consequently, the ownership of the amount
deposited was transmitted to the Bank upon the perfection of the
contract and it can make use of the amount deposited for its
banking operations, such as to pay interests on deposits and to pay
withdrawals. While the Bank has the obligation to return the amount
deposited, it has, however, no obligation to return or deliver the
same money that was deposited. And, the failure of the Bank to
return the amount deposited will not constitute estafa through
misappropriation punishable under Article 315, par. l(b) of the
Revised Penal Code, but it will only give rise to civil liability over
which the public respondents have no jurisdiction.
But even granting that the failure of the bank to pay the time and
savings deposits of private respondent David would constitute a
violation of paragraph 1(b) of Article 315 of the Revised Penal
Code, nevertheless any incipient criminal liability was deemed
avoided, because when the aforesaid bank was placed under
receivership by the Central Bank, petitioners Guingona and Martin
assumed the obligation of the bank to private respondent David,
thereby resulting in the novation of the original contractual
obligation arising from deposit into a contract of loan and
converting the original trust relation between the bank and private
respondent David into an ordinary debtor-creditor relation between
the petitioners and private respondent. Consequently, the failure of
the bank or petitioners Guingona and Martin to pay the deposits of
private respondent would not constitute a breach of trust but would
merely be a failure to pay the obligation as a debtor. Moreover,
while it is true that novation does not extinguish criminal liability, it
may however, prevent the rise of criminal liability as long as it
occurs prior to the filing of the criminal information in court. In the
case at bar, there is no dispute that petitioners Guingona and
Martin executed a promissory note on June 17, 1981 assuming the
obligation of the bank to private respondent David; while the
criminal complaint for estafa was filed on December 23, 1981 with
the Office of the City Fiscal. Hence, it is clear that novation occurred
long before the filing of the criminal complaint with the Office of the
City Fiscal. Consequently, as aforestated, any incipient criminal
liability would be avoided but there will still be a civil liability on the
part of petitioners Guingona and Martin to pay the assumed
obligation.
(2) Petitioner Guingona merely accommodated the request of the
Nation Savings and loan Association in order to clear the bank draft
through his dollar account because the bank did not have a dollar
account. Immediately after the bank draft was cleared, petitioner
Guingona authorized Nation Savings and Loan Association to
withdraw the same in order to be utilized by the bank for its
operations. It is safe to assume that the U.S. dollars were
converted first into Philippine pesos before they were accepted and
deposited in Nation Savings and Loan Association, because the
bank is presumed to have followed the ordinary course of the
business which is to accept deposits in Philippine currency only,
and that the transaction was regular and fair, in the absence of a
clear and convincing evidence to the contrary.
In conclusion, considering that the liability of the petitioners is
purely civil in nature and that there is no clear showing that they
engaged in foreign exchange transactions, We hold that the public
respondents acted without jurisdiction when they investigated the
charges against the petitioners. Consequently, public respondents
should be restrained from further proceeding with the criminal case
for to allow the case to continue, even if the petitioners could have
appealed to the Ministry of Justice, would work great injustice to
petitioners and would render meaningless the proper
administration of justice.
Page 3 of 10
6. Paulino Gullas vs. Philippine National Bank
G.R. No. L-43191 13 November 1935
Malcolm, J.:
FACTS: The United States Veterans Bureau issued a warrant
payable to the order of Francico Sabectoria Bacos. Paulino Gullas
and Pedro Lopez signed as endorsers of the aforementioned
check. Thereupon, it was cashed by the Philippine National Bank.
Subsequently, the treasury warrant was dishonored. The bank sent
notices by mail to Mr. Gullas which could not be delivered to him at
that time because he was in Manila. The bank then proceeded to
apply the outstanding balances of Mr. Gullas account with the part
payment of the subject check.
ISSUE: Whether or not PNB properly set off the account of Gullas
with the payment of the indorsed check.
HELD: No. Although PNB had with respect to the deposit of Gullas
a right of set off, its remedy was not enforced properly.
Notice of dishonor is necessary in order to charge an
indorser and that the right of action against him does not accrue
until the notice is given. Prior to the mailing of notice of dishonor,
and without waiting for any action by Gullas, the bank made use of
the money standing in his account to make good for the treasury
warrant. The action of the bank was prejudicial to Gullas. As
such,Gullas should be awarded nominal damages because of the
premature action of the bank.
