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INTELLECTUAL PROPERTY CASES OCTOBER 9, 2018 Directors of said Orient Bank and which approval the said accused

ent Bank and which approval the said accused deliberately


failed to obtain and enter the same upon the records of said banking institution
1. G.R. No. 178429 October 23, 2009 and to transmit a copy of which to the supervising department of the said bank, as
required by the General Banking Act.
JOSE C. GO, Petitioner,
vs. CONTRARY TO LAW. [Emphasis supplied.]
BANGKO SENTRAL NG PILIPINAS, Respondent.
On May 28, 2001, Go pleaded not guilty to the offense charged.
DECISION
After the arraignment, both the prosecution and accused Go took part in the pre-
BRION, J.: trial conference where the marking of the voluminous evidence for the parties was
accomplished. After the completion of the marking, the trial court ordered the
Through the present petition for review on certiorari,1 petitioner Jose C. Go (Go) parties to proceed to trial on the merits.
assails the October 26, 2006 decision2 of the Court of Appeals (CA) in CA-G.R. SP
No. 79149, as well as its June 4, 2007 resolution. 3 The CA decision and resolution Before the trial could commence, however, Go filed on February 26, 2003 7 a motion
annulled and set aside the May 20, 20034 and June 30, 20035 orders of the Regional to quash the Information, which motion Go amended on March 1, 2003. 8 Go
Trial Court (RTC), Branch 26, Manila which granted Go’s motion to quash the claimed that the Information was defective, as the facts charged therein do not
Information filed against him. constitute an offense under Section 83 of RA 337 which states:

THE FACTS No director or officer of any banking institution shall either directly or indirectly,
for himself or as the representative or agent of another, borrow any of the deposits
On August 20, 1999, an Information6 for violation of Section 83 of Republic Act No. of funds of such banks, nor shall he become a guarantor, indorser, or surety for
337 (RA 337) or the General Banking Act, as amended by Presidential Decree No. loans from such bank, to others, or in any manner be an obligor for money
1795, was filed against Go before the RTC. The charge reads: borrowed from the bank or loaned by it, except with the written approval of the
majority of the directors of the bank, excluding the director concerned. Any such
That on or about and during the period comprised between June 27, 1996 and approval shall be entered upon the records of the corporation and a copy of such
September 15, 1997, inclusive, in the City of Manila, Philippines, the said accused, entry shall be transmitted forthwith to the appropriate supervising department.
being then the Director and the President and Chief Executive Officer of the Orient The office of any director or officer of a bank who violates the provisions of this
Commercial Banking Corporation (Orient Bank), a commercial banking institution section shall immediately become vacant and the director or officer shall be
created, organized and existing under Philippines laws, with its main branch located punished by imprisonment of not less than one year nor more than ten years and
at C.M. Recto Avenue, this City, and taking advantage of his position as such by a fine of not less than one thousand nor more than ten thousand pesos.
officer/director of the said bank, did then and there wilfully, unlawfully and
knowingly borrow, either directly or indirectly, for himself or as the representative The Monetary Board may regulate the amount of credit accommodations that may
of his other related companies, the deposits or funds of the said banking institution be extended, directly or indirectly, by banking institutions to their directors,
and/or become a guarantor, indorser or obligor for loans from the said bank to officers, or stockholders. However, the outstanding credit accommodations which
others, by then and there using said borrowed deposits/funds of the said bank in a bank may extend to each of its stockholders owning two percent (2%) or more
facilitating and granting and/or caused the facilitating and granting of credit of the subscribed capital stock, its directors, or its officers, shall be limited to an
lines/loans and, among others, to the New Zealand Accounts loans in the total amount equivalent to the respective outstanding deposits and book value of the
amount of TWO BILLION AND SEVEN HUNDRED FIFTY-FOUR MILLION NINE paid-in capital contribution in the bank. Provided, however, that loans and
HUNDRED FIVE THOUSAND AND EIGHT HUNDRED FIFTY-SEVEN AND 0/100 advances to officers in the form of fringe benefits granted in accordance with rules
PESOS, Philippine Currency, said accused knowing fully well that the same has and regulations as may be prescribed by Monetary Board shall not be subject to
been done by him without the written approval of the majority of the Board of the preceding limitation. (As amended by PD 1795)
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In addition to the conditions established in the preceding paragraph, no director or prosecution prayed that the orders of the RTC quashing the Information be set
a building and loan association shall engage in any of the operations mentioned in aside and the criminal case against Go be reinstated.
said paragraphs, except upon the pledge of shares of the association having a total
withdrawal value greater than the amount borrowed. (As amended by PD 1795) On October 26, 2006, the CA rendered the assailed decision granting the
prosecution’s petition for certiorari.9 The CA declared that the RTC misread the law
In support of his motion to quash, Go averred that based on the facts alleged in when it decided to quash the Information against Go. It explained that the
the Information, he was being prosecuted for borrowing the deposits or funds of allegation that Go acted either as a borrower or a guarantor or as both borrower
the Orient Bank and/or acting as a guarantor, indorser or obligor for the bank’s and guarantor merely set forth the different modes by which the offense was
loans to other persons. The use of the word "and/or" meant that he was charged committed. It did not necessarily mean that Go acted both as borrower and
for being either a borrower or a guarantor, or for being both a borrower and guarantor for the same loan at the same time. It agreed with the prosecution’s
guarantor. Go claimed that the charge was not only vague, but also did not stand that the second paragraph of Section 83 of RA 337 is not an exception to the
constitute an offense. He posited that Section 83 of RA 337 penalized only directors first paragraph. Thus, the failure of the Information to state that the amount of the
and officers of banking institutions who acted either as borrower or as guarantor, loan Go borrowed or guaranteed exceeded the legal limits was, to the CA, an
but not as both. irrelevant issue. For these reasons, the CA annulled and set aside the RTC’s orders
and ordered the reinstatement of the criminal charge against Go. After the CA’s
Go further pointed out that the Information failed to state that his alleged act of denial of his motion for reconsideration,10 Go filed the present appeal by certiorari.
borrowing and/or guarantying was not among the exceptions provided for in the
law. According to Go, the second paragraph of Section 83 allowed banks to extend THE PETITION
credit accommodations to their directors, officers, and stockholders, provided it is
"limited to an amount equivalent to the respective outstanding deposits and book In his petition, Go alleges that the appellate court legally erred in overturning the
value of the paid-in capital contribution in the bank." Extending credit trial court’s orders. He insists that the Information failed to allege the acts or
accommodations to bank directors, officers, and stockholders is not per se omissions complained of with sufficient particularity to enable him to know the
prohibited, unless the amount exceeds the legal limit. Since the Information failed offense being charged; to allow him to properly prepare his defense; and likewise
to state that the amount he purportedly borrowed and/or guarantied was beyond to allow the court to render proper judgment.
the limit set by law, Go insisted that the acts so charged did not constitute an
offense. Repeating his arguments in his motion to quash, Go reads Section 83 of RA 337 as
penalizing a director or officer of a banking institution for either borrowing the
Finding Go’s contentions persuasive, the RTC granted Go’s motion to quash the deposits or funds of the bank, or guaranteeing or indorsing loans to others, but not
Information on May 20, 2003. It denied on June 30, 2003 the motion for for assuming both capacities. He claimed that the prosecution’s shotgun approach
reconsideration filed by the prosecution. in alleging that he acted as borrower and/or guarantor rendered the Information
highly defective for failure to specify with certainty the specific act or omission
The prosecution did not accept the RTC ruling and filed a petition for certiorari to complained of. To petitioner Go, the prosecution’s approach was a clear violation
question it before the CA. The Information, the prosecution claimed, was sufficient. of his constitutional right to be informed of the nature and cause of the accusation
The word "and/or" did not materially affect the validity of the Information, as it against him.
merely stated a mode of committing the crime penalized under Section 83 of RA
337. Moreover, the prosecution asserted that the second paragraph of Section 83 Additionally, Go reiterates his claim that credit accommodations by banks to their
(referring to the credit accommodation limit) cannot be interpreted as an exception directors and officers are legal and valid, provided that these are limited to their
to what the first paragraph provided. The second paragraph only sets borrowing outstanding deposits and book value of the paid-in capital contribution in the bank.
limits that, if violated, render the bank, not the director-borrower, liable. A violation The failure to state that he borrowed deposits and/or guaranteed loans beyond this
of the second paragraph of Section 83 – under which Go is being prosecuted – is limit rendered the Information defective. He thus asks the Court to reverse the CA
therefore separate and distinct from a violation of the first paragraph. Thus, the decision to reinstate the criminal charge.

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In its Comment,11 the prosecution raises the same defenses against Go’s Section 83 of RA 337
contentions. It insists on the sufficiency of the allegations in the Information and
prays for the denial of Go’s petition. Under Section 83, RA 337, the following elements must be present to constitute a
violation of its first paragraph:
THE COURT’S RULING
1. the offender is a director or officer of any banking institution;
The Court does not find the petition meritorious and accordingly denies it.
2. the offender, either directly or indirectly, for himself or as representative
The Accused’s Right to be Informed or agent of another, performs any of the following acts:

Under the Constitution, a person who stands charged of a criminal offense has the a. he borrows any of the deposits or funds of such bank; or
right to be informed of the nature and cause of the accusation against him.12 The
Rules of Court, in implementing the right, specifically require that the acts or b. he becomes a guarantor, indorser, or surety for loans from such
omissions complained of as constituting the offense, including the qualifying and bank to others, or
aggravating circumstances, must be stated in ordinary and concise language, not
necessarily in the language used in the statute, but in terms sufficient to enable a c. he becomes in any manner an obligor for money borrowed from
person of common understanding to know what offense is being charged and the bank or loaned by it;
attendant qualifying and aggravating circumstances present, so that the accused
can properly defend himself and the court can pronounce judgment. 13 To broaden 3. the offender has performed any of such acts without the written approval
the scope of the right, the Rules authorize the quashal, upon motion of the accused, of the majority of the directors of the bank, excluding the offender, as the
of an Information that fails to allege the acts constituting the offense. 14 director concerned.
Jurisprudence has laid down the fundamental test in appreciating a motion to quash
an Information grounded on the insufficiency of the facts alleged therein. We stated A simple reading of the above elements easily rejects Go’s contention that the law
in People v. Romualdez15 that: penalizes a bank director or officer only either for borrowing the bank’s deposits or
funds or for guarantying loans by the bank, but not for acting in both capacities.
The determinative test in appreciating a motion to quash xxx is the sufficiency of The essence of the crime is becoming an obligor of the bank without securing the
the averments in the information, that is, whether the facts alleged, if necessary written approval of the majority of the bank’s directors.
hypothetically admitted, would establish the essential elements of the offense as
defined by law without considering matters aliunde. As Section 6, Rule 110 of the The second element merely lists down the various modes of committing the
Rules of Criminal Procedure requires, the information only needs to state the offense. The third mode, by declaring that "[no director or officer of any banking
ultimate facts; the evidentiary and other details can be provided during the trial. institution shall xxx] in any manner be an obligor for money borrowed from the
bank or loaned by it," in fact serves a catch-all phrase that covers any situation
To restate the rule, an Information only needs to state the ultimate facts when a director or officer of the bank becomes its obligor. The prohibition is
constituting the offense, not the finer details of why and how the illegal acts alleged directed against a bank director or officer who becomes in any manner an obligor
amounted to undue injury or damage – matters that are appropriate for the trial. for money borrowed from or loaned by the bank without the written approval of
[Emphasis supplied] the majority of the bank’s board of directors. To make a distinction between the
act of borrowing and guarantying is therefore unnecessary because in either
The facts and circumstances necessary to be included in the Information are situation, the director or officer concerned becomes an obligor of the bank against
determined by reference to the definition and elements of the specific crimes. The whom the obligation is juridically demandable.
Information must allege clearly and accurately the elements of the crime charged.16
The language of the law is broad enough to encompass either act of borrowing or
Elements of Violation of guaranteeing, or both. While the first paragraph of Section 83 is penal in nature,
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and by principle should be strictly construed in favor of the accused, the Court is the first paragraph of Section 83, such as the one involved here, does not require
unwilling to adopt a liberal construction that would defeat the legislature’s intent an allegation that the loan exceeded the legal limit. Even if the loan involved is
in enacting the statute. The objective of the law should allow for a reasonable below the legal limit, a written approval by the majority of the bank’s directors is
flexibility in its construction. Section 83 of RA 337, as well as other banking laws still required; otherwise, the bank director or officer who becomes an obligor of the
adopting the same prohibition,17 was enacted to ensure that loans by banks and bank is liable. Compliance with the ceiling requirement does not dispense with the
similar financial institutions to their own directors, officers, and stockholders are approval requirement.
above board.18 Banks were not created for the benefit of their directors and
officers; they cannot use the assets of the bank for their own benefit, except as Evidently, the failure to observe the three requirements under Section 83 paves
may be permitted by law. Congress has thus deemed it essential to impose the way for the prosecution of three different offenses, each with its own set of
restrictions on borrowings by bank directors and officers in order to protect the elements. A successful indictment for failing to comply with the approval
public, especially the depositors.19 Hence, when the law prohibits directors and requirement will not necessitate proof that the other two were likewise not
officers of banking institutions from becoming in any manner an obligor of the bank observed.
(unless with the approval of the board), the terms of the prohibition shall be the
standards to be applied to directors’ transactions such as those involved in the Rules of Court allow amendment of insufficient Information
present case.
Assuming that the facts charged in the Information do not constitute an offense,
Credit accommodation limit is not an exception nor is it an element of the offense we find it erroneous for the RTC to immediately order the dismissal of the
Information, without giving the prosecution a chance to amend it. Section 4 of Rule
Contrary to Go’s claims, the second paragraph of Section 83, RA 337 does not 117 states:
provide for an exception to a violation of the first paragraph thereof, nor does it
constitute as an element of the offense charged. Section 83 of RA 337 actually SEC. 4. Amendment of complaint or information.—If the motion to quash is based
imposes three restrictions: approval, reportorial, and ceiling requirements. on an alleged defect of the complaint or information which can be cured by
amendment, the court shall order that an amendment be made.
The approval requirement (found in the first sentence of the first paragraph of
the law) refers to the written approval of the majority of the bank’s board of If it is based on the ground that the facts charged do not constitute an offense, the
directors required before bank directors and officers can in any manner be an prosecution shall be given by the court an opportunity to correct the defect by
obligor for money borrowed from or loaned by the bank. Failure to secure the amendment. The motion shall be granted if the prosecution fails to make the
approval renders the bank director or officer concerned liable for prosecution and, amendment, or the complaint or information still suffers from the same defect
upon conviction, subjects him to the penalty provided in the third sentence of first despite the amendment. [Emphasis supplied]
paragraph of Section 83.
Although an Information may be defective because the facts charged do not
The reportorial requirement, on the other hand, mandates that any such constitute an offense, the dismissal of the case will not necessarily follow. The
approval should be entered upon the records of the corporation, and a copy of the Rules specifically require that the prosecution should be given a chance to correct
entry be transmitted to the appropriate supervising department. The reportorial the defect; the court can order the dismissal only upon the prosecution’s failure to
requirement is addressed to the bank itself, which, upon its failure to do so, do so. The RTC’s failure to provide the prosecution this opportunity twice 21
subjects it to quo warranto proceedings under Section 87 of RA 337. 20 constitutes an arbitrary exercise of power that was correctly addressed by the CA
through the certiorari petition. This defect in the RTC’s action on the case, while
The ceiling requirement under the second paragraph of Section 83 regulates the not central to the issue before us, strengthens our conclusion that this criminal
amount of credit accommodations that banks may extend to their directors or case should be resolved through full-blown trial on the merits.
officers by limiting these to an amount equivalent to the respective outstanding
deposits and book value of the paid-in capital contribution in the bank. Again, this WHEREFORE, we DENY the petitioner’s petition for review on certiorari and
is a requirement directed at the bank. In this light, a prosecution for violation of AFFIRM the decision of the Court of Appeals in CA-G.R. SP No. 79149, promulgated
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on October 26, 2006, as well as its resolution of June 4, 2007. The Regional Trial
Court, Branch 26, Manila is directed to PROCEED with the hearing of Criminal Case
No. 99-178551. Costs against the petitioner.

SO ORDERED.

