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EN BANC Ejercito Estrada, et al.

, for plunder, defined and


penalized in R.A. 7080, AN ACT DEFINING AND
JOSEPH VICTOR G. G.R. Nos. PENALIZING THE CRIME OF PLUNDER.
EJERCITO, 157294-95
P Present: In above-stated case of People v. Estrada, et
et al., the Special Prosecution Panel[1] filed on January
iti PANGANIBA 20, 2003 before the Sandiganbayan a Request for
o N, C.J., Issuance of Subpoena Duces Tecum for the issuance
ne PUNO, of a subpoena directing the President of Export and
r, QUISUMBING, Industry Bank (EIB, formerly Urban Bank) or his/her
YNARES- authorized representative to produce the following
SANTIAGO, documents during the hearings scheduled on January
SANDOVAL- 22 and 27, 2003:
GUTIERREZ,
- versus - CARPIO, I. For Trust Account No. 858;
AUSTRIA- 1. Account Opening Documents;
MARTINEZ, 2. Trading Order No. 020385
CORONA, dated January 29, 1999;
CARPIO 3. Confirmation Advice TA 858;
SANDIGANBAYAN MORALES, 4. Original/Microfilm copies,
(SPECIAL DIVISION) CALLEJO, including the dorsal side, of the
AND PEOPLE OF SR., following:
THE PHILIPPINES, AZCUNA,
R TINGA, a. Bank of Commerce MC
es CHICO- # 0256254 in the amount
p NAZARIO, of P2,000,000.00;
o GARCIA, and b. Urban bank Corp. MC #
n VELASCO, 34181 dated November 8,
de JR., JJ. 1999 in the amount of
nt Promulgated: P10,875,749.43;
s. c. Urban Bank MC # 34182
November 30, dated November 8, 1999 in
2006 the amount
x----------------------------------- of P42,716,554.22;
---------------x d. Urban Bank Corp. MC #
37661 dated November 23,
DECISION 1999 in the amount
of P54,161,496.52;
CARPIO MORALES, J.:
5. Trust Agreement dated January
The present petition for certiorari under Rule 1999:
65 assails the Sandiganbayan Resolutions dated Trustee: Joseph Victor C. Ejercito
February 7 and 12, 2003 denying petitioner Joseph Nominee: URBAN BANK-TRUST
Victor G. Ejercitos Motions to Quash Subpoenas DEPARTMENT
Duces Tecum/Ad Testificandum, and Resolution Special Private Account No. (SPAN)
dated March 11, 2003 denying his Motion for 858; and
Reconsideration of the first two resolutions. 6. Ledger of the SPAN # 858.

The three resolutions were issued in Criminal II. For Savings Account No. 0116-17345-9
Case No. 26558, People of the Philippines v. Joseph SPAN No. 858
1
examination of bank accounts belonging to him,
1. Signature Cards; and attended the hearing of the case on January 27,
2. Statement of Account/Ledger 2003 and filed before the Sandiganbayan a letter of
even date expressing his concerns as follows,
III. Urban Bank Managers Check and their quoted verbatim:
corresponding Urban Bank Managers
Check Application Forms, as follows: Your Honors:

1. MC # 039975 dated January 18, It is with much respect that I write this
2000 in the amount court relative to the concern of
of P70,000,000.00; subpoenaing the undersigneds bank
2. MC # 039976 dated January 18, account which I have learned
2000 in the amount through the media.
of P2,000,000.00;
3. MC # 039977 dated January 18, I am sure the prosecution is aware of
2000 in the amount our banking secrecy laws everyone
of P2,000,000.00; supposed to observe. But, instead of
4. MC # 039978 dated January 18, prosecuting those who may have
2000 in the amount breached such laws, it seems it is even
of P1,000,000.00; going to use supposed evidence
which I have reason to believe could
The Special Prosecution Panel also filed only have been illegally obtained.
on January 20, 2003, a Request for Issuance of
Subpoena Duces Tecum/Ad Testificandum directed The prosecution was not content with
to the authorized representative of Equitable-PCI a general request. It even lists and
Bank to produce statements of account pertaining to identifies specific documents
certain accounts in the name of Jose Velarde and to meaning someone else in the bank
testify thereon. illegally released confidential
information.
The Sandiganbayan granted both requests by
Resolution of January 21, 2003 and subpoenas were If this can be done to me, it can
accordingly issued. happen to anyone. Not that anything
can still shock our family. Nor that I
The Special Prosecution Panel filed still have anything to hide. Your Honors.
another Request for Issuance of Subpoena Duces
Tecum/Ad Testificandum dated January 23, 2003 for But, I am not a lawyer and need time
the President of EIB or his/her authorized to consult one on a situation that
representative to produce the same documents affects every bank depositor in the
subject of the Subpoena Duces Tecum dated January country and should interest the bank
21, 2003 and to testify thereon on the hearings itself, the Bangko Sentral ng
scheduled on January 27 and 29, 2003 and Pilipinas, and maybe the Ombudsman
subsequent dates until completion of the himself, who may want to investigate,
testimony. The request was likewise granted by the not exploit, the serious breach that
Sandiganbayan. A Subpoena Duces Tecum/Ad can only harm the economy, a
Testificandum was accordingly issued on January consequence that may have been
24, 2003. overlooked. There appears to have
been deplorable connivance.
Petitioner, claiming to have learned from the
media that the Special Prosecution Panel had xxxx
requested for the issuance of subpoenas for the
2
I hope and pray, Your Honors, that I The disclosure being illegal, petitioner
will be given time to retain the concluded, the prosecution in the case may not be
services of a lawyer to help me allowed to make use of the information.
protect my rights and those of every
banking depositor. But the one I have Before the Motion to Quash was resolved by
in mind is out of the country right the Sandiganbayan, the prosecution filed another
now. Request for the Issuance of Subpoena Duces
Tecum/Ad Testificandum dated January 31, 2003,
May I, therefore, ask your Honors, again to direct the President of the EIB to produce,
that in the meantime, the issuance of on the hearings scheduled on February 3 and 5, 2003,
the subpoena be held in abeyance for the same documents subject of the January 21 and 24,
at least ten (10) days to enable me to 2003 subpoenas with the exception of the Bank of
take appropriate legal steps in Commerce MC #0256254 in the amount
connection with the prosecutions of P2,000,000 as Bank of Commerce MC #0256256
request for the issuance of subpoena in the amount of P200,000,000 was instead
concerning my accounts. (Emphasis requested. Moreover, the request covered the
supplied) following additional documents:

IV. For Savings Account No. 1701-


From the present petition, it is gathered that 00646-1:
the accounts referred to by petitioner in his above- 1. Account Opening Forms;
quoted letter are Trust Account No. 858 and Savings 2. Specimen Signature Card/s; and
Account No. 0116-17345-9.[2] 3. Statements of Account.

In open court, the Special Division of the


Sandiganbayan, through Associate Justice Edilberto The prosecution also filed a Request for the
Sandoval, advised petitioner that his remedy was to Issuance of Subpoena Duces Tecum/Ad
file a motion to quash, for which he was given up to Testificandum bearing the same date, January 31,
12:00 noon the following day, January 28, 2003. 2003, directed to Aurora C. Baldoz, Vice President-
CR-II of the PDIC for her to produce the following
Petitioner, unassisted by counsel, thus filed documents on the scheduled hearings on February 3
on January 28, 2003 a Motion to Quash Subpoena and 5, 2003:
Duces Tecum/Ad Testificandum praying that the
subpoenas previously issued to the President of the 1. Letter of authority
EIB dated January 21 and January 24, 2003 be dated November 23, 1999 re:
quashed.[3] SPAN [Special Private Account
Number] 858;
In his Motion to Quash, petitioner claimed
that his bank accounts are covered by R.A. No. 1405 2. Letter of authority dated January
(The Secrecy of Bank Deposits Law) and do not fall 29, 2000 re: SPAN 858;
under any of the exceptions stated therein. He further
claimed that the specific identification of documents 3. Letter of authority dated April 24,
in the questioned subpoenas, including details on 2000 re: SPAN 858;
dates and amounts, could only have been made
possible by an earlier illegal disclosure thereof by the 4. Urban Bank check no. 052092
EIB and the Philippine Deposit Insurance dated April 24, 2000 for the
Corporation (PDIC) in its capacity as receiver of the amount of P36, 572, 315.43;
then Urban Bank.
5. Urban Bank check no. 052093
dated April 24, 2000 for the
3
amount of P107,191,780.85; subpoena was obtained through a prior
and illegal disclosure of petitioners bank
accounts, in violation of the fruit of the
6. Signature Card Savings Account poisonous tree doctrine.
No. 0116-17345-
9. (Underscoring supplied)
Respondent People posits that Trust Account
No. 858[5] may be inquired into, not merely because
The subpoenas prayed for in both requests it falls under the exceptions to the coverage of R.A.
were issued by the Sandiganbayan on January 31, 1405, but because it is not even contemplated
2003. therein. For, to respondent People, the law applies
only to deposits which strictly means the money
On February 7, 2003, petitioner, this time delivered to the bank by which a creditor-debtor
assisted by counsel, filed an Urgent Motion to Quash relationship is created between the depositor and the
Subpoenae Duces Tecum/Ad Testificandum praying bank.
that the subpoena dated January 31, 2003 directed to
Aurora Baldoz be quashed for the same reasons The contention that trust accounts are not
which he cited in the Motion to Quash[4] he had covered by the term deposits, as used in R.A. 1405,
earlier filed. by the mere fact that they do not entail a creditor-
debtor relationship between the trustor and the bank,
On the same day, February 7, 2003, the does not lie. An examination of the law shows that
Sandiganbayan issued a Resolution denying the term deposits used therein is to be understood
petitioners Motion to Quash Subpoenae Duces broadly and not limited only to accounts which give
Tecum/Ad Testificandum dated January 28, 2003. rise to a creditor-debtor relationship between the
depositor and the bank.
Subsequently or on February 12, 2003, the
Sandiganbayan issued a Resolution denying The policy behind the law is laid down in
petitioners Urgent Motion to Quash Subpoena Duces Section 1:
Tecum/Ad Testificandum dated February 7, 2003.
SECTION 1. It is hereby declared to
Petitioners Motion for Reconsideration be the policy of the Government to
dated February 24, 2003 seeking a reconsideration of give encouragement to the people to
the Resolutions of February 7 and 12, 2003 having deposit their money in banking
been denied by Resolution of March 11, 2003, institutions and to discourage private
petitioner filed the present petition. hoarding so that the same may be
properly utilized by banks in
Raised as issues are: authorized loans to assist in the
economic development of the
1. Whether petitioners Trust Account country. (Underscoring supplied)
No. 858 is covered by the term deposit
as used in R.A. 1405;
If the money deposited under an account may
2. Whether petitioners Trust Account be used by banks for authorized loans to third
No. 858 and Savings Account No. persons, then such account, regardless of whether it
0116-17345-9 are excepted from the creates a creditor-debtor relationship between the
protection of R.A. 1405; and depositor and the bank, falls under the category of
accounts which the law precisely seeks to protect for
3. Whether the extremely-detailed the purpose of boosting the economic development
information contained in the Special of the country.
Prosecution Panels requests for
4
Trust Account No. 858 is, without doubt, one of the word. Otherwise, there would have been no
such account. The Trust Agreement between need to add the phrase or invested.
petitioner and Urban Bank provides that the trust
account covers deposit, placement or investment of Clearly, therefore, R.A. 1405 is broad enough
funds by Urban Bank for and in behalf of to cover Trust Account No. 858.
petitioner.[6] The money deposited under Trust
Account No. 858, was, therefore, intended not The protection afforded by the law is,
merely to remain with the bank but to be invested by however, not absolute, there being recognized
it elsewhere. To hold that this type of account is not exceptions thereto, as above-quoted Section 2
protected by R.A. 1405 would encourage private provides. In the present case, two exceptions apply,
hoarding of funds that could otherwise be invested to wit: (1) the examination of bank accounts is upon
by banks in other ventures, contrary to the policy order of a competent court in cases of bribery or
behind the law. dereliction of duty of public officials, and (2) the
money deposited or invested is the subject matter of
Section 2 of the same law in fact even more the litigation.
clearly shows that the term deposits was intended to
be understood broadly: Petitioner contends that since plunder is
neither bribery nor dereliction of duty, his accounts
SECTION 2. All are not excepted from the protection of R.A.
deposits of whatever nature with 1405. Philippine National Bank v. Gancayco[7] holds
banks or banking institutions in the otherwise:
Philippines including investments in
bonds issued by the Government of Cases of unexplained wealth are
the Philippines, its political similar to cases of bribery or
subdivisions and its instrumentalities, dereliction of duty and no reason is
are hereby considered as of an seen why these two classes of cases
absolutely confidential nature and cannot be excepted from the rule
may not be examined, inquired or making bank deposits
looked into by any person, confidential. The policy as to one
government official, bureau or cannot be different from the policy as
office, except upon written to the other. This policy expresses
permission of the depositor, or in the notion that a public office is a
cases of impeachment, or upon order public trust and any person who
of a competent court in cases of enters upon its discharge does so with
bribery or dereliction of duty of the full knowledge that his life, so far
public officials, or in cases where the as relevant to his duty, is open to
money deposited or invested is the public scrutiny.
subject matter of the litigation.
(Emphasis and underscoring
supplied) Undoubtedly, cases for plunder involve
unexplained wealth. Section 2 of R.A. No. 7080
states so.
The phrase of whatever nature proscribes any
restrictive interpretation of deposits. Moreover, it is SECTION 2. Definition of the Crime
clear from the immediately quoted provision that, of Plunder; Penalties. Any public
generally, the law applies not only to money which officer who, by himself or in
is deposited but also to those which connivance with members of his
are invested. This further shows that the law was not family, relatives by affinity or
intended to apply only to deposits in the strict sense consanguinity, business associates,
subordinates or other
5
persons, amasses, accumulates or malversation of public funds or
acquires ill-gotten wealth through a raids on the public treasury;
combination or series of overt or
criminal acts as described in Section 2) By receiving, directly or
1(d) hereof, in the aggregate amount indirectly, any commission,
or total value of at least Seventy-five gift, share, percentage,
million pesos (P75,000,000.00), shall kickbacks or any other form
be guilty of the crime of plunder and of pecuniary benefit from any
shall be punished by life person and/or entity in
imprisonment with perpetual absolute connection with any
disqualification from holding any government contract or
public office. Any person who project or by reason of the
participated with said public officer in office or position of the public
the commission of plunder shall officer concerned;
likewise be punished. In the
imposition of penalties, the degree of 3) By the illegal or fraudulent
participation and the attendance of conveyance or disposition of
mitigating and extenuating assets belonging to the National
circumstances shall be considered by Government or any of its
the court. The court shall declare any subdivisions, agencies or
and all ill-gotten wealth and their instrumentalities or
interests and other incomes and assets government-owned or -
including the properties and shares of controlled corporations and
stock derived from the deposit or their subsidiaries;
investment thereof forfeited in favor
of the State. (Emphasis and 4) By obtaining, receiving or
underscoring supplied) accepting directly or indirectly
any shares of stock, equity or
any other form of interest or
An examination of the overt or criminal acts participation including promise
as described in Section 1(d) of R.A. No. 7080 would of future employment in any
make the similarity between plunder and bribery business enterprise or
even more pronounced since bribery is essentially undertaking;
included among these criminal acts. Thus Section
1(d) states: 5) By establishing agricultural,
industrial or commercial
d) Ill-gotten wealth means monopolies or other
any asset, property, business combinations and/or
enterprise or material possession of implementation of decrees and
any person within the purview of orders intended to benefit
Section Two (2) hereof, acquired by particular persons or special
him directly or indirectly through interests; or
dummies, nominees, agents,
subordinates and or business 6) By taking undue advantage of
associates by any combination or official position, authority,
series of the following means or relationship, connection or
similar schemes. influence to unjustly enrich
himself or themselves at the
1) Through misappropriation, expense and to the damage and
conversion, misuse, or prejudice of the Filipino people
6
and the Republic of demanded, the subject
the Philippines. (Emphasis of the action is the
supplied) matter or thing with
respect to which the
controversy has
Indeed, all the above-enumerated overt acts arisen, concerning
are similar to bribery such that, in each case, it may which the wrong has
be said that no reason is seen why these two classes been done, and this
of cases cannot be excepted from the rule making ordinarily is the
bank deposits confidential.[8] property or the
contract and its subject
The crime of bribery and the overt acts matter, or the thing in
constitutive of plunder are crimes committed by dispute.
public officers, and in either case the noble idea that
a public office is a public trust and any person who The argument is well-
enters upon its discharge does so with the full taken. We note with approval the
knowledge that his life, so far as relevant to his duty, difference between the subject of the
is open to public scrutiny applies with equal force. action from the cause of action. We
also find petitioners definition of the
Plunder being thus analogous to bribery, the phrase subject matter of the action is
exception to R.A. 1405 applicable in cases of bribery consistent with the term subject
must also apply to cases of plunder. matter of the litigation, as the latter is
used in the Bank Deposits Secrecy
Respecting petitioners claim that the money Act.
in his bank accounts is not the subject matter of the
litigation, the meaning of the phrase subject matter of In Mellon Bank, N.A. v.
the litigation as used in R.A. 1405 is explained Magsino, where the petitioner bank
in Union Bank of the Philippines v. Court of inadvertently caused the transfer of
Appeals,[9] thus: the amount of US$1,000,000.00
instead of only US$1,000.00, the
Petitioner contends that the Court sanctioned the examination
Court of Appeals confuses the cause of the bank accounts where part of
of action with the subject of the the money was subsequently caused
action. In Yusingco v. Ong Hing Lian, to be deposited:
petitioner points out, this Court
distinguished the two concepts. x x x Section 2
of [Republic Act No.
x x x The 1405] allows the
cause of action is the disclosure of bank
legal wrong deposits in cases
threatened or where the money
committed, while the deposited is the
object of the action is subject matter of the
to prevent or redress litigation. Inasmuch
the wrong by as Civil Case No.
obtaining some legal 26899 is aimed at
relief; but the subject recovering the
of the action is neither amount converted by
of these since it is not the Javiers for their
the wrong or the relief own benefit,
7
necessarily, an detailed information was obtained by the
inquiry into the Ombudsman from the bank officials concerned
whereabouts of the during a previous investigation of the charges against
illegally acquired President Estrada, such inquiry into his bank
amount extends to accounts would itself be illegal.
whatever is
concealed by being Petitioner relies on Marquez v.
held or recorded in Desierto[10] where the Court held:
the name of persons
other than the one We rule that before an in camera
responsible for the inspection may be allowed there must
illegal acquisition. be a pending case before a court of
competent jurisdiction. Further, the
Clearly, Mellon account must be clearly identified, the
Bank involved a case where the inspection limited to the subject
money deposited was the subject matter of the pending case before the
matter of the litigation since the court of competent jurisdiction. The
money deposited was the very thing bank personnel and the account
in dispute. x x x (Emphasis and holder must be notified to be present
underscoring supplied) during the inspection, and such
inspection may cover only the
The plunder case now pending with the account identified in the pending
Sandiganbayan necessarily involves an inquiry into case. (Underscoring supplied)
the whereabouts of the amount purportedly acquired
illegally by former President Joseph Estrada.
As no plunder case against then President
In light then of this Courts pronouncement Estrada had yet been filed before a court of
in Union Bank, the subject matter of the litigation competent jurisdiction at the time the Ombudsman
cannot be limited to bank accounts under the name of conducted an investigation, petitioner concludes that
President Estrada alone, but must include those the information about his bank accounts were
accounts to which the money purportedly acquired acquired illegally, hence, it may not be lawfully used
illegally or a portion thereof was alleged to have been to facilitate a subsequent inquiry into the same bank
transferred. Trust Account No. 858 and Savings accounts.
Account No. 0116-17345-9 in the name of petitioner
fall under this description and must thus be part of Petitioners attempt to make the exclusionary
the subject matter of the litigation. rule applicable to the instant case fails. R.A. 1405, it
bears noting, nowhere provides that an unlawful
In a further attempt to show that the examination of bank accounts shall render the
subpoenas issued by the Sandiganbayan are invalid evidence obtained therefrom inadmissible in
and may not be enforced, petitioner contends, as evidence. Section 5 of R.A. 1405 only states that
earlier stated, that the information found therein, [a]ny violation of this law will subject the offender
given their extremely detailed character, could only upon conviction, to an imprisonment of not more
have been obtained by the Special Prosecution Panel than five years or a fine of not more than twenty
through an illegal disclosure by the bank officials thousand pesos or both, in the discretion of the court.
concerned. Petitioner thus claims that, following the
fruit of the poisonous tree doctrine, the subpoenas The case of U.S. v. Frazin,[11] involving the
must be quashed. Right to Financial Privacy Act of 1978 (RFPA) of
the United States, is instructive.
Petitioner further contends that even if, as Because the statute, when
claimed by respondent People, the extremely- properly construed, excludes a
8
suppression remedy, it would not be x x x [A]s early as February 8, 2001, long
appropriate for us to provide one in before the issuance of
the exercise of our supervisory the Marquez ruling, the Office of the
powers over the administration of Ombudsman, acting under the powers
justice. Where Congress has both granted to it by the Constitution and
established a right and provided R.A. No. 6770, and acting on
exclusive remedies for its violation, information obtained from various
we would encroach upon the sources, including impeachment (of
prerogatives of Congress were we to then Pres. Joseph Estrada) related
authorize a remedy not provided for reports, articles and investigative
by statute. United States v. journals, issued a Subpoena Duces
Chanen, 549 F.2d 1306, 1313 (9th Tecumaddressed to Urban
Cir.), cert. denied, 434 U.S. 825, 98 Bank. (Attachment 1-b) It should be
S.Ct. 72, 54 L.Ed.2d 83 (1977). noted that the description of the
documents sought to be produced at
that time included that of numbered
The same principle was reiterated in U.S. v. accounts 727, 737, 747, 757, 777 and
Thompson:[12] 858 and included such names as Jose
Velarde, Joseph E. Estrada, Laarni
x x x When Congress Enriquez, Guia Gomez, Joy
specifically designates a remedy for Melendrez, Peachy Osorio, Rowena
one of its acts, courts generally Lopez, Kevin or Kelvin
presume that it engaged in the Garcia. The subpoena did not single
necessary balancing of interests in out account 858.
determining what the appropriate
penalty should xxxx
be. See Michaelian, 803 F.2d at
1049 (citing cases); Frazin, 780 F.2d Thus, on February 13, 2001, PDIC, as
at 1466. Absent a specific reference receiver of Urban Bank, issued a
to an exclusionary rule, it is not certification as to the availability of
appropriate for the courts to read such bank documents relating to A/C 858
a provision into the act. and T/A 858 and the non-availability
of bank records as to the other
accounts named in
Even assuming arguendo, however, that the the subpoena. (Attachments 2, 2-1
exclusionary rule applies in principle to cases and 2-b)
involving R.A. 1405, the Court finds no reason to
apply the same in this particular case. Based on the certification issued by PDIC,
the Office of the Ombudsman
Clearly, the fruit of the poisonous tree on February 16, 2001 again issued
doctrine[13] presupposes a violation of law. If there a Subpoena Duces Tecum directed to
was no violation of R.A. 1405 in the instant case, Ms. Corazon dela Paz, as Interim
then there would be no poisonous tree to begin with, Receiver, directing the production of
and, thus, no reason to apply the doctrine. documents pertinent to account A/C
858 and T/C 858. (Attachment 3)
How the Ombudsman conducted his inquiry
into the bank accounts of petitioner is recounted by In compliance with the
respondent People of the Philippines, viz: said subpoena dated February 16,
2001, Ms. Dela Paz, as interim
receiver, furnished the Office of the
9
Ombudsman certified copies of letter dated March 16,
[14]
documents under cover latter 2001.(Attachment 6) (Emphasis in
dated February 21, 2001: the original)

1. Transaction registers
dated 7-02-99, 8-16-99, 9- The Sandiganbayan credited the foregoing
17-99, 10-18-99, 11-22- account of respondent People.[15] The Court finds no
99, 1-07-00, 04-03-00 and reason to disturb this finding of fact by the
04-24-00; Sandiganbayan.
2. Report of Unregularized
TAFs & TDs for UR The Marquez ruling notwithstanding, the above-
COIN A & B Placements described examination by the Ombudsman of
of Various Branches as of petitioners bank accounts, conducted before a case
February 29, 2000 and as was filed with a court of competent jurisdiction, was
of December 16, 1999; lawful.
and
3. Trading Orders Nos. A For the Ombudsman issued the subpoenas
No. 78102 and A No. bearing on the bank accounts of petitioner about four
078125. months before Marquez was promulgated on June
27, 2001.
Trading Order A No. 07125 is
filed in two copies a white While judicial interpretations of statutes,
copy which showed set up such as that made in Marquez with respect to R.A.
information; and a yellow No. 6770 or the Ombudsman Act of 1989, are
copy which showed reversal deemed part of the statute as of the date it was
information. Both copies have originally passed, the rule is not absolute.
been reproduced and are
enclosed with this letter. Columbia Pictures, Inc. v. Court of
[16]
Appeals teaches:
We are continuing our search
for other records and It is consequently clear that a judicial
documents pertinent to your interpretation becomes a part of the
request and we will forward to law as of the date that law was
you on Friday, 23 February originally passed, subject only to the
2001, such additional records qualification that when a doctrine
and documents as we might of this Court is overruled and a
find until then. (Attachment different view is adopted, and more
4) so when there is a reversal thereof,
the new doctrine should be
The Office of the Ombudsman then applied prospectively and should
requested for the mangers checks, not apply to parties who relied on the
detailed in the Subpoena Duces old doctrine and acted in good faith.
Tecum dated March 7, (Emphasis and underscoring
2001. (Attachment 5) supplied)

PDIC again complied with the


said Subpoena Duces When this Court construed the Ombudsman Act of
Tecum dated March 7, 2001 and 1989, in light of the Secrecy of Bank Deposits Law
provided copies of the managers in Marquez, that before an in camera inspection may
checks thus requested under cover be allowed there must be a pending case before a
10
court of competent jurisdiction, it was, in fact, examine and have access to bank
reversing an earlier doctrine found in Banco Filipino accounts and records;
Savings and Mortgage Bank v. Purisima[17].
A comparison of this provision with its counterpart
Banco Filipino involved subpoenas duces in Sec. 10(d) of P.D. 1630 clearly shows that it is
tecum issued by the Office of the Ombudsman, then only more explicit in stating that the power of the
known as the Tanodbayan,[18] in the course of Ombudsman includes the power to examine and have
its preliminary investigation of a charge of access to bank accounts and records which power
violation of the Anti-Graft and Corrupt Practices Act. was recognized with respect to the Tanodbayan
through Banco Filipino.
While the main issue in Banco Filipino was
whether R.A. 1405 precluded the Tanodbayans The Marquez ruling that there must be a pending
issuance of subpoena duces tecum of bank records in case in order for the Ombudsman to validly inspect
the name of persons other than the one who was bank records in camera thus reversed a prevailing
charged, this Court, citing P.D. 1630,[19] Section 10, doctrine.[21] Hence, it may not be retroactively
the relevant part of which states: applied.