7. Romarico G. Vitug
G.R. No. 82027 March 29, 1990
Sarmiento, J.:
FACTS: The case is a chapter in an earlier suit involving the issue
on two (2) wills of the late Dolores Vitug who died in New York,
USA in Nov 1980. She named therein private respondent Rowena
Corona (Executrix) while Nenita Alonte was co-special
administrator together with petitioner Romarico pending probate.
In January 1985, Romarico filed a motion asking for
authorization of the probate court to sell shares of stocks and real
property of the estate as reimbursements for advances he made to
the estate. The said amount was spent for payment of estate tax
from a savings account in the Bank of America.
Rowena Corona opposed the motion to sell contending
that from the said account are conjugal funds, hence part of the
estate. Vitug insisted saying that the said funds are his exclusive
property acquired by virtue of a survivorship agreement executed
with his late wife and the bank previously. In the said agreement,
they agreed that in the event of death of either, the funds will
become the sole property of the survivor.
The lower court upheld the validity of the survivorship
agreement and granted Romarico's motion to sell. The Court of
Appeals however held that said agreement constituted a
conveyance mortis causa which did not comply with the formalities
of a valid will. Further, assuming that it is donation inter vivos, it is
a prohibited donation. Vitug petitioned to the Court contending that
the said agreement is an aleatory contract.
ISSUE: Whether or not the conveyance is one of mortis
causa hence should conform to the form required of wills.
HELD: No. The survivorship agreement is a contract which
imposed a mere obligation with a term--being death. Such
contracts are permitted under Article 2012 on aleatory contracts.
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When Dolores predeceased her husband the latter acquired upon
her death a vested right over the funds in the account. The
conveyance is therefore not mortis causa.
8. Banco Filipino vs. Purisima
G.R. No. L-56429 May 28, 1988
Narvasa, J.:
FACTS: Customs special agent Manuel Caturla is accused by the
Bureau of Internal Revenue of having violated R.A. No. 3019 of the
"Anti-Graft and Corrupt Practices Act" for having allegedly acquired
property manifestly out of proportion to his salary and other lawful
income. In the course of the preliminary investigation thereof, the
Tanodbayan issued a subpoena duces tecum to the Banco Filipino
Savings & Mortgage Bank, commanding its representative to
appear at a specified time at the Office of the Tanodbayan and
furnish the latter with duly certified copies of the records in all its
branches and extension offices, of the loans, savings and time
deposits and other banking transactions, dating back to 1969,
appearing in the names of Caturla, His wife, Purita Caturla, their
Children; Manuel, Jr., Marilyn and Michael and Pedro Escuyos,
Caturla moved to quash the subpoena duces tecum but
was denied by Tanodbayan Vicente Ericta. Petitioner Banco
Filipino filed a complaint for declaratory relief with the Court of First
Instance of Manila but was denied for lack of merit by respondent
Judge Purisima.
ISSUE: Whether or not the RA 1405 “Law on Secrecy of Bank
Deposits” precludes production by subpoena duces tecum of bank
records of transactions by or in the names of the wife, children and
friends of the accused.
HELD: No. The inquiry into illegally 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. 3019 which
quite categorically states that the term, "legitimately acquired
property of a public officer or employee shall not include ... 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.
9. Joseph Victor Ejercito vs. Sandiganbayan
G.R. Nos. 157294-95 - 30 November 2006
Carpio-Morales, J.:
FACTS: The Office of the Ombudsman requested the
Sandiganbayan to issue subpoena duces tecum against the Urban
Bank relative to the case against President Joseph Estrada. Ms.
Dela Paz, receiver of the Urban Bank, furnished the Office of the
Ombudsman certified copies of manager checks detailed in the
subpoena duces tecum. The Sandiganbayan granted the same.
Page 4 of 10
However, Ejercito claims that the subpoenas issued by
the Sandiganbayan are invalid and may not be enforced because
the information found therein, given their extremely detailed
character and could only have been obtained by the Special
Prosecution Panel through an illegal disclosure by the bank
officials. Ejercito thus contended that, following the fruit of the
poisonous tree doctrine, the subpoenas must be quashed.
Moreover, the extremely-detailed information obtained by the
Ombudsman from the bank officials concerned during a previous
investigation of the charges against him, such inquiry into his bank
accounts would itself be illegal.
ISSUE: Whether or not subpoena duces tecum/ad testificandum
may be issued to order the production of statement of bank
accounts even before a case for plunder is filed in court
HELD: The Supreme Court held that plunder is analogous to
bribery, and therefore, the exception to R.A. 1405 must also apply
to cases of plunder. The court also reiterated the ruling in Marquez
v. Desierto 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 pending case before the
court of competent jurisdiction.