ARTURO D. BRION
Associate Justice

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2. G.R. No. 150318 November 22, 2010 favor of Ma. Teresa Limcauco in consideration of ₱500,000.00. In both
instruments, the signature of the plaintiff’s President, Felix H. Limcauco was
PHILIPPINE TRUST COMPANY (also known as Philtrust Bank), Petitioner, forged. Likewise, a certification to the effect that plaintiff’s Board of
vs. Directors had duly approved the sale contained the forged signature of
HON. COURT OF APPEALS and FORFOM DEVELOPMENT CORPORATION, plaintff’s President, Felix H. Limcauco.
Respondents.
(2) On July 7, 1987, a petition for issuance of owner’s duplicate copy was
DECISION filed with the Regional Trial Court of Angeles City, Branch 57 by Ellenora
Limcauco who allegedly lost said owner’s duplicate copy of TCT No. 64884,
LEONARDO-DE CASTRO, J.: which was docketed as Cad. Case No. A-124-160. On January 10, 1989, a
separate petition for the issuance of a new owner’s duplicate copy was filed
This is a Petition for Certiorari assailing the Decision1 of the Court of Appeals dated with the same court by counsel for Ma. Teresa Limcauco who allegedly lost
June 15, 2001 and the subsequent Resolution 2 denying reconsideration dated the owner’s duplicate copy of TCT No. 10896, which was docketed as Cad.
August 21, 2001. Case No. A-124-280. After due hearing, the court in Cad. Case No. A-124-
280 granted the petition in an Order dated February 1, 1989 which directed
The facts of the case, as determined by the Court of Appeals, are as follows: the Register of Deeds to issue another owner’s duplicate copy of TCT No.
10896 in place of the lost one.
Plaintiff Forfom Development Corporation is engaged in agricultural business and
real estate development and owns several parcels of land in Pampanga. It is the (3) As a consequence of the court’s order in Cad. Case No. A-124-280, TCT
registered owner of two (2) parcels of land subject of the present controversy, No. 10896 was cancelled and TCT No. 82760/T-414 was issued in the name
situated in Angeles City, Pampanga, under Transfer Certificate of Title Nos. 10896 of Ma. Teresa Limcauco who had the property covered thereby subdivided
and 64884 consisting of 1,126,530 and 571,014 square meters, respectively. into different lots for which TCT Nos. 85585, 85587, 85589 and 85591 were
Sometime in 1989, plaintiff received a letter from the Department of Agrarian issued in the name of said Ma. Teresa Limcauco. As to TCT No. 64884, this
Reform with the names Ma. Teresa Limcauco and Ellenora Limcauco as addressees. was also cancelled by the Register of Deeds of Angeles City, Honesto G.
Upon verification with the DAR and the Register of Deeds made by plaintiff’s Vice- Guarin, by virtue of a purported court order issued by Judge Eliodoro B.
President at that time, Mr. Jose Marie L. Ramos, plaintiff discovered that the subject Guinto of RTC-Branch 57. Also appearing as Entry No. 1127 in TCT No.
properties had already been transferred in the names of said Ma. Teresa Limcauco 64884 is the "Secretary’s Certificate" in favor of Felix H. Limcauco and Entry
and Ellenora Limcauco who were never known to plaintiff or its employees. No. 1128 which is the sale in favor of Ellenora Limcauco. However, the copy
Plaintiff’s Board of Directors decided to seek the assistance of the National Bureau of the court order in Cad. Case No. A-124-160 presented to said Register of
of Investigation (NBI) to conduct an investigation on the matter. On November 23, Deeds was not signed by Judge Guinto who had denied before the NBI
1989, plaintiff caused the annotation of its adverse claim on TCT No. 75533 of the authorities having signed such order or having conducted hearing on said
Registry of Deeds of Angeles City. case. The copy submitted to the Register of Deeds was merely stamped
"Original Signed." Another document certifying that the Order granting the
The results of the NBI Investigation and plaintiff’s own inquiry revealed the petition in Cad. Case No. A-124-160 had become final and executory was
following acts through which the subject parcels of land were transferred in the also submitted to the Register of Deeds in connection with the cancellation
names of Ma. Teresa Limcauco and Ellenora Vda. De Limcauco, fictitious names of TCT No. 64884. However, then Branch Clerk of Court Benedicto A. Pineda
which were used by defendant Honorata Dizon in the questioned transactions: testified that he did not sign said certification and neither had he been aware
of the proceedings in Cad. Case No. A-124-160. Atty. Pineda’s signature on
(1) A "Deed of Absolute Sale" dated March 6, 1987 was executed over the said certification appears to have been falsified by one Lorenzo San Andres.
lot covered by TCT No. 64884 in favor of Ellenora Vda. De Limcauco for the
price of ₱500,000.00. A separate "Deed of Absolute Sale" dated October 5, (4) Although the property covered by TCT No. 10896 has already been
1987 was likewise executed over the property covered by TCT No. 10896 in subdivided into different lots and covered by separate titles in the name of
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Ma. Teresa Limcauco, said lots were not yet transferred or conveyed to third having extended a loan in the amount of ₱8 million, far in excess of the property’s
parties. But as to the property covered by TCT No. 64884, said certificate market value of ₱2,855,070.00, as well as the haste in which said loan was granted.
of title was cancelled and a new certificate of title, TCT No. 75436/T-378
was issued in the name of Ellenora Vda. De Limcauco. On September 23, In its Answer, defendant Philippine Trust Company denied the allegations of the
1987, a Deed of Absolute Sale was executed by Ellenora Vda. De Limcauco Complaint as to the irregularities in the granting of the ₱8 million loan to defendant-
in favor of defendant Raul P. Claveria whereby the property covered by TCT spouses Raul and Elea Claveria. According to said defendant, the Claveria spouses
No. 64884 was supposedly sold to said defendant for the sum of have been their clients since 1986 and on October 2, 1987, all their outstanding
₱5,139,126.00. On September 24, 1987, TCT No. 75436/T-378 was obligations in the amount of ₱7,300,000.00 were consolidated into one (1) account
cancelled and a new certificate of title, TCT No. 75533 was issued in the on clean basis. Defendant bank had required the Claveria spouses to secure their
name of defendant Raul P. Claveria. On October 21, 1987, defendant clean loan of ₱7,300,000.00 with a real estate mortgage, and hence on October
spouses Raul and Elea Claveria mortgaged the property with the defendant 21, 1987, said spouses executed mortgage on real property covered by TCT No.
Philippine Trust Company to guarantee a loan in the amount of 75533 for an obligation of ₱8 million after securing an advance from the defendant
₱8,000,000.00, which mortgage was duly registered and annotated as Entry bank in the amount of ₱700,000.00. It had subjected the land offered as security
No. 2858 in TCT No. 75533. to the usual bank appraisals and examined the genuineness and authenticity of
TCT No. 75533 with the Register of Deeds of Angeles City and found the same to
On December 26, 1989, plaintiff instituted the present action against the be in existence and in order. Thereupon, the deed of mortgage executed by the
defendants Ma. Teresa Limcauco, Ellenora D. Limcauco, spouses Raul P. Claveria Claveria spouses was registered by the defendant bank with the Register of Deeds
and Elea R. Claveria, Philippine Trust Company and the Register of Deeds of and had it annotated in the original copy of the title. Defendant bank thus prayed
Angeles City. The Complaint alleged conspiratorial acts committed by said that after due hearing, the complaint against it be dismissed and a decision be
defendants who succeeded in causing the fraudulent transfer of registration of rendered (a) holding as valid and legal the mortgage on the real property covered
plaintiff’s properties in the names of Ma. Teresa Limcauco and Ellenora D. Limcauco by TCT No. 75533 of the Registry of Deeds of Angeles City, and (b) on its
and the subdivision of the land covered by TCT No. 10896 over which separate counterclaim, ordering the plaintiff to pay to defendant bank the amounts of
titles have been issued. Plaintiff prayed that the trial court render judgment (a) P50,000.00 as actual damages, ₱1,000,000.00 as moral damages, ₱100,000.00 as
declaring the deeds of sale of March 9, 1987, October 5, 1987 and September 23, attorney’s fees, and the costs of suit.
1987 as well as TCT Nos. 75436, 75533, 87269, 85585, 85587, 85589 and 85591,
all of the Registry of Deeds of Angeles City as void ab initio, (b) directing the On motion of plaintiff, the trial court ordered the service of summons by publication
reconveyance of the aforesaid real property in the name of plaintiff corporation, with respect to defendants Ma. Teresa Limcauco, Ellenora Limcauco, Raul P.
and (c) sentencing defendants to pay plaintiff sums of ₱1,000,000.00 as moral Claveria and Elea Claveria, whose addresses could not be located by the Sheriff
damages, ₱100,000.00 plus daily appearance fee of ₱1,000.00 as attorney’s fees, and even by the parties.
and costs of suit. Defendant Philippine Trust Bank filed a motion for bill of
particulars which was granted by the trial court, and accordingly plaintiff amended Defendant Register of Deeds of Angeles City filed his Answer denying that he
its Complaint to specifically allege the fraudulent acts and irregularities in the conspired with the other defendants in effecting the transfer of registration of the
transfer of registration of its properties, in addition to those already specified in subject properties and averring that it had issued the questioned transfer
the Complaint. Thus plaintiff alleged in addition that (1) the supposed court Order certificates of title to defendants Ma. Teresa Limcauco, Ellenora Vda. de Limcauco
directing the issuance of another owner’s duplicate copy actually did not exist, copy and the spouses Raul and Elea Claveria on the basis of documents filed with it and
of said Order not bearing either the signature of the judge or his branch clerk of existing in the Office of the Register of Deeds of Angeles City. In his defense,
court as well as the court seal, and yet accepted at face value in conspiracy or at defendant Register of Deeds maintained that he had no reason or basis to question
least negligently, by defendant Register of Deeds of Angeles City, not to mention the validity and legality of the documents presented before him for registration nor
the haste, among other signs of conspiracy, with which said new owner’s duplicate to question the genuineness of the signatures appearing therein, as well as the
copy of the title was issued; (2) the mortgage executed by defendant-spouses Orders of RTC-Angeles City, Branch 57, which contained a signature over and
Claveria in favor of defendant bank was characterized by irregularities, the bank above the typewritten name of Judge Eliodoro B. Guinto. He had the right to
assume that official functions were regularly performed. Plaintiff therefore has no
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cause of action against the defendant Register of Deeds as the latter merely Ramos (NBI officer), Eliodoro Constantino (NBI handwriting expert), Felix H.
performed his duties and functions embodied under Sec. 10 of P.D. No. 1529. By Limcauco, Jr. (former President of plaintiff corporation) and Atty. Benedicto Pineda
way of counterclaim, defendant Register of Deeds alleged bad faith and malice in (former Branch Clerk of Court of RTC- Angeles City, Branch 57). Defendant
plaintiff’s filing of the complaint against him, stating that (1) despite plaintiff’s Philippine Trust Company, on the other hand, presented the testimony of defendant
knowledge that defendant Register of Deeds has not committed any act of Atty. Honesto Guarin (Register of Deeds of Angeles City). After the formal offer of
malfeasance or misfeasance in the registration of the subject certificates of title, the respective documentary evidence of the parties and submission of their
he was subjected to an investigation by NBI authorities at the instance of plaintiff memoranda, the case was submitted for decision. x x x. 3
and was compelled to give a sworn statement before said government authorities
in order to clear his name; and (2) plaintiff’s former counsel had earlier manifested On December 29, 1993, the RTC rendered its Decision in favor of private
that the Register of Deeds was being impleaded merely as a nominal party; respondent Forfom Development Corporation (Forfom):
however, in a sudden and unexplained turnabout, plaintiff impleaded defendant
Register of Deeds as a principal party in its Amended Complaint. Defendant WHEREFORE, all the [foregoing] considered, judgment is hereby rendered in favor
Register of Deeds thus prayed for the dismissal of the complaint against him for of the plaintiff and against the defendants Philippine Trust Co., spouses Raul P.
utter lack of merit and on his counterclaim, that a decision be rendered ordering Claveria and Elea R. Claveria, Ma. Teresa Limcauco @ Honorata Dizon and Ellenora
the plaintiff to pay the defendant Register of Deeds the following sums: Vda. de Limcauco @ Honorata Dizon:
₱200,000.00 by way of moral damages, ₱100,000.00 by way of exemplary
damages, ₱20,000.00 by way of attorney’s fees plus ₱500.00 per appearance, and 1. Declaring the Deeds of Sale of 9 March 1987, 23 September 1987 and 5
costs of suit. October 1987 as well as Transfer Certificates of Title Nos. 75436, 75533,
82760, 85585, 85587, 85589 and 85591 all of the Register of Deeds of
In an Order dated October 30, 1991, the trial court declared the defendants Ma. Angeles City as void ab initio;
Teresa Limcauco, Ellenora Limcauco, Raul P. Claveria and Elea R. Claveria in default
for their failure to file the necessary responsive pleadings despite the lapse of sixty 2. Ordering the Register of Deeds of Angeles City to reinstate Transfer
(60) days from the last day of publication of summons, and accordingly allowed Certificates of Title Nos. 10896 and 64884 in the name of the plaintiff or to
the plaintiff to present its evidence ex parte against the said defendants. During issue new transfer certificate of title for the same parcels of land in the
the pre-trial conference held on November 25, 1991, plaintiff’s counsel manifested name of the plaintiff-corporation free from liens and encumbrances made
that it was joining the defendant Register of Deeds only as a nominal party as the subsequent to the cancellation of the said two (2) titles;
latter also waived his counterclaim against the plaintiff.
3. Ordering the defendants Philippine Trust Co., spouses Raul P. Claveria
On February 4, 1992, the trial court granted plaintiff’s motion to authenticate the and Elea R. Claveria, Ma. Teresa Limcauco @ Honorata Dizon and Ellenora
signatures appearing in the Deeds of Sale of October 5, 1987 and March 6, 1987, Vda. de Limcauco @ Honorata Dizon to pay jointly and severally the plaintiff
and that of Josefina K. Limcauco appearing in the Secretary’s Certificate containing the sum of ₱50,000.00 as actual damages in the form of attorney’s fees;
the supposed Board resolution of plaintiff approving the sale of the parcels of land and
covered by TCT Nos. 10896 and 64884. The said documents were ordered
forwarded to the NBI for authentication. During the pre-trial conference conducted 4. To pay the costs of this suit.4
on August 25, 1992, the parties agreed on two (2) issues for resolution during the
trial: (1) whether or not the Deeds of Absolute Sale purportedly executed by the On January 21, 1994, petitioner Philippine Trust Company (Philtrust) filed a Notice
plaintiff covering the subject real properties, as well as the titles issued thereat, of Appeal, alleging that the lower court erred in declaring Transfer Certificate of
TCT Nos. 75436, 75533, 87269, 85585, 85587, 85589 and 85591, all of the Title No. 75533-Angeles City void and in concluding that it was a mortgagee in bad
Registry of Deeds of Angeles City are genuine and valid; and (2) whether or not faith. Philtrust further claims that Forfom was negligent with its property.
the mortgage on the real property covered by TCT No. 75533 of the Registry of
Deeds of Angeles City is valid and legal. At the trial proper, plaintiff presented as On June 15, 2001, the Court of Appeals rendered the assailed Decision affirming
its witnesses Jose Marie L. Ramos (Vice-President of plaintiff corporation), Alberto the Decision of the RTC:
8
WHEREFORE, premises considered, the present appeal is hereby DISMISSED and Contrary to the allegation in the third argument presented by Philtrust, the Court
the appealed Decision of the trial court in Civil Case No. 6087 is hereby AFFIRMED of Appeals did not seem to have disregarded the rule that a forged deed may be
and REITERATED.5 the root of a valid title. The appellate court clearly specified the circumstances
allowing the application of such rule:
According to the Court of Appeals, Philtrust was negligent in its credit investigation
procedures and its standards for granting of loans, as shown by (a) its previously A forged deed may be the root of a valid title when an innocent purchaser for value
extending unsecured and uncollateralized loans to the spouses Raul and Elea intervenes. A purchaser in good faith and for value is one who buys the property
Claveria, and (b) its failure to discover the latter’s statement of a fictitious address of another without notice that some other person has a right to or interest in such
in the mortgage contract and being the subject of estafa cases. The Court of property and pays a full and fair price for the same, at the time of such purchase,
Appeals agreed with the trial court’s finding that Philtrust acted in haste in the or before he has notice of the claims or interest of some other person in the
execution of the mortgage and loan contracts, as the property, assessed only at property. It has been held that where a mortgagee bank accepted the mortgage in
more than ₱2 million and allegedly purchased at more than ₱5 million, was made good faith, the land involved being registered land, it is not bound to go [beyond]
to secure the principal loan obligation of ₱8 million. the certificate of title to look for flaws in the mortgagor’s title, the doctrine of
innocent purchaser for value being applicable to an innocent mortgagee for value.
The appellate court further took note of Philtrust’s refusal to present the records A mortgagee in good faith and for value is entitled to protection. A bank is not
and details of its transactions with the spouses Claveria despite being pressed to required, before accepting a mortgage, to make an investigation of the title of the
do so by Forfom. The Court of Appeals found this circumstance cast serious doubt property being given as security. This is a consequence of the rule that a person
on Philtrust’s allegation that it was a mortgagee in good faith. dealing with registered land has a right to rely upon the face of the Torrens
certificate of title and to dispense with the need of inquiring further, except when
On August 21, 2001, the Court of Appeals denied Philtrust’s Motion for the party concerned has actual knowledge of facts and circumstances that would
Reconsideration. Hence, this Petition for Certiorari, where Philtrust raises the impel a reasonably cautious man to make such inquiry.9
following arguments:
Indeed, the presence of anything which excites or arouses suspicion should prompt
1. The Court of Appeals committed grave abuse of discretion amounting to the vendee or mortgagee to look beyond the certificate and investigate the title of
lack or excess of jurisdiction in finding there was lack of evidence that the vendor appearing on the face of said certificate. 10 If the vendee or mortgagee
Philtrust was a mortgagee in good faith; hence, capriciously and wantonly failed to do so before the execution of the contract, the vendee or mortgagee is
ascribed bad faith to the latter;6 deemed to be in bad faith and therefore cannot acquire any title under the forged
instrument.
2. The Court of Appeals committed grave abuse of discretion amounting to
lack or excess of jurisdiction in finding that Philtrust had actual knowledge The determination of the case at bar, therefore, hinges on the resolution of the
of facts and circumstances pertaining to the fraudulent transfer of the first two issues, which deal with whether Philtrust is a mortgagee in good or bad
registration of the subject property from the name of Forfom to the name faith. However, since what Philtrust filed with us is a Petition for Certiorari rather
of Ellenora Limcauco, when there was no iota of evidence to support such than a Petition for Review, a finding that Philtrust is in good faith is not enough for
factual finding; hence, capriciously and wantonly ascribed bad faith to us to grant the Petition. A mere error in the judgment of the Court of Appeals in
Philtrust as the mortgagee of the said property; 7 and affirming the RTC Decision would not be enough; nothing less than grave abuse of
discretion on the part of the Court of Appeals is required for the issuance of the
3. The Court of Appeals committed grave abuse of discretion amounting to Writ of Certiorari.
lack or excess of jurisdiction in completely disregarding the well-settled rule
that a forged deed may be the root of a valid title; hence, capriciously and Philtrust claims that the loans secured by the mortgage on the subject property
wantonly nullified the real estate mortgage executed by the spouses were granted to the spouses Claveria after Philtrust was satisfied regarding the
Claveria in favor of Philtrust.8 spouses’ credit worthiness and capacity to pay.11 In fact, according to Philtrust, the
spouses Claveria were able to maintain a satisfactory record of payment during the
9
early period of their transactions with the bank.12 Philtrust insists that prior to the (a) The written official acts, or records of the official acts of the sovereign
constitution of the mortgage, it followed the standard operating procedures in authority, official bodies and tribunals, and public officers, whether of the
accepting property as security, including having investigators visit the subject Philippines, or of a foreign country;
property and appraise its value.13
(b) Documents acknowledged before a notary public except last wills and
When the Court of Appeals ruled that these claims by Philtrust were not supported testaments; and
by evidence, the latter countered before us that its allegations were supported by
the following documents: (a) the Promissory Note; 14 (b) the Deed of Mortgage;15 (c) Public records, kept in the Philippines, of private documents required by
and (c) TCT No. 75533.16 Philtrust adds that it stated in the Answer to law to be entered therein.
Interrogatories that it followed the standard operating procedures in accepting the
property as security. Since said Answer to Interrogatories is a notarized document, All other writings are private.
Philtrust claims that it is a public document which is conclusive as to the
truthfulness of its contents.17 Notarized documents fall under the second classification of public documents.
However, not all types of public documents are deemed prima facie evidence of
It is settled that banks, their business being impressed with public interest, are the facts therein stated:
expected to exercise more care and prudence than private individuals in their
dealings, even those involving registered lands.18 The rule that persons dealing Sec. 23. Public documents as evidence. — Documents consisting of entries in public
with registered lands can rely solely on the certificate of title does not apply to records made in the performance of a duty by a public officer are prima facie
banks.19 Consequently, Philtrust should prove that it exercised extraordinary evidence of the facts therein stated. All other public documents are evidence, even
diligence required of it in approving the mortgage contract in favor of the spouses against a third person, of the fact which gave rise to their execution and of the
Claveria. date of the latter.20

