Cases on General Banking Laws
Ursal v. CA (G.R. No. 142411) title, it cannot be excused on the duty of
Facts:
Spouses Moneset are registered owners of a
parcel of land and they executed on it a
Contract to Sell in favor of petitioner Ursal.
Petitioner paid the monthly installments but
stopped due to the spouses’ failure to deliver
the TCT. The land was subject of an absolute
deed of sale in favor of Dr. Canora, Jr. and was
sold again with pacto de retro. The land was
mortgaged with respondent Rural Bank of
Larena and corresponding annotations to the
title were made. For failure of the spouses to
pay the loan, the bank served a notice of
extra-judicial foreclosure. Petitioner moved for
the declaration of the non-effectivity of the
mortgage and the payment of damages
alleging that there was fraud/bad faith in the
part of the spouses and with the bank for
granting the REM in spite knowing that the
property was in possession of petitioner. RTC
ruled in favor of petitioner but maintained that
the property be foreclosed. CA affirmed in toto.
Issue:
Whether or not respondent bank acted in bad
faith by failing to look beyond the TCT of the
property before a loan may be extended upon
it.
Ruling: YES.
Banks cannot merely rely on certificates of title
in ascertaining the status of mortgaged
properties; as their business is impressed with
public interest, they are expected to exercise
more care and prudence in their dealings than
private individuals.
Indeed, the rule that persons dealing with
registered lands can rely solely on the
certificate of title does not apply to banks
Petitioner could not be considered a mortgagee
in good faith. It had knowledge that
respondent was in the US at the time the SPAs
were allegedly executed, yet, it did not
question their due execution. Though petitioner
is not expected to conduct an exhaustive
investigation on the history of the mortgagor's
exercising due diligence required of a banking
institution. Banks are expected to exercise
greater care and prudence in its dealings,
including those involving registered lands, for
their business is affected with public interest.
Page | 1
---000---
Citybank v. Cabamongan
488 SCRA 517
G.R. No. 146918 May 2, 2006
F
Ponente: Austria-Martinez, J.:
Facts:
The Cabamongan spouses Luis and Carmelita
are both based in California, USA. The spouses
opened a foreign currency time deposit
account for their children with petitioner
CityBank with a 180-day term. An impostor
who claimed to be Carmelita (wife) succeeded
to preterminate the time deposit after
presenting passport, credit card and other
identification.
The bank personnel who attended to the
transaction ignored several red flags which
could have alerted the bank as to the real
identity of the person claiming to be
'Carmelita'. For one, she failed to present the
certificate of time deposit, there was also a
discrepancy in her signature with that in the
signature cards of the bank. Finally, the photo
in the bank's file did not look like this person
claiming to be Carmelita. Despite all these
irregularities, the bank went through with the
transaction, which only took 40 minutes. The
document waiver which the impostor signed
was also not notarized, as required under
bank's procedures.
To the aghast of the spouses, they only came
to learn of the incident through a daughter-in-
law who called them up in the US. Apparently,
a break-in occurred previously in their US
residence and several important documents
were lost to the thief. The spouses demanded
payment from the bank who refused. Hence
the filing of the suit against petitioner bank.
 Cases on General Banking Laws
The spouses presented a PNP Document
Examiner expert who analysed the signature
and concluded that the signature was forged,
hence the discrepancy between the signature
of the impostor and the one written in the
signature cards held by the bank.
The trial court ruled in favor of the spouses
Cabamongan, held the bank negligent and
awarded actual, moral and exemplary
damages. The bank appealed to the CA which
affirmed the lower court's decision. Both
parties filed a petition for review on certiorari
before the SC where the petitioner insisted
that it Carmela who preterminated the TD
despite claims to the contrary, while the
Cabamongan spouses contended that
Citybank's negligence was established by
evidence.