(d) He may issue a subpoena The Ombudsmans inquiry into the subject bank
to compel any person to appear, give accounts prior to the filing of any case before a court
sworn testimony, or produce of competent jurisdiction was therefore valid at the
documentary or other evidence the time it was conducted.
Tanodbayan deems relevant to a
matter under his inquiry, 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
held that The power of the Tanodbayan to issue judicial interpretation either of R.A. 6770 or R.A.
subpoenae ad testificandum and subpoenae duces 1405, but a judge-made law which, as People v.
tecum at the time in question is not disputed, and Luvendino[22] instructs, can only be given
at any rate does not admit of doubt.[20] prospective application:

As the subpoenas subject of Banco x x x The doctrine that an


Filipino were issued during a preliminary uncounselled waiver of the right to
investigation, in effect this Court upheld the power counsel is not to be given legal effect
of the Tandobayan under P.D. 1630 to issue was initially a judge-made one and
subpoenas duces tecum for bank documents prior to was first announced on 26 April
the filing of a case before a court of competent 1983 in Morales v. Enrile and
jurisdiction. reiterated on 20 March 1985
in People v. Galit. x x x
Marquez, on the other hand, practically
reversed this ruling in Banco Filipino despite the fact While the Morales-Galit doctrine
that the subpoena power of the Ombudsman under eventually became part of Section
R.A. 6770 was essentially the same as that under P.D. 12(1) of the 1987 Constitution, that
1630. Thus Section 15 of R.A. 6770 empowers the doctrine affords no comfort to
Office of the Ombudsman to appellant Luvendino for the
requirements and restrictions
(8) Administer oaths, issue subpoena outlined
and subpoena duces tecum, and take in Morales and Galit have no
testimony in any investigation or retroactive effect and do not reach
inquiry, including the power to waivers made prior to 26 April
11
1983 the date of promulgation articles and investigative journals.[23] In the absence
of Morales. (Emphasis supplied) 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
In fine, the subpoenas issued by the would infringe the presumption of regularity in the
Ombudsman in this case were legal, hence, performance of official functions.
invocation of the fruit of the poisonous tree doctrine
is misplaced. Thus, with the filing of the plunder case against
former President Estrada before the Sandiganbayan,
AT ALL EVENTS, even if the challenged the Ombudsman, using the above independent
subpoenas are quashed, the Ombudsman is not information, may now proceed to conduct the same
barred from requiring the production of the same investigation it earlier conducted, through which it
documents based solely on information obtained by can eventually obtain the same information
it from sources independent of its previous inquiry. previously disclosed to it by the PDIC, for it is an
inescapable fact that the bank records of petitioner
In particular, the Ombudsman, even before its are no longer protected by R.A. 1405 for the reasons
inquiry, had already possessed information giving already explained above.
him grounds to believe that (1) there are bank
accounts bearing the number 858, (2) that such Since conducting such an inquiry would,
accounts are in the custody of Urban Bank, and (3) however, only result in the disclosure of the same
that the same are linked with the bank accounts of documents to the Ombudsman, this Court, in
former President Joseph Estrada who was then under avoidance of what would be a time-wasteful and
investigation for plunder. circuitous way of administering justice,[24] upholds
Only with such prior independent information could the challenged subpoenas.
it have been possible for the Ombudsman to issue
the February 8, 2001 subpoena duces Respecting petitioners claim that the
tecum addressed to the President and/or Chief Sandiganbayan violated his right to due process as he
Executive Officer of Urban Bank, which described was neither notified of the requests for the issuance
the documents subject thereof as follows: of the subpoenas nor of the grant thereof, suffice it to
state that the defects were cured when petitioner
(a) bank records and all ventilated his arguments against the issuance thereof
documents relative thereto through his earlier quoted letter addressed to the
pertaining to all bank accounts Sandiganbayan and when he filed his motions to
(Savings, Current, Time Deposit, quash before the Sandiganbayan.
Trust, Foreign Currency Deposits,
etc) under the account names of IN SUM, the Court finds that the Sandiganbayan did
Jose Velarde, Joseph E. Estrada, not commit grave abuse of discretion in issuing the
Laarni Enriquez, Guia Gomez, Joy challenged subpoenas for documents pertaining to
Melendrez, Peach Osorio, Rowena petitioners Trust Account No. 858 and Savings
Lopez, Kevin or Kelvin Garcia, 727, Account No. 0116-17345-9 for the following
737, 747, 757, 777 reasons:
and 858. (Emphasis and underscoring
supplied) 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,
The information on the existence of Bank Accounts namely: (1) the examination of bank accounts is upon
bearing number 858 was, according to respondent order of a competent court in cases of bribery or
People of the Philippines, obtained from various dereliction of duty of public officials, and (2) the
sources including the proceedings during the money deposited or invested is the subject matter of
impeachment of President Estrada, related reports, the litigation. Exception (1) applies since the plunder
12
case pending against former President Estrada is G.R. No. 71479 October 18, 1990
analogous to bribery or dereliction of duty, while MELLON BANK, N.A., petitioner,
exception (2) applies because the money deposited in vs.
petitioners bank accounts is said to form part of the HON. CELSO L. MAGSINO, in his capacity as
subject matter of the same plunder case. Presiding Judge of Branch CLIX of the Regional
Trial Court at Pasig; MELCHOR JAVIER, JR.,
2. The fruit of the poisonous tree principle, VICTORIA JAVIER; HEIRS OF HONORIO
which states that once the primary source (the tree) is POBLADOR, JR., namely: Elsa Alunan
shown to have been unlawfully obtained, any Poblador, Honorio Poblador III, Rafael
secondary or derivative evidence (the fruit) derived Poblador, Manuel Poblador, Ma. Regina
from it is also inadmissible, does not apply in this Poblador, Ma. Concepcion Poblador & Ma.
case. In the first place, R.A. 1405 does not provide Dolores Poblador; F.C. HAGEDORN & CO.,
for the application of this rule. Moreover, there is no INC.; DOMINGO JHOCSON, JR.; JOSE
basis for applying the same in this case since the MARQUEZ; ROBERTO GARINO; ELNOR
primary source for the detailed information regarding INVESTMENT CO., INC.; PARAMOUNT
petitioners bank accounts the investigation FINANCE CORPORATION; RAFAEL
previously conducted by the Ombudsman was CABALLERO; and TRI-ARC INVESTMENT
lawful. and MANAGEMENT CO., INC. respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los
3. At all events, even if the subpoenas issued Angeles for petitioner.
by the Sandiganbayan were quashed, the Jose Buendia for respondent Jose Marquez.
Ombudsman may conduct on its own the same Raul L. Cornea & Associates for Jhocson and
inquiry into the subject bank accounts that it earlier Garino.
conducted last February-March 2001, there being a Jesus L. Santos and Conrado Valera for Tri-Arc
plunder case already pending against former Investment, etc.
President Estrada. To quash the challenged Bernardo D. Calderon for respondent ELNOR and
subpoenas would, therefore, be pointless since the Rafael Caballero.
Ombudsman may obtain the same documents by Nazareno, Azada, Sabado & Dizon for Movants.
another route. Upholding the subpoenas avoids an Balgos & Perez for Paramount Finance
unnecessary delay in the administration of justice. Corporation.
Meer, Meer & Meer for Hagedorn.
WHEREFORE, the petition is Alberto Villareza for F.C. Hagedorn & Co.
DISMISSED. The Sandiganbayan Resolutions dated
February 7 and 12, 2003 and March 11, 2003 are FERNAN, C.J.:
upheld. The issue in the instant special civil action
of certiorari is whether or not, by virtue of the
The Sandiganbayan is hereby directed, principle of election of remedies, an action filed in
consistent with this Courts ruling in Marquez v. California, U.S.A., to recover real property located
Desierto, to notify petitioner as to the date the subject therein and to constitute a constructive trust on said
bank documents shall be presented in court by the property precludes the filing in our jurisdiction of
persons subpoenaed. an action to recover the purchase price of said real
property.
SO ORDERED. On May 27, 1977, Dolores Ventosa requested the
transfer of $1,000 from the First National Bank of
Moundsville, West Virginia, U.S.A. to Victoria
Javier in Manila through the Prudential Bank.
Republic of the Philippines Accordingly, the First National Bank requested the
SUPREME COURT petitioner, Mellon Bank, to effect the transfer.
Manila Unfortunately the wire sent by Mellon Bank to
THIRD DIVISION Manufacturers Hanover Bank, a correspondent of
13
Prudential Bank, indicated the amount transferred as The two checks totalling P1,000,000 was delivered
"US$1,000,000.00" instead of US$1,000.00. Hence by Poblador to F.C. Hagedorn with specific
Manufacturers Hanover Bank transferred one instructions to purchase Atlas, SMC and Philex
million dollars less bank charges of $6.30 to the shares. The four checks for P2,000,000 with Elnor
Prudential Bank for the account of Victoria Javier. Investment and Paramount Finance as payees were
On June 3, 1977, Javier opened a new dollar delivered to the latter to purchase "bearer" notes.
account (No. 343) in the Prudential Bank and Meanwhile, in July, 1977, Mellon Bank filed a
deposited $999,943.70. Immediately their, Victoria complaint docketed as No. 148056 in the Superior
Javier and her husband, Melchor Javier, Jr., made Court of California, County of Kern, against
withdrawals from the account, deposited them in Melchor Javier, Jane Doe Javier, Honorio Poblador,
several banks only to withdraw them later in an Jrn, and Does I through V. In its first amended
apparent plan to conceal, "launder" and dissipate the complaint to impose constructive trust dated July
erroneously sent amount. 14, 1977, 1 Mellon Bank alleged that it had
On June 14, 1977, Javier withdrew $475,000 from mistakenly and inadvertently cause the transfer of
account No. 343 and converted it into eight cashier's the sum of $999,000.00 to Jane Doe Javier; that it
checks made out to the following: (a) F.C. believes that the defendants had withdrawn said
Hagedorn & Co., Inc., two cheeks for the total funds; that "the defendants and each of them have
amount of P1,000,000; (b) Elnor Investment Co., used a portion of said funds to purchase real
Inc., two checks for P1,000,000; (c) Paramount property located in Kern County, California"; and
Finance Corporation, two checks for P1,000,000; that because of defendants' knowledge of Mellon
and (d) M. Javier, Jr., two checks for P496,000. The Bank's mistake and inadvertence and their use of the
first six checks were delivered to Jose Marquez and funds to purchase the property, they and "each of
Honorio Poblador, Jr. them are involuntary or constructive trustees of the
It appears that Melchor Javier, Jr. had requested real property and of any profits therefrom, with a
Jose Marquez, a realtor, to look for properties for duty to convey the same to plaintiff forthwith." It
sale in the United States. Marquez offered a 160- prayed that the defendants and each of them be
acre lot in the Mojave desert in California City declared as holders of the property in trust for the
which was owned by Honorio Poblador, Jr. Javier, plaintiff; that defendants be compelled to transfer
without having seen the property, agreed to buy it legal title and possession of the property to the
for P3,236,800 (US$437,405) although it was plaintiff; that defendants be made to pay the costs of
actually appraised at around $38,500. Consequently, the suit, and that other reliefs be granted them.
as Poblador's agent, Marquez executed in Makati a On July 29, 1977, Mellon Bank also filed in the
deed of absolute sale in favor of the Javiers and had Court of First Instance of Rizal, Branch X, a
the document notarized in Manila before an complaint against the Javier spouses, Honorio
associate of Poblador. Marquez executed another Poblador, Jr., Domingo L. Jhocson, Jr., Jose
deed of sale indicating receipt of the purchase price Marquez, Roberto Gariño, Elnor Investment Co.,
and sent the deed to the Kern County Registrar in Inc., F.C. Hagedorn & Co., Inc. and Paramount
California for registration. Finance Corporation. After its amendment, Rafael
Inasmuch as Poblador had requested that the Caballero and Tri-Arc Investment & Management
purchase price should not be paid directly to him, Company, Inc. were also named defendants. 2
the payment of P3,000,000 was coursed through The amended and supplemental complaint alleged
Elnor Investment Co., Inc., allegedly Poblador's the facts set forth above and added that Roberto
personal holding company; Paramount Finance, Gariño, chief accountant of Prudential Bank, and
allegedly headed by Poblador's brother, and F.C. who was the reference of Mrs. Ventosa's dollar
Hagedorn, allegedly a stock brokerage with remittances to Victoria Javier, immediately
extensive dealings with Poblador. The payment was informed the Javiers of the receipt of
made through the aforementioned six cashier's US$1,000,000.00; that knowing the financial
checks while the balance of P236,000 was paid in circumstances of Mrs. Ventosa and the fact that a
cash by Javier who did not even ask for a receipt. mistake had been committed, the Javiers, with
undue haste, took unlawful advantage of the
14
mistake, withdrew the whole amount and that when the notes matured, Paramount delivered
transferred the same to a "343 dollar account"; that, the proceeds of P1,000,000.00 to Tri-Arc; that
aided and abetted by Poblador and Domingo L. Poblador knew or should have known that the
Jhocson, the Javiers "compounded and completed attorney's fees he received from the Javiers came
the conversion" of the funds by withdrawing from from the trust funds; and that despite formal
the account dollars or pesos equivalent to US demands even after the filing of the complaint, the
$975,000; that by force of law, the Javiers had been defendants refused to return the trust funds which
constituted trustees of an implied trust for the they continued concealing and dissipating.
benefit of Mellon Bank with a clear duty to return to It prayed that: (a) the Javiers, Poblador, Elnor,
said bank the moneys mistakenly paid to them; that, Jhocson and Gariño be ordered to account for and
upon request of Mellon Bank and Manufacturers pay jointly and severally unto the plaintiff
Hanover Bank, Prudential Bank informed the US$999,000.00 plus increments, additions, fruits
Javiers of the erroneous transmittal of one million and interests earned by the funds from receipt
dollars first orally and later by letter-demand; that thereof until fully paid; (b) the other defendants be
conferences between the representatives of the ordered to account for and pay unto the plaintiff
Javiers, led by Jhocson and Poblador, in the latter's jointly and severally with the Javiers to the extent of
capacity as legal and financial counsel, and the amounts which each of them may have received
representatives of Mellon Bank, proved futile as the directly or indirectly from the US$999,000.00 plus
Javiers claimed that most of the moneys had been increments, additions, fruits and interests; (c)
irretrievably spent; that the Javiers could only return Marquez be held jointly and severally liable with
the amount if the Mellon Bank should agree to Poblador for the amount received by the latter for
make an absolute quitclaim and waiver of future the sale of the 160-acre lot in California City; and
rights against them, and that in a scheme to conceal (d) defendants be likewise held liable jointly and
and dissipate the funds, through the active severally for attomey's fees and litigation expenses
participation of Jose Marquez, the Javiers bought plus exemplary damages.
the California property of Poblador. In due course, the defendants filed their answers and
It further alleged that trust fund moneys totalling hearing of the case ensued. In his testimony, Jose
P3,000,000.00 were made payable to Hagedorn Marquez stated that Prudential Bank and Trust
Paramount and Elnor; that Hagedorn on instructions Company checks Nos. 2530 and 2531 in the
of Poblador, purchased shares of stock at a stock respective amounts of P100,000 and P900,000
exchange for P1,000,000.00 but later, it hastily sold payable to F. C. Hagedorn were delivered to him by
said shares at a loss of approximately P150,000.00 Melchor Javier, Jr. as partial consideration for the
to the prejudice of the plaintiff; that proceeds of the sale of Poblador's property in California. After
sale were deposited by Hagedorn in the name of receiving the checks, Hagedorn purchased shares of
Poblador and/or the law office of Poblador, Atlas Mining, Philex, Marcopper and San Miguel
Nazareno, Azada, Tomacruz and Paredes; that Corporation for Account No. 3000, which,
dividends declared on the shares were delivered by according to Fred Hagedorn belonged to the law
Hagedorn to Caballero after the complaint had been office of Poblador. 3
filed and thereafter, Caballero deposited the F.C. Hagedorn & Co., Inc. then sold the shares for
dividends in his personal account; that after P874,490.75 as evidenced by HSBC check No.
receiving the P1,000,000.00 trust money, 339736 for P400,000 and HSBC check No. 339737
Paramount issued promissory notes upon maturity for P474,490.75 payable to "cash". Mellon Bank
of which Paramount released the amount to traced these checks to Account 2825-1 of the
unknown persons; that Elnor also invested Philippine Veterans Bank in the name of Cipriano
P1,000,000.00 in Paramount for which the latter Azada, Poblador's law partner and counsel to the
also issued promissory notes; that after the filing of Javiers. 4
the complaint, counsel for plaintiff requested An employee of the Philippine Veterans Bank
Paramount not to release the amount after maturity; thereafter introduced the specimen signature cards
that in evident bad faith, Elnor transferred the non- for Account No. 2825-1 thereby confirming Azada's
negotiable Paramount promissory notes to Tri-Arc. ownership of the account. Defendants objected to
15
this testimony on the grounds of Azada's absence, After Mellon Bank filed its reply to the
the confidentiality of the bank account, and the best memorandum of Paramount, on September 10,
evidence rule. The court overruled the objection. 1982, Judge Acosta issued a resolution ordering that
Another employee of the Philippine Veterans Bank the testimonies of Baylosis and Red and the
then presented the ledger card for Account No. documents they testified on, which were
2825-1, a check deposit slip and a daily report of conditionally allowed, be stricken from the
returned items. The defendants objected but they records. 6 Judge Acosta explained:
were again overruled by the court. After a judicious evaluation of the
Mellon Bank then subpoenaed Erlinda Baylosis of arguments of the parties the Court is
the Philippine Veterans Bank to show that Azada of the view that in cases where
deposited HSBC checks No. 339736 and 339737 money held in trust was diverted by
amounting to P874,490.75 in his personal current the trustee, under the "rule of trust
account with said bank. It also subpoenaed Pilologo pursuit" the beneficiary "may elect
Red, Jr. of Hongkong & Shanghai Banking whether to accept the trust estate in
Corporation to prove that said amount was returned its new form or hold the trustee
by Azada to Hagedorn. responsible for it in its original
The testimonies of these witnesses were objected to condition" (Lathrop vs. Hampton, 31
by the defense on the grounds of res inter alios Cal. 17; Zodos vs. Marefalos 48
acta, immateriality, irrelevancy and confidentiality. Idaho 291; Bahle vs. Hasselbrach 64
To resolve the matter, the court ordered the parties NW Eq. 334, 51 Sections 508-76 Am
to submit memoranda. The defendants' objections Jur. 2d p. 475), and that "an election
were also discussed at the hearing on July 13, 1982. to pursue one remedy waives and
For the first time, Poblador's counsel raised the bars pursuit of any inconsistent
matter of "election of remedies." 5 remedy"(76 Am Jur. 2d S253). The
At the July 20, 1982 hearing, the lower court, then instant complaint among others is for
presided by Judge Eficio Acosta, conditionally the recovery of the purchase price of
allowed the testimonies of Baylosis and Red. the Kern property as held in trust for
Baylosis afffirmed that Azada deposited checks the plaintiff while in the California
Nos. 339736 and 339737 in the total amount of case the plaintiff maintains that the
P874,490.75 in his personal account with the Kern property is held in trust for the
Philippine Veterans Bank but almost plaintiff, which positions are
simultaneously, Azada issued his PVB check for the inconsistent with each other. Neither
same amount in favor of Hagedorn Consequently, can the plaintiff now abandon his
Azada's check initially bounced. For his part, Red complaint for the recovery of the
testified that Azada's check for P874,490.75 was Kern property and pursue his
received by the Hongkong & Shanghai Banking complaint for the recovery of the
Corporation and credited to the account of purchase price of said property for
Hagedorn . "if he has first sought to follow the
The defendants then moved to strike off the res, the plaintiff cannot thereafter
testimonies of Baylosis and Red from the record. hold the trustee personally
Defendant Paramount Finance Corporation, which responsible" and "when once there
is not a party to the California case, thereafter filed has been an election to do one of two
its memorandum raising the matter of "election of things, you cannot retract it and do
remedies". It averred that inasmuch as the Mellon the other thing. The election once
Bank had filed in California an action to impose made is finally made." (Fowler vs.
constructive trust on the California property and to Bowvery Savings Bank 113 N.Y.
recover the same, Mellon Bank can no longer try to 450, 21 N.E. 172, 4 LRA 145, 10
regain the purchase price of the same property Am. S.R. 479. 2 Silv. 280, 23, Abb.
through Civil Case No. 26899. The other defendants N. Cos. 133065 C. J. p. 980 Note
adopted Paramount's stand. 32).
16
The fact that the California case has jurisprudence frowns upon election of remedies if it
been stayed pending determination will lead to an inequitable result; that, as held by
of the instant case only means that this Court in Radiowealth vs. Javier, 7 there can be
should this case be dismissed, the no binding election of remedies before the decision
California case can proceed to its on the merits is had; that until Mellon Bank gets full
final determination. recovery of the trust moneys, any contention of
Furthermore, when the plaintiff filed election of remedy is premature, and that, the
the California case for the transfer of purchase price being the subject of litigation,
legal title and possession of the Kern inquiring into its movement, including its deposit in
property to the plaintiff it in effect banks, is allowed under Republic Act No. 1405.
ratified the transaction for "by taking Defendants filed their respective comments and
the proceeds or product of a oppositions to the motion for reconsideration. In its
wrongful transfer of trust property or reply, the Mellon Bank presented proof to the effect
funds, the beneficiary ratifies the that in the California case, defendants filed motions
transaction" (Board of Commissioner to stake out the cross-complaint of Mellon Bank, for
vs. Strawn [CA6 Ohio] 157 F. 49, 76 summary judgment and to stay or dismiss the action
Am Jur. 2d Section 253). on the ground of inconvenient forum but the first
Consequently the purchase price of two motions and the motion to dismiss were denied
the California property received by "without prejudice to renew upon determination of
defendant Poblador from Javier is no the Philippine action." The motion to stay
longer the proper subject matter of proceedings was "granted until determination of the
litigation and the movement and Philippine action." 8
disposition of the purchase price is On October 28, 1983, the lower court, through
therefore within the scope of the Judge Acosta, denied the motion for reconsideration
absolutely confidential nature of and ordered the continuation of the hearing (Rollo,
bank deposits as provided by Sec. 2, p. 182). The plaintiff filed a motion for the
R.A. 1405 as amended by PD No. reconsideration of both the September 10, 1982 and
1792. October 28, 1983 orders. After the parties had filed
Mellon Bank moved for reconsideration, alleging comments, opposition and reply, the court, through
that said order prevented the presentation of Judge Celso L. Magsino, denied Mellon Bank's
evidence on the purchase price of the California second motion for reconsideration on the ground
property; that the California case cannot be that it was "prescribed by the 1983 Interim Rules of
considered a waiver of the pursuit of the purchase Court" in an order dated July 9, 1985. 9
price as even if said case was filed fifteen days prior The court ruled that the determination of the
to the filing of the original complaint in this case, relevancy of the testimonies of Baylosis and Red
except for the Javiers, no other defendants raised in was "premised directly and principally" on whether
their answers the affirmative defense of the filing of or not Mellon Bank could still recover the purchase
the California case; that after the amendment of the price of the California property notwithstanding the
complaint, none of the defendants raised the matter filing of the case in California to recover title and
of "election of remedies" in their answers; that possession of the said property. After quoting the
realizing this procedural error, Paramount sought resolution of September 10, 1982, the Court ruled
the amendment of its answer to reflect the "defence" that it was a "final order or a definitive judgment
of "election of remedies"; that, disregarding its with respect to the claim of plaintiff for the
previous orders allowing evidence and testimonies recovery" of the purchase price of the California
on Account No. 2825-1, the court made a turnabout property. It stated:
and ruled that the testimonies on said account were The adjudication in the Order of
irrelevant and confidential under Republic Act No. September 10, 1982 and the Order of
1405; that Philippine law and jurisprudence does October 28, 1983, which has the
not require the election of remedies for they favor effect of declaring that plaintiff has
availment of all remedies; that even United States no cause of action against the
17
defendants for the recovery of the Case No. 26899 completely: (b) the evidence
proceeds of the sale of Kern property stricken from the records is relevant on the basis of
in the amount of Three Million Three the allegations of the amended and supplemental
Hundred Fifty Thousand Pesos complaint, and (c) the doctrine of election of
(P3,500,000.00 [sic]) for having filed remedies, which has long been declared obsolete in
a complaint for the recovery of the the United States, is not applicable in this case.
Kern property in the Superior Court With the exception of the Javiers, all the
of California, County of Kern is respondents filed their respective comments on the
a final and definitive disposition of petition. Having failed to file said comment, the
the claim of the plaintiff to recover in Javiers' counsel of record, Azada, Tomacruz &
the instant action the proceeds of sale Cacanindin, 11 was required to show cause why
of said property against the disciplinary action should not be taken against it.
defendants. The issue of "election of And, having also failed to show cause, it was fined
remedy" by the plaintiff was P300.
lengthily and thoroughly discussed In his motion for reconsideration of the resolution
and argued by the parties before the imposing said fine, Cipriano Azada alleged that in
rendition of the resolution of Civil Case No. 26899, the Javiers were indeed
September 10, 1982, and in the represented by the law firm of Poblador, Azada,
motion for reconsideration and Tomacruz & Cacanindin but he was never the
oppositions thereto before its lawyer of the Javiers' in his personal capacity; that
resolution in the Order of October after the death of Honorio Poblador, Jr., he had
28, 1983. Such issue is a substantive withdrawn from the partnership; that he is the
one as it refers to the existence of counsel of the Administratrix of the Estate of
plaintiffs cause of action to recover Honorio Poblador, Jr. for which he had filed a
the proceeds of the sale of the Kern comment, and that should the Court still require him
property in this action, and that issue to file comment for the Javiers despite the lack of
was presented to the Court as if a client-lawyer relationship, he would adopt the
motion to dismiss or a preliminary comment he had filed for the said Administratrix. 12
hearing of an affirmative defense on In its effort to locate the Javiers so that their side
the ground that plaintiff has no cause could be heard, we required the petitioner to furnish
of action, and was resolved against us with the Javiers' address as well as the name and
plaintiff in the Order of September address of their counsel. 13 In compliance therewith,
10, 1982, after a full hearing of all counsel for petitioner manifested that the Javiers
the parties. Said Order of September had two known addresses in San Juan, Metro
10, 1982 has the effect of putting an Manila and in Sampaloc, Manila; that since their
end to the controversy between the conviction in Crim. Case No. CCC-VII 2369-P.C.
parties as to the right of plaintiff to of the Pasig Regional Trial Court, the Javiers had
claim or recover the proceeds of the gone into hiding and warrants for their arrest still
sale of the Kern property from the remain unserved; 14 that the Javiers' counsel of
defendants. It is therefore an record in Civil Case No. 26899 is Atty. Cipriano
adjudication upon the merits. 10 Azada; that the same counsel appeared for the
Hence, Mellon Bank filed the instant petition for Javiers in Criminal Case No. 39851 of the Pasig
certiorari claiming that the resolution of September Regional Trial Court which is a tax evasion case
10, 1982 and the orders of October 28, 1983 and filed by the Republic of the Philippines, and that
July 9, 1985 are void for being unlawful and during the hearings of the civil and tax evasion
oppressive exercises of legal authority, subversive cases against the Javiers, Atty. Cipriano Azada, Jr.
of the fair administration of justice, and in excess of represented them. 15
jurisdiction. The petition is founded on its Inasmuch as copies of the resolution requiring
allegations that: (a) the resolution of September 10, comment on the petition and the petition itself
1982 is interlocutory as it does not dispose of Civil addressed to Melchor Javier were returned with the
18
notations "moved" and "deceased", the Court In effect, therefore, the July 9, 1985 order is a
required that said copies be sent to Mrs. Javier shortcut disposition of Civil Case No. 26899 in total
herself and that petitioner should inform the Court disregard of petitioner's right to a thorough
of the veracity of Javier's death. 16 A copy of the ventilation of its claims. By putting a premium on
resolution addressed to Mrs. Javier was returned procedural technicalities over the resolution of the
also with the notation "deceased." 17 merits of the case, the lower court rode roughshod
Counsel for petitioner accordingly informed the over the basic judicial tenet that litigations should,
Court that he learned that the Javiers had fled the as much as possible, be decided on their merits and
country and that he had no way of verifying whether not on technicalities. 22 The trial court's patent grave
Melchor Javier had indeed died. 18 abuse of discretion therefore forces us to exercise
In view of these circumstances, the Javiers' supervisory authority to correct its errors
comment on the petition shall be dispensed with as notwithstanding the fact that ordinarily, this Court
the Court deems the pleadings filed by the parties would not entertain a petition for certiorari
sufficient bases for resolving this case. The Javiers questioning the legality and validity of an
shall be served copies of this decision in accordance interlocutory order. 23
with Section 6, Rule 13 of the Rules of Court by Respondents' principal objection to the testimonies
delivering said copies to the clerk of court of the of Baylosis and Red is their alleged irrelevance to
lower court, with proof of failure of both personal the issues raised in Civil Case No. 26899. The
service and service by mail. fallacy of this objection comes to fore upon a
We hold that the lower court gravely abused its scrutiny of the complaint. Petitioner's theory therein
discretion in ruling that the resolution of September is that after the Javiers had maliciously appropriated
10, 1982 is a "final and definitive disposition" of unto themselves $999,000, the other private
petitioner's claim for the purchase price of the Kern respondents conspired and participated in the
property. The resolution is interlocutory and means concealment and dissipation of said amount. The
no more than what it states in its dispositive testimonies of Baylosis and Red are therefore
portion-the testimonies of Baylosis and Red and the needed to establish the scheme to hide the
documents they testified on, should be stricken from erroneously sent amount.
the record. Private respondents' protestations that to allow the
That the resolution discusses the common-law questioned testimonies to remain on record would
principle of election of remedies, a subject matter be in violation of the provisions of Republic Act
which shall be dealt with later, is beside the point. It No. 1405 on the secrecy of bank deposits, is
is interlocutory because the issue resolved therein is unfounded. Section 2 of said law allows the
merely the admissibility of the plaintiff's disclosure of bank deposits in cases where the
evidence. 19 As such, it does not dispose of the case money deposited is the subject matter of the
completely but leaves something more to be done litigation. 24Inasmuch as Civil Case No. 26899 is
upon its merits. 20 There are things left undone in aimed at recovering the amount converted by the
Civil Case No. 26899 after the issuance of the Javiers for their own benefit, necessarily, an inquiry
September 10, 1982 resolution not only because of into the whereabouts of the illegally acquired
its explicit dispositive portion but also due to the amount extends to whatever is concealed by being
fact that even until now, the case is still pending and held or recorded in the name of persons other than
being heard. 21 the one responsible for the illegal acquisition. 25
Furthermore, the lower court's holding in its July 9, We view respondents' reliance on the procedural
1985 order that petitioner's second motion for principle of election of remedies as part of their
reconsideration is proscribed by the 1983 Interim ploy to terminate Civil Case No. 26899
Rules of Court which disallows such motion on prematurely. With the exception of the Javiers,
a final order or judgment, should be rectified. As respondents failed to raise it as a defense in their
explained above, the resolution of September 10, answers and therefore, by virtue of Section 2, Rule
1982 is not a final one. It also contains conclusions 9 of the Rules of Court, such defense is deemed
on procedural matters which, if left unchecked, waived. 26Notwithstanding its lengthy and thorough
would prejudice petitioner's substantive rights. discussion during the hearing and in pleadings
19
subsequent to the answers, the issue of election of discordant with the modern procedural concepts
remedies has not, contrary to the lower court's embodied in the Code of Civil Procedure which
assertion, been elevated to a "substantive one." Permits a party to seek inconsistent remedies in his
Having been waived as a defense, it cannot be claim for relief without being required to elect
treated as if it has been raised in a motion to dismiss between them at the pleading stage of the
based on the nonexistence of a cause of action. litigation. 32
Moreover, granting that the defense was properly It should be noted that the remedies pursued in the
raised, it is inapplicable in this case. In its broad California case and in Civil Case No. 26899 are not
sense, election of remedies refers to the choice by a exactly repugnant or inconsistent with each other. If
party to an action of one of two or more coexisting ever, they are merely alternative in view of the
remedial rights, where several such rights arise out inclusion of parties in the latter case who are not
of the same facts, but the term has been generally named defendants in the former. The causes of
limited to a choice by a party between inconsistent action, although they all stem from the erroneous
remedial rights, the assertion of one being transmittal of dollars, are distinct as shown by the
necessarily repugnant to, or a repudiation of, the complaints lengthily set out above. The bar of an
other. In its technical and more restricted sense, election of remedies does not apply to the assertion
election of remedies is the adoption of one of two or of distinct causes of action against different persons
more coexisting remedies, with the effect of arising out of independent transactions. 33
precluding a resort to the others. 27 As correctly pointed out by the petitioner, the
As a technical rule of procedure, the purpose of the doctrine of election of remedies is not favored in the
doctrine of election of remedies is not to prevent United States for being harsh. 34 Its application with
recourse to any remedy, but to prevent double regard to two cases filed in two different
redress for a single wrong. 28 It is regarded as an jurisdictions is also circumscribed by jurisprudence
application of the law of estoppel, upon the theory on abatement of suits. Thus, in Brooks Erection Co.
that a party cannot, in the assertion of his right v. William R. Montgomery & Associates, Inc., 35 it is
occupy inconsistent positions which form the basis held:
of his respective remedies. However, when a certain The pendency of an action in the
state of facts under the law entitles a party to courts of one state or country is not a
alternative remedies, both founded upon the bar to the institution of another
Identical state of facts, these remedies are not action between the same parties and
considered inconsistent remedies. In such case, the for the same cause of action in a
invocation of one remedy is not an election which court of another state or country, nor
will bar the other, unless the suit upon the remedy is it the duty of the court in which the
first invoked shall reach the stage of final latter action is brought to stay the
adjudication or unless by the invocation of the same pending a determination of the
remedy first sought to be enforced, the plaintiff earlier action, even though the court
shall have gained an advantage thereby or caused in which the earlier action is brought
detriment or change of situation to the other. 29 It has jurisdiction sufficient to dispose