It baffles us how Philtrust can argue that the promissory note and Deed of Mortgage "Public records made in the performance of a duty by a public officer" include those
executed by the spouses Claveria, and the TCT of the subject property, can prove specified as public documents under Section 19(a), Rule 132 of the Rules of Court
its allegations that (a) the mortgage was granted after it was satisfied of the and the acknowledgement,21 affirmation or oath,22 or jurat23 portion of public
spouses’ credit worthiness; (b) the latter was able to maintain a satisfactory record documents under Section 19(c). Hence, under Section 23, notarized documents
of payment early on; or (c) it followed the standard operating procedures in are merely proof of the fact which gave rise to their execution (e.g., the notarized
accepting property as security, including having investigators visit the subject Answer to Interrogatories in the case at bar is proof that Philtrust had been served
property and appraise its value. The mere fact that Philtrust accepted the subject with Written Interrogatories), and of the date of the latter (e.g., the notarized
property as security most certainly does not prove that it followed the standard Answer to Interrogatories is proof that the same was executed on October 12,
operating procedure in doing so. As regards Philtrust’s claim that the Answer to 1992, the date stated thereon),24 but is not prima facie evidence of the facts therein
Interrogatories, being a notarized document, is conclusive as to the truthfulness of stated. Additionally, under Section 30 of the same Rule, the acknowledgement in
its contents, we deem it necessary to clarify the doctrines cited by Philtrust on this notarized documents is prima facie evidence of the execution of the instrument or
matter. document involved (e.g., the notarized Answer to Interrogatories is prima facie
proof that petitioner executed the same).25
Section 19, Rule 132 of the Rules of Court enumerates three kinds of public
documents, to wit: The reason for the distinction lies with the respective official duties attending the
execution of the different kinds of public instruments. Official duties are disputably
Sec. 19. Classes of Documents. — For the purpose of their presentation in presumed to have been regularly performed.26 As regards affidavits, including
evidence, documents are either public or private. Answers to Interrogatories which are required to be sworn to by the person making
them,27 the only portion thereof executed by the person authorized to take oaths
Public documents are: is the jurat. The presumption that official duty has been regularly performed
10
therefore applies only to the latter portion, wherein the notary public merely attests the bank, and for the names of the persons who allegedly visited the subject
that the affidavit was subscribed and sworn to before him or her, on the date property and the alleged home of the spouses Claveria, and the names of the bank
mentioned thereon. Thus, even though affidavits are notarized documents, we officers who dealt with said spouses, Philtrust refused to do so:
have ruled that affidavits, being self-serving, must be received with caution.28
10. Prior to the execution of the real estate mortgage by the Claveria spouses on
Philtrust, therefore, presented no evidence rebutting the following badges of bad the Angeles City property subject of the above-captioned case, what investigation,
faith shown in the records of the case. Even though circumstantial, the following if any did the bank undertake for the physical examination of said property, what
adequately prove by preponderance of evidence that Philtrust was aware of the were the results, if any, of such physical examination of the property, and the
fraudulent scheme perpetrated upon Forfom: name or names of the persons who visited the property?35

1. Within a period of less than one year, Philtrust extended unsecured loans [ANSWER:]
amounting to ₱7,300,000.00 to the spouses Claveria as shown in its Answer
wherein it declared: 10. The Angeles property was appraised in accordance with the usual procedure in
the appraisal of property offered as collateral. The property was visited by the
Spouses Raul and Elea Claveria has been clients of the bank since 1986 and on investigators of the Credit Department of the bank.36
October 2, 1987, all their outstanding obligations in the amount of ₱7,300,000.00
were consolidated into one account on a clean basis.29 15. Did an officer or employee of the bank actually visit the given residences of the
Claveria spouses in Angeles City and Bacolod City, the result of such visit, and the
All Philtrust can give is a very general explanation for these unsecured loans: name or names of the persons representing the bank who visited such places?
37
1avvphi1
5. Why were the Claveria spouses granted loans without collaterals at the onset? 30
[ANSWER:]
[ANSWER:]
15. As stated above, the last known address of spouses was 406 Caliraya Street,
5. The Claveria spouses passed the standards set by the bank. 31 New Alabang, Muntinlupa, M.M.38

2. Although the spouses Claveria had declared their residence to be in the plush 17. Who was the particular bank officer who dealt directly with the Claveria spouses
subdivision in Ayala Alabang, Philtrust was content to receive as security a land and handled their accounts?39
outside Metro Manila, which was only recently acquired by the said spouses. When
asked about this in the Request for Interrogatories, Philtrust merely responded [ANSWER:]
evasively:
17. The Loans and Discounts Department of the bank handled the accounts of the
7. Did the bank not request from the Claveria spouses collateral within the Metro spouses.40
Manila area and if so what was the reply of the Claveria spouses? 32
The RTC and the Court of Appeals considered these circumstances as circumstantial
[ANSWER:] evidence of Philtrust’s awareness of the fraudulent scheme against Forfom.
Nevertheless, Philtrust up to this date persists with suppressing these details:
7. The bank requested for collateral on the ₱8,300,000.00 loan preferably located
in Metro Manila.33 Petitioner humbly believes and strongly maintains its position that the presentation
of all documents pertaining to the loan transactions of Spouses Claveria is
3. It is presumed that evidence willfully suppressed would be adverse if produced. 34 unnecessary, irrelevant, and immaterial in its defense of good faith before the court
When pressed in the Request for Interrogatories for details of the investigation of a quo. Nevertheless, as discussed above, Petitioner had sufficiently proved through
11
its Answer to Interrogatories and loan documents extant in the records of the case
that it prudently complied with the standard practice of banks in accepting
mortgage.41

4. Philtrust persistently refused to cooperate with the National Bureau of


Investigation (NBI) in its investigation of the fraudulent scheme perpetrated
against Forfom, as testified by NBI agents Alberto V. Ramos and Pastor T.
Pangan,42 and as shown in NBI Investigation Report NBI-NCR 10-11-90 90-2-
5507.43

5. Had Philtrust properly conducted a credit investigation of the spouses Claveria,


it would have easily discovered that they did not reside and never resided in the
address declared by them, as revealed in the investigation by the NBI44 and
declared by the association of homeowners in the New Alabang subdivision. 45

All the foregoing considered, we find that the Court of Appeals did not even err in
finding that Philtrust was in bad faith in the execution of the mortgage contract
with the spouses Claveria. Consequently, Philtrust miserably failed to prove that
the Court of Appeals committed grave abuse of discretion amounting to lack or
excess of jurisdiction in rendering the assailed Decision and Resolution.

WHEREFORE, the instant Petition for Certiorari is DISMISSED. The Decision of


the Court of Appeals dated June 15, 2001 and the subsequent Resolution denying
reconsideration dated August 21, 2001 are AFFIRMED.

Costs against petitioner Philippine Trust Company.

SO ORDERED.

12
3. G.R. No. 114286 April 19, 2001 1) Whether or not the transaction involved is a loan transaction or a trust
receipt transaction;
THE COSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK),
petitioner 2) Whether or not the interest rates charged against the defendants by the
vs. plaintiff are proper under the letter of credit, trust receipt and under existing
THE COURT OF APPEALS, CONTINENTAL CEMENT CORPORATION, rules or regulations of the Central Bank;
GREGORY T. LIM and SPOUSE, respondents.
3) Whether or not the plaintiff properly applied the previous payment of
YNARES-SANTIAGO, J.: P300,456.27 by the defendant corporation on July 13, 1982 as payment for
the latter’s account; and
The instant petition for review seeks to partially set aside the July 26, 1993
Decision1 of respondent Court of Appeals in CA-GR. CV No. 29950, insofar as it 4) Whether or not the defendants are personally liable under the transaction
orders petitioner to reimburse respondent Continental Cement Corporation the sued for in this case.4
amount of P490, 228.90 with interest thereon at the legal rate from July 26, 1988
until fully paid. The petition also seeks to set aside the March 8, 1994 Resolution2 On September 17, 1990, the trial court rendered its Decision,5 dismissing the
of respondent Court of Appeals denying its Motion for Reconsideration. Complaint and ordering petitioner to pay respondents the following amounts under
their counterclaim: P490,228.90 representing overpayment of respondent
The facts are as follows: Corporation, with interest thereon at the legal rate from July 26, 1988 until fully
paid; P10,000.00 as attorney's fees; and costs.
On July 13, 1982, respondents Continental Cement Corporation (hereinafter,
respondent Corporation) and Gregory T. Lim (hereinafter, respondent Lim) Both parties appealed to the Court of Appeals, which partially modified the Decision
obtained from petitioner Consolidated Bank and Trust Corporation Letter of Credit by deleting the award of attorney's fees in favor of respondents and, instead,
No. DOM-23277 in the amount of P 1,068,150.00 On the same date, respondent ordering respondent Corporation to pay petitioner P37,469.22 as and for attorney's
Corporation paid a marginal deposit of P320,445.00 to petitioner. The letter of fees and litigation expenses.
credit was used to purchase around five hundred thousand liters of bunker fuel oil
from Petrophil Corporation, which the latter delivered directly to respondent Hence, the instant petition raising the following issues:
Corporation in its Bulacan plant. In relation to the same transaction, a trust receipt
for the amount of P 1,001,520.93 was executed by respondent Corporation, with 1. WHETHER OR NOT THE RESPONDENT APPELLATE COURT ACTED
respondent Lim as signatory. INCORRECTLY OR COMMITTED REVERSIBLE ERROR IN HOLDING THAT
THERE WAS OVERPAYMENT BY PRIVATE RESPONDENTS TO THE
Claiming that respondents failed to turn over the goods covered by the trust receipt PETITIONER IN THE AMOUNT OF P490,228.90 DESPITE THE ABSENCE OF
or the proceeds thereof, petitioner filed a complaint for sum of money with ANY COMPUTATION MADE IN THE DECISION AND THE ERRONEOUS
application for preliminary attachment3 before the Regional Trial Court of Manila. APPLICATION OF PAYMENTS WHICH IS IN VIOLATION OF THE NEW CIVIL
In answer to the complaint, respondents averred that the transaction between CODE.
them was a simple loan and not a trust receipt transaction, and that the amount
claimed by petitioner did not take into account payments already made by them. 2. WHETHER OR NOT THE MANNER OF COMPUTATION OF THE MARGINAL
Respondent Lim also denied any personal liability in the subject transactions. In a DEPOSIT BY THE RESPONDENT APPELLATE COURT IS IN ACCORDANCE
Supplemental Answer, respondents prayed for reimbursement of alleged WITH BANKING PRACTICE.
overpayment to petitioner of the amount of P490,228.90.
3. WHETHER OR NOT THE AGREEMENT AMONG THE PARTIES AS TO THE
At the pre-trial conference, the parties agreed on the following issues: FLOATING OF INTEREST RATE IS VALID UNDER APPLICABLE

13
JURISPRUDENCE AND THE RULES AND REGULATIONS OF THE CENTRAL to it. Compensation is proper and should take effect by operation of law because
BANK. the requisites in Article 1279 of the Civil Code are present and should extinguish
both debts to the concurrent amount.8
4. WHETHER OR NO THE RESPONDENT APPELLATE COUR GRIEVOUSLY
ERRED IN NOT CONSIDERING THE TRANSACTION AT BAR AS A TRUST Hence, the interests and other charges on the subject letter of credit should be
RECEIPT TRANSACTION ON THE BASIS OF THE JUDICIAL ADMISSIONS OF computed only on the balance of P681,075.93, which was the portion actually
THE PRIVATE RESPONDENTS AND FOR WHICH RESPONDENTS ARE LIABLE loaned by the bank to respondent Corporation.
THEREFOR.
Neither do we find error when the lower court and the Court of Appeals set aside
5. WHETHER OR NOT THE RESPONDENT APPELLATE COURT GRIEVOUSLY as invalid the floating rate of interest exhorted by petitioner to be applicable. The
ERRED IN NOT HOLDING PRIVATE RESPONDENT SPOUSES LIABLE UNDER pertinent provision in the trust receipt agreement of the parties fixing the interest
THE TRUST RECEIPT TRANSACTION.6 rate states:

The petition must be denied. I, WE jointly and severally agree to any increase or decrease in the interest
rate which may occur after July 1, 1981, when the Central Bank floated the
On the first issue respecting the fact of overpayment found by both the lower court interest rate, and to pay additionally the penalty of 1% per month until the
and respondent Court of Appeals, we stress the time-honored rule that findings of amount/s or instalments/s due and unpaid under the trust receipt on the
fact by the Court of Appeals especially if they affirm factual findings of the trial reverse side hereof is/are fully paid.9
court will not be disturbed by this Court, unless these findings are not supported
by evidence.7 We agree with respondent Court of Appeals that the foregoing stipulation is invalid,
there being no reference rate set either by it or by the Central Bank, leaving the
Petitioner decries the lack of computation by the lower court as basis for its ruling determination thereof at the sole will and control of petitioner. 1âwphi1.nêt
that there was an overpayment made. While such a computation may not have
appeared in the Decision itself, we note that the trial court's finding of overpayment While it may be acceptable, for practical reasons given the fluctuating economic
is supported by evidence presented before it. At any rate, we painstakingly conditions, for banks to stipulate that interest rates on a loan not be fixed and
reviewed and computed the payments together with the interest and penalty instead be made dependent upon prevailing market conditions, there should always
charges due thereon and found that the amount of overpayment made by be a reference rate upon which to peg such variable interest rates. An example of
respondent Bank to petitioner, i.e., P263,070.13, was more than what was ordered such a valid variable interest rate was found in Polotan, Sr. v. Court of Appeals. 10
reimbursed by the lower court. However, since respondents did not file an appeal In that case, the contractual provision stating that "if there occurs any change in
in this case, the amount ordered reimbursed by the lower court should stand. the prevailing market rates, the new interest rate shall be the guiding rate in
computing the interest due on the outstanding obligation without need of serving
Moreover, petitioner's contention that the marginal deposit made by respondent notice to the Cardholder other than the required posting on the monthly statement
Corporation should not be deducted outright from the amount of the letter of credit served to the Cardholder"11 was considered valid. The aforequoted provision was
is untenable. Petitioner argues that the marginal deposit should be considered only upheld notwithstanding that it may partake of the nature of an escalation clause,
after computing the principal plus accrued interest and other charges. However, to because at the same time it provides for the decrease in the interest rate in case
sustain petitioner on this score would be to countenance a clear case of unjust the prevailing market rates dictate its reduction. In other words, unlike the
enrichment, for while a marginal deposit earns no interest in favour of the debtor- stipulation subject of the instant case, the interest rate involved in the Polotan case
depositor, the bank is not only able to use the same for its own purposes, interest- is designed to be based on the prevailing market rate. On the other hand, a
free, but is also able to earn interest on the money loaned to respondent stipulation ostensibly signifying an agreement to "any increase or decrease in the
Corporation. Indeed, it would be onerous to compute interest and other charges interest rate," without more, cannot be accepted by this Court as valid for it leaves
on the face value of the letter of credit which the petitioner issued, without first solely to the creditor the determination of what interest rate to charge against an
crediting or setting off the marginal deposit which the respondent Corporation paid outstanding loan.
14
Petitioner has also failed to convince us that its transaction with respondent Also noteworthy is the fact that Petitioners are not importers acquiring the
Corporation is really a trust receipt transaction instead of merely a simple loan, as goods for re-sale, contrary to the express provision embodied in the trust
found by the lower court and the Court of Appeals. receipt. They are contractors who obtained the fungible goods for their
construction project. At no time did title over the construction materials
The recent case of Colinares v. Court of Appeals 12 appears to be foursquare with pass to the bank, but directly to the Petitioners from CM Builders Centre.
the facts obtaining in the case at bar. There, we found that inasmuch as the debtor This impresses upon the trust receipt in question vagueness and ambiguity,
received the goods subject of the trust receipt before the trust receipt itself was which should not be the basis for criminal prosecution in the event of
entered into, the transaction in question was a simple loan and not a trust receipt violation of its provisions.
agreement. Prior to the date of execution of the trust receipt, ownership over the
goods was already transferred to the debtor. This situation is inconsistent with The practice of banks of making borrowers sign trust receipts to facilitate
what normally obtains in a pure trust receipt transaction, wherein the goods belong collection of loans and place them under the threats of criminal prosecution
in ownership to the bank and are only released to the importer in trust after the should they be unable to pay it may be unjust and inequitable if not
loan is granted. reprehensible. Such agreements are contracts of adhesion which borrowers
have no option but to sign lest their loan be disapproved. The resort to this
In the case at bar, as in Colinares, the delivery to respondent Corporation of the scheme leaves poor and hapless borrowers at the mercy of banks, and is
goods subject of the trust receipt occurred long before the trust receipt itself was prone to misinterpretation, as had happened in this case. Eventually, PBC
executed. More specifically, delivery of the bunker fuel oil to respondent showed its true colors and admitted that it was only after collection of the
Corporation's Bulacan plant commenced on July 7, 1982 and was completed by money, as manifested by its Affidavit of Desistance.
July 19, 1982.13 Further, the oil was used up by respondent Corporation in its
normal operations by August, 1982.14 On the other hand, the subject trust receipt Similarly, respondent Corporation cannot be said to have been dishonest in its
was only executed nearly two months after full delivery of the oil was made to dealings with petitioner. Neither has it been shown that it has evaded payment of
respondent Corporation, or on September 2, 1982. its obligations. Indeed, it continually endeavored to meet the same, as shown by
the various receipts issued by petitioner acknowledging payment on the loan.
The danger in characterizing a simple loan as a trust receipt transaction was Certainly, the payment of the sum of P1,832,158.38 on a loan with a principal
explained in Colinares, to wit: amount of only P681,075.93 negates any badge of dishonesty , abuse of confidence
or mishandling of funds on the part of respondent Corporation, which are the
The Trust Receipts Law does not seek to enforce payment of the loan, rather gravamen of a trust receipt violation. Furthermore, Respondent Corporation is not
it punishes the dishonesty and abuse of confidence in the handling of money an importer, which acquired the bunker fuel oil for re-sale; it needed the oil for its
or goods to the prejudice of another regardless of whether the latter is the own operations. More importantly, at no time did title over the oil pass to petitioner,
owner. Here, it is crystal clear that on the part of Petitioners there was but directly to respondent Corporation to which the oil was directly delivered long
neither dishonesty nor abuse of confidence in the handling of money to the before the trust receipt was executed. The fact that ownership of the oil belonged
prejudice of PBC. Petitioners continually endeavored to meet their to respondent Corporation, through its President, Gregory Lim, was acknowledged
obligations, as shown by several receipts issued by PBC acknowledging by petitioner's own account officer on the witness stand, to wit:
payment of the loan.
Q -After the bank opened a letter of credit in favor of Petrophil Corp. for the
The Information charges Petitioners with intent to defraud and account of the defendants thereby paying the value of the bunker fuel oil
misappropriating the money for their personal use. The mala prohibita what transpired next after that?
nature of the alleged offense notwithstanding, intent as a state of mind was
not proved to be present in Petitioners' situation. Petitioners employed no A -Upon purchase of the bunker fuel oil and upon the requests of the
artifice in dealing with PBC and never did they evade payment of their defendant possession of the bunker fuel oil were transferred to them.
obligation nor attempt to abscond. Instead, Petitioners sought favorable
terms precisely to meet their obligation. Q -You mentioned them to whom are you referring to?
15
A -To the Continental Cement Corp. upon the execution of the trust receipt the trust receipt simply to facilitate collection by petitioner of the loan it had
acknowledging the ownership of the bunker fuel oil this should be extended to the former.
acceptable for whatever disposition he may make.
Finally, we are not convinced that respondent Gregory T. Lim and his spouse should
Q - You mentioned about acknowledging ownership of the bunker fuel oil to be personally liable under the subject trust receipt. Petitioner's argument that
whom by whom? respondent Corporation and respondent Lim and his spouse are one and the same
cannot be sustained. The transactions sued upon were clearly entered into by
A - By the Continental Cement Corp. respondent Lim in his capacity as Executive Vice President of respondent
Corporation. We stress the hornbook law that corporate personality is a shield
Q – So by your statement who really owns the bunker fuel oil? against personal liability of its officers. Thus, we agree that respondents Gregory
T. Lim and his spouse cannot be made personally liable since respondent Lim
A TTY. RACHON: entered into and signed the contract clearly in his official capacity as Executive Vice
President. The personality of the corporation is separate and distinct from the
Objection already answered, persons composing it.16

COURT: WHEREFORE, in view of all the foregoing, the instant Petition for Review is
DENIED. The Decision of the Court of Appeals dated July 26, 1993 in CA-G.R. CY
Give time to the other counsel to object. No.29950 is AFFIRMED.