Issue: Whether or not the bank is negligent
and therefor should be held liable when it
allowed the pretermination of the TD in favor
of the impostor
HELD:
YES. The bank was indeed negligent as it failed
to exercise the highest degree of care and
diligence required of it. The banking business
is impressed with public interest and of
paramount importance thereto is the trust and
confidence of the public in general. The Court
has held that the bank "is bound to know the
signatures of its customers; and if it pays a
forged check, it must be considered as making
payment out of its own funds, and cannot
ordinarily charge the amount so paid to the
account of the depositor whose name was
forged."(San Carlos Milling Ltd. vs. BPI)
It has been sufficiently shown that the
signatures of Carmelita in the pretermination
were forged. The petitioner, even with its
signature verification procedure failed to detect
the forgeries. Citybank cannot label its
negligence as mere error. For not exercising
the degree of diligence required of banking
institutions, it is liable for damages.
---000---
Ejercito vs. Sandiganbayan G.R. Nos.
157294-95, 30 November 2006
RA 1405 does not provide for the application of
this rule. At all events, the Ombudsman is not
barred from requiring the production of
documents based solely on information Page | 2
obtained by it from sources independentof its
previous inquiry.
Facts:
Joseph Victor G. Ejercito is the owner of Trust
Account No. 858 which was originally opened
at Urban Bank but which is now maintained at
Export and Industry Bank, which is the
purchaser and owner now of the former Urban
Bank and Urbancorp Investment, Inc. He is
also the owner of Savings Account No. 0116-
17345-9 which was originally opened at Urban
Bank but which is now maintained at Export
and Industry Bank, the purchaser and owner of
the former Urban Bank and Urbancorp
Investment, Inc.
Estrada was subsequently charged with
Plunder. The Sandiganbayan a Request for
Issuance of Subpoena Duces Tecum for the
issuance of a subpoena directing the President
of Export and Industry Bank (EIB, formerly
Urban Bank) or his/her authorized
representative to produce various document
related to the investigation.
The Special Prosecution Panel also filed a
Request for Issuance of Subpoena Duces
Tecum/Ad Testificandum directed to the
authorized representative of Equitable-PCI
Bank to produce statements of account
pertaining to certain accounts in the name of
“Jose Velarde” and to testify thereon.
The Sandiganbayan granted both requests by
Resolution and subpoenas were accordingly
issued. The Special Prosecution Panel filed still
another Request for Issuance of Subpoena
Duces Tecum/Ad Testificandum for the
President of EIB or his/her authorized
representative to produce the same documents
subject of the first Subpoena Duces Tecum and
to testify thereon on the hearings scheduled
and subsequent dates until completion of the
 Cases on General Banking Laws
testimony. The request was likewise granted
by the Sandiganbayan. A Subpoena Duces
Tecum/Ad Testificandum was accordingly
issued. Ejercito filed various motions to quash
the various Subpoenas Duces Tecum/Ad
Testificandum previously issued. In his Motion
to Quash, he claimed that his bank accounts
are covered by R.A. No. 1405 (The Secrecy of
Bank Deposits Law) and do not fall under any
of the exceptions stated therein. He further
claimed that the specific identification of
documents in the questioned subpoenas,
including details on dates and amounts, could
only have been made possible by an earlier
illegal disclosure thereof by the EIB and the
Philippine Deposit Insurance Corporation
(PDIC) in its capacity as receiver of the then
Urban Bank. The disclosure being illegal, he
concluded, the prosecution in the case may not
be allowed to make use of the information.
Before the motion was resolved by the
Sandiganbayan, the prosecution filed another
Issue:
Whether or not a Trust Account is covered by
the term “deposit” as used in R.A. 1405;
Held:
R.A. 1405 is broad enough to cover Trust
Account No. 858. However, the protection
afforded by the law is not absolute. There
being recognized exceptions thereto, as above-
quoted Section 2 provides. In the present
case, two exceptions apply, to wit: (1) the
examination of bank accounts is upon order of
a competent court in cases of bribery or
dereliction of duty of public officials, and (2)
the money deposited or invested is the subject
matter of the litigation. Ejercito contends that
since plunder is neither bribery nor dereliction
of duty, his accounts are not excepted from
the protection of R.A. 1405.
Cases of unexplained wealth are similar to
cases of bribery or dereliction of duty and no
reason is seen why these two classes of cases
cannot be excepted from the rule making
bank deposits confidential. The policy as to one
cannot be different from the policy as to the
other. This policy expresses the notion that a
public office is a public trust and any person
who enters upon its discharge does so with the
full knowledge that his life, so far as relevant
to his duty, is open to public scrutiny.