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, he 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. Thus, his attempt to make the
exclusionary rule applicable to the instant case fails.
The high Court, however, rejected the arguments of the
petitioner Ejercito that the bank accounts which where demanded
from certain banks even before the case was filed before the proper
court is inadmissible in evidence being fruits of poisonous tree. This
is because the Ombudsman issued the subpoenas bearing on the
bank accounts of Ejercito about four months before Marquez 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. Thus, the Court referred to the teaching of Columbia
Pictures Inc., v. Court of Appeals, that: 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 prospectively and should not apply to
parties who relied on the old doctrine and acted in good faith.
10. BSB Group Inc. vs. Sally Go
G.R. No. 168644 February 16, 2010
Peralta, J.:
FACTS: Petitioner, the BSB Group, Inc., is a duly organized
domestic corporation presided by its herein representative, Ricardo
Bangayan (Bangayan). Respondent Sally Go, alternatively referred
to as Sally Sia Go and Sally Go-Bangayan, is Bangayan's wife, who
was employed in the company as a cashier, and was engaged,
among others, to receive and account for the payments made
by the various customers of the company.
In 2002, Bangayan filed with the Manila Prosecutor's
Office a complaint for estafaand/or qualified theft against
respondent, alleging that several checks representing the
aggregate amount of P1,534,135.50 issued by the company's
customers in payment of their obligation were, instead of being
turned over to the company's coffers, indorsed by respondent who
4

deposited the same to her personal banking account maintained at
Security Bank and Trust Company (Security Bank) in Divisoria,
Manila Branch. Upon a finding that the evidence adduced was
uncontroverted, the assistant city prosecutor recommended the
filing of the Information for qualified theft against respondent.
Accordingly, respondent was charged before the
Regional Trial Court of Manila. She was found guilty; that in the
commission of the said offense, said accused acted with grave
abuse of confidence, being then employed as cashier by said
complainant at the time of the commission of the said offense and
as such she was entrusted with the said amount of money.
Respondent entered a negative plea when arraigned. The
trial ensued. On the premise that respondent had allegedly
encashed the subject checks and deposited the corresponding
amounts thereof to her personal banking account.
Petitioner, opposing respondent's move, argued for the
relevancy of the Metrobank account on the ground that the
complaint-affidavit showed that there were two checks which
respondent allegedly deposited in an account with the said bank.
To this, respondent filed a supplemental motion to quash, invoking
the absolutely confidential nature of the Metrobank account under
the provisions of Republic Act(R.A.) No. 1405. The trial court did
not sustain respondent; hence, it denied the motion to quash for
lack of merit.
Meanwhile, the prosecution was able to present in court
the testimony of Elenita Marasigan (Marasigan), the representative
of Security Bank. In a nutshell ,Marasigan's testimony sought to
prove that between 1988 and 1989, respondent ,while engaged as
cashier at the BSB Group, Inc., was able to run away with the
checks issued to the company by its customers, endorse the same,
and credit the corresponding amounts to her personal deposit
account with Security Bank. In the course of the testimony, the
subject checks were presented to Marasigan for identification and
marking as the same checks received by respondent, endorsed,
and then deposited in her personal account with Security Bank. CA
affirmed RTC’s decision.
ISSUE: Whether or not there is no difference between cash and
check for purposes of prosecuting respondent for theft of cash
HELD: In theft, the act of unlawful taking connotes deprivation of
personal property of one by another with intent to gain, and it is
immaterial that the offender is able or unable to freely dispose of
the property stolen because the deprivation relative to the offended
party has already ensued from such act of execution. The
allegation of theft of money, hence, necessitates that evidence
presented must have a tendency to prove that the offender has
unlawfully taken money belonging to another. Interestingly,
petitioner has taken pains in attempting to draw a connection
between the evidence subject of the instant review, and the
allegation of theft in the Information by claiming that respondent
had fraudulently deposited the checks in her own name. But this
line of argument works more prejudice than favor, because it in
effect, seeks to establish the commission, not of theft, but rather of
some other crime probably estafa.
Moreover, that there is no difference between cash and
check is true in other instances. In estafa by conversion, for
instance, whether the thing converted is cash or check, is
immaterial in relation to the formal allegation in an information for
that offense; a check, after all, while not regarded as legal tender,
is normally accepted under commercial usage as a substitute
for cash, and the credit it represents instated monetary value is
properly capable of appropriation. And it is in this respect that what
the offender does with the check subsequent to the act of
unlawfully taking it becomes material inasmuch as this offense is a
continuing one. In other words, in pursuing a case for this offense,
the prosecution may establish its cause by the presentation of the
checks involved. These checks would then constitute the best
evidence to establish their contents and to prove the elemental act
of conversion in support of the proposition that the offender has
indeed indorsed the same in his own name.