A TTY. RACHON : SO ORDERED.

He has testified that ownership was acknowledged in favor of Continental


Cement Corp. so that question has already been answered.

A TTY. BANAGA:

That is why I made a follow up question asking ownership of the bunker


fuel oil.

COURT:

Proceed.

A TTY .BANAGA:

Q - Who owns the bunker fuel oil after purchase from Petrophil Corp. ?

A - Gregory Lim.15

By all indications, then, it is apparent that there was really no trust receipt
transaction that took place. Evidently, respondent Corporation was required to sign

16
4. G.R. No. 97218 May 17, 1993 On 16 February 1967, the spouses Lorenzo K. Guarin and Liwayway
J. Guarin (Guarins) obtained a loan from defendant-appellant in the
PROVIDENT SAVINGS BANK, petitioner, amount of P62,500.00 payable on or before 20 June 1967. As
vs. security for the loan, they executed a real estate mortgage in favor
COURT OF APPEALS, Former SPECIAL EIGHTH DIVISION and WILSON of defendant-appellant over a parcel of land covered by TCT No.
CHUA, respondents. 177014. (Exhs. C and D).

Gonzales, Batiller, Bilog & Associates for petitioner. In September, 1972, defendant-appellant was placed under
receivership by the Central Bank of the Philippines until 27 July 1981
Resty R. Villanueva for private respondent. when the receivership was set aside by the Honorable Supreme
Court.

On 11 December 1984, Lorenzo K. Guarin, in reply to the letter of


MELO, J.: latter's counsel informing that the mortgaged property would be sold
at public auction on 27 December 1984, assured he and his wife had
The error, if error it be, of respondent Court of Appeals which petitioner seeks to every intention of paying their obligation and requesting for a
rectify via the petitioner for certiorari before us refers to respondent court's major recomputation of their account and a postponement of the
conclusion arrived at in CA-G.R. CV No. 21312 (Javellana (P), Kalalo, Dayrit, JJ) foreclosure sale. (Exh. 1).
barring petitioner from foreclosing the subject realty on account of prescription.
Petitioner begs to differ, insisting that the period during which it was placed under On 10 February 1986, the Guarins received a Statement of Account
receivership by the Central Bank is akin to a caso fortuito and should not thus be from defendant-appellant showing two outstanding accounts as of
reckoned against it. 15 February 1986. One was account of Lorenzo K. Guarin in the
amount of P591,088.80, and the other was the account of L.K.
Both petitioner and private respondent accepted the synthesized factual backdrop Guarin Manufacturing Co., Inc. in the amount of P6,287,380.27
formulated by respondent court, to wit: (Attachment to Exh. 2)

This an appeal by both plaintiff and defendant from the decision of On 26 February 1986, Lorenzo K. Guarin wrote defendant-appellant
the Regional Trial Court of the National Capital Judicial 29 September stating that he was ready and willing to pay his obligation in the total
1988, in Civil Case No. 977-NW, which directed plaintiff-appellant to amount of P591,088.80 as recomputed by defendant-appellant
pay defendant-appellant the personal obligation of the spouses whenever defendant-appellant was already to receive the payment
Guarin to defendant-appellant in the amount of P62,500.00, and inquiring as to when his mortgaged title would be available for
together with the interest, penalties, and bank charges due thereon, him to pick up. (Exh. 2)
and ordering defendant-appellant thereafter to: (1) release the real
estate mortgage executed by the spouses Lorenzo K. Guarin and Defendant-appellant replied on 27 February 1986 that Lorenzo K.
Liwayway J. Guarin in favor of defendant bank on 16 February 1967; Guarin may make payment at its office in Makati, Metro Manila, but
(2) return to surrender to plaintiff-appellant, as successor-in- that the mortgaged title could not be released to him even after the
interest of the spouses Guarin, the latter's Owner's Duplicate of Title payment of the obligation of P591,088.80 as it also served as
No. 177014; (3) pay plaintiff-appellant P20,000.00 as and for security for the indebtedness of L.Y. Guarin Manufacturing Co., Inc.,
attorney's fees; and, (4) pay the costs of suit. to defendant-appellant which was undertaken by Lorenzo K. Guarin
in his personal capacity and as president of the corporation. (Exh. 3)
The established fact are:

17
On 20 May 1986, plaintiff-appellant wrote defendant-appellant estate mortgaged executed by the Guarins in favor of defendant-
saying that the mortgaged property of the Guarins had been offered appellant on 16 February 1967; (2) return or surrender to plaintiff-
to him as payment of the judgment he obtained against the Guarins appellant, as successor-in-interest of the Guarins, the latter's
in Civil Case No. Q-47465 entitled, "Wilson Chua vs. Lorenzo K. owner's duplicate of TCT No. 177014; and (3) pay plaintiff-appellant
Guarin", and requesting for defendant-appellant's conformity to the P2,750,000.00 as actual and/or consequential damages, moral
assignment and expressing his willingness to pay for the obligation damages as may be proved during the trial, exemplary damages as
of Mr. Guarin so that the title could be released by defendant- may be reasonably assessed by the court, and attorney's fees of
appellant. (Exh. 4) P50,00.00. Defendant-appellant answered the complaint thereof and
setting up special and affirmative defenses. After trial, judgment was
On 10 July 1986, the Guarins and plaintiff-appellant executed a Deed rendered as stated in the opening paragraph hereof from which both
of Absolute Sale With Assumption of Mortgaged whereby the Guarins parties appealed . . . . (pp. 35-37, Rollo.)
sold the mortgaged property to Guarins sold the appellant for the
sum of P250,000.00 and plaintiff-appellant undertook to assume the Concerning the challenge posed by Provident Saving Bank against the personality
mortgaged obligation of the Guarins with defendant-appellant which of Wilson Chua to initiate the action to compel the release of the real estate
as of 15 February 1985 amounted to P591,088.80.(Exh. B). mortgage and the delivery of the owner's duplicate copy of the certificate of title,
respondent court noted that Wilson Chua can be considered a real-property-in-
On 5 August 1986, plaintiff-appellant informed defendant-appellant interest because he is the successor-in-interest of the Guarins who is naturally
that as a result of the judgment in Civil Case No. Q-47645, the entitled to the realty as against the so-called right of Provident Savings Bank, as
mortgaged property had been sold to him by the Guarins, as mortgagee, to foreclose the mortgage which had become stale through sheer lapse
evidenced by the Deed of Sale enclosed for guidance and information of time. The matter of novation in the form of substitution of the debtor without
of defendant-appellant. He requested that he be allowed to pay the corresponding acquiesence of the mortgagee was viewed by respondent court to
loan secured by the mortgaged, otherwise, he would be constrained be legally inconsequential due to the demeanor of the mortgagee-bank in requiring
to bring the matter to court. (Exh. 5) In reply, defendant-appellant, Wilson Chua to pay the indebtedness of Lorenzo Guarin, posterior to the change of
on 11 August 1986, informed plaintiff-appellant that his request obligors, which act was construed as equivalent to consent.
could be granted if he would settle the obligation of L.K. Guarin
Manufacturing Co., Inc., as well and defendant-appellant's letter to To the question of whether petitioner can still foreclose the subject realty,
Mr. Guarin dated 27 February 1986. (Exh. 6) respondent court gave a negative response on account of the absence of proof to
indicate that the bank was precluded from collecting indebtedness while it was
On 3 August 1987, counsel for plaintiff-appellant addressed a letter under receivership from September, 1972 until July 20,1981. Thus, there was no
to defendant-appellant informing that plaintiff-appellant had legal interruption of the pres-criptive period to speak of, said respondent court,
purchased the mortgaged property from the Guarin's and requesting which intervened between June 20, 1967, the date the mortgage matured, and
that the owner's copy of TCT No. 177014 in the possession of June 20, 1977 the last day within which petitioner could have foreclosed the
defendant-appellant be released to him so that he can register the mortgage.
sale and have the title to the property transferred in his name. He
likewise, informed defendant-appellant that it had lost whatever Respondent court did not also heed the suggestion of the petitioner bank to
right or action had against the Guarins because of prescription. (Exh. interpret Wilson Chua's assumption of the mortgage on July 10, 1986 as
E) Defendant-appellant replied on 10 August 1987 stating the tantamount to an explicit acknowledgement that the obligation was outstanding
reasons why they could not comply with plaintiff-appellant's and had not yet prescribed.
demands. (Exh. F)
As a result of these observations, respondent court reversed the decision of the
On 21 August 1986, plaintiff-appellant filed a complaint against trial court insofar as it ordered Wilson Chua to pay the sum of P591,088.80 to the
defendant-appellant to compel the latter to: (1) release the real bank and affirmed the other dispositions made the court of origin (p. 42, Rollo).
18
Following the unfavorable judgment, the bank filed a motion for reconsideration Commercial Law and Jurisprudence, 1990 ed., p. 475). The prerogative of a bank
and a motion for new trial premised on newly discovered evidence relative to a to foreclose is implicit from and is even necessary to enforce collection of secured
statement of account unearthed by the bank's liaison officer from the loose folders debts under Section 36(11) and 45 of the Corporation Code, in conjunction with
on October 18, 1990 which it believed to be of legal significance to the case. But Section 29 of the General Banking Act (6 Fletcher, 206; Agbayani, Commentaries
respondent court was unperturbed, observing that the vital piece of document and Jurisprudence on the Commercial Laws of the Philippines, 1990 ed., p. 325).
could have been located in the course of trial had the slightest degree of prudence
been exercised, considering that the statement of account sprouted the same day When a bank is prohibited to do business by the Central Bank and a receiver is
the liaison officer was advised to take an inventory of the records ( p. 45, Rollo). appointed for such bank, that bank would not be able to do new business, i.e., to
grant new loans or to accept new deposits. However, the receiver of the bank is
Hence, the petitioner at bar. obliged to collect debts owing to the bank, which debts form part of the assets of
the bank. The receiver must assemble the assets and pay the obligation of the
Consistent with its theory premised on fuerza major, petitioner insists that it can bank under receivership, and take steps to prevent dissipation of such assets.
not be blamed for not lifting a finger, so speak, during the period when it was Accordingly, the the receiver of the bank is obliged to collect pre-existing debts
enjoined by the Central Bank on September 15, 1972 from transacting business due to the bank, and in connection therewith, to foreclose mortgages securing
until this Court affirmed on July 27,1981 the decision of the Court of Appeals debts. This is not to ignore The Philippine Trust Co. vs. HSBC (67 Phil. 204 [1939],
annulling the proscription against petitioner in Central Bank vs. Court of Appeals for in that case, the Court simply rejected the objections of certain creditors to the
(106 SCRA 143 [1981]. We are not unaware of the rule laid down in Teal Motor report of a receiver, that is, objections that the receiver did not report the collection
Co. vs. Court of First Instance of Manila (51 Phil. 549 [1928]; Martin, made before the beginning of his receivership. It would follow that the bank is
Commentaries and Jurisprudence on the Philippine Commercial Laws, 1986 Revised bound by the acts, or failure to act, of the receiver. At the same time, the receiver
ed., p.125) that the appointment of a receiver does not dissolve the corporation is liable to the bank for culpable or negligent failure to collect the assets of such
nor does it interfere with the exercise of its corporate rights. But this principles is, bank and to safeguard said assets.
of course, applicable to a situation where there is no restraint imposed on the
corporation, unlike in the case at bar where petitioner Provident Savings Bank was Having arrived at the conclusion that the foreclosure is part of bank's business
specifically forbidden and immobilized from doing business in the Philippines on activity which could not have been pursued by the receiver then because of the
September 15, 1972 through Monetary Board Resolution No. 1766 until 1981 when circumstances discussed in the Central Bank case, we are thus convinced that the
the decision in Central Bank vs. Court of Appeals (supra, at p. 150) was rendered. prescriptive period was legally interrupted by fuerza mayor in 1972 on account on
The question which immediately crops up is whether a foreclose proceeding falls the prohibition imposed by the Monetary Board against petitioner from transacting
within the purview of the phrase "doing business". In Mentholatum Co., Inc., et al. business, until the directive of the board was nullified in 1981. Indeed, the period
vs. Mangaliman, et al. (72 Phil. 524 [1941]; Moreno, Philippine Law Dictionary, during which the obligee was prevented by a caso fortuito from enforcing his right
Second ed., 1972, p. 186), the term was construed by Justice Laurel to refer to: is not reckoned against him (Article 1154, New Civil Code). When prescription is
interrupted, all the benefits acquired so far from the possession cease and when
. . . a continuity of commercial dealings and arrangements, and prescription starts anew, it will be entirely a new one. This concept should not be
contemplates to that extent, the exercise of some of the words or equated with suspension where the past period is included in the computation
the normally incident to, and in progressive prosecution of, the being added to the period after prescription is resumed (4 Tolentino, Commentaries
purpose ands object of its organizations. (p. 528; emphasis and Jurisprudence on the Civil Code of the Philippines, 1991 ed., pp. 18-19).
supplied.) Consequently, when the closure of was set aside in 1981, the period of ten years
within which to foreclose under Article 1142 of the New Civil Code began to run
Withal, we believe that a foreclose is deemed embraced by the phrase "doing again and, therefore, the action filed on August 21, 1986 to compel petitioner to
business" as a preparatory measure to acquiring or holding property for petitioner release the mortgage carried with it the mistaken notion that petitioner's own suit
as a saving bank under Section 34 of the General Banking Act. Like any other foreclosure had prescribed. What exacerbates the situation is the letter of private
banking institution, petitioner is vested with the usual attributes and powers of a respondent requesting petitioner on August 6, 1986 that private respondent be
corporation under Section 36 of the Corporation Code (Vitug, Pandect of allowed to pay the loan secured by the mortgage as the result of the Deed of Sale
19
executed by the Guarins in his favor on July 10, 1986 (pp. 36-37, Rollo). In point
of law, this written communication is synonymous to an express acknowledgment
of the obligation and had the effect of interrupting the prescription for the second
time (Article 1155, New Civil Code; Osmeña vs. Rama, 14 Phil. 99 [1909]; 4
Tolentino, supra at p. 50). And this piece of document necessarily estops private
respondent from setting up prescription vis-a-vis his unfounded supposition that
acknowledgment of the debt is of no moment because the right of the petitioner to
foreclose had long prescribed in 1977 (p. 13, Petition; p. 7, Comment; pp. 19 and
58, Rollo).

Contrary to respondent court's prescription of the existence of novation, the


evidence at hand does not buttress a finding along this line from the mere fact that
petitioner supposedly did not question the substitution when the bank reacted to
private respondent's offer to pay the loan (p. 39, Rollo). What seems to have
escaped respondent court's attention was the condition imposed by the petitioner
that it will grant private respondent's request if the latter will also shoulder the
obligation incurred by Lorenzo Guarin in his capacity as president of the corporation
(p.37, Rollo). The consent of the petitioner to the substitution, as creditor, was
thus erroneously appreciated.

With the conclusions reached, we need not discuss the other issues raised in the
petition.

WHEREFORE, the petition is hereby GRANTED. The decision dated August 31, 1990,
including the resolution dated February 6, 1991 of respondent court are hereby set
aside and another one entered dismissing Wilson Chua's complaint. No special
pronouncement is made to costs.

20
5. G.R. No. 90027 March 3, 1993 14. The bank has no interest whatsoever in said contents, except
herein expressly provided, and it assumes absolutely no liability in
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner, connection therewith.1
vs.
THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST After the execution of the contract, two (2) renter's keys were given to the renters
COMPANY, respondents. — one to Aguirre (for the petitioner) and the other to the Pugaos. A guard key
remained in the possession of the respondent Bank. The safety deposit box has
Dolorfino & Dominguez Law Offices for petitioner. two (2) keyholes, one for the guard key and the other for the renter's key, and can
be opened only with the use of both keys. Petitioner claims that the certificates of
Danilo B. Banares for private respondent. title were placed inside the said box.

Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the
two (2) lots at a price of P225.00 per square meter which, as petitioner alleged in
DAVIDE, JR., J.: its complaint, translates to a profit of P100.00 per square meter or a total of
P280,500.00 for the entire property. Mrs. Ramos demanded the execution of a
Is the contractual relation between a commercial bank and another party in a deed of sale which necessarily entailed the production of the certificates of title. In
contract of rent of a safety deposit box with respect to its contents placed by the view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the
latter one of bailor and bailee or one of lessor and lessee? respondent Bank on 4 October 1979 to open the safety deposit box and get the
certificates of title. However, when opened in the presence of the Bank's
This is the crux of the present controversy. representative, the box yielded no such certificates. Because of the delay in the
reconstitution of the title, Mrs. Ramos withdrew her earlier offer to purchase the
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses lots; as a consequence thereof, the petitioner allegedly failed to realize the
Ramon and Paula Pugao entered into an agreement whereby the former purchased expected profit of P280,500.00. Hence, the latter filed on 1 September 1980 a
from the latter two (2) parcels of land for a consideration of P350,625.00. Of this complaint2 for damages against the respondent Bank with the Court of First
amount, P75,725.00 was paid as downpayment while the balance was covered by Instance (now Regional Trial Court) of Pasig, Metro Manila which docketed the
three (3) postdated checks. Among the terms and conditions of the agreement same as Civil Case No. 38382.
embodied in a Memorandum of True and Actual Agreement of Sale of Land were
that the titles to the lots shall be transferred to the petitioner upon full payment of In its Answer with Counterclaim,3 respondent Bank alleged that the petitioner has
the purchase price and that the owner's copies of the certificates of titles thereto, no cause of action because of paragraphs 13 and 14 of the contract of lease (Exhibit
Transfer Certificates of Title (TCT) Nos. 284655 and 292434, shall be deposited in "2"); corollarily, loss of any of the items or articles contained in the box could not
a safety deposit box of any bank. The same could be withdrawn only upon the joint give rise to an action against it. It then interposed a counterclaim for exemplary
signatures of a representative of the petitioner and the Pugaos upon full payment damages as well as attorney's fees in the amount of P20,000.00. Petitioner
of the purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then subsequently filed an answer to the counterclaim.4
rented Safety Deposit Box No. 1448 of private respondent Security Bank and Trust
Company, a domestic banking corporation hereinafter referred to as the In due course, the trial court, now designated as Branch 161 of the Regional Trial
respondent Bank. For this purpose, both signed a contract of lease (Exhibit "2") Court (RTC) of Pasig, Metro Manila, rendered a decision5 adverse to the petitioner
which contains, inter alia, the following conditions: on 8 December 1986, the dispositive portion of which reads:

13. The bank is not a depositary of the contents of the safe and it WHEREFORE, premises considered, judgment is hereby rendered
has neither the possession nor control of the same. dismissing plaintiff's complaint.

21
On defendant's counterclaim, judgment is hereby rendered ordering when it becomes due, and to take such steps as may be necessary
plaintiff to pay defendant the amount of FIVE THOUSAND in order that the securities may preserve their value and the rights
(P5,000.00) PESOS as attorney's fees. corresponding to them according to law.

With costs against plaintiff.6 The above provision shall not apply to contracts for the rent of safety
deposit boxes.
The unfavorable verdict is based on the trial court's conclusion that under
paragraphs 13 and 14 of the contract of lease, the Bank has no liability for the loss and then concluded that "[c]learly, the defendant-appellee is not under any
of the certificates of title. The court declared that the said provisions are binding duty to maintain the contents of the box. The stipulation absolving the
on the parties. defendant-appellee from liability is in accordance with the nature of the
contract of lease and cannot be regarded as contrary to law, public order
Its motion for reconsideration7 having been denied, petitioner appealed from the and public policy." 12 The appellate court was quick to add, however, that
adverse decision to the respondent Court of Appeals which docketed the appeal as under the contract of lease of the safety deposit box, respondent Bank is
CA-G.R. CV No. 15150. Petitioner urged the respondent Court to reverse the not completely free from liability as it may still be made answerable in case
challenged decision because the trial court erred in (a) absolving the respondent unauthorized persons enter into the vault area or when the rented box is
Bank from liability from the loss, (b) not declaring as null and void, for being forced open. Thus, as expressly provided for in stipulation number 8 of the
contrary to law, public order and public policy, the provisions in the contract for contract in question:
lease of the safety deposit box absolving the Bank from any liability for loss, (c)
not concluding that in this jurisdiction, as well as under American jurisprudence, 8. The Bank shall use due diligence that no unauthorized person shall
the liability of the Bank is settled and (d) awarding attorney's fees to the Bank and be admitted to any rented safe and beyond this, the Bank will not
denying the petitioner's prayer for nominal and exemplary damages and attorney's be responsible for the contents of any safe rented from it. 13
fees.8
Its motion for reconsideration 14 having been denied in the respondent Court's
In its Decision promulgated on 4 July 1989,9 respondent Court affirmed the Resolution of 28 August 1989, 15 petitioner took this recourse under Rule 45 of
appealed decision principally on the theory that the contract (Exhibit "2") executed the Rules of Court and urges Us to review and set aside the respondent Court's
by the petitioner and respondent Bank is in the nature of a contract of lease by ruling. Petitioner avers that both the respondent Court and the trial court (a) did
virtue of which the petitioner and its co-renter were given control over the safety not properly and legally apply the correct law in this case, (b) acted with grave
deposit box and its contents while the Bank retained no right to open the said box abuse of discretion or in excess of jurisdiction amounting to lack thereof and (c)
because it had neither the possession nor control over it and its contents. As such, set a precedent that is contrary to, or is a departure from precedents adhered to
the contract is governed by Article 1643 of the Civil Code 10 which provides: and affirmed by decisions of this Court and precepts in American jurisprudence
adopted in the Philippines. It reiterates the arguments it had raised in its motion
Art. 1643. In the lease of things, one of the parties binds himself to to reconsider the trial court's decision, the brief submitted to the respondent Court
give to another the enjoyment or use of a thing for a price certain, and the motion to reconsider the latter's decision. In a nutshell, petitioner
and for a period which may be definite or indefinite. However, no maintains that regardless of nomenclature, the contract for the rent of the safety
lease for more than ninety-nine years shall be valid. deposit box (Exhibit "2") is actually a contract of deposit governed by Title XII,
Book IV of the Civil Code of the
It invoked Tolentino vs. Gonzales 11 — which held that the owner of the Philippines. 16 Accordingly, it is claimed that the respondent Bank is liable for the
property loses his control over the property leased during the period of the loss of the certificates of title pursuant to Article 1972 of the said Code which
contract — and Article 1975 of the Civil Code which provides: provides:

Art. 1975. The depositary holding certificates, bonds, securities or Art. 1972. The depositary is obliged to keep the thing safely and to
instruments which earn interest shall be bound to collect the latter return it, when required, to the depositor, or to his heirs and
22
successors, or to the person who may have been designated in the contract may establish such stipulations, clauses, terms and conditions as they
contract. His responsibility, with regard to the safekeeping and the may deem convenient, provided they are not contrary to law, morals, good
loss of the thing, shall be governed by the provisions of Title I of this customs, public order or public policy.
Book.
After the respondent Bank filed its comment, this Court gave due course to the
If the deposit is gratuitous, this fact shall be taken into account in petition and required the parties to simultaneously submit their respective
determining the degree of care that the depositary must observe. Memoranda.

Petitioner then quotes a passage from American Jurisprudence 17 which is The petition is partly meritorious.
supposed to expound on the prevailing rule in the United States, to wit:
We agree with the petitioner's contention that the contract for the rent of the safety
The prevailing rule appears to be that where a safe-deposit company deposit box is not an ordinary contract of lease as defined in Article 1643 of the
leases a safe-deposit box or safe and the lessee takes possession of Civil Code. However, We do not fully subscribe to its view that the same is a
the box or safe and places therein his securities or other valuables, contract of deposit that is to be strictly governed by the provisions in the Civil Code
the relation of bailee and bail or is created between the parties to on deposit; 19 the contract in the case at bar is a special kind of deposit. It cannot
the transaction as to such securities or other valuables; the fact that be characterized as an ordinary contract of lease under Article 1643 because the
the full and absolute possession and control of the safety deposit box was not given to
safe-deposit company does not know, and that it is not expected the joint renters — the petitioner and the Pugaos. The guard key of the box
that it shall know, the character or description of the property which remained with the respondent Bank; without this key, neither of the renters could
is deposited in such safe-deposit box or safe does not change that open the box. On the other hand, the respondent Bank could not likewise open the
relation. That access to the contents of the safe-deposit box can be box without the renter's key. In this case, the said key had a duplicate which was
had only by the use of a key retained by the lessee ( whether it is made so that both renters could have access to the box.
the sole key or one to be used in connection with one retained by
the lessor) does not operate to alter the foregoing rule. The Hence, the authorities cited by the respondent Court 20 on this point do not apply.
argument that there is not, in such a case, a delivery of exclusive Neither could Article 1975, also relied upon by the respondent Court, be invoked
possession and control to the deposit company, and that therefore as an argument against the deposit theory. Obviously, the first paragraph of such
the situation is entirely different from that of ordinary bailment, has provision cannot apply to a depositary of certificates, bonds, securities or
been generally rejected by the courts, usually on the ground that as instruments which earn interest if such documents are kept in a rented safety
possession must be either in the depositor or in the company, it deposit box. It is clear that the depositary cannot open the box without the renter
should reasonably be considered as in the latter rather than in the being present.
former, since the company is, by the nature of the contract, given
absolute control of access to the property, and the depositor cannot We observe, however, that the deposit theory itself does not altogether find
gain access thereto without the consent and active participation of unanimous support even in American jurisprudence. We agree with the petitioner
the company. . . . (citations omitted). that under the latter, the prevailing rule is that the relation between a bank renting
out safe-deposit boxes and its customer with respect to the contents of the box is
and a segment from Words and Phrases 18 which states that a contract for that of a bail or and bailee, the bailment being for hire and mutual benefit. 21 This
the rental of a bank safety deposit box in consideration of a fixed amount is just the prevailing view because:
at stated periods is a bailment for hire.
There is, however, some support for the view that the relationship
Petitioner further argues that conditions 13 and 14 of the questioned contract are in question might be more properly characterized as that of landlord
contrary to law and public policy and should be declared null and void. In support and tenant, or lessor and lessee. It has also been suggested that it
thereof, it cites Article 1306 of the Civil Code which provides that parties to a should be characterized as that of licensor and licensee. The relation
23
between a bank, safe-deposit company, or storage company, and negligence or delay would be void for being contrary to law and public policy. In
the renter of a safe-deposit box therein, is often described as the instant case, petitioner maintains that conditions 13 and 14 of the questioned
contractual, express or implied, oral or written, in whole or in part. contract of lease of the safety deposit box, which read:
But there is apparently no jurisdiction in which any rule other than
that applicable to bailments governs questions of the liability and 13. The bank is not a depositary of the contents of the safe and it
rights of the parties in respect of loss of the contents of safe-deposit has neither the possession nor control of the same.
boxes. 22 (citations omitted)
14. The bank has no interest whatsoever in said contents, except
In the context of our laws which authorize banking institutions to rent out safety herein expressly provided, and it assumes absolutely no liability in
deposit boxes, it is clear that in this jurisdiction, the prevailing rule in the United connection therewith. 28
States has been adopted. Section 72 of the General Banking Act 23 pertinently
provides: are void as they are contrary to law and public policy. We find Ourselves in
agreement with this proposition for indeed, said provisions are inconsistent
Sec. 72. In addition to the operations specifically authorized with the respondent Bank's responsibility as a depositary under Section
elsewhere in this Act, banking institutions other than building and 72(a) of the General Banking Act. Both exempt the latter from any liability
loan associations may perform the following services: except as contemplated in condition 8 thereof which limits its duty to
exercise reasonable diligence only with respect to who shall be admitted to
(a) Receive in custody funds, documents, and any rented safe, to wit:
valuable objects, and rent safety deposit boxes for the
safeguarding of such effects. 8. The Bank shall use due diligence that no unauthorized person shall
be admitted to any rented safe and beyond this, the Bank will not
xxx xxx xxx be responsible for the contents of any safe rented from it. 29

The banks shall perform the services permitted under subsections Furthermore, condition 13 stands on a wrong premise and is contrary to the
(a), (b) and (c) of this section as depositories or as agents. . . . 24 actual practice of the Bank. It is not correct to assert that the Bank has
(emphasis supplied) neither the possession nor control of the contents of the box since in fact,
the safety deposit box itself is located in its premises and is under its
Note that the primary function is still found within the parameters of a contract of absolute control; moreover, the respondent Bank keeps the guard key to
deposit, i.e., the receiving in custody of funds, documents and other valuable the said box. As stated earlier, renters cannot open their respective boxes
objects for safekeeping. The renting out of the safety deposit boxes is not unless the Bank cooperates by presenting and using this guard key. Clearly
independent from, but related to or in conjunction with, this principal function. A then, to the extent above stated, the foregoing conditions in the contract in
contract of deposit may be entered into orally or in writing 25 and, pursuant to question are void and ineffective. It has been said:
Article 1306 of the Civil Code, the parties thereto may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not With respect to property deposited in a safe-deposit box by a
contrary to law, morals, good customs, public order or public policy. The customer of a safe-deposit company, the parties, since the relation
depositary's responsibility for the safekeeping of the objects deposited in the case is a contractual one, may by special contract define their respective
at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary duties or provide for increasing or limiting the liability of the deposit
would be liable if, in performing its obligation, it is found guilty of fraud, negligence, company, provided such contract is not in violation of law or public
delay or contravention of the tenor of the agreement. 26 In the absence of any policy. It must clearly appear that there actually was such a special
stipulation prescribing the degree of diligence required, that of a good father of a contract, however, in order to vary the ordinary obligations implied
family is to be observed. 27 Hence, any stipulation exempting the depositary from by law from the relationship of the parties; liability of the deposit
any liability arising from the loss of the thing deposited on account of fraud, company will not be enlarged or restricted by words of doubtful
24
meaning. The company, in renting SO ORDERED
safe-deposit boxes, cannot exempt itself from liability for loss of the
contents by its own fraud or negligence or that of its agents or
servants, and if a provision of the contract may be construed as an
attempt to do so, it will be held ineffective for the purpose. Although
it has been held that the lessor of a safe-deposit box cannot limit its
liability for loss of the contents thereof through its own negligence,
the view has been taken that such a lessor may limits its liability to
some extent by agreement or stipulation. 30 (citations omitted)

Thus, we reach the same conclusion which the Court of Appeals arrived at, that is,
that the petition should be dismissed, but on grounds quite different from those
relied upon by the Court of Appeals. In the instant case, the respondent Bank's
exoneration cannot, contrary to the holding of the Court of Appeals, be based on
or proceed from a characterization of the impugned contract as a contract of lease,
but rather on the fact that no competent proof was presented to show that
respondent Bank was aware of the agreement between the petitioner and the
Pugaos to the effect that the certificates of title were withdrawable from the safety
deposit box only upon both parties' joint signatures, and that no evidence was
submitted to reveal that the loss of the certificates of title was due to the fraud or
negligence of the respondent Bank. This in turn flows from this Court's
determination that the contract involved was one of deposit. Since both the
petitioner and the Pugaos agreed that each should have one (1) renter's key, it
was obvious that either of them could ask the Bank for access to the safety deposit
box and, with the use of such key and the Bank's own guard key, could open the
said box, without the other renter being present.

Since, however, the petitioner cannot be blamed for the filing of the complaint and
no bad faith on its part had been established, the trial court erred in condemning
the petitioner to pay the respondent Bank attorney's fees. To this extent, the
Decision (dispositive portion) of public respondent Court of Appeals must be
modified.

WHEREFORE, the Petition for Review is partially GRANTED by deleting the award
for attorney's fees from the 4 July 1989 Decision of the respondent Court of Appeals
in CA-G.R. CV No. 15150. As modified, and subject to the pronouncement We made
above on the nature of the relationship between the parties in a contract of lease
of safety deposit boxes, the dispositive portion of the said Decision is hereby
AFFIRMED and the instant Petition for Review is otherwise DENIED for lack of merit.

No pronouncement as to costs.

25
6. G.R. No. 168644 February 16, 2010 That in or about or sometime during the period comprised (sic) between January
1988 [and] October 1989, inclusive, in the City of Manila, Philippines, the said
BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN, accused did then and there willfully, unlawfully and feloniously with intent [to] gain
Petitioner, and without the knowledge and consent of the owner thereof, take, steal and carry
vs. away cash money in the total amount of ₱1,534,135.50 belonging to BSB GROUP
SALLY GO a.k.a. SALLY GO-BANGAYAN, Respondent. OF COMPANIES represented by RICARDO BANGAYAN, to the damage and prejudice
of said owner in the aforesaid amount of ₱1,534,135.50, Philippine currency.
DECISION
That in the commission of the said offense, said accused acted with grave abuse
PERALTA, J.: of confidence, being then employed as cashier by said complainant at the time of
the commission of the said offense and as such she was entrusted with the said
This is a Petition for Review under Rule 45 of the Rules of Court assailing the amount of money.
Decision of the Court of Appeals in CA-G.R. SP No. 876001 dated April 20, 2005,
which reversed and set aside the September 13, 2004 2 and November 5, 20043 Contrary to law.9
Orders issued by the Regional Trial Court of Manila, Branch 36 4 in Criminal Case
No. 02-202158 for qualified theft. The said orders, in turn, respectively denied the Respondent entered a negative plea when arraigned.10 The trial ensued. On the
motion filed by herein respondent Sally Go for the suppression of the testimonial premise that respondent had allegedly encashed the subject checks and deposited
and documentary evidence relative to a Security Bank account, and denied the corresponding amounts thereof to her personal banking account, the
reconsideration. prosecution moved for the issuance of subpoena duces tecum /ad testificandum
against the respective managers or records custodians of Security Bank’s Divisoria
The basic antecedents are no longer disputed. Branch, as well as of the Asian Savings Bank (now Metropolitan Bank & Trust Co.
[Metrobank]), in Jose Abad Santos, Tondo, Manila Branch.11 The trial court granted
Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided the motion and issued the corresponding subpoena.12
by its herein representative, Ricardo Bangayan (Bangayan). Respondent Sally Go,
alternatively referred to as Sally Sia Go and Sally Go-Bangayan, is Bangayan’s Respondent filed a motion to quash the subpoena dated November 4, 2003,
wife, who was employed in the company as a cashier, and was engaged, among addressed to Metrobank, noting to the court that in the complaint-affidavit filed
others, to receive and account for the payments made by the various customers of with the prosecutor, there was no mention made of the said bank account, to which
the company. respondent, in addition to the Security Bank account identified as Account No. 01-
14-006, allegedly deposited the proceeds of the supposed checks. Interestingly,
In 2002, Bangayan filed with the Manila Prosecutor’s Office a complaint for estafa while respondent characterized the Metrobank account as irrelevant to the case,
and/or qualified theft5 against respondent, alleging that several checks6 she, in the same motion, nevertheless waived her objection to the irrelevancy of
representing the aggregate amount of ₱1,534,135.50 issued by the company’s the Security Bank account mentioned in the same complaint-affidavit, inasmuch as
customers in payment of their obligation were, instead of being turned over to the she was admittedly willing to address the allegations with respect thereto. 13
company’s coffers, indorsed by respondent who deposited the same to her personal
banking account maintained at Security Bank and Trust Company (Security Bank) Petitioner, opposing respondent’s move, argued for the relevancy of the Metrobank
in Divisoria, Manila Branch.7 Upon a finding that the evidence adduced was account on the ground that the complaint-affidavit showed that there were two
uncontroverted, the assistant city prosecutor recommended the filing of the checks which respondent allegedly deposited in an account with the said bank.14
Information for qualified theft against respondent.8 To this, respondent filed a supplemental motion to quash, invoking the absolutely
confidential nature of the Metrobank account under the provisions of Republic Act
Accordingly, respondent was charged before the Regional Trial Court of Manila, (R.A.) No. 1405.15 The trial court did not sustain respondent; hence, it denied the
Branch 36, in an Information, the inculpatory portion of which reads: motion to quash for lack of merit.16