Undoubtedly, cases for plunder involve
unexplained wealth. The crime of bribery and
the overt acts constitutive of plunder are Page | 3
crimes committed by public officers, noble idea
that “a public office is a public trust and any
person who enters upon its discharge does so
with the full knowledge that his life, so far as
relevant to his duty, is open to public scrutiny”
applies with equal force.
Also, the plunder case now pending with the
Sandiganbayan necessarily involves an inquiry
into the whereabouts of the amount
purportedly acquired illegally by former
President Joseph Estrada. Republic Act No.
1405 allows the disclosure of bank deposits in
cases where the money deposited is the
subject matter of the litigation. Hence, these
accounts are no longer protected by the
Secrecy of Bank Deposits Law, there being two
exceptions to the said law applicable in this
case, namely: (1)the examination of bank
accounts is upon order of a competent court in
cases of bribery or dereliction of duty of public
officials, and (2)the money deposited or
invested is the subject matter of the litigation.
Exception (1) applies since the plunder case
pending against former President Estrada is
analogous to bribery or dereliction of duty,
while exception (2) applies because the money
deposited in Ejercito’s bank accounts is said to
form part of the subject matter of the same
plunder case. The “fruit of the poisonous tree”
doctrine or the exclusionary rule is inapplicable
in cases of unlawful examination of bank
accounts.
---000---
KAREN E. SALVACION, minor, thru
Federico N. Salvacion, Jr., father and
Natural Guardian, and Spouses FEDERICO
N. SALVACION, JR., and EVELINA E.
SALVACION vs. CENTRAL BANK OF THE
PHILIPPINES, CHINA BANKING
CORPORATION and GREG BARTELLI y
NORTHCOTT, G.R. No. 94723 August 21,
1997
 Cases on General Banking Laws
FACTS:
Greg Bartelli, an American tourist, was
arrested for committing four counts of rape
and serious illegal detention against Karen
Salvacion. Police recovered from him several
dollar checks and a dollar account in the China
Banking Corp. He was, however, able to
escape from prison. In a civil case filed against
him, the trial court awarded Salvacion moral,
exemplary and attorney’s fees amounting to
almost P1,000,000.00.
Salvacion tried to execute the judgment on the
dollar deposit of Bartelli with the China
Banking Corp. but the latter refused arguing
that Section 11 of Central Bank Circular No.
960 exempts foreign currency deposits from
attachment, garnishment, or any other order
or process of any court, legislative body,
government agency or any administrative body
whatsoever. Salvacion therefore filed this
action for declaratory relief in the Supreme
Court.
ISSUE: Should Section 113 of Central Bank
Circular No. 960 and Section 8 of Republic Act
No. 6426, as amended by PD 1246, otherwise
known as the Foreign Currency Deposit Act be
made applicable to a foreign transient?
HELD: NO.
The provisions of Section 113 of Central Bank
Circular No. 960 and PD No. 1246, insofar as it
amends Section 8 of Republic Act No. 6426,
are hereby held to be INAPPLICABLE to this
case because of its peculiar circumstances.
Respondents are hereby required to comply
with the writ of execution issued in the civil
case and to release to petitioners the dollar
deposit of Bartelli in such amount as would
satisfy the judgment.
Supreme Court ruled that the questioned law
makes futile the favorable judgment and award
of damages that Salvacion and her parents
fully deserve. It then proceeded to show that
the economic basis for the enactment of RA
No. 6426 is not anymore present; and even if
it still exists, the questioned law still denies
those entitled to due process of law for being
unreasonable and oppressive. The intention of
the law may be good when enacted. The law
failed to anticipate the iniquitous effects
producing outright injustice and inequality such
as the case before us.
The SC adopted the comment of the Solicitor Page | 4
General who argued that the Offshore Banking
System and the Foreign Currency Deposit
System were designed to draw deposits from
foreign lenders and investors and,
subsequently, to give the latter protection.
However, the foreign currency deposit made by
a transient or a tourist is not the kind of
deposit encouraged by PD Nos. 1034 and 1035
and given incentives and protection by said
laws because such depositor stays only for a
few days in the country and, therefore, will
maintain his deposit in the bank only for a
short time. Considering that Bartelli is just a
tourist or a transient, he is not entitled to the
protection of Section 113 of Central Bank
Circular No. 960 and PD No. 1246 against
attachment, garnishment or other court
processes.
