MA. FLORINA G. GUZMAN-CUREG ATTY.

DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

BANKING LAWS

1. BPI V. CA and Benjamin Napiza

G.R. No. 112392 , February 29, 2000

FACTS:
September 3, 1987: Bejanmin Napiza deposited in Foreign Currency
Deposit Unit (FCDU) Savings Account which he maintained in BPI a
Continental Bank Manager's Check dated August 17, 1984, payable to "cash"
$2,500.00
The check belonged to Henry who went to the office of Napiza and
requested him to deposit the check in his dollar account by way of
accommodation and for the purpose of clearing the same. 
Napiza acceded, and agreed to deliver to Chan a signed blank withdrawal
slip, with the understanding that as soon as the check is cleared, both of them
would go to the bank to withdraw .
On October 23, 1984, using the blank withdrawal slip given by Napiza to
Chan, Ruben Gayon, Jr. was able to withdraw. The withdrawal slip shows that
the amount was payable to Ramon A. de Guzman and Agnes C. de Guzman
and was duly initialed by the branch assistant manager, Teresita Lindo.
On November 20, 1984, BPI received communication from the Wells
Fargo Bank International of New York that check deposited by Napiza was a
counterfeit check because it was "not of the type or style of checks issued by
Continental Bank International." 
Mr. Ariel Reyes, manager of BPI, instructed one of its employees,
Benjamin D. Napiza IV, who is Napiza's son, to inform his father that the check
bounced. Reyes himself sent a telegram to Napiza regarding the dishonor of the
check.
Napiza's son told Reyes that the check has been assigned "for
encashment" to Ramon A. de Guzman and/or Agnes C. de Guzman after it
shall have been cleared upon instruction of Chan. His father immediately tried
to contact Chan but Chan was out of town. Napiza's son undertook to return
the amount of $2,500.00 to BPI.

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

On August 12, 1986, BPI filed a complaint against Napiza for the return
of $2,500.00 or the prevailing peso equivalent plus legal interest, attorney's
fees, and litigation and/or costs of suit.

BPI also filed a motion for admission of a third party complaint against
Chan. He alleged that "thru strategem and/or manipulation," Chan was able to
withdraw the amount of $2,500.00 even without Napiza's passbook. 
On November 4, 1991: Lower Court dismissed the complaint. Having
admitted that it committed a "mistake" in not waiting for the clearance of the
check before authorizing the withdrawal of its value or proceeds, BPI should
suffer the resultant loss.
CA: Affirmed the lower courts decision
BPI committed "clears gross negligence" in allowing Ruben Gayon, Jr. to
withdraw the money without presenting BPI's passbook and, before the check
was cleared and in crediting the amount indicated therein in Napiza's account. 
BPI claims that Napiza, having affixed his signature at the dorsal side of
the check, should be liable in accordance to Sec. 66 of the Negotiable
Instrument Law.

Sec. 66. Liability of general indorser. — Every indorser who indorses

without qualification, warrants to all subsequent holders in due course
—
The matters and things mentioned in subdivisions (a), (b), and (c) of the
next preceding section; and
That the instrument is at the time of his indorsement, valid and
subsisting.
And, in addition, he engages that on due presentment, it shall be
accepted or paid, or both, as the case may be, according to its tenor, and
that if it be dishonored, and the necessary proceedings on dishonor be
duly taken, he will pay the amount thereof to the holder, or to any
subsequent indorser who may be compelled to pay it.

Sec. 65, on the other hand, provides for the following warranties of a
person negotiating an instrument by delivery or by qualified

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

indorsement: (a) that the instrument is genuine and in all respects what
it purports to be; (b) that he has a good title to it, and (c) that all prior
parties had capacity to contract. 

ISSUE: Whether or not Napiza can be held liable as an indorser or

accommodation party

HELD: NO. Ordinarily Napiza may be held liable as an indorser of the check or
even as an accommodation party. However, to hold Napiza liable for the
amount of the check he deposited by the strict application of the law and
without considering the attending circumstances in the case would result in an
injustice and in the erosion of the public trust in the banking system. 
The interest of justice thus demands looking into the events that led to
the encashment of the check. Under the Philippine foreign currency deposit
system, two requisites must be presented to petitioner bank by the person
withdrawing an amount: (a) a duly filled-up withdrawal slip, and Napiza signed
a blank deposit slip but withdrawal slip itself indicates a special instruction
that the amount is payable to "Ramon A. de Guzman &/or Agnes C. de
Guzman."
(b) the depositor's passbook. In depositing the check in his name,
Napiza did not become the outright owner of the amount stated therein. By
depositing the check with BPI, he was, in a way, merely designating BPI as the
collecting bank. This is in consonance with the rule that a negotiable
instrument, such as a check, whether a manager's check or ordinary check, is
not legal tender
Negligence is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable
man would do.
While it is true that Napiza's having signed a blank withdrawal slip set in
motion the events that resulted in the withdrawal and encashment of the
counterfeit check, the negligence of BPI's personnel was the proximate cause of
the loss that petitioner sustained. 
Proximate cause, which is determined by a mixed consideration of logic,
common sense, policy and precedent, is "that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces
the injury, and without which the result would not have occurred."
The proximate cause = disregard of its own rules and the clearing
requirement in the banking system.