26
Meanwhile, the prosecution was able to present in court the testimony of Elenita subject matter in litigation was to be determined by the allegations in the
Marasigan (Marasigan), the representative of Security Bank. In a nutshell, information and, in this respect, it alluded to the assailed November 5, 2004 Order
Marasigan’s testimony sought to prove that between 1988 and 1989, respondent, of the trial court, which declared to be erroneous the limitation of the present
while engaged as cashier at the BSB Group, Inc., was able to run away with the inquiry merely to what was contained in the information.27
checks issued to the company by its customers, endorse the same, and credit the
corresponding amounts to her personal deposit account with Security Bank. In the For her part, respondent claimed that the money represented by the Security Bank
course of the testimony, the subject checks were presented to Marasigan for account was neither relevant nor material to the case, because nothing in the
identification and marking as the same checks received by respondent, endorsed, criminal information suggested that the money therein deposited was the subject
and then deposited in her personal account with Security Bank.17 But before the matter of the case. She invited particular attention to that portion of the criminal
testimony could be completed, respondent filed a Motion to Suppress, 18 seeking Information which averred that she has stolen and carried away cash money in the
the exclusion of Marasigan’s testimony and accompanying documents thus far total amount of ₱1,534,135.50. She advanced the notion that the term "cash
received, bearing on the subject Security Bank account. This time respondent money" stated in the Information was not synonymous with the checks she was
invokes, in addition to irrelevancy, the privilege of confidentiality under R.A. No. purported to have stolen from petitioner and deposited in her personal banking
1405. account. Thus, the checks which the prosecution had Marasigan identify, as well as
the testimony itself of Marasigan, should be suppressed by the trial court at least
The trial court, nevertheless, denied the motion in its September 13, 2004 Order. 19 for violating respondent’s right to due process.28 More in point, respondent opined
A motion for reconsideration was subsequently filed, but it was also denied in the that admitting the testimony of Marasigan, as well as the evidence pertaining to
Order dated November 5, 2004.20 These two orders are the subject of the instant the Security Bank account, would violate the secrecy rule under R.A. No. 1405. 29
case.
In its reply, petitioner asserted the sufficiency of the allegations in the criminal
Aggrieved, and believing that the trial court gravely abused its discretion in acting Information for qualified theft, as the same has sufficiently alleged the elements of
the way it did, respondent elevated the matter to the Court of Appeals via a petition the offense charged. It posits that through Marasigan’s testimony, the Court would
for certiorari under Rule 65. Finding merit in the petition, the Court of Appeals be able to establish that the checks involved, copies of which were attached to the
reversed and set aside the assailed orders of the trial court in its April 20, 2005 complaint-affidavit filed with the prosecutor, had indeed been received by
Decision.21 The decision reads: respondent as cashier, but were, thereafter, deposited by the latter to her personal
account with Security Bank. Petitioner held that the checks represented the cash
WHEREFORE, the petition is hereby GRANTED. The assailed orders dated money stolen by respondent and, hence, the subject matter in this case is not only
September 13, 2004 and November 5, 2004 are REVERSED and SET ASIDE. The the cash amount represented by the checks supposedly stolen by respondent, but
testimony of the SBTC representative is ordered stricken from the records. also the checks themselves.30

SO ORDERED.22 We derive from the conflicting advocacies of the parties that the issue for resolution
is whether the testimony of Marasigan and the accompanying documents are
With the denial of its motion for reconsideration,23 petitioner is now before the irrelevant to the case, and whether they are also violative of the absolutely
Court pleading the same issues as those raised before the lower courts. confidential nature of bank deposits and, hence, excluded by operation of R.A. No.
1405. The question of admissibility of the evidence thus comes to the fore. And the
In this Petition24 under Rule 45, petitioner averred in the main that the Court of Court, after deliberative estimation, finds the subject evidence to be indeed
Appeals had seriously erred in reversing the assailed orders of the trial court, and inadmissible.
in effect striking out Marasigan’s testimony dealing with respondent’s deposit
account with Security Bank.25 It asserted that apart from the fact that the said Prefatorily, fundamental is the precept in all criminal prosecutions, that the
evidence had a direct relation to the subject matter of the case for qualified theft constitutive acts of the offense must be established with unwavering exactitude
and, hence, brings the case under one of the exceptions to the coverage of and moral certainty because this is the critical and only requisite to a finding of
confidentiality under R.A. 1405.26 Petitioner believed that what constituted the guilt. 31 Theft is present when a person, with intent to gain but without violence
27
against or intimidation of persons or force upon things, takes the personal property favor, because it in effect, seeks to establish the commission, not of theft, but
of another without the latter’s consent. It is qualified when, among others, and as rather of some other crime probably estafa.
alleged in the instant case, it is committed with abuse of confidence. 32 The
prosecution of this offense necessarily focuses on the existence of the following Moreover, that there is no difference between cash and check is true in other
elements: (a) there was taking of personal property belonging to another; (b) the instances. In estafa by conversion, for instance, whether the thing converted is
taking was done with intent to gain; (c) the taking was done without the consent cash or check, is immaterial in relation to the formal allegation in an information
of the owner; (d) the taking was done without violence against or intimidation of for that offense; a check, after all, while not regarded as legal tender, is normally
persons or force upon things; and (e) it was done with abuse of confidence. 33 In accepted under commercial usage as a substitute for cash, and the credit it
turn, whether these elements concur in a way that overcomes the presumption of represents in stated monetary value is properly capable of appropriation. And it is
guiltlessness, is a question that must pass the test of relevancy and competency in this respect that what the offender does with the check subsequent to the act of
in accordance with Section 334 Rule 128 of the Rules of Court. unlawfully taking it becomes material inasmuch as this offense is a continuing
one.37 In other words, in pursuing a case for this offense, the prosecution may
Thus, whether these pieces of evidence sought to be suppressed in this case the establish its cause by the presentation of the checks involved. These checks would
testimony of Marasigan, as well as the checks purported to have been stolen and then constitute the best evidence to establish their contents and to prove the
deposited in respondent’s Security Bank account are relevant, is to be addressed elemental act of conversion in support of the proposition that the offender has
by considering whether they have such direct relation to the fact in issue as to indeed indorsed the same in his own name.38
induce belief in its existence or non-existence; or whether they relate collaterally
to a fact from which, by process of logic, an inference may be made as to the Theft, however, is not of such character. Thus, for our purposes, as the Information
existence or non-existence of the fact in issue.35 in this case accuses respondent of having stolen cash, proof tending to establish
that respondent has actualized her criminal intent by indorsing the checks and
The fact in issue appears to be that respondent has taken away cash in the amount depositing the proceeds thereof in her personal account, becomes not only
of ₱1,534,135.50 from the coffers of petitioner. In support of this allegation, irrelevant but also immaterial and, on that score, inadmissible in evidence.
petitioner seeks to establish the existence of the elemental act of taking by
adducing evidence that respondent, at several times between 1988 and 1989, We now address the issue of whether the admission of Marasigan’s testimony on
deposited some of its checks to her personal account with Security Bank. Petitioner the particulars of respondent’s account with Security Bank, as well as of the
addresses the incongruence between the allegation of theft of cash in the corresponding evidence of the checks allegedly deposited in said account,
Information, on the one hand, and the evidence that respondent had first stolen constitutes an unallowable inquiry under R.A. 1405.
the checks and deposited the same in her banking account, on the other hand, by
impressing upon the Court that there obtains no difference between cash and check It is conceded that while the fundamental law has not bothered with the triviality
for purposes of prosecuting respondent for theft of cash. Petitioner is mistaken. of specifically addressing privacy rights relative to banking accounts, there,
nevertheless, exists in our jurisdiction a legitimate expectation of privacy
In theft, the act of unlawful taking connotes deprivation of personal property of governing such accounts. The source of this right of expectation is statutory, and
one by another with intent to gain, and it is immaterial that the offender is able or it is found in R.A. No. 1405,39 otherwise known as the Bank Secrecy Act of 1955.
40
unable to freely dispose of the property stolen because the deprivation relative to
the offended party has already ensued from such act of execution.36 The allegation
of theft of money, hence, necessitates that evidence presented must have a R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and
tendency to prove that the offender has unlawfully taken money belonging to at the same time encourage the people to deposit their money in banking
another. Interestingly, petitioner has taken pains in attempting to draw a institutions, so that it may be utilized by way of authorized loans and thereby assist
connection between the evidence subject of the instant review, and the allegation in economic development.41 Owing to this piece of legislation, the confidentiality of
of theft in the Information by claiming that respondent had fraudulently deposited bank deposits remains to be a basic state policy in the Philippines. 42 Section 2 of
the checks in her own name. But this line of argument works more prejudice than the law institutionalized this policy by characterizing as absolutely confidential in

28
general all deposits of whatever nature with banks and other financial institutions intention of the lawmakers to place banks deposits beyond the reach of execution
in the country. It declares: to satisfy a final judgmentThus:

Section 2. All deposits of whatever nature with banks or banking institutions in x x x Mr. Marcos: Now, for purposes of the record, I should like the Chairman of
the Philippines including investments in bonds issued by the Government of the the Committee on Ways and Means to clarify this further. Suppose an individual
Philippines, its political subdivisions and its instrumentalities, are hereby has a tax case. He is being held liable by the Bureau of Internal Revenue [(BIR)]
considered as of an absolutely confidential nature and may not be examined, or, say, ₱1,000.00 worth of tax liability, and because of this the deposit of this
inquired or looked into by any person, government official, bureau or office, except individual [has been] attached by the [BIR].
upon written permission of the depositor, or in cases of impeachment, or upon
order of a competent court in cases of bribery or dereliction of duty of public Mr. Ramos: The attachment will only apply after the court has pronounced
officials, or in cases where the money deposited or invested is the subject matter sentence declaring the liability of such person. But where the primary aim is to
of the litigation.1avvphi1 determine whether he has a bank deposit in order to bring about a proper
assessment by the [BIR], such inquiry is not allowed by this proposed law.
Subsequent statutory enactments43 have expanded the list of exceptions to this
policy yet the secrecy of bank deposits still lies as the general rule, falling as it Mr. Marcos: But under our rules of procedure and under the Civil Code, the
does within the legally recognized zones of privacy. 44 There is, in fact, much attachment or garnishment of money deposited is allowed. Let us assume for
disfavor to construing these primary and supplemental exceptions in a manner that instance that there is a preliminary attachment which is for garnishment or for
would authorize unbridled discretion, whether governmental or otherwise, in holding liable all moneys deposited belonging to a certain individual, but such
utilizing these exceptions as authority for unwarranted inquiry into bank accounts. attachment or garnishment will bring out into the open the value of such deposit.
It is then perceivable that the present legal order is obliged to conserve the Is that prohibited by... the law?
absolutely confidential nature of bank deposits.45
Mr. Ramos: It is only prohibited to the extent that the inquiry... is made only for
The measure of protection afforded by the law has been explained in China Banking the purpose of satisfying a tax liability already declared for the protection of the
Corporation v. Ortega.46 That case principally addressed the issue of whether the right in favor of the government; but when the object is merely to inquire whether
prohibition against an examination of bank deposits precludes garnishment in he has a deposit or not for purposes of taxation, then this is fully covered by the
satisfaction of a judgment. Ruling on that issue in the negative, the Court found law. x x x
guidance in the relevant portions of the legislative deliberations on Senate Bill No.
351 and House Bill No. 3977, which later became the Bank Secrecy Act, and it held Mr. Marcos: The law prohibits a mere investigation into the existence and the
that the absolute confidentiality rule in R.A. No. 1405 actually aims at protection amount of the deposit.
from unwarranted inquiry or investigation if the purpose of such inquiry or
investigation is merely to determine the existence and nature, as well as the Mr. Ramos: Into the very nature of such deposit. x x x 47
amount of the deposit in any given bank account. Thus,
In taking exclusion from the coverage of the confidentiality rule, petitioner in the
x x x The lower court did not order an examination of or inquiry into the deposit of instant case posits that the account maintained by respondent with Security Bank
B&B Forest Development Corporation, as contemplated in the law. It merely contains the proceeds of the checks that she has fraudulently appropriated to
required Tan Kim Liong to inform the court whether or not the defendant B&B herself and, thus, falls under one of the exceptions in Section 2 of R.A. No. 1405
Forest Development Corporation had a deposit in the China Banking Corporation that the money kept in said account is the subject matter in litigation. To
only for purposes of the garnishment issued by it, so that the bank would hold the highlight this thesis, petitioner avers, citing Mathay v. Consolidated Bank and Trust
same intact and not allow any withdrawal until further order. It will be noted from Co.,48 that the subject matter of the action refers to the physical facts; the things
the discussion of the conference committee report on Senate Bill No. 351 and real or personal; the money, lands, chattels and the like, in relation to which the
House Bill No. 3977which later became Republic Act No. 1405, that it was not the suit is prosecuted, which in the instant case should refer to the money deposited
in the Security Bank account.49 On the surface, however, it seems that petitioner’s
29
theory is valid to a point, yet a deeper treatment tends to show that it has argued for being excluded by operation of R.A. No. 1405. They are likewise irrelevant to
quite off-tangentially. This, because, while Mathay did explain what the subject the case, inasmuch as they do not appear to have any logical and reasonable
matter of an action is, it nevertheless did so only to determine whether the class connection to the prosecution of respondent for qualified theft. We find full merit
suit in that case was properly brought to the court. in and affirm respondent’s objection to the evidence of the prosecution. The Court
of Appeals was, therefore, correct in reversing the assailed orders of the trial court.
What indeed constitutes the subject matter in litigation in relation to Section 2 of
R.A. No. 1405 has been pointedly and amply addressed in Union Bank of the A final note. In any given jurisdiction where the right of privacy extends its scope
Philippines v. Court of Appeals,50 in which the Court noted that the inquiry into to include an individual’s financial privacy rights and personal financial matters,
bank deposits allowable under R.A. No. 1405 must be premised on the fact that there is an intermediate or heightened scrutiny given by courts and legislators to
the money deposited in the account is itself the subject of the action.51 Given this laws infringing such rights.52 Should there be doubts in upholding the absolutely
perspective, we deduce that the subject matter of the action in the case at bar is confidential nature of bank deposits against affirming the authority to inquire into
to be determined from the indictment that charges respondent with the offense, such accounts, then such doubts must be resolved in favor of the former. This
and not from the evidence sought by the prosecution to be admitted into the attitude persists unless congress lifts its finger to reverse the general state policy
records. In the criminal Information filed with the trial court, respondent, respecting the absolutely confidential nature of bank deposits.53
unqualifiedly and in plain language, is charged with qualified theft by abusing
petitioner’s trust and confidence and stealing cash in the amount of ₱1,534,135.50. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-
The said Information makes no factual allegation that in some material way G.R. SP No. 87600 dated April 20, 2005, reversing the September 13, 2004 and
involves the checks subject of the testimonial and documentary evidence sought November 5, 2004 Orders of the Regional Trial Court of Manila, Branch 36 in
to be suppressed. Neither do the allegations in said Information make mention of Criminal Case No. 02-202158, is AFFIRMED.
the supposed bank account in which the funds represented by the checks have
allegedly been kept. SO ORDERED.

In other words, it can hardly be inferred from the indictment itself that the Security
Bank account is the ostensible subject of the prosecution’s inquiry. Without
needlessly expanding the scope of what is plainly alleged in the Information, the
subject matter of the action in this case is the money amounting to ₱1,534,135.50
alleged to have been stolen by respondent, and not the money equivalent of the
checks which are sought to be admitted in evidence. Thus, it is that, which the
prosecution is bound to prove with its evidence, and no other.

It comes clear that the admission of testimonial and documentary evidence relative
to respondent’s Security Bank account serves no other purpose than to establish
the existence of such account, its nature and the amount kept in it. It constitutes
an attempt by the prosecution at an impermissible inquiry into a bank deposit
account the privacy and confidentiality of which is protected by law. On this score
alone, the objection posed by respondent in her motion to suppress should have
indeed put an end to the controversy at the very first instance it was raised before
the trial court.