must be pointed out that ordinarily, election of of the entire controversy.
remedies is not made until the judicial proceedings Nevertheless, sometimes stated as a
has gone to judgment on the merits. 30 matter of comity not of right, it is
Consonant with these rulings, this Court, through usual for the court in which the later
Justice J.B.L. Reyes, opined that while some action is brought to stay proceedings
American authorities hold that the mere initiation of under such circumstances until the
proceedings constitutes a binding choice of earlier action is determined.
remedies that precludes pursuit of alternative However, in view of the fact that the California
courses, the better rule is that no binding election court wherein the case for recovery of the Kern
occurs before a decision on the merits is had or a property was first filed against the Javiers had
detriment to the other party supervenes. 31 This is stayed proceedings therein until after the
because the principle of election of remedies is termination of Civil Case No. 26899, the court
20
below can do no less than expedite the disposition FLOR, Special Prosecutors of the Dept. of
of said case. Justice, defendants-appellees.
We cannot dispose of this case without condemning Ramon B. de los Reyes and Zoilo P. Perlas for
in the strongest terms possible the acts of chicanery plaintiffs-appellants.
so apparent from the records. The respective Villamor & Gancayco for defendants-appellees.
liabilities of the respondents are still being
determined by the court below. We must warn,
however, against the use of technicalities and REGALA, J.:
obstructive tactics to delay a just settlement of this The principal question presented in this case is
case. The taking advantage of the petitioner's whether a bank can be compelled to disclose the
mistake to gain sudden and undeserved wealth is records of accounts of a depositor who is under
marked by circumstances so brazen and shocking investigation for unexplained wealth.
that any further delay will reflect poorly on the kind This question arose when defendants Emilio A.
of justice our courts dispense. The possible Gancayco and Florentino Flor, as special
involvement of lawyers in this sorry scheme stamps prosecutors of the Department of Justice, required
a black mark on the legal profession. The Integrated the plaintiff Philippine National Bank to produce at
Bar of the Philippines (IBP) must be made aware of a hearing to be held at 10 a.m. on February 20, 1961
the ostensible participation, if not instigation, in the the records of the bank deposits of Ernesto T.
spiriting away of the missing funds. The IBP must Jimenez, former administrator of the Agricultural
take the proper action at the appropriate time Credit and Cooperative Administration, who was
against all lawyers involved in any misdeeds arising then under investigation for unexplained wealth. In
from this case. declining to reveal its records, the plaintiff bank
WHEREFORE, the resolution of September 10, invoked Republic Act No. 1405 which provides:
1982 and the orders of October 28, 1982 and July 9, SEC. 2. All deposits of whatever nature with
1985 are hereby annulled. The lower court is banks or banking institutions in the
ordered to proceed with dispatch in the disposition Philippines including investments in bonds
of Civil case No. 26899, considering that thirteen issued by the Government of the
(13) years have gone by since the original erroneous Philippines, its political subdivisions and its
remittance. instrumentalities, are hereby considered as
Service of this decision on the Javier spouses shall of an absolutely confidential nature and may
be in accordance with Section 6, Rule 13 of the not be examined, inquired or looked into by
Rules of Court. A copy of this decision shall be any person, government official, bureau or
served on the Integrated Bar of the Philippines. office, except upon written permission of the
The decision is immediately executory. Costs depositor, or in cases of impeachment, or
against private respondents. upon order of a competent court in cases of
SO ORDERED. bribery or dereliction of duty of public
officials, or in cases where the money
deposited or invested is the subject matter of
Republic of the Philippines the litigation.
SUPREME COURT The plaintiff bank also called attention to the penal
Manila provision of the law which reads:
EN BANC SEC. 5. Any violation of this law will
G.R. No. L-18343 September 30, 1965 subject the offender upon conviction, to an
PHILIPPINE NATIONAL BANK and imprisonment of not more than five years or
EDUARDO Z. ROMUALDEZ, in his capacity as a fine of not more than twenty thousand
President of the Philippine National pesos or both, in the discretion of the court.
Bank, plaintiffs-appellants, On the other hand, the defendants cited the Anti-
vs. Graft and Corrupt Practices Act (Republic Act No.
EMILIO A. GANCAYCO and FLORENTINO 3019) in support of their claim of authority and
demanded anew that plaintiff Eduardo Z.
21
Romualdez, as bank president, produce the records dereliction of duty of public officials; and (4) In
or he would be prosecuted for contempt. The law cases where the money deposited or invested is the
invoked by the defendant states: subject matter of the litigation."
SEC. 8. Dismissal due to unexplained In support of their position, plaintiffs contend, first,
wealth. — If in accordance with the that the Anti-Graft Law (which took effect on
provisions of Republic Act Numbered One August 17, 1960) is a general law which cannot be
thousand three hundred seventy-nine, a deemed to have impliedly repealed section 2 of
public official has been found to have Republic Act No. 1405 (which took effect on Sept.
acquired during his incumbency, whether in 9, 1955), because of the rule that repeals by
his name or in the name of other persons, an implication are not favored. Second, they argue that
amount of property and/or money manifestly to construe section 8 of the Anti-Graft Law as
out of proportion to his salary and to his allowing inquiry into bank deposits would be to
other lawful income, that fact shall be a negate the policy expressed in section 1 of Republic
ground for dismissal or removal. Properties Act No. 1405 which is "to give encouragement to
in the name of the spouse and unmarried the people to deposit their money in banking
children of such public official may be taken institutions and to discourage private hoarding so
into consideration, when their acquisition that the same may be utilized by banks in authorized
through legitimate means cannot be loans to assist in the economic development of the
satisfactorily shown. Bank deposits shall be country."
taken into consideration in the enforcement Contrary to their claim that their position effects a
of this section, notwithstanding any reconciliation of the provisions of the two laws,
provision of law to the contrary. plaintiffs are actually making the provisions of
Because of the threat of prosecution, plaintiffs filed Republic Act No. 1405 prevail over those of the
an action for declaratory judgment in the Manila Anti-Graft Law, because even without the latter law
Court of First Instance. After trial, during which the balance standing to the depositor's credit can be
Senator Arturo M. Tolentino, author of the Anti- considered provided its disclosure is made in any of
Graft and Corrupt Practices Act testified, the court the cases provided in Republic Act No. 1405.
rendered judgment, sustaining the power of the The truth is that these laws are so repugnant to each
defendants to compel the disclosure of bank other than no reconciliation is possible. Thus, while
accounts of ACCFA Administrator Jimenez. The Republic Act No. 1405 provides that bank deposits
court said that, by enacting section 8 of, the Anti- are "absolutely confidential ... and [therefore] may
Graft and Corrupt Practices Act, Congress clearly not be examined, inquired or looked into," except in
intended to provide an additional ground for the those cases enumerated therein, the Anti-Graft Law
examination of bank deposits. Without such directs in mandatory terms that bank deposits "shall
provision, the court added prosecutors would be be taken into consideration in the enforcement of
hampered if not altogether frustrated in the this section, notwithstanding any provision of law to
prosecution of those charged with having acquired the contrary." The only conclusion possible is that
unexplained wealth while in public section 8 of the Anti-Graft Law is intended to
office.1awphîl.nèt amend section 2 of Republic Act No. 1405 by
From that judgment, plaintiffs appealed to this providing additional exception to the rule against
Court. In brief, plaintiffs' position is that section 8 the disclosure of bank deposits.
of the Anti-Graft Law "simply means that such bank Indeed, it is said that if the new law is inconsistent
deposits may be included or added to the assets of with or repugnant to the old law, the presumption
the Government official or employee for the against the intent to repeal by implication is
purpose of computing his unexplained wealth if and overthrown because the inconsistency or
when the same are discovered or revealed in the repugnancy reveals an intent to repeal the existing
manner authorized by Section 2 of Republic Act law. And whether a statute, either in its entirety or
1405, which are (1) Upon written permission of the in part, has been repealed by implication is
depositor; (2) In cases of impeachment; (3) Upon ultimately a matter of legislative intent. (Crawford,
order of a competent court in cases of bribery or The Construction of Statutes, Secs. 309-310. Cf.
22
Iloilo Palay and Corn Planters Ass'n v. Feliciano, vs.
G.R. No. L-24022, March 3, 1965). HON. FIDEL PURISIMA, etc., and HON.
The recent case of People v. De Venecia, G.R. No. VICENTE ERICTA and JOSE DEL FIERO,
L-20808, July 31, 1965 invites comparison with this etc., respondents.
case. There it was held:
The result is that although sec. 54 [Rev. NARVASA, J.:
Election Code] prohibits a classified civil The verdict in this special civil action of certiorari
service employee from aiding any candidate, turns upon the question of whether or not the "Law
sec. 29 [Civil Service Act of 1959] allows on Secrecy of Bank Deposits" 1 precludes
such classified employee to express his production by subpoena duces tecum of bank
views on current political problems or records of transactions by or in the names of the
issues, or to mention the name of his wife, children and friends of a special agent of the
candidate for public office, even if such Bureau of Customs, accused before
expression of views or mention of names the Tanodbayan of having allegedly acquired
may result in aiding one particular property manifestly out of proportion to his salary
candidate. In other words, the last paragraph and other lawful income, in violation of the "Anti-
of sec. 29 is an exception to sec. 54; at most, Graft and Corrupt Practices Act." 2
an amendment to sec. 54. The Customs special agent involved is Manuel
With regard to the claim that disclosure would be Caturla, and the accusation against him was filed by
contrary to the policy making bank deposits the Bureau of Internal Revenue. 3 In the course of
confidential, it is enough to point out that while the preliminary investigation thereof,
section 2 of Republic Act 1405 declares bank the Tanodbayan issued a subpoena duces tecum to
deposits to be "absolutely confidential," it the Banco Filipino Savings & Mortgage Bank,
nevertheless allows such disclosure in the following commanding its representative to appear at a
instances: (1) Upon written permission of the specified time at the Office of the Tanodbayan and
depositor; (2) In cases of impeachment; (3) Upon furnish the latter with duly certified copies of the
order of a competent court in cases of bribery or records in all its branches and extension offices, of
dereliction of duty of public officials; (4) In cases the loans, savings and time deposits and other
where the money deposited is the subject matter of banking transactions, dating back to 1969,
the litigation. Cases of unexplained wealth are appearing in the names of Caturla, his wife, Purita
similar to cases of bribery or dereliction of duty and Caturla, their children — Manuel, Jr., Marilyn and
no reason is seen why these two classes of cases Michael — and/or Pedro Escuyos. 4
cannot be excepted from the rule making bank Caturla moved to quash the subpoena duces
deposits confidential. The policy as to one cannot be tecum 5 arguing that compliance therewith would
different from the policy as to the other. This policy result in a violation of Sections 2 and 3 of the Law
express the motion that a public office is a public on Secrecy of Bank Deposits.
trust and any person who enters upon its discharge Then Tanodbayan Vicente Ericta not only denied
does so with the full knowledge that his life, so far the motion for lack of merit, and directed
as relevant to his duty, is open to public scrutiny. compliance with the subpoena, 6 but also expanded
WHEREFORE, the decision appealed from is its scope through a second subpoena duces
affirmed, without pronouncement as to costs. tecum,7 this time requiring production by Banco
Filipino of the bank records in all its branches and
extension offices, of Siargao Agro-Industrial
Republic of the Philippines Corporation, Pedro Escuyos or his wife, Emeterio
SUPREME COURT Escuyos, Purita Caturla, Lucia Escuyos or her
Manila husband, Romeo Escuyos, Emerson Escuyos,
FIRST DIVISION Fraterno Caturla, Amparo Montilla, Cesar Caturla,
G.R. No. L-56429 May 28, 1988 Manuel Caturla or his children, Manuel Jr., Marilyn
BANCO FILIPINO SAVINGS AND and Michael, LTD Pub/Restaurant, and Jose Buo or
MORTGAGE BANK, petitioner, his wife, Evelyn. Two other subpoena of
23
substantially the same tenor as the second were — could be deemed so whimsical, capricious,
released by the Tanodbayan's Office. 8 The last despotic or oppressive an act as to constitute grave
required obedience under sanction of contempt. abuse of discretion. Obviously, the writ of certiorari
The Banco Filipino Savings & Mortgage Bank, cannot issue simply on a showing of disagreement
hereafter referred to simply as BF Bank, took over between a party and the court upon some material
from Caturla in the effort to nullify the subpoenae. factual or legal issue. There must be a reasonable
It filed a complaint for declaratory relief with the demonstration that a party's contentions are so
Court of First Instance of Manila, 9which was clearly correct, or the court's ruling thereon so
assigned by raffle to the sala of respondent Judge clearly wrong, to justify the issuance of a writ
Fidel Purisima. BF Bank prayed for a judicial of certiorari. No such demonstration exists in this
declaration as to whether its compliance with the case. Indeed, for aught that the record shows, the
subpoenae duces tecum would constitute an Court's refusal to grant the application for a
infringement of the provisions of Sections 2 and 3 restraining order was, in the premises, licit and
of R.A. No. 1405 in relation to Section 8 of R.A. proper, or its validity, fairly debatable, at the very
No. 3019. It also asked that pending final resolution least. Be this as it may, on the merits the petitioner
of the question, the Tanodbayan be provisionally cannot succeed. Its declared theory is untenable.
restrained from exacting compliance with The provisions of R.A. No. 1405 subject of BF's
the subpoenae. declaratory action, read as follows:
Respondent Judge Purisima issued an Order Sec. 2. All deposits of whatever
denying for lack of merit the application by BF nature with banks or banking
Bank for a preliminary injunction and/or restraining institutions in the Philippines
order. 10 including investments in bonds
This Order is now impugned in the instant certiorari issued by the Government of the
action instituted by BF Bank before this Court, as Philippines, its political subdivisions
having been issued with grave abuse of discretion, and its instrumentalities, are hereby
amounting to lack of jurisdiction. It is the bank's considered as of an absolutely
theory that the order declining to grant that remedy confidential nature and may not be
operated as a premature adjudication of the very examined, inquired or looked into by
issue raised in the declaratory suit, and as judicial any person, government official,
sufferance of a transgression of the bank deposits bureau or office, except upon written
statute, and so constituted grievous error correctible permission of the depositor, or in
by certiorari. It further argues that subpoenae in cases of impeachment, or upon order
question are in the nature of "fishing expeditions" or of a competent court in cases of
"general warrants" since they authorize bribery or dereliction of duty of
indiscriminate inquiry into bank records; that, public officials, or in cases where the
assuming that such an inquiry is allowed as regards money deposited or invested is the
public officials under investigation for a violation of subject matter of litigation.
the Anti-Graft & Corrupt Practices Act, it is Sec. 3. It shall be unlawful for any
constitutionally impermissible with respect to official or employee of a banking
private individuals or public officials not under institution to disclose to any person
investigation on a charge of violating said Act; and other than those mentioned in
that while prosecution of offenses should not, as a Section two hereof any information
rule, be enjoined, there are recognized exceptions to concerning said deposits
the principle one of which is here present, i.e. to The other provision involved in the declaratory
avoid multiplicity of suits, similar subpoenae having action is Section 8 of R.A. No. 3019. It reads:
been directed to other banks as well. Sec. 8. Dismissal due to unexplained
It is difficult to see how the refusal by the Court a wealth. — If in accordance with the
quo to issue the temporary restraining order applied provisions of Republic Act
for by the petitioner — in other words, its Numbered One thousand three
disagreement with the petitioner's advocated theory hundred seventy-nine, a public
24
official has been found to have Republic Act No. 1405 by providing
acquired during his incumbency, an additional exception to the rule
whether in his name or in the name against the disclosure of bank
of other persons, an amount of desposits.
property and/or money manifestly xxx xxx xxx
out of proportion to this salary and to ... Cases of unexplained wealth 14 are
his other lawful income, that fact similar to cases of bribery or
shall be a ground for dismissal or dereliction of duty 15 and no reason is
removal. Properties in the name of seen why these two classes of cases
the spouse and unmarried children of cannot be excepted from the rule
such public official may be taken making bank deposits confidential.
into consideration, when their The policy as to one cannot be
acquisition through legitimate means different from the policy as to the
cannot be satisfactorily shown. Bank other. This policy expresses the
deposits shall be taken into notion that a public office is a public
consideration in the enforcement of trust and any person who enters upon
this section, notwithstanding any its discharge does so with the full
prohibition of law to the contrary. knowledge that his life, so far as
In our decision in Philippine National Bank v. relevant to his duty, is open to public
Gancayco, rendered on September 30, 1966, 11 we scrutiny.
upheld the judgment of the Trial Court "sustaining The inquiry into illegally acquired property — or
the power of the defendants (special prosecutors of property NOT "legitimately acquired" — extends to
the Department of Justice) to compel the disclosure cases where such property is concealed by being
(by PNB) of bank accounts of ACCFA held by or recorded in the name of other persons.
Administrator Jimenez (then under investigation for This proposition is made clear by R.A. No. 3019
unexplained wealth), .. (it being ruled) that, by which quite categorically states that the term,
enacting section 8 of the Anti-Graft and Corrupt "legitimately acquired property of a public officer
Practices Act, Congress clearly intended to provide or employee shall not include .. property unlawfully
an additional ground for the examination of bank acquired by the respondent, but its ownership is
deposits .. (for) without such provision, the .. concealed by its being recorded in the name of, or
prosecutors would be hampered if not altogether held by, respondent's spouse, ascendants,
frustrated in the prosection of those charged with descendants, relatives or any other persons." 16
having acquired unexplained wealth while in public To sustain the petitioner's theory, and restrict the
office. 12 We ourselves declared in said case inquiry only to property held by or in the name of
that 13— the government official or employee, or his spouse
.. while Republic Act No. 1405 and unmarried children is unwarranted in the light
provides that bank deposits are of the provisions of the statutes in question, and
"absolutely confidential .. and would make available to persons in government
[therefore] may not be examined, who illegally acquire property an easy and fool-
inquired or looked into," except in proof means of evading investigation and
those cases enumerated therein, the prosecution; all they would have to do would be to
Anti-Graft Law directs in mandatory simply place the property in the possession or name
terms that bank deposits "shall be of persons other than their spouse and unmarried
taken into consideration in the children. This is an absurdity that we will not
enforcement of this ascribe to the lawmakers.
section, notwithstanding any The power of the Tanodbayan to issue
provision of law to the contrary." subpoenae ad testificandcum and subpoenae duces
The only conclusion possible is that tecum at the time in question is not disputed, and at
section 8 of the Anti-Graft Law is any rate does not admit of doubt. 17 The subpoenae
intended to amend section 2 of
25
issued by him, will be sustained against the where petitioner is the branch manager. The accounts
petitioner's impugnation. to be inspected are Account Nos. 011-37270, 240-
WHEREFORE, the petition for certiorari is 020718, 245-30317-3 and 245-30318-1, involved in
DISMISSED, with costs against petitioner. a case pending with the Ombudsman entitled, Fact-
Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., Finding and Intelligence Bureau (FFIB) v. Amado
concur. Lagdameo, et. al. The order further states:
It is worth mentioning that the power of the
Ombudsman to investigate and to require the
EN BANC production and inspection of records and documents
[G.R. No. 135882. June 27, 2001] is sanctioned by the 1987 Philippine Constitution,
LOURDES T. MARQUEZ, in her capacity as Republic Act No. 6770, otherwise known as the
Branch Manager, Union Bank of the Ombudsman Act of 1989 and under existing
Philippines, petitioners, vs. HON. jurisprudence on the matter. It must be noted that R.
ANIANO A. DESIERTO, (in his capacity A. 6770 especially Section 15 thereof provides,
as OMBUDSMAN, Evaluation and among others, the following powers, functions and
Preliminary Investigation Bureau, Office duties of the Ombudsman, to wit:
of the Ombudsman, ANGEL C. MAYOR- xxx
ALGO, JR., MARY ANN CORPUZ- (8) Administer oaths, issue subpoena and subpoena
MANALAC and JOSE T. DE JESUS, JR., duces tecum and take testimony in any investigation
in their capacities as Chairman and or inquiry, including the power to examine and have
Members of the Panel, access to bank accounts and records;
respectively, respondents. (9) Punish for contempt in accordance with the
DECISION Rules of Court and under the same procedure and
PARDO, J.: with the same penalties provided therein.
In the petition at bar, petitioner seeks to-- Clearly, the specific provision of R.A. 6770, a later
a. Annul and set aside, for having been issued legislation, modifies the law on the Secrecy of Bank
without or in excess of jurisdiction or with Deposits (R.A. 1405) and places the office of the
grave abuse of discretion amounting to lack of Ombudsman in the same footing as the courts of
jurisdiction, respondents order dated September law in this regard.[2]
7, 1998 in OMB-0-97-0411, In Re: Motion to The basis of the Ombudsman in ordering an in
Cite Lourdes T. Marquez for indirect contempt, camera inspection of the accounts is a trail of
received by counsel of September 9, 1998, and managers checks purchased by one George Trivinio,
their order dated October 14, 1998, denying a respondent in OMB-0-97-0411, pending with the
Marquezs motion for reconsideration dated office of the Ombudsman.
September 10, 1998, received by counsel on It would appear that Mr. George Trivinio,
October 20, 1998. purchased fifty one (51) Managers Checks (MCs) for
b. Prohibit respondents from implementing a total amount of P272.1 Million at Traders Royal
their order dated October 14, 1998, in Bank, United Nations Avenue branch, on May 2 and
proceeding with the hearing of the motion to 3, 1995. Out of the 51 MCs, eleven (11) MCs
cite Marquez for indirect contempt, through the in the amount of P70.6 million, were deposited
issuance by this Court of a temporary and credited to an account maintained at the Union
restraining order and/or preliminary Bank, Julia Vargas Branch.[3]
injunction.[1] On May 26, 1998, the FFIB panel met in
The antecedent facts are as follows: conference with petitioner Lourdes T. Marquez and
Sometime in May 1998, petitioner Marquez Atty. Fe B. Macalino at the banks main office, Ayala
received an Order from the Ombudsman Aniano A. Avenue, Makati City. The meeting was for the
Desierto dated April 29, 1998, to produce several purpose of allowing petitioner and Atty. Macalino to
bank documents for purposes of inspection in view the checks furnished by Traders Royal Bank.
camerarelative to various accounts maintained at After convincing themselves of the veracity of the
Union Bank of the Philippines, Julia Vargas Branch, checks, Atty. Macalino advised Ms. Marquez to
26
comply with the order of the Ombudsman. Petitioner the Ombudsman which is punishable under Section
agreed to an in camera inspection set on June 3, 36 of R.A. 6770.[7]
1998.[4] On July 10, 1998, petitioner together with Union
However, on June 4, 1998, petitioner wrote the Bank of the Philippines, filed a petition for
Ombudsman explaining to him that the accounts in declaratory relief, prohibition and injunction[8] with
question cannot readily be identified and asked for the Regional Trial Court, Makati City, against the
time to respond to the order. The reason forwarded Ombudsman.
by petitioner was that despite diligent efforts and The petition was intended to clear the rights and
from the account numbers presented, we can not duties of petitioner. Thus, petitioner sought a
identify these accounts since the checks are issued in declaration of her rights from the court due to the
cash or bearer. We surmised that these accounts have clear conflict between R. A. No. 6770, Section 15
long been dormant, hence are not covered by the new and R. A. No. 1405, Sections 2 and 3.
account number generated by the Union Bank Petitioner prayed for a temporary restraining
system. We therefore have to verify from the order (TRO) because the Ombudsman and other
Interbank records archives for the whereabouts of persons acting under his authority were continuously
these accounts.[5] harassing her to produce the bank documents relative
The Ombudsman, responding to the request of to the accounts in question. Moreover, on June 16,
the petitioner for time to comply with the order, 1998, the Ombudsman issued another order stating
stated: firstly, it must be emphasized that Union that unless petitioner appeared before the FFIB with
Bank, Julia Vargas Branch was the depositary bank the documents requested, petitioner manager would
of the subject Traders Royal Bank Managers Checks be charged with indirect contempt and obstruction of
(MCs), as shown at its dorsal portion and as cleared justice.
by the Philippine Clearing House, not the In the meantime,[9] on July 14, 1998, the lower
International Corporate Bank. court denied petitioners prayer for a temporary
Notwithstanding the fact that the checks were restraining order and stated thus:
payable to cash or bearer, nonetheless, the name of After hearing the arguments of the parties, the court
the depositor(s) could easily be identified since the finds the application for a Temporary Restraining
account numbers x x x where said checks were Order to be without merit.
deposited are identified in the order. Since the application prays for the restraint of the
Even assuming that the accounts xxx were respondent, in the exercise of his contempt powers
already classified as dormant accounts, the bank is under Section 15 (9) in relation to paragraph (8) of
still required to preserve the records pertaining to the R.A. 6770, known as The Ombudsman Act of 1989,
accounts within a certain period of time as required there is no great or irreparable injury from which
by existing banking rules and regulations. petitioners may suffer, if respondent is not so
And finally, the in camera inspection was restrained. Respondent should he decide to exercise
already extended twice from May 13, 1998 to June his contempt powers would still have to apply with
3, 1998, thereby giving the bank enough time within the court. x x x Anyone who, without lawful
which to sufficiently comply with the order.[6] excuse x x x refuses to produce documents for
Thus, on June 16, 1998, the Ombudsman issued inspection, when thereunto lawfully required shall
an order directing petitioner to produce the bank be subject to discipline as in case of contempt of
documents relative to the accounts in issue. The Court and upon application of the individual or
order states: body exercising the power in question shall be dealt
Viewed from the foregoing, your persistent refusal with by the Judge of the First Instance (now RTC)
to comply with Ombudsmans order is unjustified, having jurisdiction of the case in a manner provided
and is merely intended to delay the investigation of by law (section 580 of the Revised Administrative
the case. Your act constitutes disobedience of or Code). Under the present Constitution only judges
resistance to a lawful order issued by this office and may issue warrants, hence, respondent should apply
is punishable as Indirect Contempt under Section with the Court for the issuance of the warrant
3(b) of R.A. 6770. The same may also constitute needed for the enforcement of his contempt orders.
obstruction in the lawful exercise of the functions of It is in these proceedings where petitioners may
27
question the propriety of respondents exercise of his Respondent Ombudsman panel set the incident
contempt powers. Petitioners are not therefore left for hearing on September 7, 1998.[19] After hearing,
without any adequate remedy. the panel issued an order dated September 7, 1998,
The questioned orders were issued with the ordering petitioner and counsel to appear for a
investigation of the case of Fact-Finding and continuation of the hearing of the contempt charges
Intelligence Bureau vs. Amado Lagdameo, et. el., against her.[20]
OMB-0-97-0411, for violation of R.A. 3019. Since On September 10, 1998, petitioner filed with the
petitioner failed to show prima facie evidence that Ombudsman a motion for reconsideration of the
the subject matter of the investigation is outside the above order.[21] Her motion was premised on the fact
jurisdiction of the Office of the Ombudsman, no that there was a pending case with the Regional Trial
writ of injunction may be issued by this Court to Court, Makati City,[22] which would determine
delay this investigation pursuant to Section 14 of whether obeying the orders of the Ombudsman to
the Ombudsman Act of 1989.[10] produce bank documents would not violate any law.
On July 20, 1998, petitioner filed a motion for The FFIB opposed the motion,[23] and on
reconsideration based on the following grounds: October 14, 1998, the Ombudsman denied the
a. Petitioners application for Temporary motion by order the dispositive portion of which
Restraining Order is not only to restrain reads:
the Ombudsman from exercising his Wherefore, respondent Lourdes T. Marquezs
contempt powers, but to stop him from motion for reconsideration is hereby DENIED, for
implementing his Orders dated April lack of merit. Let the hearing of the motion of the
29,1998 and June 16,1998; and Fact Finding Intelligence Bureau (FFIB) to cite her
b. The subject matter of the investigation for indirect contempt be intransferrably set to 29
being conducted by the Ombudsman at October 1998 at 2:00 oclock p.m. at which date and
petitioners premises is outside his time she should appear personally to submit her
jurisdiction.[11] additional evidence. Failure to do so shall be
On July 23, 1998, the Ombudsman filed a deemed a waiver thereof.[24]
motion to dismiss the petition for declaratory Hence, the present petition.[25]
relief[12] on the ground that the Regional Trial Court The issue is whether petitioner may be cited for
has no jurisdiction to hear a petition for relief from indirect contempt for her failure to produce the
the findings and orders of the Ombudsman, citing R. documents requested by the Ombudsman. And
A. No. 6770, Sections 14 and 27. On August 7, 1998, whether the order of the Ombudsman to have an in
the Ombudsman filed an opposition to petitioners camerainspection of the questioned account is
motion for reconsideration dated July 20, 1998.[13] allowed as an exception to the law on secrecy of bank
On August 19, 1998, the lower court denied deposits (R. A. No. 1405).
petitioners motion for reconsideration,[14] and also An examination of the secrecy of bank deposits
the Ombudsmans motion to dismiss.[15] law (R. A. No. 1405) would reveal the following
On August 21, 1998, petitioner received a copy exceptions:
of the motion to cite her for contempt, filed with the 1. Where the depositor consents in writing;
Office of the Ombudsman by Agapito B. Rosales, 2. Impeachment case;
Director, Fact Finding and Intelligence Bureau 3. By court order in bribery or dereliction of
(FFIB).[16] duty cases against public officials;
On August 31, 1998, petitioner filed with the 4. Deposit is subject of litigation;
Ombudsman an opposition to the motion to cite her 5. Sec. 8, R. A. No. 3019, in cases of
in contempt on the ground that the filing thereof was unexplained wealth as held in the case of
premature due to the petition pending in the lower PNB vs. Gancayco[26]
court.[17] Petitioner likewise reiterated that she had The order of the Ombudsman to produce for in
no intention to disobey the orders of the camera inspection the subject accounts with the
Ombudsman. However, she wanted to be clarified as Union Bank of the Philippines, Julia Vargas Branch,
to how she would comply with the orders without her is based on a pending investigation at the Office of
breaking any law, particularly R. A. No. 1405.[18] the Ombudsman against Amado Lagdameo, et. al. for
28
violation of R. A. No. 3019, Sec. 3 (e) and (g) relative warrant the opening of the bank account for
to the Joint Venture Agreement between the Public inspection.
Estates Authority and AMARI. Zones of privacy are recognized and protected in
We rule that before an in camera inspection may our laws. The Civil Code provides that "[e]very
be allowed, there must be a pending case before a person shall respect the dignity, personality, privacy
court of competent jurisdiction. Further, the account and peace of mind of his neighbors and other
must be clearly identified, the inspection limited to persons" and punishes as actionable torts several acts
the subject matter of the pending case before the for meddling and prying into the privacy of
court of competent jurisdiction. The bank personnel another. It also holds a public officer or employee or
and the account holder must be notified to be present any private individual liable for damages for any
during the inspection, and such inspection may cover violation of the rights and liberties of another person,
only the account identified in the pending case. and recognizes the privacy of letters and other private
In Union Bank of the Philippines v. Court communications. The Revised Penal Code makes a
of Appeals, we held that Section 2 of crime of the violation of secrets by an officer, the
the Law on Secrecy of Bank Deposits, revelation of trade and industrial secrets, and trespass
as amended, declares bank deposits to to dwelling. Invasion of privacy is an offense in
be absolutely confidential except: special laws like the Anti-Wiretapping Law, the
(1) In an examination made in the course of Secrecy of Bank Deposits Act, and the Intellectual
a special or general examination of a Property Code.[28]
bank that is specifically authorized by IN VIEW WHEREOF, we GRANT the
the Monetary Board after being satisfied petition. We order the Ombudsman to cease and
that there is reasonable ground to believe desist from requiring Union Bank Manager Lourdes
that a bank fraud or serious irregularity T. Marquez, or anyone in her place to comply with
has been or is being committed and that the order dated October 14, 1998, and similar
it is necessary to look into the deposit to orders. No costs.
establish such fraud or irregularity, SO ORDERED.
(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 Republic of the Philippines
the exclusive use of the bank, SUPREME COURT
(3) Upon written permission of the Manila
depositor, SECOND DIVISION
(4) In cases of impeachment, G.R. No. 174629 February 14, 2008
(5) Upon order of a competent court in REPUBLIC OF THE PHILIPPINES,
cases of bribery or dereliction of duty of Represented by THE ANTI-MONEY
public officials, or LAUNDERING COUNCIL (AMLC),petitioner,
(6) In cases where the money deposited or vs.
invested is the subject matter of the HON. ANTONIO M. EUGENIO, JR., AS
litigation[27] PRESIDING JUDGE OF RTC, MANILA,
In the case at bar, there is yet no pending BRANCH 34, PANTALEON ALVAREZ and
litigation before any court of competent authority. LILIA CHENG, respondents.
What is existing is an investigation by the office of DECISION
the Ombudsman. In short, what the Office of the TINGA, J.:
Ombudsman would wish to do is to fish for The present petition for certiorari and prohibition
additional evidence to formally charge Amado under Rule 65 assails the orders and resolutions
Lagdameo, et. al., with the Sandiganbayan. Clearly, issued by two different courts in two different cases.
there was no pending case in court which would The courts and cases in question are the Regional
Trial Court of Manila, Branch 24, which heard SP
29
Case No. 06-1142001 and the Court of Appeals, Trinidad (Trinidad), Alfredo Liongson (Liongson)
Tenth Division, which heared CA-G.R. SP No. and Cheng Yong which were to be the subject of the
95198.2 Both cases arose as part of the aftermath of inquiry.10 The rationale for the said resolution was
the ruling of this Court in Agan v. founded on the cited findings of the CIS that
PIATCO3 nullifying the concession agreement amounts were transferred from a Hong Kong bank
awarded to the Philippine International Airport account owned by Jetstream Pacific Ltd. Account to
Terminal Corporation (PIATCO) over the Ninoy bank accounts in the Philippines maintained by
Aquino International Airport – International Liongson and Cheng Yong.11 The Resolution also
Passenger Terminal 3 (NAIA 3) Project. noted that "[b]y awarding the contract to PIATCO
I. despite its lack of financial capacity, Pantaleon
Following the promulgation of Agan, a series of Alvarez caused undue injury to the government by