Here is a child, a 12-year old girl, who in her
belief that all Americans are good and in her
gesture of kindness by teaching his alleged
niece the Filipino language as requested by the
American, trustingly went with said stranger to
his apartment, and there she was raped by
said American tourist Greg Bartelli. Not once,
but ten times. She was detained therein for
four (4) days. This American tourist was able
to escape from the jail and avoid punishment.
On the other hand, the child, having received a
favorable judgment in the Civil Case for
damages in the amount of more than
P1,000,000.00, which amount could alleviate
the humiliation, anxiety, and besmirched
reputation she had suffered and may continue
to suffer for a long, long time; and knowing
that this person who had wronged her has the
money, could not, however get the award of
damages because of this unreasonable law.
This questioned law, therefore makes futile the
favorable judgment and award of damages
that she and her parents fully deserve.
If Karen's sad fate had happened to anybody's
own kin, it would be difficult for him to fathom
 Cases on General Banking Laws
how the incentive for foreign currency deposit
could be more important than his child's rights
to said award of damages; in this case, the
victim's claim for damages from this alien who
had the gall to wrong a child of tender years of
a country where he is a mere visitor. This
further illustrates the flaw in the questioned
provisions.
It is worth mentioning that R.A. No. 6426 was
enacted in 1983 or at a time when the
country's economy was in a shambles; when
foreign investments were minimal and
presumably, this was the reason why said
statute was enacted. But the realities of the
present times show that the country has
recovered economically; and even if not, the
questioned law still denies those entitled to
due process of law for being unreasonable and
oppressive. The intention of the questioned law
may be good when enacted. The law failed to
anticipate the iniquitous effects producing
outright injustice and inequality such as the
case before us.
It has thus been said that —
But I also know, that laws and institutions
must go hand in hand with the progress of the
human mind. As that becomes more
developed, more enlightened, as new
discoveries are made, new truths are disclosed
and manners and opinions change with the
change of circumstances, institutions must
advance also, and keep pace with the times. . .
We might as well require a man to wear still
the coat which fitted him when a boy, as
civilized society to remain ever under the
regimen of their barbarous ancestors.
In fine, the application of the law depends on
the extent of its justice. Eventually, if we rule
that the questioned Section 113 of Central
Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order
or process of any court, legislative body,
government agency or any administrative body
whatsoever, is applicable to a foreign
transient, injustice would result especially to a
citizen aggrieved by a foreign guest like
accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides
that "in case of doubt in the interpretation or
application of laws, it is presumed that the
lawmaking body intended right and justice to
prevail. "Ninguno non deue enriquecerse
tortizeramente con dano de otro." Simply
stated, when the statute is silent or
ambiguous, this is one of those fundamental Page | 5
solutions that would respond to the vehement
urge of conscience. (Padilla vs. Padilla, 74 Phil.
377).
It would be unthinkable, that the questioned
Section 113 of Central Bank No. 960 would be
used as a device by accused Greg Bartelli for
wrongdoing, and in so doing, acquitting the
guilty at the expense of the innocent.
Call it what it may — but is there no conflict of
legal policy here? Dollar against Peso?
Upholding the final and executory judgment of
the lower court against the Central Bank
Circular protecting the foreign depositor?
Shielding or protecting the dollar deposit of a
transient alien depositor against injustice to a
national and victim of a crime? This situation
calls for fairness against legal tyranny.
___________
NOTES:
On February 4, 1989, Greg Bartelli y Northcott,
an American tourist, coaxed and lured
petitioner Karen Salvacion, then 12 years old
to go with him to his apartment. Therein, Greg
Bartelli detained Karen Salvacion for four days,
or up to February 7, 1989 and was able to rape
the child once on February 4, and three times
each day on February 5, 6, and 7, 1989. On
February 7, 1989, after policemen and people
living nearby, rescued Karen, Greg Bartelli was
arrested and detained at the Makati Municipal
Jail. The policemen recovered from Bartelli the
following items: 1.) Dollar Check No. 368,
Control No. 021000678-1166111303, US
3,903.20; 2.) COCOBANK Bank Book No. 104-
108758-8 (Peso Acct.); 3.) Dollar Account —
China Banking Corp., US$/A#54105028-2; 4.)