In sum, we hold that the testimony of Marasigan on the particulars of respondent’s


supposed bank account with Security Bank and the documentary evidence
represented by the checks adduced in support thereof, are not only incompetent
30
7. G.R. No. L-34964 January 31, 1973 Corporation of defendant B & B Forest Development Corporation, and if there is
any deposit, to hold the same intact and not allow any withdrawal until further
CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants, order from this Court." Tan Kim Liong moved to reconsider but was turned down
vs. by order of March 27, 1972. In the same order he was directed "to comply with
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First the order of this Court dated March 4, 1972 within ten (10) days from the receipt
Instance of Manila, Branch VIII, and VICENTE G. ACABAN, respondents- of copy of this order, otherwise his arrest and confinement will be ordered by the
appellees. Court." Resisting the two orders, the China Banking Corporation and Tan Kim Liong
instituted the instant petition.
Sy Santos, Del Rosario and Associates for petitioners-appellants.
The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners
Tagalo, Gozar and Associates for respondents-appellees. reads:

Sec. 2. All deposits of whatever nature with banks or banking


institutions in the Philippines including investments in bonds issued
MAKALINTAL, J.: by the Government of the Philippines, its political subdivisions and
its instrumentalities, are hereby considered as of absolutely
The only issue in this petition for certiorari to review the orders dated March 4, confidential nature and may not be examined, inquired or looked
1972 and March 27, 1972, respectively, of the Court of First Instance of Manila in into by any person, government official, bureau or office, except
its Civil Case No. 75138, is whether or not a banking institution may validly refuse upon written permission of the depositor, or in cases of
to comply with a court process garnishing the bank deposit of a judgment debtor, impeachment, or upon order of a competent court in cases of bribery
by invoking the provisions of Republic Act No. 1405. * or dereliction of duty of public officials, or in cases where the money
deposited or invested is the subject matter of the litigation.
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against
Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Sec 3. It shall be unlawful for any official or employee of a banking
Bautista for the collection of a sum of money. Upon motion of the plaintiff the trial institution to disclose to any person other than those mentioned in
court declared the defendants in default for failure to answer within the Section two hereof any information concerning said deposits.
reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk
to receive the plaintiff's evidence. On January 20, 1970 judgment by default was Sec. 5. Any violation of this law will subject offender upon conviction,
rendered against the defendants. to an imprisonment of not more than five years or a fine of not more
than twenty thousand pesos or both, in the discretion of the court.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit
of the defendant B & B Forest Development Corporation with the China Banking The petitioners argue that the disclosure of the information required by the court
Corporation. Accordingly, a notice of garnishment was issued by the Deputy Sheriff does not fall within any of the four (4) exceptions enumerated in Section 2, and
of the trial court and served on said bank through its cashier, Tan Kim Liong. In that if the questioned orders are complied with Tan Kim Liong may be criminally
reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions liable under Section 5 and the bank exposed to a possible damage suit by B & B
of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any Forest Development Corporation. Specifically referring to this case, the position of
information relative to bank deposits. Thereupon the plaintiff filed a motion to cite the petitioners is that the bank deposit of judgment debtor B & B Forest
Tan Kim Liong for contempt of court. Development Corporation cannot be subject to garnishment to satisfy a final
judgment against it in view of the aforequoted provisions of law.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion.
However, Tan Kim Liong was ordered "to inform the Court within five days from We do not view the situation in that light. The lower court did not order an
receipt of this order whether or not there is a deposit in the China Banking examination of or inquiry into the deposit of B & B Forest Development Corporation,
31
as contemplated in the law. It merely required Tan Kim Liong to inform the court Mr. MARCOS. The law prohibits a mere investigation into the
whether or not the defendant B & B Forest Development Corporation had a deposit existence and the amount of the deposit.
in the China Banking Corporation only for purposes of the garnishment issued by
it, so that the bank would hold the same intact and not allow any withdrawal until Mr. RAMOS. Into the very nature of such deposit.
further order. It will be noted from the discussion of the conference committee
report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Mr. MARCOS. So I come to my original question. Therefore,
Act 1405, that it was not the intention of the lawmakers to place bank deposits preliminary garnishment or attachment of the deposit is not allowed?
beyond the reach of execution to satisfy a final judgment. Thus:
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. Now, for purposes of the record, I should like the
Chairman of the Committee on Ways and Means to clarify this Mr. MARCOS. I am glad that is clarified. So that the established rule
further. Suppose an individual has a tax case. He is being held liable of procedure as well as the substantive law on the matter is
by the Bureau of Internal Revenue for, say, P1,000.00 worth of tax amended?
liability, and because of this the deposit of this individual is attached
by the Bureau of Internal Revenue. Mr. RAMOS. Yes. That is the effect.

Mr. RAMOS. The attachment will only apply after the court has Mr. MARCOS. I see. Suppose there has been a decision, definitely
pronounced sentence declaring the liability of such person. But establishing the liability of an individual for taxation purposes and
where the primary aim is to determine whether he has a bank this judgment is sought to be executed ... in the execution of that
deposit in order to bring about a proper assessment by the Bureau judgment, does this bill, or this proposed law, if approved, allow the
of Internal Revenue, such inquiry is not authorized by this proposed investigation or scrutiny of the bank deposit in order to execute the
law. judgment?

Mr. MARCOS. But under our rules of procedure and under the Civil Mr. RAMOS. To satisfy a judgment which has become executory.
Code, the attachment or garnishment of money deposited is allowed.
Let us assume, for instance, that there is a preliminary attachment Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is
which is for garnishment or for holding liable all moneys deposited P1,000,000 and the deposit is half a million, will this bill allow
belonging to a certain individual, but such attachment or scrutiny into the deposit in order that the judgment may be
garnishment will bring out into the open the value of such deposit. executed?
Is that prohibited by this amendment or by this law?
Mr. RAMOS. Merely to determine the amount of such money to
Mr. RAMOS. It is only prohibited to the extent that the inquiry is satisfy that obligation to the Government, but not to determine
limited, or rather, the inquiry is made only for the purpose of whether a deposit has been made in evasion of taxes.
satisfying a tax liability already declared for the protection of the
right in favor of the government; but when the object is merely to xxx xxx xxx
inquire whether he has a deposit or not for purposes of taxation,
then this is fully covered by the law. Mr. MACAPAGAL. But let us suppose that in an ordinary civil action
for the recovery of a sum of money the plaintiff wishes to attach the
Mr. MARCOS. And it protects the depositor, does it not? properties of the defendant to insure the satisfaction of the
judgment. Once the judgment is rendered, does the gentleman
Mr. RAMOS. Yes, it protects the depositor. mean that the plaintiff cannot attach the bank deposit of the
defendant?
32
Mr. RAMOS. That was the question raised by the gentleman from
Pangasinan to which I replied that outside the very purpose of this
law it could be reached by attachment.

Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be


attached?

Mr. RAMOS. That is so.

(Vol. II, Congressional Record, House of Representatives, No. 12,


pp. 3839-3840, July 27, 1955).

It is sufficiently clear from the foregoing discussion of the conference committee


report of the two houses of Congress that the prohibition against examination of
or inquiry into a bank deposit under Republic Act 1405 does not preclude its being
garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in
such a case, and if the existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is hard to conceive that it was ever within
the intention of Congress to enable debtors to evade payment of their just debts,
even if ordered by the Court, through the expedient of converting their assets into
cash and depositing the same in a bank.

WHEREFORE, the orders of the lower court dated March 4 and 27, 1972,
respectively, are hereby affirmed, with costs against the petitioners-appellants.

33
8. G.R. No. 128996 February 15, 2002 Malou Genuino, contrary to their disclosures and the aforementioned bank policy,
appeared to have been actively engaged in business endeavors that were in conflict
CARMEN LL. INTENGAN, ROSARIO LL. NERI, and RITA P. BRAWNER, with the business of the bank. It was found that with the use of two (2) companies
petitioners, in which they have personal financial interest, namely Torrance Development
vs. Corporation and Global Pacific Corporation, they managed or caused existing bank
COURT OF APPEALS, DEPARTMENT OF JUSTICE, AZIZ RAJKOTWALA, clients/depositors to divert their money from Citibank, N.A., such as those placed
WILLIAM FERGUSON, JOVEN REYES, and VIC LIM, respondents. in peso and dollar deposits and money placements, to products offered by other
companies that were commanding higher rate of yields. This was done by first
DECISION transferring bank clients’ monies to Torrance and Global which in turn placed the
monies of the bank clients in securities, shares of stock and other certificates of
DE LEON, JR., J.: third parties. It also appeared that out of these transactions, Mr. Dante L. Santos
and Ms. Marilou Genuino derived substantial financial gains.
Before us is a petition for review on certiorari, seeking the reversal of the Decision1
dated July 8, 1996 of the former Fifteenth Division2 of the Court of Appeals in CA- 5.1 In the course of the investigation, I was able to determine that the bank clients
G.R. SP No. 37577 as well as its Resolution3 dated April 16, 1997 denying which Mr. Santos and Ms. Genuino helped/caused to divert their deposits/money
petitioners’ motion for reconsideration. The appellate court, in its Decision, placements with Citibank, NA. to Torrance and Global (their family corporations)
sustained a resolution of the Department of Justice ordering the withdrawal of for subsequent investment in securities, shares of stocks and debt papers in other
informations for violation of Republic Act No. 1405 against private respondents. companies were as follows:

The facts are: xxx

On September 21, 1993, Citibank filed a complaint for violation of section 31,4 in b) Carmen Intengan
relation to section 1445 of the Corporation Code against two (2) of its officers,
Dante L. Santos and Marilou Genuino. Attached to the complaint was an affidavit6 xxx
executed by private respondent Vic Lim, a vice-president of Citibank. Pertinent
portions of his affidavit are quoted hereunder: d) Rosario Neri

2.1 Sometime this year, the higher management of Citibank, N.A. assigned me to xxx
assist in the investigation of certain anomalous/highly irregular activities of the
Treasurer of the Global Consumer Group of the bank, namely, Dante L. Santos and i) Rita Brawner
the Asst. Vice President in the office of Mr. Dante L. Santos, namely Ms. Marilou
(also called Malou) Genuino. Ms. Marilou Genuino apart from being an Assistant All the above persons/parties have long standing accounts with Citibank, N.A. in
Vice President in the office of Mr. Dante L. Santos also performed the duties of an savings/dollar deposits and/or in trust accounts and/or money placements.
Account Officer. An Account Officer in the office of Mr. Dante L. Santos personally
attends to clients of the bank in the effort to persuade clients to place and keep As evidence, Lim annexed bank records purporting to establish the deception
their monies in the products of Citibank, NA., such as peso and dollar deposits, practiced by Santos and Genuino. Some of the documents pertained to the dollar
mortgage backed securities and money placements, among others. deposits of petitioners Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P. Brawner,
as follows:
xxx xxx xxx
a) Annex "A-6"7 - an "Application for Money Transfer" in the amount of US
4.1 The investigation in which I was asked to participate was undertaken because $140,000.00, executed by Intengan in favor of Citibank $ S/A No.
the bank had found records/evidence showing that Mr. Dante L. Santos and Ms. 24367796, to be debited from her Account No. 22543341;
34
b) Annex "A-7"8 - a "Money Transfer Slip" in the amount of US $45,996.30, Fourth step: Upon receipt by Global and/or Torrance of the remittances from the
executed by Brawner in favor of Citibank $ S/A No. 24367796, to be debited other companies, Global and/or Torrance would then issue its/their own checks
from her Account No. 22543236; and drawn against their Citibank accounts in favor of Santos and Genuino.

c) Annex "A-9"9 - an "Application for Money Transfer" in the amount of US The amounts covered by the checks represent the shares of Santos and Genuino
$100,000.00, executed by Neri in favor of Citibank $ S/A No. 24367796, to in the margins Global and/or Torrance had realized out of the placements [using
be debited from her Account No. 24501018. the diverted monies of the Citibank clients] made with the other companies.

In turn, private respondent Joven Reyes, vice-president/business manager of the Fifth step: At the same time, Global and/or Torrance would also issue its/their
Global Consumer Banking Group of Citibank, admits to having authorized Lim to check(s) drawn against its/their Citibank accounts in favor of the bank client.
state the names of the clients involved and to attach the pertinent bank records,
including those of petitioners’.10 He states that private respondents Aziz The check(s) cover the principal amount (or parts thereof) which the Citibank client
Rajkotwala and William Ferguson, Citibank, N.A. Global Consumer Banking Country had previously transferred, with the help of Santos and/or Genuino, from his
Business Manager and Country Corporate Officer, respectively, had no hand in the Citibank account to the Citibank account(s) of Global and/or Torrance for
disclosure, and that he did so upon the advice of counsel. placement in the other companies, plus the interests or earnings his placements in
other companies had made less the spreads made by Global, Torrance, Santos and
In his memorandum, the Solicitor General described the scheme as having been Genuino.
conducted in this manner:
The complaints which were docketed as I.S. Nos. 93-9969, 93-10058 and 94-1215
First step: Santos and/or Genuino would tell the bank client that they knew of were subsequently amended to include a charge of estafa under Article 315,
financial products of other companies that were yielding higher rates of interests paragraph 1(b)11 of the Revised Penal Code.
in which the bank client can place his money. Acting on this information, the bank
client would then authorize the transfer of his funds from his Citibank account to As an incident to the foregoing, petitioners filed respective motions for the
the Citibank account of either Torrance or Global. exclusion and physical withdrawal of their bank records that were attached to Lim’s
affidavit.
The transfer of the Citibank client’s deposits was done through the accomplishment
of either an Application For Manager’s Checks or a Term Investment Application in In due time, Lim and Reyes filed their respective counter-affidavits.12 In separate
favor of Global or Torrance that was prepared/filed by Genuino herself. Memoranda dated March 8, 1994 and March 15, 1994 2nd Assistant Provincial
Prosecutor Hermino T. Ubana, Sr. recommended the dismissal of petitioners’
Upon approval of the Application for Manager’s Checks or Term Investment complaints. The recommendation was overruled by Provincial Prosecutor Mauro M.
Application, the funds of the bank client covered thereof were then deposited in Castro who, in a Resolution dated August 18, 1994,13 directed the filing of
the Citibank accounts of Torrance and/or Global. informations against private respondents for alleged violation of Republic Act No.
1405, otherwise known as the Bank Secrecy Law.
Second step: Once the said fund transfers had been effected, Global and/or
Torrance would then issue its/ their checks drawn against its/their Citibank Private respondents’ counsel then filed an appeal before the Department of Justice
accounts in favor of the other companies whose financial products, such as (DOJ). On November 17, 1994, then DOJ Secretary Franklin M. Drilon issued a
securities, shares of stocks and other certificates, were offering higher yields. Resolution14 ordering, inter alia, the withdrawal of the aforesaid informations
against private respondents. Petitioners’ motion for reconsideration15 was denied
Third step: On maturity date(s) of the placements made by Torrance and/or Global by DOJ Acting Secretary Demetrio G. Demetria in a Resolution dated March 6,
in the other companies, using the monies of the Citibank client, the other 1995.16
companies would then. return the placements to Global and/or Torrance with the
corresponding interests earned.
35
Initially, petitioners sought the reversal of the DOJ resolutions via a petition for The instant petition was actually denied by the former Third Division of this Court
certiorari and mandamus filed with this Court, docketed as G.R. No. 119999- in a Resolution18 dated July 16, 1997, on the ground that petitioners had failed to
120001. However, the former First Division of this Court, in a Resolution dated show that a reversible error had been committed. On motion, however, the petition
June 5, 1995,17 referred the matter to the Court of the Appeals, on the basis of was reinstated19 and eventually given due course.20
the latter tribunal’s concurrent jurisdiction to issue the extraordinary writs therein
prayed for. The petition was docketed as CA-G.R. SP No. 37577 in the Court of In assailing the appellate court’s findings, petitioners assert that the disclosure of
Appeals. their bank records was unwarranted and illegal for the following reasons:

On July 8, 1996, the Court of Appeals rendered judgment dismissing the petition I.
in CA-G.R. SP No. 37577 and declared therein, as follows:
IN BLATANT VIOLATION OF R.A. NO. 1405, PRIVATE RESPONDENTS ILLEGALLY
Clearly, the disclosure of petitioners’ deposits was necessary to establish the MADE DISCLOSURES OF PETITIONERS’ CONFIDENTIAL BANK DEPOSITS FOR
allegation that Santos and Genuino had violated Section 31 of the Corporation Code THEIR SELFISH ENDS IN PROSECUTING THEIR COMPLAINT IN IS. NO. 93-8469
in acquiring "any interest adverse to the corporation in respect of any matter which THAT DID NOT INVOLVE PETITIONERS.
has been reposed in him in confidence." To substantiate the alleged scheme of
Santos and Genuino, private respondents had to present the records of the monies II.
which were manipulated by the two officers which included the bank records of
herein petitioners. PRIVATE RESPONDENTS’ DISCLOSURES DO NOT FALL UNDER THE FOURTH
EXCEPTION OF R.A. NO. 1405 (i.e., "in cases where the money deposited or
Although petitioners were not the parties involved in IS. No. 93-8469, their invested is the subject matter of the litigation"), NOR UNDER ANY OTHER
accounts were relevant to the complete prosecution of the case against Santos and EXCEPTION:
Genuino and the respondent DOJ properly ruled that the disclosure of the same
falls under the last exception of R.A. No. 1405. That ruling is consistent with the (1)
principle laid down in the case of Mellon Bank, N.A. vs. Magsino (190 SCRA 633)
where the Supreme Court allowed the testimonies on the bank deposits of someone PETITIONERS’ DEPOSITS ARE NOT INVOLVED IN ANY LITIGATION
not a party to the case as it found that said bank deposits were material or relevant BETWEEN PETITIONERS AND RESPONDENTS. THERE IS NO LITIGATION
to the allegations in the complaint. Significantly, therefore, as long as the bank BETWEEN THE PARTIES, MUCH LESS ONE INVOLVING PETITIONERS’
deposits are material to the case, although not necessarily the direct subject matter DEPOSITS AS THE SUBJECT MATTER THEREOF.
thereof, a disclosure of the same is proper and falls within the scope of the
exceptions provided for by R.A. No. 1405. (2)

xxx xxx xxx EVEN ASSUMING ARGUENDO THAT THERE IS A LITIGATION INVOLVING
PETITIONERS’ DEPOSITS AS THE SUBJECT MATTER THEREOF, PRIVATE
Moreover, the language of the law itself is clear and cannot be subject to different RESPONDENTS’ DISCLOSURES OF PETITIONERS’ DEPOSITS ARE
interpretations. A reading of the provision itself would readily reveal that the NEVERTHELESS ILLEGAL FOR WANT OF THE REQUISITE COURT ORDER, IN
exception "or in cases where the money deposited or invested is the subject matter VIOLATION OF R.A. NO. 1405.
of the litigation" is not qualified by the phrase "upon order of competent Court"
which refers only to cases of bribery or dereliction of duty of public officials. III.