investigations concerning the award of the NAIA 3 giving PIATCO unwarranted benefits, advantage, or
contracts to PIATCO were undertaken by the preference in the discharge of his official
Ombudsman and the Compliance and Investigation administrative functions through manifest partiality,
Staff (CIS) of petitioner Anti-Money Laundering evident bad faith, or gross inexcusable negligence,
Council (AMLC). On 24 May 2005, the Office of in violation of Section 3(e) of Republic Act No.
the Solicitor General (OSG) wrote the AMLC 3019."12
requesting the latter’s assistance "in obtaining more Under the authority granted by the Resolution, the
evidence to completely reveal the financial trail of AMLC filed an application to inquire into or
corruption surrounding the [NAIA 3] Project," and examine the deposits or investments of Alvarez,
also noting that petitioner Republic of the Trinidad, Liongson and Cheng Yong before the
Philippines was presently defending itself in two RTC of Makati, Branch 138, presided by Judge
international arbitration cases filed in relation to the (now Court of Appeals Justice) Sixto Marella, Jr.
NAIA 3 Project.4 The CIS conducted an intelligence The application was docketed as AMLC No. 05-
database search on the financial transactions of 005.13 The Makati RTC heard the testimony of the
certain individuals involved in the award, including Deputy Director of the AMLC, Richard David C.
respondent Pantaleon Alvarez (Alvarez) who had Funk II, and received the documentary evidence of
been the Chairman of the PBAC Technical the AMLC.14 Thereafter, on 4 July 2005, the Makati
Committee, NAIA-IPT3 Project.5 By this time, RTC rendered an Order (Makati RTC bank inquiry
Alvarez had already been charged by the order) granting the AMLC the authority to inquire
Ombudsman with violation of Section 3(j) of R.A. and examine the subject bank accounts of Alvarez,
No. 3019.6 The search revealed that Alvarez Trinidad, Liongson and Cheng Yong, the trial court
maintained eight (8) bank accounts with six (6) being satisfied that there existed "[p]robable cause
different banks.7 [to] believe that the deposits in various bank
On 27 June 2005, the AMLC issued Resolution No. accounts, details of which appear in paragraph 1 of
75, Series of 2005,8 whereby the Council resolved the Application, are related to the offense of
to authorize the Executive Director of the AMLC violation of Anti-Graft and Corrupt Practices Act
"to sign and verify an application to inquire into now the subject of criminal prosecution before the
and/or examine the [deposits] or investments of Sandiganbayan as attested to by the Informations,
Pantaleon Alvarez, Wilfredo Trinidad, Alfredo Exhibits C, D, E, F, and G."15 Pursuant to the
Liongson, and Cheng Yong, and their related web Makati RTC bank inquiry order, the CIS proceeded
of accounts wherever these may be found, as to inquire and examine the deposits, investments
defined under Rule 10.4 of the Revised and related web accounts of the four.16
Implementing Rules and Regulations;" and to Meanwhile, the Special Prosecutor of the Office of
authorize the AMLC Secretariat "to conduct an the Ombudsman, Dennis Villa-Ignacio, wrote a
inquiry into subject accounts once the Regional letter dated 2 November 2005, requesting the
Trial Court grants the application to inquire into AMLC to investigate the accounts of Alvarez,
and/or examine the bank accounts" of those four PIATCO, and several other entities involved in the
individuals.9 The resolution enumerated the nullified contract. The letter adverted to probable
particular bank accounts of Alvarez, Wilfredo cause to believe that the bank accounts "were used
30
in the commission of unlawful activities that were following an ex parte application, and he argued
committed" in relation to the criminal cases then that nothing in R.A. No. 9160 authorized the
pending before the Sandiganbayan.17 Attached to AMLC to seek the authority to inquire into bank
the letter was a memorandum "on why the accounts ex parte.25 The day after Alvarez filed his
investigation of the [accounts] is necessary in the motion, 26 January 2006, the Manila RTC issued an
prosecution of the above criminal cases before the Order26 staying the enforcement of its bank inquiry
Sandiganbayan."18 order and giving the Republic five (5) days to
In response to the letter of the Special Prosecutor, respond to Alvarez’s motion.
the AMLC promulgated on 9 December 2005 The Republic filed an Omnibus Motion for
Resolution No. 121 Series of 2005,19 which Reconsideration27 of the 26 January 2006 Manila
authorized the executive director of the AMLC to RTC Order and likewise sought to strike out
inquire into and examine the accounts named in the Alvarez’s motion that led to the issuance of said
letter, including one maintained by Alvarez with order. For his part, Alvarez filed a Reply and
DBS Bank and two other accounts in the name of Motion to Dismiss28 the application for bank
Cheng Yong with Metrobank. The Resolution inquiry order. On 2 May 2006, the Manila RTC
characterized the memorandum attached to the issued an Omnibus Order29 granting the Republic’s
Special Prosecutor’s letter as "extensively Motion for Reconsideration, denying Alvarez’s
justif[ying] the existence of probable cause that the motion to dismiss and reinstating "in full force and
bank accounts of the persons and entities mentioned effect" the Order dated 12 January 2006. In the
in the letter are related to the unlawful activity of omnibus order, the Manila RTC reiterated that the
violation of Sections 3(g) and 3(e) of Rep. Act No. material allegations in the application for bank
3019, as amended."20 inquiry order filed by the Republic stood as "the
Following the December 2005 AMLC Resolution, probable cause for the investigation and
the Republic, through the AMLC, filed an examination of the bank accounts and investments
application21 before the Manila RTC to inquire into of the respondents."30
and/or examine thirteen (13) accounts and two (2) Alvarez filed on 10 May 2006 an Urgent
related web of accounts alleged as having been used Motion31 expressing his apprehension that the
to facilitate corruption in the NAIA 3 Project. AMLC would immediately enforce the omnibus
Among said accounts were the DBS Bank account order and would thereby render the motion for
of Alvarez and the Metrobank accounts of Cheng reconsideration he intended to file as moot and
Yong. The case was raffled to Manila RTC, Branch academic; thus he sought that the Republic be
24, presided by respondent Judge Antonio Eugenio, refrained from enforcing the omnibus order in the
Jr., and docketed as SP Case No. 06-114200. meantime. Acting on this motion, the Manila RTC,
On 12 January 2006, the Manila RTC issued an on 11 May 2006, issued an Order32 requiring the
Order (Manila RTC bank inquiry order) granting OSG to file a comment/opposition and reminding
the Ex ParteApplication expressing therein "[that] the parties that judgments and orders become final
the allegations in said application to be impressed and executory upon the expiration of fifteen (15)
with merit, and in conformity with Section 11 of days from receipt thereof, as it is the period within
R.A. No. 9160, as amended, otherwise known as the which a motion for reconsideration could be filed.
Anti-Money Laundering Act (AMLA) of 2001 and Alvarez filed his Motion for Reconsideration33 of
Rules 11.1 and 11.2 of the Revised Implementing the omnibus order on 15 May 2006, but the motion
Rules and Regulations."22 Authority was thus was denied by the Manila RTC in an Order34 dated
granted to the AMLC to inquire into the bank 5 July 2006.
accounts listed therein. On 11 July 2006, Alvarez filed an Urgent Motion
On 25 January 2006, Alvarez, through counsel, and Manifestation35 wherein he manifested having
entered his appearance23 before the Manila RTC in received reliable information that the AMLC was
SP Case No. 06-114200 and filed an Urgent Motion about to implement the Manila RTC bank inquiry
to Stay Enforcement of Order of January 12, order even though he was intending to appeal from
2006.24 Alvarez alleged that he fortuitously learned it. On the premise that only a final and executory
of the bank inquiry order, which was issued judgment or order could be executed or
31
implemented, Alvarez sought that the AMLC be disallowed under the Anti money Laundering Act
immediately ordered to refrain from enforcing the (AMLA).
Manila RTC bank inquiry order. Meanwhile, respondent Lilia Cheng filed with the
On 12 July 2006, the Manila RTC, acting on Court of Appeals a Petition for Certiorari,
Alvarez’s latest motion, issued an Order36 directing Prohibition and Mandamus with Application for
the AMLC "to refrain from enforcing the order TRO and/or Writ of Preliminary Injunction45 dated
dated January 12, 2006 until the expiration of the 10 July 2006, directed against the Republic of the
period to appeal, without any appeal having been Philippines through the AMLC, Manila RTC Judge
filed." On the same day, Alvarez filed a Notice of Eugenio, Jr. and Makati RTC Judge Marella, Jr..
Appeal37 with the Manila RTC. She identified herself as the wife of Cheng
On 24 July 2006, Alvarez filed an Urgent Ex Yong46 with whom she jointly owns a conjugal
Parte Motion for Clarification.38 Therein, he alleged bank account with Citibank that is covered by the
having learned that the AMLC had began to inquire Makati RTC bank inquiry order, and two conjugal
into the bank accounts of the other persons bank accounts with Metrobank that are covered by
mentioned in the application for bank inquiry order the Manila RTC bank inquiry order. Lilia Cheng
filed by the Republic.39 Considering that the Manila imputed grave abuse of discretion on the part of the
RTC bank inquiry order was issued ex parte, Makati and Manila RTCs in granting AMLC’s ex
without notice to those other persons, Alvarez parte applications for a bank inquiry order, arguing
prayed that the AMLC be ordered to refrain from among others that the ex parte applications violated
inquiring into any of the other bank deposits and her constitutional right to due process, that the bank
alleged web of accounts enumerated in AMLC’s inquiry order under the AMLA can only be granted
application with the RTC; and that the AMLC be in connection with violations of the AMLA and that
directed to refrain from using, disclosing or the AMLA can not apply to bank accounts opened
publishing in any proceeding or venue any and transactions entered into prior to the effectivity
information or document obtained in violation of of the AMLA or to bank accounts located outside
the 11 May 2006 RTC Order.40 the Philippines.47
On 25 July 2006, or one day after Alvarez filed his On 1 August 2006, the Court of Appeals, acting on
motion, the Manila RTC issued an Order41 wherein Lilia Cheng’s petition, issued a Temporary
it clarified that "the Ex Parte Order of this Court Restraining Order48enjoining the Manila and Makati
dated January 12, 2006 can not be implemented trial courts from implementing, enforcing or
against the deposits or accounts of any of the executing the respective bank inquiry orders
persons enumerated in the AMLC Application until previously issued, and the AMLC from enforcing
the appeal of movant Alvarez is finally resolved, and implementing such orders. On even date, the
otherwise, the appeal would be rendered moot and Manila RTC issued an Order49 resolving to hold in
academic or even nugatory."42 In addition, the abeyance the resolution of the urgent omnibus
AMLC was ordered "not to disclose or publish any motion for reconsideration then pending before it
information or document found or obtained in until the resolution of Lilia Cheng’s petition for
[v]iolation of the May 11, 2006 Order of this certiorari with the Court of Appeals. The Court of
Court."43 The Manila RTC reasoned that the other Appeals Resolution directing the issuance of the
persons mentioned in AMLC’s application were not temporary restraining order is the second of the four
served with the court’s 12 January 2006 Order. This rulings assailed in the present petition.
25 July 2006 Manila RTC Order is the first of the The third assailed ruling50 was issued on 15 August
four rulings being assailed through this petition. 2006 by the Manila RTC, acting on the Urgent
In response, the Republic filed an Urgent Omnibus Motion for Clarification51 dated 14 August 2006
Motion for Reconsideration44 dated 27 July 2006, filed by Alvarez. It appears that the 1 August 2006
urging that it be allowed to immediately enforce the Manila RTC Order had amended its previous 25
bank inquiry order against Alvarez and that July 2006 Order by deleting the last paragraph
Alvarez’s notice of appeal be expunged from the which stated that the AMLC "should not disclose or
records since appeal from an order of inquiry is publish any information or document found or
obtained in violation of the May 11, 2006 Order of
32
this Court."52 In this new motion, Alvarez argued accounts under Section 11 of Rep. Act No.
that the deletion of that paragraph would allow the 9160 (AMLA), commit grave abuse of
AMLC to implement the bank inquiry orders and discretion?
publish whatever information it might obtain (a) Is an application for an order
thereupon even before the final orders of the Manila authorizing inquiry into or
RTC could become final and executory.53 In the 15 examination of bank accounts or
August 2006 Order, the Manila RTC reiterated that investments under Section 11 of the
the bank inquiry order it had issued could not be AMLA ex-parte in nature or one
implemented or enforced by the AMLC or any of its which requires notice and hearing?
representatives until the appeal therefrom was (b) What legal procedures and
finally resolved and that any enforcement thereof standards should be observed in the
would be unauthorized.54 conduct of the proceedings for the
The present Consolidated Petition55 for certiorari issuance of said order?
and prohibition under Rule 65 was filed on 2 (c) Is such order susceptible to legal
October 2006, assailing the two Orders of the challenges and judicial review?
Manila RTC dated 25 July and 15 August 2006 and 2. Is it proper for this Court at this time and
the Temporary Restraining Order dated 1 August in this case to inquire into and pass upon the
2006 of the Court of Appeals. Through an Urgent validity of the 1 July 2005 Order of the
Manifestation and Motion56 dated 9 October 2006, RTC-Makati and the 12 January 2006 Order
petitioner informed the Court that on 22 September of the RTC-Manila, considering the
2006, the Court of Appeals hearing Lilia Cheng’s pendency of CA G.R. SP No. 95-198 (Lilia
petition had granted a writ of preliminary injunction Cheng v. Republic) wherein the validity of
in her favor.57 Thereafter, petitioner sought as well both orders was challenged?62
the nullification of the 22 September 2006 After the oral arguments, the parties were directed
Resolution of the Court of Appeals, thereby to file their respective memoranda, which they
constituting the fourth ruling assailed in the instant did,63 and the petition was thereafter deemed
petition.58 submitted for resolution.
The Court had initially granted a Temporary II.
Restraining Order59 dated 6 October 2006 and later Petitioner’s general advocacy is that the bank
on a Supplemental Temporary Restraining inquiry orders issued by the Manila and Makati
Order60 dated 13 October 2006 in petitioner’s favor, RTCs are valid and immediately enforceable
enjoining the implementation of the assailed rulings whereas the assailed rulings, which effectively
of the Manila RTC and the Court of Appeals. stayed the enforcement of the Manila and Makati
However, on respondents’ motion, the Court, RTCs bank inquiry orders, are sullied with grave
through a Resolution61 dated 11 December 2006, abuse of discretion. These conclusions flow from
suspended the implementation of the restraining the posture that a bank inquiry order, issued upon a
orders it had earlier issued. finding of probable cause, may be issued ex
Oral arguments were held on 17 January 2007. The parte and, once issued, is immediately executory.
Court consolidated the issues for argument as Petitioner further argues that the information
follows: obtained following the bank inquiry is necessarily
1. Did the RTC-Manila, in issuing the beneficial, if not indispensable, to the AMLC in
Orders dated 25 July 2006 and 15 August discharging its awesome responsibility regarding
2006 which deferred the implementation of the effective implementation of the AMLA and that
its Order dated 12 January 2006, and the any restraint in the disclosure of such information to
Court of Appeals, in issuing its Resolution appropriate agencies or other judicial fora would
dated 1 August 2006, which ordered render meaningless the relief supplied by the bank
the status quo in relation to the 1 July 2005 inquiry order.
Order of the RTC-Makati and the 12 January Petitioner raises particular arguments questioning
2006 Order of the RTC-Manila, both of Lilia Cheng’s right to seek injunctive relief before
which authorized the examination of bank the Court of Appeals, noting that not one of the
33
bank inquiry orders is directed against her. Her AMLA, Republic Act (R.A.) No. 9160, was passed
"cryptic assertion" that she is the wife of Cheng in 2001. It was amended by R.A. No. 9194 in 2003.
Yong cannot, according to petitioner, Section 4 of the AMLA states that "[m]oney
"metamorphose into the requisite legal standing to laundering is a crime whereby the proceeds of an
seek redress for an imagined injury or to maintain unlawful activity as [defined in the law] are
an action in behalf of another." In the same breath, transacted, thereby making them appear to have
petitioner argues that Alvarez cannot assert any originated from legitimate sources."66 The section
violation of the right to financial privacy in behalf further provides the three modes through which the
of other persons whose bank accounts are being crime of money laundering is committed. Section 7
inquired into, particularly those other persons creates the AMLC and defines its powers, which
named in the Makati RTC bank inquiry order who generally relate to the enforcement of the AMLA
did not take any step to oppose such orders before provisions and the initiation of legal actions
the courts. authorized in the AMLA such as civil forefeiture
Ostensibly, the proximate question before the Court proceedings and complaints for the prosecution of
is whether a bank inquiry order issued in money laundering offenses.67
accordance with Section 10 of the AMLA may be In addition to providing for the definition and
stayed by injunction. Yet in arguing that it does, penalties for the crime of money laundering, the
petitioner relies on what it posits as the final and AMLA also authorizes certain provisional remedies
immediately executory character of the bank inquiry that would aid the AMLC in the enforcement of the
orders issued by the Manila and Makati RTCs. AMLA. These are the "freeze order" authorized
Implicit in that position is the notion that the inquiry under Section 10, and the "bank inquiry order"
orders are valid, and such notion is susceptible to authorized under Section 11.
review and validation based on what appears on the Respondents posit that a bank inquiry order under
face of the orders and the applications which Section 11 may be obtained only upon the pre-
triggered their issuance, as well as the provisions of existence of a money laundering offense case
the AMLA governing the issuance of such orders. already filed before the courts.68 The conclusion is
Indeed, to test the viability of petitioner’s argument, based on the phrase "upon order of any competent
the Court will have to be satisfied that the subject court in cases of violation of this Act," the word
inquiry orders are valid in the first place. However, "cases" generally understood as referring to actual
even from a cursory examination of the applications cases pending with the courts.
for inquiry order and the orders themselves, it is We are unconvinced by this proposition, and agree
evident that the orders are not in accordance with instead with the then Solicitor General who
law. conceded that the use of the phrase "in cases of"
III. was unfortunate, yet submitted that it should be
A brief overview of the AMLA is called for. interpreted to mean "in the event there are
Money laundering has been generally defined by the violations" of the AMLA, and not that there are
International Criminal Police Organization already cases pending in court concerning such
(Interpol) `as "any act or attempted act to conceal or violations.69 If the contrary position is adopted, then
disguise the identity of illegally obtained proceeds the bank inquiry order would be limited in purpose
so that they appear to have originated from as a tool in aid of litigation of live cases, and wholly
legitimate sources."64 Even before the passage of inutile as a means for the government to ascertain
the AMLA, the problem was addressed by the whether there is sufficient evidence to sustain an
Philippine government through the issuance of intended prosecution of the account holder for
various circulars by the Bangko Sentral ng violation of the AMLA. Should that be the situation,
Pilipinas. Yet ultimately, legislative proscription in all likelihood the AMLC would be virtually
was necessary, especially with the inclusion of the deprived of its character as a discovery tool, and
Philippines in the Financial Action Task Force’s list thus would become less circumspect in filing
of non-cooperative countries and territories in the complaints against suspect account holders. After
fight against money laundering.65 The original all, under such set-up the preferred strategy would
be to allow or even encourage the indiscriminate
34
filing of complaints under the AMLA with the hope accordance with the rules of examination of
or expectation that the evidence of money the BSP.70 (Emphasis supplied)
laundering would somehow surface during the trial. Of course, Section 11 also allows the AMLC to
Since the AMLC could not make use of the bank inquire into bank accounts without having to obtain
inquiry order to determine whether there is a judicial order in cases where there is probable
evidentiary basis to prosecute the suspected cause that the deposits or investments are related to
malefactors, not filing any case at all would not be kidnapping for ransom,71certain violations of the
an alternative. Such unwholesome set-up should not Comprehensive Dangerous Drugs Act of
come to pass. Thus Section 11 cannot be interpreted 2002,72 hijacking and other violations under R.A.
in a way that would emasculate the remedy it has No. 6235, destructive arson and murder. Since such
established and encourage the unfounded initiation special circumstances do not apply in this case,
of complaints for money laundering. there is no need for us to pass comment on this
Still, even if the bank inquiry order may be availed proviso. Suffice it to say, the proviso contemplates a
of without need of a pre-existing case under the situation distinct from that which presently
AMLA, it does not follow that such order may be confronts us, and for purposes of the succeeding
availed of ex parte. There are several reasons why discussion, our reference to Section 11 of the
the AMLA does not generally sanction ex AMLA excludes said proviso.
parte applications and issuances of the bank inquiry In the instances where a court order is required for
order. the issuance of the bank inquiry order, nothing in
IV. Section 11 specifically authorizes that such court
It is evident that Section 11 does not specifically order may be issued ex parte. It might be argued
authorize, as a general rule, the issuance ex parte of that this silence does not preclude the ex
the bank inquiry order. We quote the provision in parte issuance of the bank inquiry order since the
full: same is not prohibited under Section 11. Yet this
SEC. 11. Authority to Inquire into Bank argument falls when the immediately preceding
Deposits. ― Notwithstanding the provisions provision, Section 10, is examined.
of Republic Act No. 1405, as amended, SEC. 10. Freezing of Monetary Instrument
Republic Act No. 6426, as amended, or Property. ― The Court of Appeals,
Republic Act No. 8791, and other laws, the upon application ex parte by the AMLC
AMLC may inquire into or examine any and after determination that probable
particular deposit or investment with any cause exists that any monetary instrument or
banking institution or non bank financial property is in any way related to an unlawful
institution upon order of any competent activity as defined in Section 3(i) hereof,
court in cases of violation of this Act, when may issue a freeze order which shall be
it has been established that there is effective immediately. The freeze order
probable cause that the deposits or shall be for a period of twenty (20) days
investments are related to an unlawful unless extended by the court.73
activity as defined in Section 3(i) hereof or Although oriented towards different purposes, the
a money laundering offense under Section freeze order under Section 10 and the bank inquiry
4 hereof, except that no court order shall order under Section 11 are similar in that they are
be required in cases involving unlawful extraordinary provisional reliefs which the AMLC
activities defined in Sections 3(i)1, (2) and may avail of to effectively combat and prosecute
(12). money laundering offenses. Crucially, Section 10
To ensure compliance with this Act, the uses specific language to authorize an ex
Bangko Sentral ng Pilipinas (BSP) may parte application for the provisional relief therein, a
inquire into or examine any deposit of circumstance absent in Section 11. If indeed the
investment with any banking institution or legislature had intended to authorize ex
non bank financial institution when the parte proceedings for the issuance of the bank
examination is made in the course of a inquiry order, then it could have easily expressed
periodic or special examination, in
35
such intent in the law, as it did with the freeze order authorization with respect to bank inquiry orders
under Section 10. under Section 11.
Even more tellingly, the current language of The Court could divine the sense in allowing ex
Sections 10 and 11 of the AMLA was crafted at the parte proceedings under Section 10 and in
same time, through the passage of R.A. No. 9194. proscribing the same under Section 11. A freeze
Prior to the amendatory law, it was the AMLC, not order under Section 10 on the one hand is aimed at
the Court of Appeals, which had authority to issue a preserving monetary instruments or property in any
freeze order, whereas a bank inquiry order always way deemed related to unlawful activities as defined
then required, without exception, an order from a in Section 3(i) of the AMLA. The owner of such
competent court.74 It was through the same monetary instruments or property would thus be
enactment that ex parte proceedings were inhibited from utilizing the same for the duration of
introduced for the first time into the AMLA, in the the freeze order. To make such freeze order
case of the freeze order which now can only be anteceded by a judicial proceeding with notice to
issued by the Court of Appeals. It certainly would the account holder would allow for or lead to the
have been convenient, through the same amendatory dissipation of such funds even before the order
law, to allow a similar ex parte procedure in the could be issued.
case of a bank inquiry order had Congress been so On the other hand, a bank inquiry order under
minded. Yet nothing in the provision itself, or even Section 11 does not necessitate any form of physical
the available legislative record, explicitly points to seizure of property of the account holder. What the
an ex parte judicial procedure in the application for bank inquiry order authorizes is the examination of
a bank inquiry order, unlike in the case of the freeze the particular deposits or investments in banking
order. institutions or non-bank financial institutions. The
That the AMLA does not contemplate ex monetary instruments or property deposited with
parte proceedings in applications for bank inquiry such banks or financial institutions are not seized in
orders is confirmed by the present implementing a physical sense, but are examined on particular
rules and regulations of the AMLA, promulgated details such as the account holder’s record of
upon the passage of R.A. No. 9194. With respect to deposits and transactions. Unlike the assets subject
freeze orders under Section 10, the implementing of the freeze order, the records to be inspected
rules do expressly provide that the applications for under a bank inquiry order cannot be physically
freeze orders be filed ex parte,75 but no similar seized or hidden by the account holder. Said records
clearance is granted in the case of inquiry orders are in the possession of the bank and therefore
under Section 11.76 These implementing rules were cannot be destroyed at the instance of the account
promulgated by the Bangko Sentral ng Pilipinas, the holder alone as that would require the extraordinary
Insurance Commission and the Securities and cooperation and devotion of the bank.
Exchange Commission,77 and if it was the true Interestingly, petitioner’s memorandum does not
belief of these institutions that inquiry orders could attempt to demonstrate before the Court that the
be issued ex parte similar to freeze orders, language bank inquiry order under Section 11 may be
to that effect would have been incorporated in the issued ex parte, although the petition itself did
said Rules. This is stressed not because the devote some space for that argument. The petition
implementing rules could authorize ex argues that the bank inquiry order is "a special and
parte applications for inquiry orders despite the peculiar remedy, drastic in its name, and made
absence of statutory basis, but rather because the necessary because of a public necessity… [t]hus, by
framers of the law had no intention to allow such ex its very nature, the application for an order or
parte applications. inquiry must necessarily, be ex parte." This
Even the Rules of Procedure adopted by this Court argument is insufficient justification in light of the
in A.M. No. 05-11-04-SC78 to enforce the clear disinclination of Congress to allow the
provisions of the AMLA specifically authorize ex issuance ex parte of bank inquiry orders under
parte applications with respect to freeze orders Section 11, in contrast to the legislature’s clear
under Section 1079 but make no similar inclination to allow the ex parte grant of freeze
orders under Section 10.
36
Without doubt, a requirement that the application notice requirement would not be an empty
for a bank inquiry order be done with notice to the spectacle. It may be so that the process of obtaining
account holder will alert the latter that there is a the inquiry order may become more cumbersome or
plan to inspect his bank account on the belief that prolonged because of the notice requirement, yet we
the funds therein are involved in an unlawful fail to see any unreasonable burden cast by such
activity or money laundering offense.80 Still, the circumstance. After all, as earlier stated, requiring
account holder so alerted will in fact be unable to do notice to the account holder should not, in any way,
anything to conceal or cleanse his bank account compromise the integrity of the bank records
records of suspicious or anomalous transactions, at subject of the inquiry which remain in the
least not without the whole-hearted cooperation of possession and control of the bank.
the bank, which inherently has no vested interest to Petitioner argues that a bank inquiry order
aid the account holder in such manner. necessitates a finding of probable cause, a
V. characteristic similar to a search warrant which is
The necessary implication of this finding that applied to and heard ex parte. We have examined
Section 11 of the AMLA does not generally the supposed analogy between a search warrant and
authorize the issuance ex parte of the bank inquiry a bank inquiry order yet we remain to be
order would be that such orders cannot be issued unconvinced by petitioner.
unless notice is given to the owners of the account, The Constitution and the Rules of Court prescribe
allowing them the opportunity to contest the particular requirements attaching to search warrants
issuance of the order. Without such a consequence, that are not imposed by the AMLA with respect to
the legislated distinction between ex bank inquiry orders. A constitutional warrant
parte proceedings under Section 10 and those which requires that the judge personally examine under
are not ex parte under Section 11 would be lost and oath or affirmation the complainant and the
rendered useless. witnesses he may produce,82 such examination
There certainly is fertile ground to contest the being in the form of searching questions and
issuance of an ex parte order. Section 11 itself answers.83 Those are impositions which the
requires that it be established that "there is probable legislative did not specifically prescribe as to the
cause that the deposits or investments are related to bank inquiry order under the AMLA, and we cannot
unlawful activities," and it obviously is the court find sufficient legal basis to apply them to Section
which stands as arbiter whether there is indeed such 11 of the AMLA. Simply put, a bank inquiry order
probable cause. The process of inquiring into the is not a search warrant or warrant of arrest as it
existence of probable cause would involve the contemplates a direct object but not the seizure of
function of determination reposed on the trial court. persons or property.
Determination clearly implies a function of Even as the Constitution and the Rules of Court
adjudication on the part of the trial court, and not a impose a high procedural standard for the
mechanical application of a standard pre- determination of probable cause for the issuance of
determination by some other body. The word search warrants which Congress chose not to
"determination" implies deliberation and is, in prescribe for the bank inquiry order under the
normal legal contemplation, equivalent to "the AMLA, Congress nonetheless disallowed ex
decision of a court of justice."81 parte applications for the inquiry order. We can
The court receiving the application for inquiry order discern that in exchange for these procedural
cannot simply take the AMLC’s word that probable standards normally applied to search warrants,
cause exists that the deposits or investments are Congress chose instead to legislate a right to notice
related to an unlawful activity. It will have to and a right to be heard— characteristics of judicial
exercise its proceedings which are not ex parte.Absent any
own determinative function in order to be convinced demonstrable constitutional infirmity, there is no
of such fact. The account holder would be certainly reason for us to dispute such legislative policy
capable of contesting such probable cause if given choices.
the opportunity to be apprised of the pending VI.
application to inquire into his account; hence a
37
The Court’s construction of Section 11 of the deposited or invested is the subject matter of
AMLA is undoubtedly influenced by right to the litigation. (Emphasis supplied)
privacy considerations. If sustained, petitioner’s Because of the Bank Secrecy Act, the
argument that a bank account may be inspected by confidentiality of bank deposits remains a basic
the government following an ex parteproceeding state policy in the Philippines.87 Subsequent laws,
about which the depositor would know nothing including the AMLA, may have added exceptions to
would have significant implications on the right to the Bank Secrecy Act, yet the secrecy of bank
privacy, a right innately cherished by all deposits still lies as the general rule. It falls within
notwithstanding the legally recognized exceptions the zones of privacy recognized by our laws.88The
thereto. The notion that the government could be so framers of the 1987 Constitution likewise
empowered is cause for concern of any individual recognized that bank accounts are not covered by
who values the right to privacy which, after all, either the right to information89 under Section 7,
embodies even the right to be "let Article III or under the requirement of full public
alone," the most comprehensive of rights and the disclosure90 under Section 28, Article II.91 Unless
right most valued by civilized people.84 the Bank Secrecy Act is repealed or
One might assume that the constitutional dimension amended, the legal order is obliged to conserve the
of the right to privacy, as applied to bank deposits, absolutely confidential nature of Philippine bank
warrants our present inquiry. We decline to do so. deposits.
Admittedly, that question has proved controversial Any exception to the rule of absolute confidentiality
in American jurisprudence. Notably, the United must be specifically legislated. Section 2 of the
States Supreme Court in U.S. v. Miller85 held that Bank Secrecy Act itself prescribes exceptions
there was no legitimate expectation of privacy as to whereby these bank accounts may be examined by
the bank records of a depositor.86 Moreover, the text "any person, government official, bureau or office";
of our Constitution has not bothered with the namely when: (1) upon written permission of the
triviality of allocating specific rights peculiar to depositor; (2) in cases of impeachment; (3) the
bank deposits. examination of bank accounts is upon order of a
However, sufficient for our purposes, we can assert competent court in cases of bribery or dereliction of
there is a right to privacy governing bank accounts duty of public officials; and (4) the money
in the Philippines, and that such right finds deposited or invested is the subject matter of the
application to the case at bar. The source of such litigation. Section 8 of R.A. Act No. 3019, the Anti-
right is statutory, expressed as it is in R.A. No. 1405 Graft and Corrupt Practices Act, has been
otherwise known as the Bank Secrecy Act of 1955. recognized by this Court as constituting an
The right to privacy is enshrined in Section 2 of that additional exception to the rule of absolute
law, to wit: confidentiality,92 and there have been other similar
SECTION 2. All deposits of whatever recognitions as well.93
nature with banks or banking institutions The AMLA also provides exceptions to the Bank
in the Philippines including investments Secrecy Act. Under Section 11, the AMLC may
in bonds issued by the Government of the inquire into a bank account upon order of any
Philippines, its political subdivisions and competent court in cases of violation of the AMLA,
its instrumentalities, are hereby it having been established that there is probable
considered as of an absolutely cause that the deposits or investments are related to
confidential natureand may not be unlawful activities as defined in Section 3(i) of the
examined, inquired or looked into by any law, or a money laundering offense under Section 4
person, government official, bureau or thereof. Further, in instances where there is
office, except upon written permission of the probable cause that the deposits or investments are
depositor, or in cases of impeachment, or related to kidnapping for ransom,94 certain
upon order of a competent court in cases of violations of the Comprehensive Dangerous Drugs
bribery or dereliction of duty of public Act of 2002,95 hijacking and other violations under
officials, or in cases where the money R.A. No. 6235, destructive arson and murder, then