Page 5 of 10
11. Intengan vs. Court of Appeals
G.R. No. 128996 February 15, 2002
De Leon, Jr., J.:
FACTS: On September 21, 1993, Citibank filed a complaint for
violation of section 31 in relation to section 144 of the Corporation
Code against two (2) of its officers, Dante L. Santos and Marilou
Genuino. Attached to the complaint was an affidavit executed by
private respondent Vic Lim, a vice-president of Citibank.
As evidence, Lim annexed bank records purporting to
establish the deception practiced by Santos and Genuino. Some of
the documents pertained to the dollar deposits of petitioners
Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P. Brawner. In turn,
private respondent Joven Reyes, vice-president/business manager
of the Global Consumer Banking Group of Citibank, admits to
having authorized Lim to state the names of the clients involved
and to attach the pertinent bank records, including those of
petitioners’
Petitioners aver that respondents violated RA 1405.
ISSUE: Whether or not Respondents are liable for violation of
Secrecy of Bank Deposits Act, RA 1405.
HELD: No. The accounts in question are U.S. dollar deposits;
consequently, the applicable law is not Republic Act No. 1405 but
Republic Act (RA) No. 6426, known as the “Foreign Currency
Deposit Act of the Philippines,” However, applying Act No. 3326,
the offense prescribes in eight years, therefore, per available
records, private respondents may no longer be haled before the
courts for violation of Republic Act No. 6426.
12. PCIB vs. Court of Appeals
G.R. No. 121413 January 29, 2001
Quisumbing, J.:
FACTS: This case is composed of three consolidated petitions
involving several checks, payable to the Bureau of Internal
Revenue, but was embezzled allegedly by an organized syndicate.
I. G. R. Nos. 121413 and 121479
On October 19, 1977, plaintiff Ford issued a Citibank
check amounting to P4,746,114.41 in favor of the Commissioner of
Internal Revenue for the payment of manufacturer’s taxes. The
check was deposited with defendant IBAA (now PCIB),
subsequently cleared the the Central Bank, and paid by Citibank to
IBAA. The proceeds never reached BIR, so plaintiff was compelled
to make a second payment. Defendant refused to reimburse
plaintiff, and so the latter filed a complaint. An investigation
revealed that the check was recalled by Godofredo Rivera, the
general ledger accountant of Ford, and was replaced by a
manager’s check. Alleged members of a syndicate deposited the
two manager’s checks with Pacific Banking Corporation. Ford filed
a third party complaint against Rivera and PBC. The case against
PBC was dismissed. The case against Rivera was likewise
dismissed because summons could not be served. The trial court
held Citibank and PCIB jointly and severally liable to Ford, but the
Court of Appeals only held PCIB liable.
II. G. R. No. 128604
Ford drew two checks in favor of the Commissioner of
Internal Revenue, amounting to P5,851,706.37 and
P6,311,591.73. Both are crossed checks payable to payee’s
account only. The checks never reached BIR, so plaintiff was
compelled to make second payments. Plaintiff instituted an action
for recovery against PCIB and Citibank.
On investigation of NBI, the modus operandi was
discovered. Gorofredo Rivera made the checks but instead of
delivering them to BIR, passed it to Castro, who was the manager
of PCIB San Andres. Castro opened a checking account in the
name of a fictitious person “Reynaldo Reyes”. Castro deposited a
worthless Bank of America check with the same amount as that
5

issued by Ford. While being routed to the Central Bank for clearing,
the worthless check was replaced by the genuine one from Ford.
The trial court absolved PCIB and held Citibank liable,
which decision was affirmed in toto by the Court of Appeals.
ISSUES:
(1) Whether there is contributory negligence on the part of Ford
(2) Has petitioner Ford the right to recover from the collecting bank
(PCIBank) and the drawee bank (Citibank) the value of the checks
intended as payment to the Commissioner of Internal Revenue?
HELD:
(1) The general rule is that if the master is injured by the negligence
of a third person and by the concurring contributory negligence of
his own servant or agent, the latter's negligence is imputed to his
superior and will defeat the superior's action against the third
person, assuming, of course that the contributory negligence was
the proximate cause of the injury of which complaint is made. As
defined, proximate cause is that which, in the natural and
continuous sequence, unbroken by any efficient, intervening cause
produces the injury and without the result would not have occurred.