ID-122-30-8877; 5.) Philippine Money
(P234.00) cash; 6.) Door Keys 6 pieces; 7.)
Stuffed Doll (Teddy Bear) used in seducing the
complainant.
 Cases on General Banking Laws
---000---
China Banking Corporation v. CA, G.R. No.
140687, December 18, 2006
DECISION
(1st Division)
CHICO-NAZARIO, J.:
I. THE FACTS
A complaint for recovery of sums of money and
annulment of sales of real properties and
shares of stock was filed by Jose Gotianuy
against his son-in-law, George Dee, and his
daughter, Mary Margaret Dee. Jose Gotianuy
accused his daughter Mary Margaret Dee of
stealing, among his other properties, US dollar
deposits with Citibank N.A. amounting to not
less than P35,000,000.00 and US$864,000.00.
Mary Margaret Dee received these amounts
from Citibank N.A. through checks which she
allegedly deposited at China Banking
Corporation (China Bank).
Jose Gotianuy died during the pendency of the
case before the trial court. He was substituted
by his other daughter, Elizabeth Gotianuy Lo.
The latter presented six US Dollar checks
withdrawn by Mary Margaret Dee from Jose
Gotianuy’s US dollar placement with Citibank.
In the course of the trial, the lower court
ordered two employees of petitioner China
Bank to testify and disclose in whose name the
dollar fund was deposited. The CA affirmed the
trial court’s order; thus, China Bank appealed
to the Supreme Court.
II. THE ISSUE
May the Citibank dollar checks with Jose
Gotianuy and/or Mary Margaret Dee as payees,
which were deposited with petitioner China
Bank, be looked into notwithstanding the law
on secrecy of foreign currency deposits?
Corollarily, may Jose Gotianuy be considered a
depositor who is entitled to seek an inquiry
over the said foreign currency deposits?
III. THE RULING
[The Supreme Court DENIED the petition,
AFFIRMED the decision of the CA pro hac
vice, and REMANDED the case to the trial
court for continuation of hearing with utmost
dispatch consistent with this ruling.] Page | 6
YES, the Citibank dollar checks with Jose
Gotianuy and/or Mary Margaret Dee as
payees, which were deposited with
petitioner China Bank, may be looked into
notwithstanding the law on secrecy of
foreign currency deposits.
Sec. 8 of R.A. 6426, the Foreign Currency
Deposit Act, provides that all authorized
foreign currency deposits are considered
absolutely confidential in nature and may
not be inquired into. Under the same provision,
there is only one exception to this rule, that is,
when disclosure is allowed upon the
written permission of the depositor.
In this case, Jose Gotianuy was considered by
the Court as a co-depositor of Mary Margaret
Dee. The Court reasoned that since Jose
Gotianuy is the named co-payee of Mary
Margaret Dee in the subject checks, which
were deposited in China Bank, then Jose
Gotianuy is likewise a depositor thereof.
On that basis, no written consent from Mary
Margaret Dee is necessary for the examination
of the foreign currency deposits. As the
owner of the funds unlawfully taken and
which are undisputably now deposited
with China Bank, Jose Gotianuy has the
right to inquire into the said deposits.
A depositor, in cases of bank deposits, is one
who pays money into the bank in the usual
course of business, to be placed to his credit
and subject to his check or the beneficiary of
the funds held by the bank as trustee. On this
score, the observations of the Court of Appeals
are worth reiterating:
Furthermore, it is indubitable that the
Citibank checks were drawn against
the foreign currency account with
Citibank, NA. The monies subject of
said checks originally came from the
 Cases on General Banking Laws
late Jose Gotianuy, the owner of the
account. Thus, he also has legal rights
and interests in the CBC account where
said monies were deposited. More
importantly, the Citibank checks
(Exhibits "AAA" to "AAA-5")
readily demonstrate (sic) that the
late Jose Gotianuy is one of the
payees of said checks. Being a co-
payee thereof, then he or his
estate can be considered as a co-
depositor of said checks. Ergo,
since the late Jose Gotianuy is a
co-depositor of the CBC account,
then his request for the assailed
subpoena is tantamount to an
express permission of a depositor
for the disclosure of the name of
the account holder. The April 16,
1999 Order perforce must be
sustained. (Emphasis supplied.)