38
there is no need for the AMLC to obtain a court Cheng or Lilia Cheng."98 Petitioner does not
order before it could inquire into such accounts. specifically deny that Lilia Cheng holds rights of
It cannot be successfully argued the proceedings ownership over the three said accounts, laying focus
relating to the bank inquiry order under Section 11 instead on the fact that she was not named as a
of the AMLA is a "litigation" encompassed in one subject of either the Makati or Manila RTC inquiry
of the exceptions to the Bank Secrecy Act which is orders. We are reasonably convinced that Lilia
when "the money deposited or invested is the Cheng has sufficiently demonstrated her joint
subject matter of the litigation." The orientation of ownership of the three accounts, and such
the bank inquiry order is simply to serve as a conclusion leads us to acknowledge that she has the
provisional relief or remedy. As earlier stated, the standing to assail via certiorari the inquiry orders
application for such does not entail a full-blown authorizing the examination of her bank accounts as
trial. the orders interfere with her statutory right to
Nevertheless, just because the AMLA establishes maintain the secrecy of said accounts.
additional exceptions to the Bank Secrecy Act it While petitioner would premise that the inquiry into
does not mean that the later law has dispensed with Lilia Cheng’s accounts finds root in Section 11 of
the general principle established in the older law the AMLA, it cannot be denied that the authority to
that "[a]ll deposits of whatever nature with banks or inquire under Section 11 is only exceptional in
banking institutions in the Philippines x x x are character, contrary as it is to the general rule
hereby considered as of an absolutely confidential preserving the secrecy of bank deposits. Even
nature."96 Indeed, by force of statute, all bank though she may not have been the subject of the
deposits are absolutely confidential, and that nature inquiry orders, her bank accounts nevertheless were,
is unaltered even by the legislated exceptions and she thus has the standing to vindicate the right
referred to above. There is disfavor towards to secrecy that attaches to said accounts and their
construing these exceptions in such a manner that owners. This statutory right to privacy will not
would authorize unlimited discretion on the part of prevent the courts from authorizing the inquiry
the government or of any party seeking to enforce anyway upon the fulfillment of the requirements set
those exceptions and inquire into bank deposits. If forth under Section 11 of the AMLA or Section 2 of
there are doubts in upholding the absolutely the Bank Secrecy Act; at the same time, the owner
confidential nature of bank deposits against of the accounts have the right to challenge whether
affirming the authority to inquire into such the requirements were indeed complied with.
accounts, then such doubts must be resolved in VII.
favor of the former. Such a stance would persist There is a final point of concern which needs to be
unless Congress passes a law reversing the general addressed. Lilia Cheng argues that the AMLA,
state policy of preserving the absolutely confidential being a substantive penal statute, has no retroactive
nature of Philippine bank accounts. effect and the bank inquiry order could not apply to
The presence of this statutory right to privacy deposits or investments opened prior to the
addresses at least one of the arguments raised by effectivity of Rep. Act No. 9164, or on 17 October
petitioner, that Lilia Cheng had no personality to 2001. Thus, she concludes, her subject bank
assail the inquiry orders before the Court of Appeals accounts, opened between 1989 to 1990, could not
because she was not the subject of said orders. be the subject of the bank inquiry order lest there be
AMLC Resolution No. 75, which served as the a violation of the constitutional prohibition
basis in the successful application for the Makati against ex post facto laws.
inquiry order, expressly adverts to Citibank Account No ex post facto law may be enacted,99 and no law
No. 88576248 "owned by Cheng Yong and/or Lilia may be construed in such fashion as to permit a
G. Cheng with Citibank N.A.,"97 whereas Lilia criminal prosecution offensive to the ex post
Cheng’s petition before the Court of Appeals is facto clause. As applied to the AMLA, it is plain
accompanied by a certification from Metrobank that that no person may be prosecuted under the penal
Account Nos. 300852436-0 and 700149801-7, both provisions of the AMLA for acts committed prior to
of which are among the subjects of the Manila the enactment of the law on 17 October 2001. As
inquiry order, are accounts in the name of "Yong much was understood by the lawmakers since they
39
deliberated upon the AMLA, and indeed there is no constitutionally infirm, offensive as it is to the ex
serious dispute on that point. post facto clause.
Does the proscription against ex post facto laws Still, we must note that the position submitted by
apply to the interpretation of Section 11, a provision Lilia Cheng is much broader than what we are
which does not provide for a penal sanction but willing to affirm. She argues that the proscription
which merely authorizes the inspection of suspect against ex post facto laws goes as far as to prohibit
accounts and deposits? The answer is in the any inquiry into deposits or investments included in
affirmative. In this jurisdiction, we have defined bank accounts opened prior to the effectivity of the
an ex post facto law as one which either: AMLA even if the suspect transactions were entered
(1) makes criminal an act done before the into when the law had already taken effect. The
passage of the law and which was innocent Court recognizes that if this argument were to be
when done, and punishes such an act; affirmed, it would create a horrible loophole in the
(2) aggravates a crime, or makes it greater AMLA that would in turn supply the means to
than it was, when committed; fearlessly engage in money laundering in the
(3) changes the punishment and inflicts a Philippines; all that the criminal has to do is to
greater punishment than the law annexed to make sure that the money laundering activity is
the crime when committed; facilitated through a bank account opened prior to
(4) alters the legal rules of evidence, and 2001. Lilia Cheng admits that "actual money
authorizes conviction upon less or different launderers could utilize the ex post facto provision
testimony than the law required at the time of the Constitution as a shield" but that the remedy
of the commission of the offense; lay with Congress to amend the law. We can hardly
(5) assuming to regulate civil rights and presume that Congress intended to enact a self-
remedies only, in effect imposes penalty or defeating law in the first place, and the courts are
deprivation of a right for something which inhibited from such a construction by the cardinal
when done was lawful; and rule that "a law should be interpreted with a view to
(6) deprives a person accused of a crime upholding rather than destroying it."101
of some lawful protection to which he has Besides, nowhere in the legislative record cited by
become entitled, such as the protection of Lilia Cheng does it appear that there was an
a former conviction or acquittal, or a unequivocal intent to exempt from the bank inquiry
proclamation of amnesty. (Emphasis order all bank accounts opened prior to the passage
supplied)100 of the AMLA. There is a cited exchange between
Prior to the enactment of the AMLA, the fact that Representatives Ronaldo Zamora and Jaime Lopez
bank accounts or deposits were involved in where the latter confirmed to the former that
activities later on enumerated in Section 3 of the "deposits are supposed to be exempted from
law did not, by itself, remove such accounts from scrutiny or monitoring if they are already in place as
the shelter of absolute confidentiality. Prior to the of the time the law is enacted."102 That statement
AMLA, in order that bank accounts could be does indicate that transactions already in place when
examined, there was need to secure either the the AMLA was passed are indeed exempt from
written permission of the depositor or a court order scrutiny through a bank inquiry order, but it cannot
authorizing such examination, assuming that they yield any interpretation that records of transactions
were involved in cases of bribery or dereliction of undertaken after the enactment of the AMLA are
duty of public officials, or in a case where the similarly exempt. Due to the absence of cited
money deposited or invested was itself the subject authority from the legislative record that
matter of the litigation. The passage of the AMLA unqualifiedly supports respondent Lilia Cheng’s
stripped another layer off the rule on absolute thesis, there is no cause for us to sustain her
confidentiality that provided a measure of lawful interpretation of the AMLA, fatal as it is to
protection to the account holder. For that reason, the the anima of that law.
application of the bank inquiry order as a means of IX.
inquiring into records of transactions entered into We are well aware that Lilia Cheng’s petition
prior to the passage of the AMLA would be presently pending before the Court of Appeals
40
likewise assails the validity of the subject bank currency deposits shall be
inquiry orders and precisely seeks the annulment of exempt from attachment,
said orders. Our current declarations may indeed garnishment, or any other order
have the effect of preempting that0 petition. Still, in to process of any court,
order for this Court to rule on the petition at bar legislative body, government
which insists on the enforceability of the said bank agency or any administrative
inquiry orders, it is necessary for us to consider and body whatsoever
rule on the same question which after all is a pure i.) has taken away the right of
question of law. petitioners to have the bank
WHEREFORE, the PETITION is DISMISSED. deposit of defendant Greg
No pronouncement as to costs. Bartelli y Northcott garnished
SO ORDERED. to satisfy the judgment
rendered in petitioners favor
in violation of substantive
EN BANC due process guaranteed by
[G.R. No. 94723. August 21, 1997] the Constitution;
KAREN E. SALVACION, minor, thru Federico ii.) has given foreign
N. Salvacion, Jr., father and Natural currency depositors an undue
Guardian, and Spouses FEDERICO N. favor or a class privilege in
SALVACION, JR., and EVELINA E. violation of the equal
SALVACION, petitioners, vs. CENTRAL protection clause of the
BANK OF THE PHILIPPINES, CHINA Constitution;
BANKING CORPORATION and GREG iii.) has provided a safe haven
BARTELLI y for criminals like the herein
NORTHCOTT, respondents. respondent Greg Bartelli y
DECISION Northcott since criminals
TORRES, JR., J.: could escape civil liability for
In our predisposition to discover the original their wrongful acts by merely
intent of a statute, courts become the unfeeling pillars converting their money to a
of the status quo. Little do we realize that statutes or foreign currency and
even constitutions are bundles of compromises depositing it in a foreign
thrown our way by their framers. Unless we exercise currency deposit account with
vigilance, the statute may already be out of tune and an authorized bank.
irrelevant to our day. The antecedents facts:
The petition is for declaratory relief. It prays for On February 4, 1989, Greg Bartelli y Northcott,
the following reliefs: an American tourist, coaxed and lured petitioner
a.) Immediately upon the filing of this Karen Salvacion, then 12 years old to go with him to
petition, an Order be issued restraining the his apartment. Therein, Greg Bartelli detained Karen
respondents from applying and enforcing Salvacion for four days, or up to February 7, 1989
Section 113 of Central Bank Circular No. and was able to rape the child once on February 4,
960; and three times each day on February 5, 6, and 7,
b.) After hearing, judgment be rendered: 1989. On February 7, 1989, after policemen and
1.) Declaring the respective people living nearby, rescued Karen, Greg Bartelli
rights and duties of petitioners was arrested and detained at the Makati Municipal
and respondents; Jail. The policemen recovered from Bartelli the
2.) Adjudging Section 113 of following items: 1.) Dollar Check No. 368, Control
Central Bank Circular No. 960 as No. 021000678-1166111303, US
contrary to the provision of the 3,903.20; 2.) COCOBANK Bank Book No. 104-
Constitution, hence void; because 108758-8 (Peso Acct.); 3.) Dollar Account China
its provision that Foreign Banking Corp., US $/A#54105028-2; 4.) ID-122-30-
41
8877; 5.) Philippine Money (P234.00) dated April 25, 1989 on whether Section 113 of CB
cash; 6.) Door Keys 6 pieces; 7.) Stuffed Doll Circular No. 960 has any exception or whether said
(Teddy Bear) used in seducing the complainant. section has been repealed or amended since said
On February 16, 1989, Makati Investigating section has rendered nugatory the substantive right of
Fiscal Edwin G. Condaya filed against Greg Bartelli, the plaintiff to have the claim sought to be enforced
Criminal Case No. 801 for Serious Illegal Detention by the civil action secured by way of the writ of
and Criminal Cases Nos. 802, 803, 804, and 805 for preliminary attachment as granted to the plaintiff
four (4) counts of Rape. On the same day, petitioners under Rule 57 of the Revised Rules of Court. The
filed with the Regional Trial Court of Makati Civil Central Bank responded as follows:
Case No. 89-3214 for damages with preliminary May 26, 1989
attachment against Greg Bartelli. On February 24, Ms. Erlinda S. Carolino
1989, the day there was a scheduled hearing for 12 Pres. Osmea Avenue
Bartellis petition for bail the latter escaped from jail. South Admiral Village
On February 28, 1989, the court granted the Paranaque, Metro Manila
fiscals Urgent Ex-Parte Motion for the Issuance of Dear Ms. Carolino:
Warrant of Arrest and Hold Departure This is in reply to your letter dated April
Order. Pending the arrest of the accused Greg 25, 1989 regarding your inquiry on Section
Bartelli y Northcott, the criminal cases were archived 113, CB Circular No. 960 (1983).
in an Order dated February 28, 1989. The cited provision is absolute in
Meanwhile, in Civil Case No. 89-3214, the application. It does not admit of any
Judge issued an Order dated February 22, 1989 exception, nor has the same been repealed
granting the application of herein petitioners, for the nor amended.
issuance of the writ of preliminary attachment. After The purpose of the law is to encourage
petitioners gave Bond No. JCL (4) 1981 by FGU dollar accounts within the countrys banking
Insurance Corporation in the amount P100,000.00, a system which would help in the
Writ of Preliminary Attachment was issued by the development of the economy. There is no
trial court on February 28, 1989. intention to render futile the basic rights of
On March 1, 1989, the Deputy Sheriff of Makati a person as was suggested in your subject
served a Notice of Garnishment on China Banking letter. The law may be harsh as some
Corporation. In a letter dated March 13, 1989 to the perceive it, but it is still the
Deputy Sheriff of Makati, China Banking law. Compliance is, therefore, enjoined.
Corporation invoked Republic Act No. 1405 as its Very truly yours,
answer to the notice of garnishment served on it. On (SGD) AGAPITO S. FAJARDO
March 15, 1989, Deputy Sheriff of Makati Armando Director[1]
de Guzman sent his reply to China Banking Meanwhile, on April 10, 1989, the trial court
Corporation saying that the garnishment did not granted petitioners motion for leave to serve
violate the secrecy of bank deposits since the summons by publication in the Civil Case No. 89-
disclosure is merely incidental to a garnishment 3214 entitled Karen Salvacion. et al. vs. Greg
properly and legally made by virtue of a court order Bartelli y Northcott. Summons with the complaint
which has placed the subject deposits in custodia was published in the Manila Times once a week for
legis. In answer to this letter of the Deputy Sheriff of three consecutive weeks. Greg Bartelli failed to file
Makati, China Banking Corporation, in a letter dated his answer to the complaint and was declared in
March 20, 1989, invoked Section 113 of Central default on August 7, 1989. After hearing the case ex-
Bank Circular No. 960 to the effect that the dollar parte, the court rendered judgment in favor of
deposits of defendant Greg Bartelli are exempt from petitioners on March 29, 1990, the dispositive
attachment, garnishment, or any other order or portion of which reads:
process of any court, legislative body, government WHEREFORE, judgment is hereby
agency or any administrative body, whatsoever. rendered in favor of plaintiffs and against
This prompted the counsel for petitioners to defendant, ordering the latter:
make an inquiry with the Central Bank in a letter
42
1. To pay plaintiff Karen E. Salvacion the Karen took her first year high school in St. Marys
amount of P500,000.00 as moral damages; Academy in Pasay City but has recently transferred
2. To pay her parents, plaintiffs spouses to Arellano University for her second year.
Federico N. Salvacion, Jr., and Evelina E. In the afternoon of February 4, 1989, Karen was at
Salvacion the amount of P150,000.00 each the Plaza Fair Makati Cinema Square, with her
or a total of P300,000.00 for both of them; friend Edna Tangile whiling away her free time. At
3. To pay plaintiffs exemplary damages about 3:30 p.m. while she was finishing her snack
of P100,000.00; and on a concrete bench in front of Plaza Fair, an
4. To pay attorneys fees in an amount American approached her. She was then alone
equivalent to 25% of the total amount of because Edna Tangile had already left, and she was
damages herein awarded; about to go home. (TSN, Aug. 15, 1989, pp. 2 to 5)
5. To pay litigation expenses The American asked her name and introduced
of P10,000.00; plus himself as Greg Bartelli. He sat beside her when he
6. Costs of the suit. talked to her. He said he was a Math teacher and
SO ORDERED. told her that he has a sister who is a nurse in New
The heinous acts of respondents Greg Bartelli York. His sister allegedly has a daughter who is
which gave rise to the award were related in graphic about Karens age and who was with him in his
detail by the trial court in its decision as follows: house along Kalayaan Avenue. (TSN, Aug. 15,
The defendant in this case was originally 1989, pp. 4-5).
detained in the municipal jail of Makati but The American asked Karen what was her favorite
was able to escape therefrom on February subject and she told him its Pilipino. He then invited
24, 1989 as per report of the Jail Warden of her to go with him to his house where she could
Makati to the Presiding Judge, Honorable teach Pilipino to his niece. He even gave her a
Manuel M. Cosico of the Regional Trial stuffed toy to persuade her to teach his niece. (Id.,
Court of Makati, Branch 136, where he was pp.5-6)
charged with four counts of Rape and They walked from Plaza Fair along Pasong Tamo,
Serious Illegal Detention (Crim. Cases Nos. turning right to reach the defendants house along
802 to 805).Accordingly, upon motion of Kalayaan Avenue. (Id., p.6)
plaintiffs, through counsel, summons was When they reached the apartment house, Karen
served upon defendant by publication in the notices that defendants alleged niece was not
Manila Times, a newspaper of general outside the house but defendant told her maybe his
circulation as attested by the Advertising niece was inside. When Karen did not see the
Manager of the Metro Media Times, Inc., alleged niece inside the house, defendant told her
the publisher of the said maybe his niece was upstairs, and invited Karen to
newspaper. Defendant, however, failed to go upstairs. (Id., p. 7)
file his answer to the complaint despite the Upon entering the bedroom defendant suddenly
lapse of the period of sixty (60) days from locked the door. Karen became nervous because his
the last publication; hence, upon motion of niece was not there. Defendant got a piece of cotton
the plaintiffs through counsel, defendant cord and tied Karens hands with it, and then he
was declared in default and plaintiffs were undressed her. Karen cried for help but defendant
authorized to present their evidence ex strangled her. He took a packing tape and he
parte. covered her mouth with it and he circled it around
In support of the complaint, plaintiffs her head. (Id., p. 7)
presented as witness the minor Karen E. Then, defendant suddenly pushed Karen towards the
Salvacion, her father, Federico N. Salacion, bed which was just near the door. He tied her feet
Jr., a certain Joseph Aguilar and a certain and hands spread apart to the bed posts. He knelt in
Liberato Mandulio, who gave the following front of her and inserted his finger in her sex
testimony: 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
43
was full of blood and Karen felt more pain after the chance to call for help. At nighttime he slept with
withdrawal of the finger. (Id., p.8) her again. (TSN, Aug. 15, 1989, pp. 12-14)
He then got a Johnsons Baby Oil and he applied it On February 6, 1989, Monday, Karen was raped
to his sex organ as well as to her sex organ. After three times, once in the morning for thirty minutes
that he forced his sex organ into her but he was not after breakfast of biscuits; again in the afternoon;
able to do so. While he was doing it, Karen found it and again in the evening. At first, Karen did not
difficult to breathe and she perspired a lot while know that there was a window because everything
feeling severe pain. She merely presumed that he was covered by a carpet, until defendant opened the
was able to insert his sex organ a little, because she window for around fifteen minutes or less to let
could not see. Karen could not recall how long the some air in, and she found that the window was
defendant was in that position. (Id., pp. 8-9) covered by styrofoam and plywood. After that, he
After that, he stood up and went to the bathroom to again closed the window with a hammer and he put
wash. He also told Karen to take a shower and he the styrofoam, plywood, and carpet back. (Id., pp.
untied her hands. Karen could only hear the sound 14-15)
of the water while the defendant, she presumed, was That Monday evening, Karen had a chance to call
in the bathroom washing his sex organ. When she for help, although defendant left but kept the door
took a shower more blood came out from her. In the closed. She went to the bathroom and saw a small
meantime, defendant changed the mattress because window covered by styrofoam and she also spotted
it was full of blood. After the shower, Karen was a small hole. She stepped on the bowl and she cried
allowed by defendant to sleep. She fell asleep for help through the hole. She cried: Maawa na po
because she got tired crying. The incident happened kayo sa akin. Tulungan nyo akong makalabas
at about 4:00 p.m. Karen had no way of determining dito. Kinidnap ako! Somebody heard her. It was a
the exact time because defendant removed her woman, probably a neighbor, but she got angry and
watch.Defendant did not care to give her food said she was istorbo. Karen pleaded for help and the
before she went to sleep. Karen woke up at about woman told her to sleep and she will call the
8:00 oclock the following morning. (Id., pp. 9-10) police. She finally fell asleep but no policeman
The following day, February 5, 1989, a Sunday, came. (TSN, Aug. 15, 1989, pp. 15-16)
after breakfast of biscuit and coke at about 8:30 to She woke up at 6:00 oclock the following morning,
9:00 a.m. defendant raped Karen while she was still and she saw defendant in bed, this time
bleeding. For lunch, they also took biscuit and sleeping. She waited for him to wake up. When he
coke. She was raped for the second time at about woke up, he again got some food but he always kept
12:00 to 2:00 p.m. In the evening, they had rice for the door locked. As usual, she was merely fed with
dinner which defendant had stored downstairs; it biscuit and coke. On that day, February 7, 1989, she
was he who cooked the rice that is why it looks like was again raped three times. The first at about 6:30
lugaw. For the third time, Karen was raped again to 7:00 a.m., the second at about 8:30 9:00, and the
during the night. During those three times defendant third was after lunch at 12:00 noon. After he had
succeeded in inserting his sex organ but she could raped her for the second time he left but only for a
not say whether the organ was inserted wholly. short while. Upon his return, he caught her shouting
Karen did not see any firearm or any bladed for help but he did not understand what she was
weapon. The defendant did not tie her hands and shouting about.After she was raped the third time,
feet nor put a tape on her mouth anymore but she he left the house. (TSN, Aug. 15, 1989, pp. 16-
did not cry for help for fear that she might be killed; 17) She again went to the bathroom and shouted for
besides, all those windows and doors were help. After shouting for about five minutes, she
closed. And even if she shouted for help, nobody heard many voices. The voices were asking for her
would hear her. She was so afraid that if somebody name and she gave her name as Karen
would hear her and would be able to call a police, it Salvacion. After a while, she heard a voice of a
was still possible that as she was still inside the woman saying they will just call the police. They
house, defendant might kill her. Besides, the were also telling her to change her clothes.She went
defendant did not leave that Sunday, ruling out her from the bathroom to the room but she did not
change her clothes being afraid that should the
44
neighbors call the police and the defendant see her Arellano University, situated along Taft Avenue,
in different clothes, he might kill her. At that time because she was ashamed to be the subject of
she was wearing a T-shirt of the American bacause conversation in the school. She first applied for
the latter washed her dress. (Id., p. 16) transfer to Jose Abad Santos, Arellano University
Afterwards, defendant arrived and opened the along Taft Avenue near the Light Rail Transit
door. He asked her if she had asked for help because Station but she was denied admission after she told
there were many policemen outside and she denied the school the true reason for her transfer. The
it. He told her to change her clothes, and she did reason for their denial was that they might be
change to the one she was wearing on Saturday. He implicated in the case. (TSN, Aug. 15, 1989, p. 46)
instructed her to tell the police that she left home xxx xxx xxx
and willingly; then he went downstairs but he After the incident, Karen has changed a lot. She
locked the door. She could hear people conversing does not play with her brother and sister anymore,
but she could not understand what they were and she is always in a state of shock; she has been
saying. (Id., p. 19) absent-minded and is ashamed even to go out of the
When she heard the voices of many people who house. (TSN, Sept. 12, 1989, p. 10) She appears to
were conversing downstairs, she knocked be restless or sad. (Id., p. 11) The father prays
repeatedly at the door as hard as she could. She for P500,000.00 moral damages for Karen for this
heard somebody going upstairs and when the door shocking experience which probably, she would
was opened, she saw a policeman. The policeman always recall until she reaches old age, and he is not
asked her name and the reason why she was sure if she could ever recover from this
there. She told him she was kidnapped. Downstairs, experience. (TSN, Sept. 24, 1989, pp. 10-11)
he saw about five policemen in uniform and the Pursuant to an Order granting leave to publish
defendant was talking to them. Nakikipag-areglo po notice of decision, said notice was published in the
sa mga pulis, Karen added. The policeman told him Manila Bulletin once a week for three consecutive
to just explain at the precinct. (Id., p. 20) weeks. After the lapse of fifteen (15) days from the
They went out of the house and she saw some of her date of the last publication of the notice of judgment
neighbors in front of the house. They rode the car of and the decision of the trial court had become final,
a certain person she called Kuya Boy together with petitioners tried to execute on Bartellis dollar deposit
defendant, the policeman, and two of her neighbors with China Banking Corporation. Likewise, the bank
whom she called Kuya Bong Lacson and one Ate invoked Section 113 of Central Bank Circular No.
Nita. They were brought to Sub-Station I and there 960.
she was investigated by a policeman. At about 2:00 Thus, petitioners decided to seek relief from this
a.m., her father arrived, followed by her mother Court.
together with some of their neighbors. Then they The issues raised and the arguments articulated
were brought to the second floor of the police by the parties boil down to two:
headquarters. (Id., p. 21) May this Court entertain the instant petition
At the headquarters, she was asked several despite the fact that original jurisdiction in petitions
questions by the investigator. The written statement for declaratory relief rests with the lower court? She
she gave to the police was marked Exhibit A. Then Section 113 of Central Bank Circular No. 960 and
they proceeded to the National Bureau of Section 8 of R.A. 6426, as amended by P.D. 1246,
Investigation together with the investigator and her otherwise known as the Foreign Currency Deposit
parents. At the NBI, a doctor, a medico- Act be made applicable to a foreign transient?
legal officer, examined her private parts. It was Petitioners aver as heretofore stated that Section
already 3:00 in early morning, of the following day 113 of Central Bank Circular No. 960 providing that
when they reached the NBI, (TSN, Aug. 15, 1989, Foreign currency deposits shall be exempt from
p. 22) The findings of the medico-legal officer has attachment, garnishment, or any other order or
been marked as Exhibit B. process of any court, legislative body, government
She was studying at the St. Marys Academy in agency or any administrative body whatsoever.
Pasay City at the time of the Incident but she should be adjudged as unconstitutional on the
subsequently transferred to Apolinario Mabini, grounds that: 1.) it has taken away the right of
45
petitioners to have the bank deposit of defendant a position to properly channel the same to loans and
Greg Bartelli y Northcott garnished to satisfy the investments in the Philippines, thus directly
judgment rendered in petitioners favor in violation of contributing to the economic development of the
substantive due process guaranteed by the country; that the subject section is being enforced
Constitution; 2.) it has given foreign currency according to the regular methods of procedure; and
depositors an undue favor or a class privilege n that it applies to all currency deposits made by any
violation of the equal protection clause of the person and therefore does not violate the equal
Constitution; 3.) it has provided a safe haven for protection clause of the Constitution.
criminals like the herein respondent Greg Bartelli y Respondent Central Bank further avers that the
Northcott since criminal could escape civil liability questioned provision is needed to promote the public
for their wrongful acts by merely converting their interest and the general welfare; that the State cannot
money to a foreign currency and depositing it in a just stand idly by while a considerable segment of the
foreign currency deposit account with an authorized society suffers from economic distress; that the State
bank; and 4.) The Monetary Board, in issuing had to take some measures to encourage economic
Section 113 of Central Bank Circular No. 960 has development; and that in so doing persons and
exceeded its delegated quasi- legislative power when property may be subjected to some kinds of restraints
it took away: a.) the plaintiffs substantive right to or burdens to secure the general welfare or public
have the claim sought to be enforced by the civil interest. Respondent Central Bank also alleges that
action secured by way of the writ of preliminary Rule 39 and Rule 57 of the Revised Rules of Court
attachment as granted by Rule 57 of the Revised provide that some properties are exempted from
Rules of Court; b.) the plaintiffs substantive right to execution/attachment especially provided by law and
have the judgment credit satisfied by way of the writ R.A. No. 6426 as amended is such a law, in that it
of execution out of the bank deposit of the judgment specifically provides, among others, that foreign
debtor as granted to the judgment creditor by Rule 39 currency deposits shall be exempted from
of the Revised Rules of Court, which is beyond its attachment, garnishment, or any other order or
power to do so. process of any court, legislative body, government
On the other hand, respondent Central Bank, in agency or any administrative body whatsoever.
its Comment alleges that the Monetary Board in For its part, respondent China Banking
issuing Section 113 of CB Circular No. 960 did not Corporation, aside from giving reasons similar to that
exceed its power or authority because the subject of respondent Central Bank, also stated that
Section is copied verbatim from a portion of R.A. respondent China Bank is not unmindful of the
No. 6426 as amended by P.D. 1246. Hence, it was inhuman sufferings experienced by the minor Karen
not the Monetary Board that grants exemption from E. Salvacion from the beastly hands of Greg Bartelli;
attachment or garnishment to foreign currency that it is not only too willing to release the dollar
deposits, but the law (R.A. 6426 as amended) itself; deposit of Bartelli which may perhaps partly mitigate
that it does not violate the substantive due process the sufferings petitioner has undergone; but it is
guaranteed by the Constitution because a.) it was restrained from doing so in view of R.A. No. 6426
based on a law; b.) the law seems to be and Section 113 of Central Bank Circular No. 960;
reasonable; c.) it is enforced according to regular and that despite the harsh effect to these laws on
methods of procedure; and d.) it applies to all petitioners, CBC has no other alternative but to
members of a class. follow the same.
Expanding, the Central Bank said; that one This court finds the petition to be partly
reason for exempting the foreign currency deposits meritorious.
from attachment, garnishment or any other order Petitioner deserves to receive the damages
process of any court, is to assure the development awarded to her by the court. But this petition for
and speedy growth of the Foreign Currency Deposit declaratory relief can only be entertained and treated
System and the Offshore Banking System in the as a petition for mandamus to require respondents to
Philippines; that another reason is to encourage the honor and comply with the writ of execution in Civil
inflow of foreign currency deposits into the banking Case No. 89-3214.
institutions thereby placing such institutions more in
46
The Court has no original and exclusive only fault was in her being so naive and
jurisdiction over a petition for declatory credulous to believe easily that defendant,
relief.[2] However, exceptions to this rule have been an American national, could not have such
recognized. Thus, where the petition has far-reaching a bestial desire on her nor capable of
implications and raises questions that should be committing such heinous crime. Being only
resolved, it may be treated as one for mandamus.[3] 12 years old when that unfortunate incident
Here is a child, a 12-year old girl, who in her happened, she has never heard of an old
belief that all Americans are good and in her gesture Filipino adage that in every forest there is a
of kindness by teaching his alleged niece the Filipino snake, xxx.[4]
language as requested by the American, trustingly If Karens sad fate had happened to anybodys
went with said stranger to his apartment, and there own kin, it would be difficult for him to fathom how
she was raped by said American tourist Greg the incentive for foreign currency deposit could be
Bartelli. Not once, but ten times. She was detained more important than his childs right to said award of
therein for four (4) days. This American tourist was damages; in this case, the victims claim for damages
able to escape from the jail and avoid from this alien who had the gall to wrong a child of
punishment. On the other hand, the child, having tender years of a country where he is mere
received a favorable judgment in the Civil Case for visitor. This further illustrates the flaw in the
damages in the amount of more than P1,000,000.00, questioned provisions.
which amount could alleviate the humiliation, It is worth mentioning that R.A. No. 6426 was
anxiety, and besmirched reputation she had suffered enacted in 1983 or at a time when the countrys
and may continue to suffer for a long, long time; and economy was in a shambles; when foreign
knowing that this person who had wronged her has investments were minimal and presumably, this was
the money, could not, however get the award of the reason why said statute was enacted. But the
damages because of this unreasonable law. This realities of the present times show that the country
questioned law, therefore makes futile the favorable has recovered economically; and even if not, the
judgment and award of damages that she and her questioned law still denies those entitled to due
parents fully deserve. As stated by the trial court in process of law for being unreasonable and
its decision, oppressive. The intention of the questioned law may
Indeed, after hearing the testimony of be good when enacted. The law failed to anticipate
Karen, the Court believes that it was the inquitous effects producing outright injustice and
indoubtedly a shocking and traumatic inequality such as as the case before us.
experience she had undergone which could It has thus been said that-
haunt her mind for a long, long time, the But I also know,[5] that laws and institutions
mere recall of which could make her feel so must go hand in hand with the progress of
humiliated, as in fact she had been actually the human mind. As that becomes more
humiliated once when she was refused developed, more enlightened, as new
admission at the Abad Santos High School, discoveries are made, new truths are
Arellano University, where she sought to disclosed and manners and opinions change
transfer from another school, simply with the change of circumstances,
because the school authorities of the said institutions must advance also, and keep
High School learned about what happened pace with the times We might as well
to her and allegedly feared that they might require a man to wear still the coat which
be implicated in the case. fitted him when a boy, as civilized society
xxx to remain ever under the regimen of their
The reason for imposing exemplary or barbarous ancestors.
corrective damages is due to the wanton In his comment, the Solicitor General correctly
and bestial manner defendant had opined, thus:
committed the acts of rape during a period "The present petition has far-reaching
of serious illegal detention of his hapless implications on the right of a national to
victim, the minor Karen Salvacion whose obtain redress for a wrong committed by an
47
alien who takes refuge under a law and and regulations at the time the
regulation promulgated for a purpose which deposit was made shall govern.
does not contemplate the application The aforecited Section 113 was copied
thereof envisaged by the allien. More from Section 8 of Republic Act No. 6426.
specifically, the petition raises the question As amended by P.D. 1246, thus:
whether the protection against attachment, Sec. 8. Secrecy of
garnishment or other court process Foreign Currency Deposits. -- All
accorded to foreign currency deposits PD foreign currency deposits
No. 1246 and CB Circular No. 960 applies authorized under this Act, as
when the deposit does not come from a amended by Presidential Decree
lender or investor but from a mere transient No. 1035, as well as foreign
who is not expected to maintain the deposit currency deposits authorized
in the bank for long. under Presidential Decree No.
The resolution of this question is important 1034, are hereby declared as and
for the protection of nationals who are considered of an absolutely
victimized in the forum by foreigners who confidential nature and, except
are merely passing through. upon the written permission of
xxx the depositor, in no instance shall
xxx Respondents China Banking such foreign currency deposits be
Corporation and Central Bank of the examined, inquired or looked
Philippines refused to honor the writ of into by any person, government
execution issued in Civil Case No. 89-3214 official, bureau or office whether
on the strength of the following provision judicial or administrative or
of Central Bank Circular No. 960: legislative or any other entity
Sec. 113 Exemption from whether public or
attachment. Foreign currency private: Provided, however, that
deposits shall be exempt from said foreign currency deposits
attachment, garnishment, or any shall be exempt from attachment,
other order or process of any garnishment, or any other order
court, legislative body, or process of any court,
government agency or any legislative body, government
administrative body whatsoever. agency or any administrative
Central Bank Circular No. 960 was issued pursuant body whatsoever.
to Section 7 of Republic Act No. 6426: The purpose of PD 1246 in according
Sec. 7. Rules protection against attachment, garnishment
and Regulations. The Monetary and other court process to foreign currency
Board of the Central Bank shall deposits is stated in its whereases, viz.:
promulgate such rules and WHEREAS, under Republic Act
regulations as may be necessary No. 6426, as amended by
to carry out the provisions of this Presidential Decree No. 1035,
Act which shall take effect after certain Philippine banking
the publication of such rules and institutions and branches of
regulations in the Official foreign banks are authorized to
Gazette and in a newspaper of accept deposits in foreign
national circulation for at least currency;
once a week for three WHEREAS, under provisions of
consecutive weeks. In case the Presidential Decree No. 1034
Central Bank promulgates new authorizing the establishment of
rules and regulations decreasing an offshore banking system in the
the rights of depositors, the rules Philippines, offshore banking
48
units are also authorized to communication facilities, among
receive foreign currency deposits others, exist in the Philippines;
in certain cases; WHEREAS, it is in the interest
WHEREAS, in order to assure of developing countries to have
the development and as wide access as possible to the
speedy growth of the Foreign sources of capital funds for
Currency Deposit System and the economic development;
Offshore Banking System in the WHEREAS, an offshore banking
Philippines, certain incentives system based in the Philippines
were provided for under the will be advantageous and
two Systems such as beneficial to the country by
confidentiality subject to certain increasing our links with foreign
exceptions and tax exemptions lenders, facilitating the flow of
on the interest income of desired investments into the
depositors who are nonresidents Philippines, creating employment
and are not engaged in trade or opportunities and expertise in
business in the Philippines; international finance, and
WHEREAS, making absolute the contributing to the national
protective cloak of development effort.
confidentiality over such foreign WHEREAS, the geographical
currency deposits, exempting location, physical and human
such deposits from tax, and resources, and other positive
guaranteeing the vested right of factors provide the Philippines
depositors would better with the clear potential to
encourage the inflow of foreign develop as another financial
currency deposits into the center in Asia;
banking institutions authorized to On the other hand, the Foreign Currency
accept such deposits in the Deposit system was created by PD No.
Philippines thereby placing such 1035. Its purpose are as follows:
institutions more in a position to WHEREAS, the establishment of
properly channel the same to an offshore banking system in the
loans and investments in the Philippines has been authorized
Philippines, thus directly under a separate decree;
contributing to the economic WHEREAS, a number of local
development of the country; commercial banks, as depository
Thus, one of the principal purposes of the bank under the Foreign Currency
protection accorded to foreign currency Deposit Act (RA No. 6426), have
deposits is to assure the development and the resources and managerial
speedy growth of the Foreign Currency competence to more actively
Deposit system and the Offshore Banking engage in foreign exchange
in the Philippines (3rd Whereas). transactions and participate in the
The Offshore Banking System was grant of foreign currency loans to
established by PD No. 1034. In turn, the resident corporations and firms;
purposes of PD No. 1034 are as follows: WHEREAS, it is timely to
WHEREAS, conditions expand the foreign currency
conducive to the establishment of lending authority of the said
an offshore banking system, such depository banks under RA 6426
as political stability, a growing and apply to their transactions the
economy and adequate same taxes as would be