It appears that although the employees of Ford initiated the
transactions attributable to an organized syndicate, in our view,
their actions were not the proximate cause of encashing the checks
payable to the CIR. The degree of Ford's negligence, if any, could
not be characterized as the proximate cause of the injury to the
parties. The mere fact that the forgery was committed by a drawer-
payor's confidential employee or agent, who by virtue of his position
had unusual facilities for perpertrating the fraud and imposing the
forged paper upon the bank, does notentitle the bank toshift the
loss to the drawer-payor, in the absence of some circumstance
raising estoppel against the drawer. This rule likewise applies to
the checks fraudulently negotiated or diverted by the confidential
employees who hold them in their possession.
(2) We have to scrutinize, separately, PCIBank's share of
negligence when the syndicate achieved its ultimate agenda of
stealing the proceeds of these checks.
a. G. R. Nos. 121413 and 121479.
On record, PCIBank failed to verify the authority of Mr.
Rivera to negotiate the checks. The neglect of PCIBank employees
to verify whether his letter requesting for the replacement of the
Citibank Check No. SN-04867 was duly authorized, showed lack of
care and prudence required in the circumstances. Furthermore, it
was admitted that PCIBank is authorized to collect the payment of
taxpayers in behalf of the BIR. As an agent of BIR, PCIBank is duty
bound to consult its principal regarding the unwarranted
instructions given by the payor or its agent. It is a well-settled rule
that the relationship between the payee or holder of commercial
paper and the bank to which it is sent for collection is, in the
absence of an argreement to the contrary, that of principal and
agent. A bank which receives such paper for collection is the agent
of the payee or holder.
Indeed, the crossing of the check with the phrase
"Payee's Account Only," is a warning that the check should be
deposited only in the account of the CIR. Thus, it is the duty of the
collecting bank PCIBank to ascertain that the check be deposited
in payee's account only. Therefore, it is the collecting bank
(PCIBank) which is bound to scrutinize the check and to know its
depositors before it could make the clearing indorsement "all prior
indorsements and/or lack of indorsement guaranteed".
Lastly, banking business requires that the one who first
cashes and negotiates the check must take some precautions to
learn whether or not it is genuine. And if the one cashing the check
through indifference or other circumstance assists the forger in
committing the fraud, he should not be permitted to retain the
proceeds of the check from the drawee whose sole fault was that it
did not discover the forgery or the defect in the title of the person
negotiating the instrument before paying the check. For this
reason, a bank which cashes a check drawn upon another bank,
without requiring proof as to the identity of persons presenting it, or
making inquiries with regard to them, cannot hold the proceeds
against the drawee when the proceeds of the checks were
afterwards diverted to the hands of a third party. In such cases the
drawee bank has a right to believe that the cashing bank (or the
collecting bank) had, by the usual proper investigation, satisfied
Page 6 of 10
itself of the authenticity of the negotiation of the checks. Thus, one
who encashed a check which had been forged or diverted and in
turn received payment thereon from the drawee, is guilty of
negligence which proximately contributed to the success of the
fraud practiced on the drawee bank. The latter may recover from
the holder the money paid on the check.
b. G. R. No. 128604
In this case, there was no evidence presented confirming
the conscious participation of PCIBank in the embezzlement. As a
general rule, however, a banking corporation is liable for the
wrongful or tortuous acts and declarations of its officers or agents
within the course and scope of their employment. A bank will be
held liable for the negligence of its officers or agents when acting
within the course and scope of their employment. It may be liable
for the tortuous acts of its officers even as regards that species of
tort of which malice is an essential element. In this case, we find a
situation where the PCIBank appears also to be the victim of the
scheme hatched by a syndicate in which its own management
employees had participated. But in this case, responsibility for
negligence does not lie on PCIBank's shoulders alone.
Citibank failed to notice and verify the absence of the
clearing stamps. For this reason, Citibank had indeed failed to
perform what was incumbent upon it, which is to ensure that the
amount of the checks should be paid only to its designated payee.
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. Thus,
invoking the doctrine of comparative negligence, we are of the view
that both PCIBank and Citibank failed in their respective obligations
and both were negligent in the selection and supervision of their
employees resulting in the encashment of Citibank Check Nos. SN
10597 AND 16508. Thus, we are constrained to hold them equally
liable for the loss of the proceeds of said checks issued by Ford in
favor of the CIR.