In the complaint of Jose Gotianuy, he alleged
that his US dollar deposits with Citibank were
illegally taken from him. On the other hand,
China Bank employee Cristuta Labios testified
that Mary Margaret Dee came to China Bank
and deposited the money of Jose Gotianuy in
Citibank US dollar checks to the dollar account
of her sister Adrienne Chu. This fortifies the
Court’s conclusion that an inquiry into the said
deposit at China Bank is justified. At the very
least, Jose Gotianuy as the owner of these
funds is entitled to a hearing on the
whereabouts of these funds.
Philippine Savings Bank v. Senate
Impeachment Court, G.R. No. 200238,
February 9, 2012
RESOLUTION
(Re Application by Petitioners of a TRO) Page | 7
I. THE FACTS
Philippine Savings Bank (PS Bank) and its
President, Pascual M. Garcia III, filed before
the Supreme Court an original civil action for
certiorari and prohibition with application for
temporary restraining order and/or writ of
preliminary injunction. The TRO was sought to
stop the Senate, sitting as impeachment court,
from further implementing the Subpoena Ad
Testificandum et Duces Tecum, dated February
6, 2012, that it issued against the Branch
Manager of PS Bank, Katipunan Branch. The
subpoena assailed by petitioners covers the
foreign currency denominated accounts
allegedly owned by the impeached Chief
Justice Renato Corona of the Philippine
Supreme Court.
II. THE ISSUE
Should a TRO be issued against the
impeachment court to enjoin it from further
implementing the subpoena with respect to the
alleged foreign currency denominated accounts
of CJ Corona?
III. THE RULING

All things considered and in view of the
distinctive circumstances attendant to the
present case, the Court was constrained to
render a limited pro hac vice ruling. Clearly it
was not the intent of the legislature when
it enacted the law on secrecy on foreign
currency deposits to perpetuate injustice.
This Court is of the view that the allowance
of the inquiry would be in accord with the
rudiments of fair play, the upholding of
fairness in our judicial system and would
be an avoidance of delay and time-
wasteful and circuitous way
administering justice.
[The Court en banc ISSUED A TEMPORARY
RESTRAINING ORDER enjoining the
respondents from implementing the subpoena.
It also REQUIRED the respondents to
COMMENT on the [merits of the] petition.]
YES, a TRO should be issued against the
impeachment court to enjoin it from
further implementing the subpoena with
respect to the alleged foreign currency
denominated accounts of CJ Corona.
There are two requisite conditions for the
of
issuance of a preliminary injunction:

---000---
 Cases on General Banking Laws
(1) the right to be protected exists prima facie, GOVERNMENT SERVICE INSURANCE
and SYSTEM, Petitioner,vs. THE HONORABLE
15th DIVISION OF THE COURT OF
(2) the acts sought to be enjoined are violative APPEALS and INDUSTRIAL BANK OF
of that right. It must be proven that the KOREA,TONG YANG MERCHANT BANK,
violation sought to be prevented would cause HANAREUM BANKING CORP., LAND BANK
an irreparable injustice. OF THE PHILIPPINES,WESTMONT BANK Page | 8
and DOMSAT HOLDINGS, INC.,
A clear right to maintain the
Respondents; G.R. No. 189206 June 8,
confidentiality of the foreign currency
2011
deposits of the Chief Justice is provided
under Section 8 of Republic Act No. 6426, FACTS:
otherwise known as the Foreign Currency
Deposit Act of the Philippines (RA 6426). On December 13, 1996, a surety bond was
This law establishes the absolute agreed with DOMSAT HOLDINGS, INC. as the
confidentiality of foreign currency principal and the GSIS as administrator and
deposits: the obligees are Land Bank of the Philippines,
Tong Yang Merchant Bank, Industrial Bank of
xxx xxx xxx Korea and First Merchant Banking Corporation
collectively known as “The Banks” with the
Under R.A. No. 6426 there is only a single
loan granted to DOMSAT of US $
exception to the secrecy of foreign currency
11,000,000.00 to be used for the financing of
deposits, that is, disclosure is allowed only
the two-year lease of a Russian Satellite from
upon the written permission of the depositor.