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

2. BSB Group v. Sally Go

G.R. No. 168644, February 16, 2010

FACTS:
Petitioner is a duly organized domestic corporation presided by its
representative, Ricardo Bangayan, husband of herein respondent Sally Go.
Respondent was employed as a cashier, and was engaged, among others, to
receive and account for the payments made by the various customers of the
company. Bangayan filed with the Manila Prosecutor’s Office a complaint for
estafa/qualified theft against respondent alleging that several checks issued by
the company’s customers in payment of their obligation were, instead of being
turned over to the company’s coffers, indorsed by respondent who deposited
the same to her personal banking account maintained at Security Bank.
Accordingly, respondent was charged and the prosecution moved for the
issuance of subpoena duces tecum/ad testificandum against the respective
managers or records custodians of Security Bank and Asian Savings Bank.
Respondent opposed and meanwhile, prosecution was able to present in court
the testimony of one Security Bank representative. Petitioner moved to exclude
the testimony but was denied by the trial court. CA reversed and set aside the
order.
ISSUE:
Whether or not the testimony on the particulars of respondent’s account with
Security Bank, as well as of the corresponding evidence of the checks allegedly
deposited in said account, constitutes an unallowable inquiry under R.A. 1405.
HELD: YES.
The Court found guidance in the relevant portions of the legislative
deliberations on Senate Bill No. 351 and House Bill No. 3977, which later
became the Bank Secrecy Act, and it held that the absolute confidentiality rule
in R.A. No. 1405 actually aims at protection from unwarranted inquiry or
investigation if the purpose of such inquiry or investigation is merely to
determine the existence and nature, as well as the amount of the deposit in
any given bank account.
What indeed constitutes the subject matter in litigation in relation to Section 2
of R.A. No. 1405 has been pointedly and amply addressed in Union Bank of the

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

Philippines v. Court of Appeals, in which the Court noted that the inquiry into
bank deposits allowable under R.A. No. 1405 must be premised on the fact
that the money deposited in the account is itself the subject of the action.
Given this perspective, we deduce that the subject matter of the action in the
case at bar is to be determined from the indictment that charges respondent
with the offense, and not from the evidence sought by the prosecution to be
admitted into the records. In the criminal Information filed with the trial court,
respondent, unqualifiedly and in plain language, is charged with qualified theft
by abusing petitioner’s trust and confidence and stealing cash. The said
Information makes no factual allegation that in some material way involves the
checks subject of the testimonial and documentary evidence sought to be
suppressed. Neither do the allegations in said Information make mention of the
supposed bank account in which the funds represented by the checks have
allegedly been kept.
In other words, it can hardly be inferred from the indictment itself that the
Security Bank account is the ostensible subject of the prosecution’s inquiry.
Without needlessly expanding the scope of what is plainly alleged in the
Information, the subject matter of the action in this case is the money alleged
to have been stolen by respondent, and not the money equivalent of the checks
which are sought to be admitted in evidence. Thus, it is that, which the
prosecution is bound to prove with its evidence, and no other.
It comes clear that the admission of testimonial and documentary evidence
relative to respondent’s Security Bank account serves no other purpose than to
establish the existence of such account, its nature and the amount kept in it. It
constitutes an attempt by the prosecution at an impermissible inquiry into a
bank deposit account the privacy and confidentiality of which is protected by
law. On this score alone, the objection posed by respondent in her motion to
suppress should have indeed put an end to the controversy at the very first
instance it was raised before the trial court.

3. 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.
G.R. No. 189206 June 8, 2011

FACTS:

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

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.

ISSUE:
Whether or not the US$11,000,000.00 deposit in the account of respondent
Domsat in Westmont Bank is covered by the secrecy of bank deposit.

HELD:
The Court declared that Domsat’s deposit in Westmont Bank is covered by
Republic Act No. 6426 or the Bank Secrecy Law
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.
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.
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

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MA. FLORINA G. GUZMAN-CUREG ATTY. DANILO BARDE
IV-A, MANILA LAW COLLEGE COMMERCIAL LAW REVIEW

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.)
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.