13. Philippine Deposit Insurance Corporation vs. Citibank
GR NO.170290 April 11, 2012
Mendoza, J.:
FACTS: Petitioner Philippine Deposit Insurance
Corporation (PDIC) is a government instrumentality created by
virtue of Republic Act (R.A.) No. 3591, as amended by R.A. No.
9302.
Respondent Citibank, N.A. (Citibank) is a banking
corporation while respondent Bank of America, S.T. & N.A. (BA) is
a national banking association, both of which are duly organized
and existing under the laws of the United States of America and
duly licensed to do business in the Philippines, with offices
in Makati City.
In 1977, PDIC conducted an examination of the books of
account of Citibank. It discovered that Citibank, in the course of its
banking business, from September 30, 1974 to June 30, 1977,
received from its head office and other foreign branches a total
of P11,923,163,908.00 in dollars, covered by Certificates of Dollar
Time Deposit that were interest-bearing with corresponding
maturity dates. These funds, which were lodged in the books of
Citibank under the account “Their Account-Head Office/Branches-
Foreign Currency,” were not reported to PDIC as deposit liabilities
that were subject to assessment for insurance. As such, in a letter
dated March 16, 1978, PDIC assessed Citibank for deficiency in
the sum of P1,595,081.96.
Similarly, sometime in 1979, PDIC examined the books of
accounts of BA which revealed that from September 30, 1976 to
June 30, 1978, BA received from its head office and its other
foreign branches a total of P629,311,869.10 in dollars, covered by
Certificates of Dollar Time Deposit that were interest-bearing with
corresponding maturity dates and lodged in their books under the
account “Due to Head Office/Branches.” Because BA also
excluded these from its deposit liabilities, PDIC wrote to BA
on October 9, 1979, seeking the remittance of P109,264.83
representing deficiency premium assessments for dollar deposits.
6

Believing that litigation would inevitably arise from this
dispute, Citibank and BA each filed a petition for declaratory relief
before the Court of First Instance (now the Regional Trial Court) of
Rizal on July 19, 1979 and December 11, 1979, respectively. In
their petitions, Citibank and BA sought a declaratory judgment
stating that the money placements they received from their head
office and other foreign branches were not deposits and did not
give rise to insurable deposit liabilities under Sections 3 and 4 of
R.A. No. 3591 (the PDIC Charter) and, as a consequence, the
deficiency assessments made by PDIC were improper and
erroneous. The cases were then consolidated.
On June 29, 1998, the Regional Trial Court, Branch 163,
Pasig City (RTC) promulgated its Decision in favor of Citibank and
BA. Aggrieved, PDIC appealed to the CA which affirmed the ruling
of the RTC in its October 27, 2005 Decision. Hence, this petition.
ISSUE: Whether or not a branch of a bank has a separate legal
Personality.
HELD: No. A branch has no separate legal personality. This Court
is of the opinion that the key to the resolution of this controversy is
the relationship of the Philippine branches of Citibank and BA to
their respective head offices and their other foreign branches.
The Court begins by examining the manner by which a
foreign corporation can establish its presence in the Philippines. It
may choose to incorporate its own subsidiary as a domestic
corporation, in which case such subsidiary would have its own
separate and independent legal personality to conduct business in
the country. In the alternative, it may create a branch in
the Philippines, which would not be a legally independent unit, and
simply obtain a license to do business in the Philippines.
In the case of Citibank and BA, it is apparent that
they both did not incorporate a separate domestic corporation to
represent its business interests in the Philippines. Their Philippine
branches are, as the name implies, merely branches, without a
separate legal personality from their parent company, Citibank and
BA. Thus, being one and the same entity, the funds placed by the
respondents in their respective branches in the Philippines should
not be treated as deposits made by third parties subject to deposit
insurance under the PDIC Charter. The purpose of the PDIC is to
protect the depositing public in the event of a bank closure. It has
already been sufficiently established by US jurisprudence and
Philippine statutes that the head office shall answer for the liabilities
of its branch. Now, suppose the Philippine branch of Citibank
suddenly closes for some reason. Citibank N.A. would then be
required to answer for the deposit liabilities of
Citibank Philippines. If the Court were to adopt the posture of
PDIC that the head office and the branch are two separate entities
and that the funds placed by the head office and its foreign
branches with the Philippine branch are considered deposits within
the meaning of the PDIC Charter, it would result to the incongruous
situation where Citibank, as the head office, would be placed in the
ridiculous position of having to reimburse itself, as depositor, for
the losses it may incur occasioned by the closure of Citibank
Philippines. Surely our law makers could not have envisioned such
a preposterous circumstance when they created PDIC.