49
applicable to transaction of the It would be unthinkable, that the questioned
proposed offshore banking units; Section 113 of Central Bank No. 960 would be used
It is evident from the above [Whereas as a device by accused Greg Bartelli for wrongdoing,
clauses] that the Offshore Banking System and in so doing, acquitting the guilty at the expense
and the Foreign Currency Deposit System of the innocent.
were designed to draw deposits from Call it what it may but is there no conflict of
foreign lenders and investors (Vide second legal policy here? Dollar against Peso? Upholding
Whereas of PD No. 1034; third Whereas of the final and executory judgment of the lower court
PD No. 1035). It is these depositors that are against the Central Bank Circular protecting the
induced by the two laws and given foreign depositor? Shielding or protecting the dollar
protection and incentives by them. deposit of a transient alien depositor against injustice
Obviously, the foreign currency deposit to a national and victim of a crime? This situation
made by a transient or a tourist is not the calls for fairness legal tyranny.
kind of deposit encourage by PD Nos. 1034 We definitely cannot have both ways and rest in
and 1035 and given incentives and the belief that we have served the ends of justice.
protection by said laws because such IN VIEW WHEREOF, the provisions of
depositor stays only for a few days in the Section 113 of CB Circular No. 960 and PD No.
country and, therefore, will maintain his 1246, insofar as it amends Section 8 of R.A. 6426 are
deposit in the bank only for a short time. hereby held to be INAPPLICABLE to this case
Respondent Greg Bartelli, as stated, is just because of its peculiar circumstances. Respondents
a tourist or a transient. He deposited his are hereby REQUIRED to COMPLY with the writ of
dollars with respondent China Banking execution issued in Civil Case No. 89-3214, Karen
Corporation only for safekeeping during his Salvacion, et al. vs. Greg Bartelli y Northcott, by
temporary stay in the Philippines. Branch CXLIV, RTC Makati and to RELEASE to
For the reasons stated above, the Solicitor petitioners the dollar deposit of respondent Greg
General thus submits that the dollar deposit Bartelli y Northcott in such amount as would satisfy
of respondent Greg Bartelli is not entitled the judgment.
to the protection of Section 113 of Central SO ORDERED.
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 Republic of the Philippines
extent of its justice. Eventually, if we rule that the SUPREME COURT
questioned Section 113 of Central Bank Circular No. Manila
960 which exempts from attachment, garnishment, or EN BANC
any other order or process of any court. Legislative
body, government agency or any administrative body G.R. No. L-34964 January 31, 1973
whatsoever, is applicable to a foreign transient, CHINA BANKING CORPORATION and TAN
injustice would result especially to a citizen KIM LIONG, petitioners-appellants,
aggrieved by a foreign guest like accused Greg vs.
Bartelli. This would negate Article 10 of the New HON. WENCESLAO ORTEGA, as Presiding
Civil Code which provides that in case of doubt in Judge of the Court of First Instance of Manila,
the interpretation or application of laws, it is Branch VIII, and VICENTE G.
presumed that the lawmaking body intended right ACABAN, respondents-appellees.
and justice to prevail. Ninguno non deue Sy Santos, Del Rosario and Associates for
enriquecerse tortizerzmente con damo de petitioners-appellants.
otro.Simply stated, when the statute is silent or Tagalo, Gozar and Associates for respondents-
ambiguous, this is one of those fundamental appellees.
solutions that would respond to the vehement urge of
conscience. (Padilla vs. Padilla, 74 Phil. 377) MAKALINTAL, J.:
50
The only issue in this petition for certiorari to The pertinent provisions of Republic Act No. 1405
review the orders dated March 4, 1972 and March relied upon by the petitioners reads:
27, 1972, respectively, of the Court of First Instance Sec. 2. All deposits of whatever
of Manila in its Civil Case No. 75138, is whether or nature with banks or banking
not a banking institution may validly refuse to institutions in the Philippines
comply with a court process garnishing the bank including investments in bonds
deposit of a judgment debtor, by invoking the issued by the Government of the
provisions of Republic Act No. 1405. * Philippines, its political subdivisions
On December 17, 1968 Vicente Acaban filed a and its instrumentalities, are hereby
complaint in the court a quo against Bautista considered as of absolutely
Logging Co., Inc., B & B Forest Development confidential nature and may not be
Corporation and Marino Bautista for the collection examined, inquired or looked into by
of a sum of money. Upon motion of the plaintiff the any person, government official,
trial court declared the defendants in default for bureau or office, except upon written
failure to answer within the reglementary period, permission of the depositor, or in
and authorized the Branch Clerk of Court and/or cases of impeachment, or upon order
Deputy Clerk to receive the plaintiff's evidence. On of a competent court in cases of
January 20, 1970 judgment by default was rendered bribery or dereliction of duty of
against the defendants. public officials, or in cases where the
To satisfy the judgment, the plaintiff sought the money deposited or invested is the
garnishment of the bank deposit of the defendant B subject matter of the litigation.
& B Forest Development Corporation with the Sec 3. It shall be unlawful for any
China Banking Corporation. Accordingly, a notice official or employee of a banking
of garnishment was issued by the Deputy Sheriff of institution to disclose to any person
the trial court and served on said bank through its other than those mentioned in
cashier, Tan Kim Liong. In reply, the bank' cashier Section two hereof any information
invited the attention of the Deputy Sheriff to the concerning said deposits.
provisions of Republic Act No. 1405 which, it was Sec. 5. Any violation of this law will
alleged, prohibit the disclosure of any information subject offender upon conviction, to
relative to bank deposits. Thereupon the plaintiff an imprisonment of not more than
filed a motion to cite Tan Kim Liong for contempt five years or a fine of not more than
of court. twenty thousand pesos or both, in the
In an order dated March 4, 1972 the trial court discretion of the court.
denied the plaintiff's motion. However, Tan Kim The petitioners argue that the disclosure of the
Liong was ordered "to inform the Court within five information required by the court does not fall
days from receipt of this order whether or not there within any of the four (4) exceptions enumerated in
is a deposit in the China Banking Corporation of Section 2, and that if the questioned orders are
defendant B & B Forest Development Corporation, complied with Tan Kim Liong may be criminally
and if there is any deposit, to hold the same intact liable under Section 5 and the bank exposed to a
and not allow any withdrawal until further order possible damage suit by B & B Forest Development
from this Court." Tan Kim Liong moved to Corporation. Specifically referring to this case, the
reconsider but was turned down by order of March position of the petitioners is that the bank deposit of
27, 1972. In the same order he was directed "to judgment debtor B & B Forest Development
comply with the order of this Court dated March 4, Corporation cannot be subject to garnishment to
1972 within ten (10) days from the receipt of copy satisfy a final judgment against it in view of the
of this order, otherwise his arrest and confinement aforequoted provisions of law.
will be ordered by the Court." Resisting the two We do not view the situation in that light. The lower
orders, the China Banking Corporation and Tan court did not order an examination of or inquiry into
Kim Liong instituted the instant petition. the deposit of B & B Forest Development
Corporation, as contemplated in the law. It merely
51
required Tan Kim Liong to inform the court for the purpose of satisfying a tax
whether or not the defendant B & B Forest liability already declared for the
Development Corporation had a deposit in the protection of the right in favor of the
China Banking Corporation only for purposes of the government; but when the object is
garnishment issued by it, so that the bank would merely to inquire whether he has a
hold the same intact and not allow any withdrawal deposit or not for purposes of
until further order. It will be noted from the taxation, then this is fully covered by
discussion of the conference committee report on the law.
Senate Bill No. 351 and House Bill No. 3977, Mr. MARCOS. And it protects the
which later became Republic Act 1405, that it was depositor, does it not?
not the intention of the lawmakers to place bank Mr. RAMOS. Yes, it protects the
deposits beyond the reach of execution to satisfy a depositor.
final judgment. Thus: Mr. MARCOS. The law prohibits a
Mr. MARCOS. Now, for purposes of mere investigation into the existence
the record, I should like the and the amount of the deposit.
Chairman of the Committee on Ways Mr. RAMOS. Into the very nature of
and Means to clarify this further. such deposit.
Suppose an individual has a tax case. Mr. MARCOS. So I come to my
He is being held liable by the Bureau original question. Therefore,
of Internal Revenue for, say, preliminary garnishment or
P1,000.00 worth of tax liability, and attachment of the deposit is not
because of this the deposit of this allowed?
individual is attached by the Bureau Mr. RAMOS. No, without judicial
of Internal Revenue. authorization.
Mr. RAMOS. The attachment will Mr. MARCOS. I am glad that is
only apply after the court has clarified. So that the established rule
pronounced sentence declaring the of procedure as well as the
liability of such person. But where substantive law on the matter is
the primary aim is to determine amended?
whether he has a bank deposit in Mr. RAMOS. Yes. That is the effect.
order to bring about a proper Mr. MARCOS. I see. Suppose there
assessment by the Bureau of Internal has been a decision, definitely
Revenue, such inquiry is not establishing the liability of an
authorized by this proposed law. individual for taxation purposes and
Mr. MARCOS. But under our rules this judgment is sought to be
of procedure and under the Civil executed ... in the execution of that
Code, the attachment or garnishment judgment, does this bill, or this
of money deposited is allowed. Let proposed law, if approved, allow the
us assume, for instance, that there is investigation or scrutiny of the bank
a preliminary attachment which is for deposit in order to execute the
garnishment or for holding liable all judgment?
moneys deposited belonging to a Mr. RAMOS. To satisfy a judgment
certain individual, but such which has become executory.
attachment or garnishment will bring Mr. MARCOS. Yes, but, as I said
out into the open the value of such before, suppose the tax liability is
deposit. Is that prohibited by this P1,000,000 and the deposit is half a
amendment or by this law? million, will this bill allow scrutiny
Mr. RAMOS. It is only prohibited to into the deposit in order that the
the extent that the inquiry is limited, judgment may be executed?
or rather, the inquiry is made only
52
Mr. RAMOS. Merely to determine
the amount of such money to satisfy
that obligation to the Government, SECOND DIVISION
but not to determine whether a
deposit has been made in evasion of [G.R. No. 84526. January 28, 1991.]
taxes.
xxx xxx xxx PHILIPPINE COMMERCIAL & INDUSTRIAL
Mr. MACAPAGAL. But let us BANK and JOSE HENARES, Petitioners, v.
suppose that in an ordinary civil THE HON. COURT OF APPEALS and
action for the recovery of a sum of MARINDUQUE MINING AND INDUSTRIAL
money the plaintiff wishes to attach CORPORATION, Respondents.
the properties of the defendant to
insure the satisfaction of the Bengzon, Zarraga, Narciso, Cudala, Pecson &
judgment. Once the judgment is Bengson, for Petitioners.
rendered, does the gentleman mean
that the plaintiff cannot attach the Rexes V . Alejano for Private Respondent.
bank deposit of the defendant?
Mr. RAMOS. That was the question
raised by the gentleman from SYLLABUS
Pangasinan to which I replied that
outside the very purpose of this law
it could be reached by attachment. 1. REMEDIAL LAW; PROVISIONAL
Mr. MACAPAGAL. Therefore, in REMEDIES; GARNISHMENT; CONSTRUED. —
such ordinary civil cases it can be Garnishment is considered as a specie of attachment
attached? for reaching credits belonging to the judgment
Mr. RAMOS. That is so. debtor and owing to him from a stranger to the
(Vol. II, Congressional Record, litigation. Under the provision of Section 8, Rule 57
House of Representatives, No. 12, of the Rules of Court, the garnishee [the third
pp. 3839-3840, July 27, 1955). person] is obliged to deliver the credits, etc. to the
It is sufficiently clear from the foregoing discussion proper officer issuing the writ and "the law exempts
of the conference committee report of the two from liability the person having in his possession or
houses of Congress that the prohibition against under his control any credits or other personal
examination of or inquiry into a bank deposit under property belonging to the defendant, . . ., if such
Republic Act 1405 does not preclude its being property be delivered or transferred, . . ., to the
garnished to insure satisfaction of a judgment. clerk, sheriff, or other officer of the court in which
Indeed there is no real inquiry in such a case, and if the action is pending." (Engineering Construction,
the existence of the deposit is disclosed the Inc. v. National Power Corp., G.R. No. L-34589,
disclosure is purely incidental to the execution June 29, 1988)
process. It is hard to conceive that it was ever within
the intention of Congress to enable debtors to evade 2. ID.; ACTIONS; EXECUTION; IMMEDIATE
payment of their just debts, even if ordered by the RELEASE OF FUNDS UNDER GARNISHMENT
Court, through the expedient of converting their AND PURSUANT TO A WRIT OF EXECUTION,
assets into cash and depositing the same in a bank. ENJOYS PRESUMPTION OF REGULARITY. —
WHEREFORE, the orders of the lower court dated The immediate release of the funds by the
March 4 and 27, 1972, respectively, are hereby petitioners on the strength of the notice of
affirmed, with costs against the petitioners- garnishment and writ of execution, whose issuance,
appellants. absent any patent defect, enjoys the presumption of
Zaldivar, Castro, Fernando, Barredo, Makasiar, regularity, sufficiently supported by Sec. 41, Rule
Antonio and Esguerra, JJ., concur. 39 of the Rules of Court.
Concepcion, C.J. and Teehankee, J., took no part.
53
3. MERCANTILE LAW; SECRECY OF BANK x x x
DEPOSITS ACT; NOT VIOLATED WHERE
DISCLOSURE WAS MADE INCIDENTAL TO
THE EXECUTION PROCESS. — It is clear from For the reasons above adduced, We are constrained
the discussion of the conference committee report to reconsider Our aforesaid decision and to set it
on Senate Bill No. 351 and House Bill No. 3977, aside and in lieu thereof hereby enter another
which later became Republic Act 1405, that the decision AFFIRMING the decision dated January
prohibition against examination of or inquiry into a 15, 1985 of the Regional Trial Court of Manila,
bank deposit under Republic Act 1405 does not Branch 11, in Civil Case No. 103100 entitled
preclude its being garnished to insure satisfaction of "Marinduque Mining and Industrial Corporation
a judgment. Indeed there is no real inquiry in such a (MMIC) v. Philippine Commercial and Industrial
case, and if existence of the deposit is disclosed the Bank, Et. Al." 6
disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever within The undisputed facts 7 as gathered from the
the intention of Congress to enable debtors to evade findings of the trial court are as follows:chanrob1es
payment of their just debts, even if ordered by the virtual 1aw library
Court, through the expedient of converting their
assets into cash and depositing the same in a bank. The instant case originated from an action 8 filed
(CBC v. Ortega, G.R. No. L-34964, January 31, with the National Labor Relations Commission
1973) (NLRC) by a group of laborers who obtained
therefrom a favorable judgment for the payment of
4. REMEDIAL LAW; EVIDENCE; FINDINGS OF backwages amounting to P205,853.00 against the
FACT OF THE APPELLATE COURT, private Respondent.chanroblesvirtualawlibrary
GENERALLY BINDING ON APPEAL; CASE AT
BAR, AN EXCEPTION. — The findings of fact of On April 26, 1976, the said Commission issued a
the appellate court are binding on this Court, the writ of execution directing the Deputy Sheriff of
said rule however admits of exceptions, such as Negros Occidental, one Damian Rojas, to enforce
when the Court of Appeals clearly misconstrued and the aforementioned judgment. The pertinent portion
misapplied the law, drawn from the incorrect of the said writ reads as follows:chanrob1es virtual
conclusions of fact established by evidence and 1aw library
otherwise at certain conclusions which are based on x x x
misapprehension of facts, as in the case at bar.