INTERSPUTNIK.
In Intengan v. Court of Appeals, the Court
ruled that where the accounts in question are Domsat failed to pay the loan and GSIS
U.S. dollar deposits, the applicable law is not refused to comply with its obligation reasoning
Republic Act No. 1405 but RA 6426. Similarly, that Domsat did not use the loan proceeds for
in the recent case of Government Service the payment of rental for the satellite. GSIS
Insurance System v. 15th Division of the Court alleged that Domsat, with Westmont Bank as
of Appeals, the Court also held that RA 6426 is the conduit, transferred the U.S. $11 Million
the applicable law for foreign currency deposits loan proceeds from the Industrial Bank of
and not Republic Act No. 1405. xxx. Korea to Citibank New York account of
Westmont Bank and from there to the Binondo
xxx xxx xxx
Branch of Westmont Bank. The Banks filed a
complaint before the RTC of Makati against
The written consent under RA 6426
Domsat and GSIS.
constitutes a waiver of the depositor’s
right to privacy in relation to such
GSIS requested for the issuance of a subpoena
deposit. In the present case, neither the
duces tecum to the custodian of records of
prosecution nor the Impeachment Court
Westmont Bank to produce bank ledger
has presented any such written waiver by
covering the account of Domsat with the
the alleged depositor, Chief Justice
Westmont Bank (now United Overseas Bank)
Renato C. Corona. Also, while
and other pertinent documents. The RTC
impeachment may be an exception to the
issued the subpoena but nonetheless, the RTC
secrecy of bank deposits under RA 1405,
then granted the second motion for
it is not an exemption to the absolute
reconsideration by “The Banks” to quash the
confidentiality of foreign currency
subpoena granted to GSIS.
deposits under RA 6426.
GSIS assailed its case to the CA and CA
---000---
partially granted it’s petition allowing it to look
into documents but not the bank ledger
 Cases on General Banking Laws
because the US $ 11,000,000.00 deposited by
Domsat to Westmont Bank is covered by R.A.
6426 or the Bank Secrecy Law. GSIS now filed
a petition for certiorari in the Supreme Court
for the decision of CA allowing the quashal by
the RTC of a subpoena for the production of
bank ledger.
ISSUE:
Whether or not the deposited US $
11,000,000.00 by Domsat, Inc. to Westmont
Bank is covered by R.A. 6426 as what “The
Banks” contend or it is covered by R.A. 1405
as what GSIS contends.
competitor banks. Bank records, including
dollar deposits of petitioners, purporting to
establish the deception practiced by the
officers, were annexed to the complaint.
Petitioners now complained that Citibank
violated Republic Act No. 1405. Supreme Court
ruled that since the accounts in question are Page | 9
U.S. dollar deposits, the applicable law
therefore is not Republic Act No. 1405 but
Republic Act No. 6426.

RULING:

The Supreme Court ruled in favor of R.A. 6426

and thereby AFFIRMING the decision of Court
of Appeals. R.A. 1405 was enacted on 1955
while R.A. 6426 was enacted on 1974. These
two laws both support the confidentiality of
bank deposits. There is no conflict between
them. Republic Act No. 1405 was enacted for
the purpose of giving encouragement to the
people to deposit their money in banking
institutions and to discourage private hoarding
so that the same may be properly utilized by
banks in authorized loans to assist in the
economic development of the country. It
covers all bank deposits in the Philippines and
no distinction was made between domestic and
foreign deposits. Thus, Republic Act No. 1405
is considered a law of general application. On
the other hand, Republic Act No. 6426 was
intended to encourage deposits from foreign
lenders and investors. It is a special law
designed especially for foreign currency
deposits in the Philippines.

A general law does not nullify a specific or

special law. Generalia specialibus non
derogant. Therefore, it is beyond cavil that
Republic Act No. 6426 applies in this case.
Intengan v. Court of Appeals affirmed the
above-cited principle and categorically declared
that for foreign currency deposits, such as U.S.
dollar deposits, the applicable law is Republic
Act No. 6426.In said case, Citibank filed an
action against its officers for persuading their
clients to transfer their dollar deposits to