Petitioners’ motion for reconsideration was similarly denied in a Resolution dated THEREFORE, PETITIONERS ARE ENTITLED TO PROSECUTE PRIVATE
April 16, 1997. Appeal was made in due time to this Court. RESPONDENTS FOR VIOLATIONS OF R.A. NO. 1405 FOR HAVING ILLEGALLY

36
DISCLOSED PETITIONERS’ CONFIDENTIAL BANK DEPOSITS AND RECORDS IN IS. written permission. It does not matter if that such disclosure was necessary to
NO. 93-8469. establish Citibank’s case against Dante L. Santos and Marilou Genuino. Lim’s act
of disclosing details of petitioners’ bank records regarding their foreign currency
Apart from the reversal of the decision and resolution of the appellate court as well deposits, with the authority of Reyes, would appear to belong to that species of
as the resolutions of the Department of Justice, petitioners pray that the latter criminal acts punishable by special laws, called malum prohibitum. In this regard,
agency be directed to issue a resolution ordering the Provincial Prosecutor of Rizal it has been held that:
to file the corresponding informations for violation of Republic Act No. 1405 against
private respondents. While it is true that, as a rule and on principles of abstract justice, men are not and
should not be held criminally responsible for acts committed by them without guilty
The petition is not meritorious. knowledge and criminal or at least evil intent xxx, the courts have always
recognized the power of the legislature, on grounds of public policy and compelled
Actually, this case should have been studied more carefully by all concerned. The by necessity, "the great master of things," to forbid in a limited class of cases the
finest legal minds in the country - from the parties’ respective counsel, the doing of certain acts, and to make their commission criminal without regard to the
Provincial Prosecutor, the Department of Justice, the Solicitor General, and the intent of the doer. xxx In such cases no judicial authority has the power to require,
Court of Appeals - all appear to have overlooked a single fact which dictates the in the enforcement of the law, such knowledge or motive to be shown. As was said
outcome of the entire controversy. A circumspect review of the record shows us in the case of State vs. McBrayer xxx:
the reason. The accounts in question are U.S. dollar deposits; consequently, the
applicable law is not Republic Act No. 1405 but Republic Act (RA) No. 6426, known ‘It is a mistaken notion that positive, willful intent, as distinguished from a mere
as the "Foreign Currency Deposit Act of the Philippines," section 8 of which intent, to violate the criminal law, is an essential ingredient in every criminal
provides: offense, and that where there is the absence of such intent there is no offense;
this is especially so as to statutory offenses. When the statute plainly forbids an
Sec. 8. Secrecy of Foreign Currency Deposits.- All foreign currency deposits act to be done, and it is done by some person, the law implies conclusively the
authorized under this Act, as amended by Presidential Decree No. 1035, as well as guilty intent, although the offender was honestly mistaken as to the meaning of
foreign currency deposits authorized under Presidential Decree No. 1034, are the law he violates. When the language is plain and positive, and the offense is not
hereby declared as and considered of an absolutely confidential nature and, except made to depend upon the positive, willful intent and purpose, nothing is left to
upon the written permission of the depositor, in no instance shall such foreign interpretation.’22
currency deposits be examined, inquired or looked into by any person, government
official bureau or office whether judicial or administrative or legislative or any other Ordinarily, the dismissal of the instant petition would have been without prejudice
entity whether public or private: Provided, however, that said foreign currency to the filing of the proper charges against private respondents. The matter would
deposits shall be exempt from attachment, garnishment, or any other order or have ended here were it not for the intervention of time, specifically the lapse
process of any court, legislative body, government agency or any administrative thereof. So as not to unduly prolong the settlement of the case, we are constrained
body whatsoever.21 (italics supplied) to rule on a material issue even though it was not raised by the parties. We refer
to the issue of prescription.
Thus, under R.A. No. 6426 there is only a single exception to the secrecy of foreign
currency deposits, that is, disclosure is allowed only upon the written permission Republic Act No. 6426 being a special law, the provisions of Act No. 3326,23 as
of the depositor. Incidentally, the acts of private respondents complained of amended by Act No. 3763, are applicable:
happened before the enactment on September 29, 2001 of R.A. No. 9160 otherwise
known as the Anti-Money Laundering Act of 2001. SECTION 1. Violations penalized by special acts shall, unless otherwise provided
in such acts, prescribe in accordance with the following rules: (a) after a year for
A case for violation of Republic Act No. 6426 should have been the proper case offences punished only by a fine or by imprisonment for not more than one month,
brought against private respondents. Private respondents Lim and Reyes admitted or both: (b) after four years for those punished by imprisonment for more than
that they had disclosed details of petitioners’ dollar deposits without the latter’s one month, but less than two years; (c) after eight years for those punished by
37
imprisonment for two years or more, but less than six years; and (d) after twelve judicial notice;32 on the other, ignorantia legis non excusat.33 Even during the
years for any other offence punished by imprisonment for six years or more, except pendency of this appeal, nothing prevented the petitioners from filing a complaint
the crime of treason, which shall prescribe after twenty years: Provided, however, charging the correct offense against private respondents. This was not done, as
That all offences against any law or part of law administered by the Bureau of everyone involved was content to submit the case on the basis of an alleged
Internal Revenue shall prescribe after five years. Violations penalized by municipal violation of Republic Act No. 1405 (Bank Secrecy Law), however, incorrectly
ordinances shall prescribe after two months. invoked.34

Violations of the regulations or conditions of certificates of public convenience WHEREFORE, the petition is hereby DENIED. No pronouncement as to costs.
issued by the Public Service Commission shall prescribe after two months.
SO ORDERED.
SEC. 2. Prescription shall begin to run from the day of the commission of the
violation of the law, and if the same be not known at the time, from the discovery
thereof and the institution of judicial proceedings for its investigation and
punishment.

The prescription shall be interrupted when proceedings are instituted against the
guilty person, and shall begin to run again if the proceedings are dismissed for
reasons not constituting jeopardy.1âwphi1

A violation of Republic Act No. 6426 shall subject the offender to imprisonment of
not less than one year nor more than five years, or by a fine of not less than five
thousand pesos nor more than twenty-five thousand pesos, or both.24 Applying
Act No. 3326, the offense prescribes in eight years.25 Per available records, private
respondents may no longer be haled before the courts for violation of Republic Act
No. 6426. Private respondent Vic Lim made the disclosure in September of 1993
in his affidavit submitted before the Provincial Fiscal.26 In her complaint-
affidavit,27 Intengan stated that she learned of the revelation of the details of her
foreign currency bank account on October 14, 1993. On the other hand, Neri
asserts that she discovered the disclosure on October 24, 1993.28 As to Brawner,
the material date is January 5, 1994.29 Based on any of these dates, prescription
has set in.30

The filing of the complaint or information in the case at bar for alleged violation of
Republic Act No. 1405 did not have the effect of tolling the prescriptive period. For
it is the filing of the complaint or information corresponding to the correct offense
which produces that effect.31

It may well be argued that the foregoing disquisition would leave petitioners with
no remedy in law. We point out, however, that the confidentiality of foreign
currency deposits mandated by Republic Act No. 6426, as amended by Presidential
Decree No. 1246, came into effect as far back as 1977. Hence, ignorance thereof
cannot be pretended. On one hand, the existence of laws is a matter of mandatory
38
9. G.R. No. 135882 June 27, 2001 jurisprudence on the matter. It must be noted that R.A. 6770 especially
Section 15 thereof provides, among others, the following powers, functions
LOURDES T. MARQUEZ, in her capacity as Branch Manager, UNION BANK OF and duties of the Ombudsman, to wit:
THE PHILIPPINES, petitioner,
vs. xxx
HONORABLE ANIANO A. DESIERTO, in his capacity as OMBUDSMAN, ANGEL
C. MAYOR-ALGO, JR., MARY ANN CORPUZ-MANALAC AND JOSE T. DE (8) Administer oaths, issue subpoena duces tecum and take testimony in
JESUS, JR., in their capacity as Chairman and Members of the Panel, respectively, any investigation or inquiry, including the power to examine and have
respondents. access to banks accounts and records;

PARDO, J.: (9) Punish for contempt in accordance with the Rules of Court and under
the same procedure and with the same penalties provided therein.
In the petition at bar, petitioner seeks to --
Clearly, the specific provision of R.A. 6770, a later legislation, modifies the
a. Annul and set aside, for having been issued without or in excess of law on the Secrecy of Bank Deposits (R.A.1405) and places the office of the
jurisdiction or with grave abuse of discretion amounting to lack of Ombudsman in the same footing as the courts of law in this regard."2
jurisdiction, respondents' order dated September 7, 1998 in OMB-0-97-
0411, In Re: Motion to Cite Lourdes T. Marquez for indirect contempt, The basis of the Ombudsman in ordering an in camera inspection of the accounts
received by counsel of September 9,1998, and their order dated October is a trail managers checks purchased by one George Trivinio, a respondent in OMB-
14,1998, denying Marquez's motion for reconsideration dated September 097-0411, pending with the office of the Ombudsman.
10, 1998, received by counsel on October 20, 1998.
It would appear that Mr. George Trivinio, purchased fifty one (51) Managers Checks
b. Prohibit respondents from implementing their order dated October 14, (MCs) for a total amount of P272.1 Million at Traders Royal Bank, United Nations
1998, in proceeding with the hearing of the motion to cite Marquez for Avenue branch, on May 2 and 3, 1995. Out of the 51 MCs, eleven (11) MCs in the
indirect contempt, through the issuance by this Court of a temporary amount of P70.6 million, were deposited and credited to an account maintained at
restraining order and/or preliminary injunction.1 the Union Bank, Julia Vargas Branch.3

The antecedent facts are as follows: On May 26, 1998, the FFIB panel met in conference with petitioner Lourdes T.
Marquez and Atty. Fe B. Macalino at the bank's main office, Ayala Avenue, Makati
Sometime in May 1998, petitioner Marquez received an Order from the City. The meeting was for the purpose of allowing petitioner and Atty. Macalino to
Ombudsman Aniano A. Desierto dated April 29, 1998, to produce several bank view the checks furnished by Traders Royal Bank. After convincing themselves of
documents for purposes of inspection in camera relative to various accounts the veracity of the checks, Atty. Macalino advised Ms. Marquez to comply with the
maintained at Union Bank of the Philippines, Julia Vargas Branch, where petitioner order of the Ombudsman. Petitioner agreed to an in camera inspection set on
is the branch manager. The accounts to be inspected are Account Nos. 011-37270, June 3, 1998.4
240-020718, 245-30317-3 and 245-30318-1, involved in a case pending with the
Ombudsman entitled, Fact-Finding and Intelligence Bureau (FFIB) v. Amado However, on June 4,1998, petitioner wrote the Ombudsman explaining to him that
Lagdameo, et al. The order further states: the accounts in question cannot readily be identified and asked for time to respond
to the order. The reason forwarded by the petitioner was that "despite diligent
"It is worth mentioning that the power of the Ombudsman to investigate efforts and from the accounts numbers presented, we can not identify these
and to require the production and inspection of records and documents is accounts since the checks are issued in cash or bearer. We surmised that these
sanctioned by the 1987 Philippine Constitution, Republic Act No. 6770, accounts have long been dormant, hence are not covered by the new account
otherwise known as Ombudsman Act of 1989 and under existing
39
number generated by the Union Bank system. We therefore have to verify from Petitioner prayed for a temporary restraining order (TRO) because the Ombudsman
the Interbank records archives for the whereabouts of these accounts. 5 and the other persons acting under his authority were continuously harassing her
to produce the bank documents relatives to the accounts in question. Moreover,
The Ombudsman, responding to the request of the petitioner for time to comply on June 16, 1998, the Ombudsman issued another order stating that unless
with the order, stated: "firstly, it must be emphasized that Union Bank, Julia Vargas petitioner appeared before the FFIB with the documents requested, petitioner
Branch was depositary bank of the subject Traders Royal Bank Manager's Check manager would be charged with indirect contempt and obstruction of justice.
(MCs), as shown at its dorsal portion and as cleared by the Philippines Clearing
House, not the International Corporate Bank. In the meantime,9 on July 14, 1998, the lower court denied petitioner's prayer for
a temporary restraining order and stated us:
Notwithstanding the facts that the checks were payable to cash or bearer,
nonetheless, the name of the depositor(s) could easily be identified since the "After hearing the arguments of the parties, the court finds the application
account numbers x x x where said checks were deposited are identified in the for a Temporary Restraining Order to be without merit.
order.
"Since the application prays for restraint of the respondent, in the exercise
Even assuming that the accounts xxx were already classified as "dormant of his contempt powers under Section 15(9) in relation to paragraph (8) of
accounts," the bank is still required to preserve the records pertaining to the RA. 6770, known as " The Ombudsman Act of 1989", there is no great or
accounts within a certain period of time as required by existing banking rules and irreparable injury from which petitioners may suffer, if respondent is not so
regulations. restrained. Respondent should he decide to exercise his contempt powers
would still have to apply with the court. x x x Anyone who, without lawful
And finally, the in camera inspection was already extended twice from May 13, excuse x x x refuses to produce documents for inspection, when thereunto
1998 to June 3,1998 thereby giving the bank enough time within which to lawfully required shall be subject to discipline as in case of contempt of
sufficiently comply with the order."6 Court and upon application of the individual or body exercising the power
in question shall be dealt with by the Judge of the First Instance (now RTC)
Thus, on June 16, 1998, the Ombudsman issued an order directing petitioner to having jurisdiction of the case in a manner provided by the law (section 580
produce the bank documents relative to accounts in issue. The order states: of the Revised Administrative Code). Under the present Constitution only
judges may issue warrants, hence, respondent should apply with the Court
Viewed from the foregoing, your persistent refusal to comply with for the issuance of the warrant needed for the enforcement of his contempt
Ombudsman's order in unjustified, and is merely intended to delay the orders. It is in these proceedings where petitioner may question the
investigation of the case. Your act constitutes disobedience of or resistance propriety of respondent's exercise of his contempt powers. Petitioners are
to a lawful order issued by this office and is punishable as Indirect Contempt not therefore left without any adequate remedy.
under Section 3(b) of R.A. 6770. The same may also constitute obstruction
in the lawful exercise of the functions of the Ombudsman which is "The questioned orders were issued with the investigation of the case of
punishable under Section 36 of R.A. 6770.7 Fact-Finding and Intelligence Bureau vs. Amado Lagdameo, et. al., OMB-0-
97-0411, for violation of RA. 3019. Since petitioner failed to show prima
On July 10,1998, petitioner together with Union Bank of the Philippines, filed a facie evidence that the subject matter of the investigation is outside the
petition for declaratory relief, prohibition and injunctions8 with the Regional Trial jurisdiction of the Office of the Ombudsman, no writ of injunction may be
Court, Makati City, against the Ombudsman. issued by this Court to delay this investigation pursuant to section 14 of
Ombudsman Act of 1989."10
The petition was intended to clear the rights and duties of petitioner. Thus,
petitioner sought a declaration of her rights from the court due to the clear conflict On July 20,1998, petitioner filed a motion for reconsideration based on the
between RA No.6770, Section 15 and R.A. No. 1405, Sections 2 and 3. following grounds:

40
a. Petitioners' application for filed Temporary Restraining Order is not only "Wherefore, respondent Lourdes T. Marquez's motion for reconsideration is
to restrain the Ombudsman from exercising his contempt powers, but to hereby DENIED, for lack of merit. Let the hearing of the motion of the Fact
stop him from implementing his Orders dated April 29, 1998 and June 16, Finding Intelligence Bureau (FFIB) to cite her for indirect contempt to be
1998: and intransferrably set to 29 October 1998 at 2:00 o'clock p.m. at which date
and time she should appear personally to submit her additional evidence.
b. The subject matter of the investigation being conducted by the Failure to do so shall be deemed a waiver thereof." 24
Ombudsman at petitioners' premises is outside his jurisdiction.11
Hence, the present petition.25
On July 23, 1998, the Ombudsman filed a motion to dismiss the petition for
declaratory relief12 on the ground that the Regional Trial Court has no jurisdiction The issue is whether petitioner may be cited for indirect contempt for her failure
to hear a petition for relief from the findings and orders of the Ombudsman, citing to produce the documents requested by the Ombudsman. And whether the order
R.A. No. 6770, Sections 14 and 27. On August 7, 1998, the Ombudsman filed an of the Ombudsman to have an in camera inspection of the questioned account is
opposition to petitioner's motion for reconsideration dated July 20, 1998.13 allowed as an exception to the law on secrecy of bank deposits (R.A. No.1405).

On August 19,1998, the lower court denied petitioner's motion for An examination of the secrecy of bank deposits law (R.A. No.1405) would reveal
reconsideration,14 and also the Ombudsman's motion to dismiss. 15 the following exceptions:

On August 21, 1998, petitioner received a copy of the motion to cite her for 1. Where the depositor consents in writing;
contempt, filed with the Office of the Ombudsman by Agapito B. Rosales, Director,
Fact Finding and Intelligence Bureau (FFIB).16 2. Impeachment case;

On August 31, 1998, petitioner filed with the Ombudsman an opposition to the 3. By court order in bribery or dereliction of duty cases against public
motion to cite her in contempt on the ground that the filing thereof was premature officials;
due to the petition pending in the lower court. 17 Petitioner likewise reiterated that
she had no intention to disobey the orders of the Ombudsman. However, she 4. Deposit is subject of litigation;
wanted to be clarified as to how she would comply with the orders without her
breaking any law, particularly RA. No. 1405.18 5. Sec. 8, R.A. No.3019, in cases of unexplained wealth as held in the case
of PNB vs. Gancayco.26
Respondent Ombudsman panel set the incident for hearing on September 7,
1998.19 After hearing, the panel issued an order dated September 7, 1998, ordering The order of the Ombudsman to produce for in camera inspection the subject
petitioner and counsel to appear for a continuation of the hearing of the contempt accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on
charges against her.20 a pending investigation at the Office of the Ombudsman against Amado Lagdameo,
et. al. for violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture
On September 10, 1998, petitioner filed with the Ombudsman a motion for Agreement between the Public Estates Authority and AMARI.
reconsideration of the above order. 21 Her motion was premised on the fact that
there was a pending case with the Regional Trial Court, Makati City,22 which would We rule that before an in camera inspection may be allowed, there must be a
determine whether obeying the orders of the Ombudsman to produce bank pending case before a court of competent jurisdiction. Further, the account must
documents would not violate any law. be clearly identified, the inspection limited to the subject matter of the pending
case before the court of competent jurisdiction. The bank personnel and the
The FFIB opposed the motion,23 and on October 14, 1998, the Ombudsman denied account holder must be notified to be present during the inspection, and such
the motion by order the dispositive portion of which reads: inspection may cover only the account identified in the pending case.

41
In Union Bank of the Philippines v. Court of Appeals, we held that "Section 2 of the Wiretapping Law, the Secrecy of Bank Deposits Act, and the Intellectual
Law on Secrecy of Bank Deposits, as amended, declares bank deposits to be Property Code.28
"absolutely confidential" except:
IN VIEW WHEREOF, we GRANT the petition. We order the Ombudsman to cease
(1) In an examination made in the course of a special or general and desist from requiring Union Bank Manager Lourdes T. Marquez, or anyone in
examination of a bank that is specifically authorized by the Monetary Board her place to comply with the order dated October 14,1998, and similar orders. No
after being satisfied that there is reasonable ground to believe that a bank costs.
fraud or serious irregularity has been or is being committed and that it is
necessary to look into the deposit to establish such fraud or irregularity, 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 the exclusive use of the
bank,

(3) Upon written permission of the depositor,

(4) In cases of impeachment,

(5) Upon order of a competent court in cases of bribery or dereliction of


duty of public officials, or

(6) In cases where the money deposited or invested is the subject matter
of the litigation".27

In the case at bar, there is yet no pending litigation before any court of competent
authority. What is existing is an investigation by the Office of the Ombudsman. In
short, what the office of the ombudsman would wish to do is to fish for additional
evidence to formally charge Amado Lagdameo, et. al., with the Sandiganbayan.
Clearly, there was no pending case in court which would warrant the opening of
the bank account for inspection.

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

42