Further, you are to collect from same respondent the


DECISION total amount of P205,853.00 as their backwage (sic)
for twelve (12) months and then turn over said
amount to this commission for further disposition.
SARMIENTO, J.: In case you fail to collect said amount in cash, you
are to cause the satisfaction of the same on the
movable or immovable properties of the respondent
This is a petition for review on certiorari which not exempt from execution. (Exhs. G, G-1 and G-3,
assails both the resolution 1 dated June 27, 1988 of also Exh. 3; Emphasis supplied). 9
the Court of Appeals 2 which reconsidered and set
aside its earlier decision 3 dated February 26, 1988 Accordingly, on April 28, 1976, the aforenamed
reversing the decision 4 of the trial court and deputy sheriff went to the mining site of the private
subsequent resolution 5 dated August 3, 1988 which respondent and served the writ of execution on the
denied the petitioners’ motion for reconsideration. persons concerned, but nothing seemed to have
The dispositive portion of the resolution in question happened thereat.
dated June 27, 1988 reads as follows:chanrob1es
virtual 1aw library Thereafter, the Sheriff prepared on his own a Notice
54
of Garnishment dated April 29, 1976 addressed to On July 6, 1976, the private respondent, then
six (6) banks, all located in Bacolod City, one of plaintiff, filed a complaint before the Regional Trial
which being the petitioner herein, directing the bank Court of Manila, Branch II, against the petitioners
concerned to immediately issue a check in the name and Damian Rojas, the Deputy Provincial Sheriff of
of the Deputy Provincial Sheriff of Negros Negros Occidental, then defendants, alleging that
Occidental in an amount equivalent to the amount the former’s current deposit with the petitioner bank
of the garnishment and that proper receipt would be was levied upon, garnished, and with undue haste
issued therefor. unlawfully allowed to be withdrawn, and
notwithstanding the alleged unauthorized disclosure
Incidentally, the house lawyer of the private of the said current deposit and unlawful release
respondent, Atty. Rexes V. Alejano, acting on a tip thereof, the latter have failed and refused to restore
regarding the existence of the said notice of the amount of P37,466.18 to the formers account
garnishment, communicated with the bank manager, despite repeated demands.
the petitioner Jose Henares, verbally at first at
around 2:00 o’clock in the afternoon of that day, Both the petitioners and the Deputy Sheriff filed
April 29, 1976, and later confirmed in a formal their respective answers denying the material
letter received by the petitioner Henares at about averments of the said complaint and alleged that
5:00 o’clock of that same day, requesting the their actuations were all in accordance with law and
withholding of any release of the deposit of the likewise filed counterclaims for damages, including
private respondent with the petitioner bank. a cross-claim of the former against the latter. The
third-party complaint of the petitioners against the
Meanwhile, at about 9:30 in the morning of April forty-nine (49) laborers in the NLRC case was,
29, 1976, the deputy sheriff presented the Notice of however, dismissed for failure of the sheriff to serve
Garnishment and the Writ of Execution attached summons upon the latter.
therewith to the petitioner Henares and later in the
afternoon, demanded from the latter, under pain of On January 23, 1982, after several postponements,
contempt, the release of the deposit of the the pre-trial was finally conducted and terminated
private Respondent. with only the petitioners and the private respondent
participating, through their respective counsel.
The petitioner Henares, upon knowing from the
Acting Provincial Sheriff that there was no On January 15, 1985, the trial court rendered its
restraining order from the National Labor Relations judgment in favor of the private respondent, the
Commission and on the favorable advice of the dispositive portion of which reads:chanrob1es
bank’s legal counsel, issued a debit memo for the virtual 1aw library
full balance of the private respondent’s account with
the petitioner bank. Thereafter, he issued a WHEREFORE, judgment is hereby rendered in
manager’s check in the name of the Deputy favor of the plaintiff and against the three (3)
Provincial Sheriff of Negros Occidental for the defendants by ordering the latter to pay, jointly and
amount of P37,466.18, which was the exact balance severally, the plaintiff the following amounts, to
of the private respondent’s account as of that day. wit:chanrob1es virtual 1aw library

On the following day, April 30, 1976, at about 1:00 (a) the sum of P37,466.18, with interest thereon at
o’clock in the afternoon, the deputy sheriff returned the rate of 12% per annum from date of first
to the bank in order to encash the check but before demand on April 29, 1976 until the amount shall
the actual encashment, the petitioner Henares once have been fully and completely restored and paid;
again inquired about any existing restraining order
from the NLRC and upon being told that there was (b) the sum of P10,000.00 as attorney’s fees.
none, the latter allowed the said
encashment.chanroblesvirtualawlibrary Defendants are ordered to pay, jointly and severally,
double costs.10
55
x x x not have the effect of delivering the money
garnished to the sheriff or to the party in whose
favor the attachment is issued. The fund is retained
On appeal, the respondent court in a decision dated by the garnishee or the person holding the money
February 26, 1988, first reversed the said judgment for the defendant.chanrobles lawlibrary : rednad
of the lower court, but however, on the motion for
reconsideration filed by the private respondent, The garnishee, or one in whose hands property is
subsequently annulled and set aside its said decision attached or garnished, is universally regarded as
in a resolution dated June 27, 1988. On August 3, charged with its legal custody pending outcome of
1988, the respondent court denied the petitioners’ the attachment or garnishment unless, by local
own motion for reconsideration. statute and practice, he is permitted to surrender or
pay the garnished property or funds into court, to
Hence, this petition. the attaching officer, or to a receiver or trustee
appointed to receive them. (5 Am. Jur. 14)
The petitioners raise two issues, 11 to
wit:chanrob1es virtual 1aw library The effect of the garnishment, therefore, was to
require the Philippine Trust Company, holder of the
1. Whether or not petitioners had legal basis in funds of the Luzon Surety Co., to set aside said
releasing the garnished deposit of private amount from the funds of the Luzon Surety Co., and
respondent to the sheriff. keep the same subject to the final orders of the
Court. In the case at bar there was never an order to
2. Whether or not petitioners violated Republic Act deliver the full amount garnished to the plaintiff-
No. 1405, otherwise known as the Secrecy of Bank appellee; all that was ordered to be delivered after
Deposits Act when they allowed the sheriff to the judgment had become final was the amount
garnish the deposit of private Respondent. found by the Court of Appeals to be due. The
balance of the amount garnished, therefore,
The petition is impressed with merit. remained all the time in the possession of the bank
as part of the funds of the Luzon Surety Co.
The crux of the instant controversy boils down to although the same could not be disposed of by the
the question of whether or not a bank is liable for owner. (De la Rama v. Villarosa, Et Al., L-17927,
releasing its depositor’s funds on the strength of the June 29, 1963, 8 SCRA 413, 418-419; Emphasis
notice of garnishment made by the deputy sheriff supplied). 12
pursuant to a writ of execution issued by the
National Labor Relations Commission (NLRC). The above-mentioned contention citing De la Rama
is not exactly on all fours with the facts of the case
The respondent court in its questioned resolution at bar. In De la Rama, the amount garnished was not
dated June 27, 1988, held that the petitioners were actually taken possession of by the sheriff, even
liable, in this wise:chanrob1es virtual 1aw library from the time of garnishment, because the judgment
debtor was able to appeal to the Court of Appeals
In the case at bar, Defendant-Appellant PCIB, and obtain from the Court an injunction prohibiting
despite vigorous objections from plaintiff-appellee, execution of the judgment.
with indecent haste disclosed and released the
deposit of plaintiff-appellee on the strength of a On the other hand, nowhere in the record of the
mere notice of garnishment which the Honorable present case is there any evidence of an appeal by
Supreme Court ruled upon is no authority for the the private respondent from the decision of the
release of the deposit, thus:chanrob1es virtual 1aw NLRC or the existence of any restraining order to
library prevent the release of the private respondent’s
deposit to the deputy sheriff at the time of the
In the second place, the mere garnishment of funds service of the notice of garnishment and writ of
belonging to a party upon order of the court does execution to the petitioners.
56
same, at the time of service upon them of a copy of
On the contrary, the uncontroverted statements in the order of attachment and notice as provided in
the deposition of the petitioner Henares that he had the last preceding section, shall be liable to the
previously sought the advice of the bank’s counsel applicant of the amount of such credits, debts or
and that he had checked twice with the Acting other property, until the attachment be discharged,
Provincial Sheriff who had informed him of the or any judgment recovered by him be satisfied,
absence of any restraining order, belie any unless such property be delivered or transferred, or
allegation of undue and indecent haste in the release such debts be paid, to the clerk, sheriff or other
of the said deposit in question. proper officer of the court issuing the attachment.