Finally, the Court agrees with the CA ruling that there is
nothing in the definition of a “bank” and a “banking institution” in
Section 3(b) of the PDIC Charter[27] which explicitly states that the
head office of a foreign bank and its other branches are separate
and distinct from their Philippine branches.
There is no need to complicate the matter when it can be
solved by simple logic bolstered by law and jurisprudence. Based
on the foregoing, it is clear that the head office of a bank and its
branches are considered as one under the eyes of the law. While
branches are treated as separate business units for commercial
and financial reporting purposes, in the end, the head office
remains responsible and answerable for the liabilities of its
branches which are under its supervision and control. As such, it
is unreasonable for PDIC to require the respondents, Citibank and
BA, to insure the money placements made by their home office and
other branches. Deposit insurance is superfluous and entirely
unnecessary when, as in this case, the institution holding the funds
and the one which made the placements are one and the same
legal entity.
Page 7 of 10
14. Philippine Deposit Insurance Corporation vs. Court of
Appeals
G.R. No. 118917 - December 22, 1997
Kapunan, J.:
FACTS: On September 22, 1983, plaintiffs-appellees invested in
money market placements with the Premiere Financing
Corporation (PFC) in the sum of P10,000.00 each for which they
were issued by the PFC corresponding promissory notes and
checks. On the same date (September 22, 1983), John Francis
Cotaoco, for and in behalf of plaintiffs-appellees, went to the PFC
to encash the promissory notes and checks, but the PFC referred
him to the Regent Saving Bank (RSB). Instead of paying the
promissory notes and checks, the RSB, upon agreement of
Cotaoco, issued the subject 13 certificates of time deposit with Nos.
09648 to 09660, inclusive, each stating, among others, that the
same certifies that the bearer thereof has deposited with the RSB
the sum of P10,000.00; that the certificate shall bear 14% interest
per annum; that the certificate is insured up toP15,000.00 with the
PDIC; and that the maturity date thereof is on November 3, 1983
(Exhs. “B”, “B-1” to “B-12”).
On the aforesaid maturity dated (November 3, 1983),
Cotaoco went to the RSB to encash the said certificates. Thereat,
RSB Executive Vice President Jose M. Damian requested Cotaoco
for a deferment or an extension of a few days to enable the RSB to
raise the amount to pay for the same (Exh. “D”). Cotaoco
agreed. Despite said extension, the RSB still failed to pay the
value of the certificates. Instead, RSB advised Cotaoco to file a
claim with the PDIC.
Meanwhile, on June 15, 1984, the Monetary Board of the
Central Bank issued Resolution No. 788 (Exh. ‘2’, Records, p. 159)
suspending the operations of the RSB. Eventually, the records of
RSB were secured and its deposit liabilities were eventually
determined. On December 7, 1984, the Monetary Board issued
Resolution No. 1496 (Exh. ‘1’) liquidating the RSB. Subsequently,
a masterlist or inventory of the RSB assets and liabilities was
prepared. However, the certificates of time deposit of plaintiffs-
appellees were not included in the list on the ground that the
certificates were not funded by the PFC or duly recorded as
liabilities of RSB.
On September 4, 1984, plaintiffs-appellees filed with the
PDIC their respective claims for the amount of the certificates
(Exhs. “C”, “C-1”, to “C-12”). Sabina Yu, James Ngkaion, Elaine
Ngkaion and Jeffrey Ngkaion, who have similar claims on their
certificates of time deposit with the RSB, likewise filed their claims
with the PDIC. To their dismay, PDIC refused the aforesaid claims
on the ground that the Traders Royal Bank Check No. 299255
dated September 22, 1983 for the amount of P125,846.07 (Exh.
“B”) issued by PFC for the aforementioned certificates was
returned by the drawee bank for having been drawn against
insufficient funds; and said check was not replaced by the PFC,
resulting in the cancellation of the certificates as indebtedness or
liabilities of RSB.
Consequently, on March 31, 1987, private respondents
filed an action for collection against PDIC, RSB and the Central
Bank.
On September 14, 1987, the trial court, declared the
Central Bank in default for failing to file an answer.
On May 29, 1989, the trial court rendered its decision
ordering the defendants therein to pay plaintiffs, jointly and
severally, the amount corresponding to the latter’s certificates of
time deposit.
Both PDIC and RSB appealed.