The cases more in point to the present controversy Garnishment is considered as a specie of attachment
are the recent decisions in Engineering Construction for reaching credits belonging to the judgment
Inc. v. National Power Corporation 13 and Rizal debtor and owing to him from a stranger to the
Commercial Banking Corporation (RCBC) v. De litigation. Under the above cited rule, the garnishee
Castro 14 where the Court absolved both [the third person] is obliged to deliver the credits,
garnishees, MERALCO and RCBC, respectively, etc. to the proper officer issuing the writ and "the
from any liability for their prompt compliance in the law exempts from liability the person having in his
release of garnished funds, possession or under his control any credits or other
personal property belonging to the defendant, . . ., if
The rationale behind Engineering Construction, Inc. such property be delivered or transferred, . . ., to the
and which was quoted in Rizal Commercial clerk, sheriff, or other officer of the court in which
Banking Corporation is persuasive:chanrob1es the action is pending."cralaw virtua1aw library
virtual 1aw library
x x x Applying the foregoing to the case at bar,
MERALCO, as garnishee, after having been
judicially compelled to pay the amount of the
But while partial restitution is warranted in favor of judgment represented by funds in its possession
NPC, we find that the Appellate Court erred in not belonging to the judgment debtor or NPC, should be
absolving MERALCO, the garnishee, from its released from all responsibilities over such amount
obligations to NPC with respect to the payment to after delivery thereof to the sheriff. The reason for
ECI of P1,114,543.23, thus in effect subjecting the rule is self evident. To expose garnishees to
MERALCO to double liability MERALCO should risks for obeying court orders and processes would
not have been faulted for its prompt obedience to a only undermine the administration of justice.
writ of garnishment. Unless there are compelling (Emphasis ours.) 15
reasons such as: a defect on the face of the writ or x x x
actual knowledge on the part of the garnishee of
lack of entitlement on the part of the garnisher, it is
not incumbent upon the garnishee to inquire or to Moreover, there is no issue concerning the
judge for itself whether or not the order for the indebtedness of the petitioner bank to the private
advance execution of a judgment is valid.chanrobles respondent since the latter has never denied the
virtual lawlibrary existence of its deposit with the former, the said
deposit being considered a credit in favor of the
Section 8, Rule 57 of the Rules of Court depositor against the bank. 16 We therefore see no
provides:chanrob1es virtual 1aw library application for Sec. 39, Rule 39 of the Rules of
Court invoked by the private respondent as to
Effect of attachment of debts and credits. — All necessitate the "examination of the debtor of the
persons having in their possession or under their judgment debtor." 17
control any credits or other similar personal
property belonging to the party against whom Rather, we find the immediate release of the funds
attachment is issued, or owing any debts to the by the petitioners on the strength of the notice of
57
garnishment and writ of execution, whose issuance, their just debts, even if ordered by the Court,
absent any patent defect, enjoys the presumption of through the expedient of converting their assets into
regularity, sufficiently supported by Sec. 41, Rule cash and depositing the same in a bank.
39 of the Rules of Court which reads:chanrob1es
virtual 1aw library Since there is no evidence that the petitioners
x x x themselves divulged the information that the private
respondent had an account with the petitioner bank
and it is undisputed that the said account was
After an execution against property has issued, a properly the object of the notice of garnishment and
person indebted to the judgment debtor may pay to writ of execution carried out by the deputy sheriff, a
the officer holding the execution the amount of his duly authorized officer of the court, we can not
debt or so much thereof as may be necessary to therefore hold the petitioners liable under R.A.
satisfy the execution, and the officer’s receipt shall 1405.
be a sufficient discharge for the amount so paid or
directed to be credited by the judgment creditor on While the general rule is that the findings of fact of
the execution.chanrobles law library the appellate court are binding on this Court, the
x x x said rule however admits of exceptions, such as
when the Court of Appeals clearly misconstrued and
misapplied the law, drawn from the incorrect
Finally, we likewise take cognizance of the subject conclusions of fact established by evidence and
of the judgment sought to be enforced in the writ of otherwise at certain conclusions which are based on
execution in question, namely, laborers’ backwages. misapprehension of facts, 19 as in the case at bar.
We believe that the petitioners should rather be
commended for having acted with urgent dispatch The petitioners are therefore absolved from any
despite attempts by the private respondent, as with liability for the disclosure and release of the private
so many scheming employers, to frustrate or respondent’s deposit to the custody of the deputy
unjustifiably delay the prompt satisfaction of final sheriff in satisfaction of the final judgment for the
judgments which often result in undue prejudice to laborers’ backwages.
the legitimate claims of labor.
WHEREFORE, the petition is GRANTED and the
With regard to the second issue, we find no challenged Resolutions dated June 27, 1988 and
violation whatsoever by the petitioners of Republic August 13, 1988 of the Court of Appeals are hereby
Act No. 1405, otherwise known as the Secrecy of ANNULLED and SET ASIDE and its Decision
Bank Deposits Act. The Court in China Banking dated February 26, 1988 dismissing the complaint is
Corporation v. Ortega 18 had the occasion to hereby REINSTATED. With costs against the
dispose of this issue when it stated, thus:chanrob1es private Respondent.chanrobles law library : red
virtual 1aw library
SO ORDERED.
It is clear from the discussion of the conference
committee report on Senate Bill No. 351 and House
Bill No. 3977, which later became Republic Act Republic of the Philippines
1405, that the prohibition against examination of or SUPREME COURT
inquiry into a bank deposit under Republic Act Manila
1405 does not preclude its being garnished to insure THIRD DIVISION
satisfaction of a judgment. Indeed there is no real G.R. No. L-34548 November 29, 1988
inquiry in such a case, and if existence of the RIZAL COMMERCIAL BANKING
deposit is disclosed the disclosure is purely CORPORATION, petitioner,
incidental to the execution process. It is hard to vs.
conceive that it was ever within the intention of THE HONORABLE PACIFICO P. DE
Congress to enable debtors to evade payment of
58
CASTRO and PHILIPPINE VIRGINIA the necessary steps for the protection of its own
TOBACCO ADMINISTRATION, respondents interest [Record on Appeal, p. 36]
Meer, Meer & Meer for petitioner. Upon an Urgent Ex-Parte Motion dated January 27,
The Solicitor General for respondents. 1970 filed by BADOC, the respondent Judge issued
an Order granting the Ex-Parte Motion and directing
CORTES, J.: the herein petitioner "to deliver in check the amount
The crux of the instant controversy dwells on the garnished to Sheriff Faustino Rigor and Sheriff
liability of a bank for releasing its depositor's funds Rigor in turn is ordered to cash the check and
upon orders of the court, pursuant to a writ of deliver the amount to the plaintiff's representative
garnishment. If in compliance with the court order, and/or counsel on record." [Record on Appeal, p.
the bank delivered the garnished amount to the 20; Rollo, p. 5.] In compliance with said Order,
sheriff, who in turn delivered it to the judgment petitioner delivered to Sheriff Rigor a certified
creditor, but subsequently, the order of the court check in the sum of P 206,916.76.
directing payment was set aside by the same judge, Respondent PVTA filed a Motion for
should the bank be held solidarily liable with the Reconsideration dated February 26,1970 which was
judgment creditor to its depositor for reimbursement granted in an Order dated April 6,1970, setting
of the garnished funds? The Court does not think so. aside the Orders of Execution and of Payment and
In Civil Case No. Q-12785 of the Court of First the Writ of Execution and ordering petitioner and
Instance of Rizal, Quezon City Branch IX entitled BADOC "to restore, jointly and severally, the
"Badoc Planters, Inc. versus Philippine Virginia account of PVTA with the said bank in the same
Tobacco Administration, et al.," which was an condition and state it was before the issuance of the
action for recovery of unpaid tobacco deliveries, an aforesaid Orders by reimbursing the PVTA of the
Order (Partial Judgment) was issued on January 15, amount of P 206, 916.76 with interests at the legal
1970 by the Hon. Lourdes P. San Diego, then rate from January 27, 1970 until fully paid to the
Presiding Judge, ordering the defendants therein to account of the PVTA This is without prejudice to
pay jointly and severally, the plaintiff Badoc the right of plaintiff to move for the execution of the
Planters, Inc. (hereinafter referred to as "BADOC") partial judgment pending appeal in case the motion
within 48 hours the aggregate amount of for reconsideration is denied and appeal is taken
P206,916.76, with legal interests thereon. from the said partial judgment." [Record on Appeal,
On January 26,1970, BADOC filed an Urgent Ex- p. 58]
Parte Motion for a Writ of Execution of the said The Motion for Reconsideration of the said Order of
Partial Judgment which was granted on the same April 6, 1970 filed by herein petitioner was denied
day by the herein respondent judge who acted in in the Order of respondent judge dated June 10,
place of the Hon. Judge San Diego who had just 1970 and on June 19, 1970, which was within the
been elevated as a Justice of the Court of Appeals. period for perfecting an appeal, the herein petitioner
Accordingly, the Branch Clerk of Court on the very filed a Notice of Appeal to the Court of Appeals
same day, issued a Writ of Execution addressed to from the said Orders.
Special Sheriff Faustino Rigor, who then issued a This case was then certified by the Court of Appeals
Notice of Garnishment addressed to the General to this Honorable Court, involving as it does purely
Manager and/or Cashier of Rizal Commercial questions of law.
Banking Corporation (hereinafter referred to as The petitioner raises two principal queries in the
RCBC), the petitioner in this case, requesting a instant case: 1) Whether or not PVTA funds are
reply within five (5) days to said garnishment as to public funds not subject to garnishment; and 2)
any property which the Philippine Virginia Tobacco Whether or not the respondent Judge correctly
Administration (hereinafter referred to as "PVTA") ordered the herein petitioner to reimburse the
might have in the possession or control of petitioner amount paid to the Special Sheriff by virtue of the
or of any debts owing by the petitioner to said execution issued pursuant to the Order/Partial
defendant. Upon receipt of such Notice, RCBC Judgment dated January 15, 1970.
notified PVTA thereof to enable the PVTA to take The record reveals that on February 2, 1970, private
respondent PVTA filed a Motion for
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Reconsideration of the Order/ Partial Judgment of and blamed RCBC for the supposed "hasty release
January 15, 1970. This was granted and the of the amount from the deposit of the PVTA
aforementioned Partial Judgment was set aside. The without giving PVTA a chance to take proper steps
case was set for hearings on November 4, 9 and 11, by informing it of the action being taken against its
1970 [Rollo, pp. 205-207.] However, in view of the deposit, thereby observing with prudence the five-
failure of plaintiff BADOC to appear on the said day period given to it by the sheriff." [Rollo, p. 81.]
dates, the lower court ordered the dismissal of the Such allegations must be rejected for lack of merit.
case against PVTA for failure to prosecute [Rollo, In the first place, it should be pointed out that
p. 208.] RCBC did not deliver the amount on the strength
It must be noted that the Order of respondent Judge solely of a Notice of Garnishment; rather, the
dated April 6, 1970 directing the plaintiff to release of the funds was made pursuant to the
reimburse PVTA t e amount of P206,916.76 with aforesaid Order of January 27, 1970. While the
interests became final as to said plaintiff who failed Notice of Garnishment dated January 26, 1970
to even file a motion for reconsideration, much less contained no demand of payment as it was a mere
to appeal from the said Order. Consequently, the request for petitioner to withold any funds of the
order to restore the account of PVTA with RCBC in PVTA then in its possession, the Order of January
the same condition and state it was before the 27, 1970 categorically required the delivery in
issuance of the questioned orders must be upheld as check of the amount garnished to the special sheriff,
to the plaintiff, BADOC. Faustino Rigor.
However, the questioned Order of April 6, 1970 In the second place, the bank had already filed a
must be set aside insofar as it ordered the petitioner reply to the Notice of Garnishment stating that it
RCBC, jointly and severally with BADOC, to had in its custody funds belonging to the PVTA,
reimburse PVTA. which, in fact was the basis of the plaintiff in filing
The petitioner merely obeyed a mandatory directive a motion to secure delivery of the garnished amount
from the respondent Judge dated January 27, 1970, to the sheriff. [See Rollo, p. 93.]
ordering petitioner 94 "to deliver in check the Lastly, the bank, upon the receipt of the Notice of
amount garnished to Sheriff Faustino Rigor and Garnishment, duly informed PVTA thereof to
Sheriff Rigor is in turn ordered to cash the check enable the latter to take the necessary steps for the
and deliver the amount to the plaintiffs protection of its own interest [Record on Appeal, p.
representative and/or counsel on record." [Record 36]
on Appeal, p. 20.] It is important to stress, at this juncture, that there
PVTA however claims that the manner in which the was nothing irregular in the delivery of the funds of
bank complied with the Sheriffs Notice of PVTA by check to the sheriff, whose custody is
Garnishment indicated breach of trust and equivalent to the custody of the court, he being a
dereliction of duty on the part of the bank as court officer. The order of the court dated January
custodian of government funds. It insistently urges 27, 1970 was composed of two parts, requiring: 1)
that the premature delivery of the garnished amount RCBC to deliver in check the amount garnished to
by RCBC to the special sheriff even in the absence the designated sheriff and 2) the sheriff in turn to
of a demand to deliver made by the latter, before the cash the check and deliver the amount to the
expiration of the five-day period given to reply to plaintiffs representative and/or counsel on record. It
the Notice of Garnishment, without any reply must be noted that in delivering the garnished
having been given thereto nor any prior amount in check to the sheriff, the RCBC did not
authorization from its depositor, PVTA and even if thereby make any payment, for the law mandates
the court's order of January 27, 1970 did not require that delivery of a check does not produce the effect
the bank to immediately deliver the garnished of payment until it has been cashed. [Article 1249,
amount constitutes such lack of prudence as to Civil Code.]
make it answerable jointly and severally with the Moreover, by virtue of the order of garnishment, the
plaintiff for the wrongful release of the money from same was placed in custodia legis and therefore,
the deposit of the PVTA. The respondent Judge in from that time on, RCBC was holding the funds
his controverted Order sustained such contention subject to the orders of the court a quo. That the
60
sheriff, upon delivery of the check to him by RCBC that the Appellate Court erred in not
encashed it and turned over the proceeds thereof to absolving MERALCO, the
the plaintiff was no longer the concern of RCBC as garnishee, from its obligations to
the responsibility over the garnished funds passed to NPC with respect to the payment of
the court. Thus, no breach of trust or dereliction of ECI of P 1,114,543.23, thus in effect
duty can be attributed to RCBC in delivering its subjecting MERALCO to double
depositor's funds pursuant to a court order which liability. MERALCO should not
was merely in the exercise of its power of control have been faulted for its prompt
over such funds. obedience to a writ of garnishment.
... The garnishment of property to Unless there are compelling reasons
satisfy a writ of execution operates such as: a defect on the face of the
as an attachment and fastens upon writ or actual knowledge on the part
the property a lien by which the of the garnishee of lack of
property is brought under the entitlement on the part of the
jurisdiction of the court issuing the garnisher, it is not incumbent upon
writ. It is brought into custodia legis, the garnishee to inquire or to judge
under the sole control of such court for itself whether or not the order for
[De Leon v. Salvador, G.R. Nos. L- the advance execution of a judgment
30871 and L-31603, December is valid.
28,1970, 36 SCRA 567, 574.] Section 8, Rule 57 of the Rules of
The respondent judge however, censured the Court provides:
petitioner for having released the funds "simply on Effect of attachment
the strength of the Order of the court which. far of debts and
from ordering an immediate release of the amount credits.—All persons
involved, merely serves as a standing authority to having in their
make the release at the proper time as prescribed by possession or under
the rules." [Rollo, p. 81.] their control any
This argument deserves no serious consideration. credits or other
As stated earlier, the order directing the bank to similar personal
deliver the amount to the sheriff was distinct and property belonging to
separate from the order directing the sheriff to the party against
encash the said check. The bank had no choice but whom attachment is
to comply with the order demanding delivery of the issued, or owing any
garnished amount in check. The very tenor of the debts to the same, all
order called for immediate compliance therewith. the time of service
On the other hand, the bank cannot be held liable upon them of a copy
for the subsequent encashment of the check as this of the order of
was upon order of the court in the exercise of its attachment and notice
power of control over the funds placed in custodia as provided in the last
legis by virtue of the garnishment. preceding section,
In a recent decision [Engineering Construction Inc., shall be liable to the
v. National Power Corporation, G.R. No. L-34589, applicant for the
June 29, 1988] penned by the now Chief Justice amount of such
Marcelo Fernan, this Court absolved a garnishee credits, debts or other
from any liability for prompt compliance with its property, until the
order for the delivery of the garnished funds. The attachment be
rationale behind such ruling deserves emphasis in discharged, or any
the present case: judgment recovered
But while partial restitution is by him be satisfied,
warranted in favor of NPC, we find unless such property
61
be delivered or dutifully abided by it, the
transferred, or such presumption being that judicial
debts be paid, to the orders are valid and issued in the
clerk, sheriff or other regular performance of the duties of
proper officer of the the Court" [Section 5(m) Rule 131,
court issuing the Revised Rules of Court]. This should
attachment. operate with greater force in relation
Garnishment is considered as a to the herein petitioner which, not
specie of attachment for reaching being a party in the case, was just
credits belonging to the judgment called upon to perform an act in
debtor and owing to him from a accordance with a judicial flat. A
stranger to the litigation. Under the contrary view will invite disrespect
above-cited rule, the garnishee [the for the majesty of the law and induce
third person] is obliged to deliver the reluctance in complying with judicial
credits, etc. to the proper officer orders out of fear that said orders
issuing the writ and "the law exempts might be subsequently invalidated
from liability the person having in and thereby expose one to suffer
his possession or under his control some penalty or prejudice for
any credits or other personal property obeying the same. And this is what
belonging to the defendant, ..., if will happen were the controversial
such property be delivered or orders to be sustained. We need not
transferred, ..., to the clerk, sheriff, or underscore the danger of this as a
other officer of the court in which the precedent.
action is pending. [3 Moran, xxx xxx xxx
Comments on the Rules of Court 34 [ Brief for the Petitioner, Rollo, p.
(1970 ed.)] 212; Emphasis supplied.]
Applying the foregoing to the case at bar, From the foregoing, it may be concluded that the
MERALCO, as garnishee, after having been charge of breach of trust and/or dereliction of duty
judicially compelled to pay the amount of the as well as lack of prudence in effecting the
judgment represented by funds in its possession immediate payment of the garnished amount is
belonging to the judgment debtor or NPC, should be totally unfounded. Upon receipt of the Notice of
released from all responsibilities over such amount Garnishment, RCBC duly informed PVTA thereof
after delivery thereof to the sheriff. The reason for to enable the latter to take the necessary steps for its
the rule is self-evident. To expose garnishees to protection. However, right on the very next day
risks for obeying court orders and processes would after its receipt of such notice, RCBC was already
only undermine the administration of justice. served with the Order requiring delivery of the
[Emphasis supplied.] garnished amount. Confronted as it was with a
The aforequoted ruling thus bolsters RCBC's stand mandatory directive, disobedience to which exposed
that its immediate compliance with the lower court's it to a contempt order, it had no choice but to
order should not have been met with the harsh comply.
penalty of joint and several liability. Nor can its The respondent Judge nevertheless held that the
liability to reimburse PVTA of the amount delivered liability of RCBC for the reimbursement of the
in check be premised upon the subsequent garnished amount is predicated on the ruling of the
declaration of nullity of the order of delivery. As Supreme Court in the case of Commissioner of
correctly pointed out by the petitioner: Public Highways v. Hon. San Diego[G.R. No. L-
xxx xxx xxx 30098, February 18, 1970, 31 SCRA 616] which he
That the respondent Judge, after his found practically on all fours with the case at bar.
Order was enforced, saw fit to recall The Court disagrees.
said Order and decree its nullity, The said case which reiterated the rule in Republic
should not prejudice one who v. Palacio [G.R. No. L-20322, May 29, 1968, 23
62
SCRA 899] that government funds and properties sued were not exempt from garnishment"
may not be seized under writs of execution or [Philippine National Bank v. Pabalan, G.R. No. L-
garnishment to satisfy such judgment is definitely 33112, June 15, 1978, 83 SCRA 595, 598.]
distinguishable from the case at bar. In National Shipyards and Steel Corp. v. CIR [G.R.
In the Commissioner of Public Highways case No. L-17874, August 31, 1964, 8 SCRA 781], this
[supra], the bank which precipitately allowed the Court held that the allegation to the effect that the
garnishment and delivery of the funds failed to funds of the NASSCO are public funds of the
inform its depositor thereof, charged as it was with government and that as such, the same may not be
knowledge of the nullity of the writ of execution garnished, attached or levied upon is untenable for,
and notice of garnishment against government as a government-owned or controlled corporation, it
funds. In the aforementioned case, the funds has a personality of its own, distinct and separate
involved belonged to the Bureau of Public from that of the government. This court has likewise
Highways, which being an arm of the executive ruled that other govemment-owned and controlled
branch of the government, has no personality of its corporations like National Coal Company, the
own separate from the National Government. The National Waterworks and Sewerage Authority
funds involved were government funds covered by (NAWASA), the National Coconut Corporation
the rule on exemption from execution. (NACOCO) the National Rice and Corn
This brings us to the first issue raised by the Corporation (NARIC) and the Price Stabilization
petitioner: Are the PVTA funds public funds Council (PRISCO) which possess attributes similar
exempt from garnishment? The Court holds that to those of the PVTA are clothed with personalities
they are not. of their own, separate and distinct from that of the
Republic Act No. 2265 created the PVTA as an government [National Coal Company v. Collector
ordinary corporation with all the attributes of a of Internal Revenue, 46 Phil. 583 (1924); Bacani
corporate entity subject to the provisions of the and Matoto v. National Coconut Corporation et al.,
Corporation Law. Hence, it possesses the power "to 100 Phil. 471 (1956); Reotan v. National Rice &
sue and be sued" and "to acquire and hold such Corn Corporation, G.R. No. L-16223, February 27,
assets and incur such liabilities resulting directly 1962, 4 SCRA 418.] The rationale in vesting it with
from operations authorized by the provisions of this a separate personality is not difficult to find. It is
Act or as essential to the proper conduct of such well-settled that when the government enters into
operations." [Section 3, Republic Act No. 2265.] commercial business, it abandons its sovereign
Among the specific powers vested in the PVTA are: capacity and is to be treated like any other
1) to buy Virginia tobacco grown in the Philippines corporation [Manila Hotel Employees' Association
for resale to local bona fide tobacco manufacturers v. Manila Hotel Co. and CIR, 73 Phil. 734 (1941).]
and leaf tobacco dealers [Section 4(b), R.A. No. Accordingly, as emphatically expressed by this
2265]; 2) to contracts of any kind as may be Court in a 1978 decision, "garnishment was the
necessary or incidental to the attainment of its appropriate remedy for the prevailing party which
purpose with any person, firm or corporation, with could proceed against the funds of a corporate entity
the Government of the Philippines or with any even if owned or controlled by the government"
foreign government, subject to existing laws inasmuch as "by engaging in a particular business
[Section 4(h), R.A. No. 22651; and 3) generally, to thru the instrumentality of a corporation, the
exercise all the powers of a corporation under the government divests itself pro hac vice of its
Corporation Law, insofar as they are not sovereign character, so as to render the corporation
inconsistent with the provisions of this Act [Section subject to the rules of law governing private
4(k), R.A. No. 2265.] corporations" [Philippine National Bank v. CIR,
From the foregoing, it is clear that PVTA has been G.R No. L-32667, January 31, 1978, 81 SCRA 314,
endowed with a personality distinct and separate 319.]
from the government which owns and controls it. Furthermore, in the case of PVTA, the law has
Accordingly, this Court has heretofore declared that expressly allowed it funds to answer for various
the funds of the PVTA can be garnished since obligations, including the one sought to be enforced
"funds of public corporation which can sue and be by plaintiff BADOC in this case (i.e. for unpaid
63
deliveries of tobacco). Republic Act No. 4155, judgment sustaining the liability of the PVTA to
which discounted the erstwhile support given by the answer for its obligations, then the purpose of the
Central Bank to PVTA, established in lieu thereof a law in creating the PVTA would be defeated. For it
"Tobacco Fund" to be collected from the proceeds was declared to be a national policy, with respect to
of fifty per centum of the tariff or taxes of imported the local Virginia tobacco industry, to encourage the
leaf tobacco and also fifty per centum of the specific production of local Virginia tobacco of the qualities
taxes on locally manufactured Virginia type needed and in quantities marketable in both
cigarettes. domestic and foreign markets, to establish this
Section 5 of Republic Act No. 4155 provides that industry on an efficient and economic basis, and to
this fund shall be expended for the support or create a climate conducive to local cigarette
payment of: manufacture of the qualities desired by the
1. Indebtedness of the Philippine consuming public, blending imported and native
Virginia Tobacco Administration and Virginia leaf tobacco to improve the quality of
the former Agricultural Credit and locally manufactured cigarettes [Section 1, Republic
Cooperative Financing Act No. 4155.]
Administration to FACOMAS and The Commissioner of Public Highways case is thus
farmers and planters regarding distinguishable from the case at bar. In said case,
Virginia tobacco transactions in the Philippine National Bank (PNB) as custodian of
previous years; funds belonging to the Bureau of Public Highways,
2. Indebtedness of the Philippine an agency of the government, was chargeable with
Virginia Tobacco Administration and knowledge of the exemption of such government
the former Agricultural Credit and funds from execution and garnishment pursuant to
Cooperative Financing the elementary precept that public funds cannot be
Administration to the Central Bank disbursed without the appropriation required by law.
in gradual amounts regarding On the other hand, the same cannot hold true for
Virginia tobacco transactions in RCBC as the funds entrusted to its custody, which
previous years; belong to a public corporation, are in the nature of
3. Continuation of the Philippine private funds insofar as their susceptibility to
Virginia Tobacco Administration garnishment is concerned. Hence, RCBC cannot be
support and subsidy charged with lack of prudence for immediately
operations including the purchase of complying with the order to deliver the garnished
locally grown and produced Virginia amount. Since the funds in its custody are precisely
leaf tobacco, at the present support meant for the payment of lawfully-incurred
and subsidy prices, its procurement, obligations, RCBC cannot rightfully resist a court
redrying, handling, warehousing and order to enforce payment of such obligations. That
disposal thereof, and the redrying such court order subsequently turned out to have
plants trading within the purview of been erroneously issued should not operate to the
their contracts; detriment of one who complied with its clear order.
4. Operational, office and field Finally, it is contended that RCBC was bound to
expenses, and the establishment of inquire into the legality and propriety of the Writ of
the Tobacco Research and Grading Execution and Notice of Garnishment issued against
Institute. [Emphasis supplied.] the funds of the PVTA deposited with said bank.
Inasmuch as the Tobacco Fund, a special fund, was But the bank was in no position to question the
by law, earmarked specifically to answer legality of the garnishment since it was not even a
obligations incurred by PVTA in connection with its party to the case. As correctly pointed out by the
proprietary and commercial operations authorized petitioner, it had neither the personality nor the
under the law, it follows that said funds may be interest to assail or controvert the orders of
proceeded against by ordinary judicial processes respondent Judge. It had no choice but to obey the
such as execution and garnishment. If such funds same inasmuch as it had no standing at all to
cannot be executed upon or garnished pursuant to a impugn the validity of the partial judgment rendered
64
in favor of the plaintiff or of the processes issued in WHEREFORE, the petition is hereby granted and
execution of such judgment. the petitioner is ABSOLVED from any liability to
RCBC cannot therefore be compelled to make respondent PVTA for reimbursement of the funds
restitution solidarily with the plaintiff BADOC. garnished. The questioned Order of the respondent
Plaintiff BADOC alone was responsible for the Judge ordering the petitioner, jointly and severally
issuance of the Writ of Execution and Order of with BADOC, to restore the account of PVTA are
Payment and so, the plaintiff alone should bear the modified accordingly.
consequences of a subsequent annulment of such SO ORDERED.
court orders; hence, only the plaintiff can be ordered
to restore the account of the PVTA.

65