ISSUE: Whether or not PDIC can be held liable for value of the
certificates of time deposit held by the petitioners.
HELD: NO. Whenever an insured bank shall have been closed on
account of insolvency,
payment of the insured deposits in such bank shall be made by the
Corporation as soon as possible. The term “deposit” means the
7
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unpaid balance of money or its equivalent received by a bank in
the usual course of business and for which it has given or is obliged
to give credit to a commercial, checking, savings, time or thrift
account or which is evidence by passbook, check and/or certificate
of deposit printed or issued in accordance with Central Bank rules
and regulations and other applicable laws, together with such other
obligations of a bank which, consistent with banking usage and
practices, the Board of Directors shall determine and prescribe by
regulations to be deposit liabilities of the Bank. These pieces of
evidence convincingly show that the subject CTDs were indeed
issued without RSB receiving any money therefor. No deposit, as
defined in Section 3 (f) of R.A. No. 3591, therefore came into
existence. Accordingly, petitioner PDIC cannot be held liable for
value of the certificates of time deposit held by private respondents.
HELD: YES. Without doubt, a petition for declaratory relief does
not essentially entail an executory process. There is nothing in its
nature, however, that prohibits a counter claim from being set-up in
the same action. There is nothing in the nature of a special civil
action for declaratory relief that prescribes the filing of a
counterclaim based on the same transaction, deed or contract
subject of the complaint . A special civil action is after all not
essentially different from an ordinary civil action, which is generally
governed by Rules 1 to 56 of the Rules of Court, except that the
former deals with a special subject matter which makes necessary
some special regulation. But the identity between their fundamental
nature is such that the same rules governing ordinary civil suits
may and do apply to special civil actions if not inconsistent with or
if they may serve to supplement the provisions of the peculiar rules
governing special laws.

15. Philippine Deposit Insurance Corporation vs. Court of

Appeals

G.R. No. 126911 April 30, 2003

Carpio-Morales, J.:

FACTS: Prior to May 22, 1997, respondents had 71 certificates of

time deposits denominated as "Golden Time Deposits" (GTD) with
an aggregate face value of P1,115,889.96. May 22, 1987, a Friday,
the Monetary Board (MB) of the Central Bank of the Philippines,
now Bangko Sentral ng Pilipinas, issued Resolution 5052
prohibiting Manila Banking Corporation to do business in the
Philippines, and placing its assets and affairs under receivership.
The Resolution, however, was not served on MBC until Tuesday
the following week, or on May 26, 1987, when the designated
Receiver took over. On May 25, 1987 - the next banking day
following the issuance of the MB Resolution, respondent Jose
Abad was at the MBC at 9:00 a.m. for the purpose of pre-
terminating the71 aforementioned GTDs and re-depositing the
fund represented thereby into 28 new GTDs in denominations of
P40,000.00 or less under the names of herein respondents
individually or jointly with each others Of the 28 new GTDs, Jose
Abad pre-terminated 8 and withdrew the value thereof in the total
amount of P320,000.00. Respondents thereafter filed their
claims with the PDIC for the payment of the remaining 20 insured
GTDs. February 11, 1988, PDIC paid respondents the value of 3
claims in the total amount of P120,000.00. PDIC, however,
withheld payment of the 17 remaining claims after Washington
Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to
the PDIC that there was massive conversion and substitution of
trust and deposit accounts on May 25, 1987 at MBC-Iloilo.
Because of the report, PDIC entertained serious reservation in
recognizing respondents' GTDs as deposit liabilities of MBC-Iloilo.
Thus, PDIC filed a petition for declaratory relief against
respondents with the RTC of Iloilo City, for a judicial declaration
determination of the insurability of respondents' GTD sat MBC-
Iloilo. In their Answer respondents set up a counterclaim against
PDIC whereby they asked for payment of their insured deposits.
The Trial Court ordered petitioners to pay the balance of the
deposit insurance to respondents. The Court of Appeals affirmed
the decision of the lower court. Petitioner posits that the trial court
erred in ordering it to pay the balance of the deposit insurance to
respondents, maintaining that the instant petition stemmed from a
petition for declaratory relief which does not essentially entail an
executory process, and the only relief that should have been
granted by the trial court is a declaration of the parties' rights and
duties. As such, petitioner continues, no order of payment may
arise from the case as this is beyond the office of declaratory relief
proceedings.

ISSUE: Whether or not the trial court order the payment of the
balance even if the petition stemmed from a petition for declaratory
relief which does not essentially entail an executor process.

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