Banking Law Cases

CHINA BANKING CORPORATION vs. ORTEGA G.R. No. L-34964 January 31, 1973 MAKALINTAL, J. FACTS: Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. Upon motion of the plaintiff the trial court declared the defendants in default for failure to answer within the reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. In a judgment by default it was rendered against the defendants. 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 Corporation. Accordingly, a notice of garnishment was issued by the Deputy Sheriff of the trial court and served on said bank through its cashier, Tan Kim Liong. In reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act No. 1405 which, it was alleged, prohibit the disclosure of any information relative to bank deposits. Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt contempt of court. Trial court denied the plaintiff's plaintiff's motion

ISSUE: Whether or not a banking institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor, by invoking the provisions of R.A. 1405.

HELD: The order of the trial court was was AFFIRMED. The prohibition against 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.

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BAÑAS vs. ASIA PACIFIC FINANCE CORPORATION G.R. No. 128703. October 18, 2000 BELLOSILLO, J. FACTS: Respondent filed a complaint for a sum of money with prayer for a writ of replevin against petitioner. Bañas executed a Promissory Note in favor of C. G. Dizon Construction whereby for value received he promised to pay to the order of C. G. Dizon Construction the sum of P390,000.00 in installments of "P32,500.00 every 25th day of the month starting from September 25, 1980 up to August 25, 1981." 1981. " C. G. Dizon Construction endorsed with recourse the Promissory Note to ASIA PACIFIC. its corporate officers executed a Deed of Chattel Mortgage covering three (3) heavy equipment units of Caterpillar Bulldozer Crawler Tractors. Moreover, Cenen Dizon executed a Continuing Undertaking wherein he bound himself to pay the obligation jointly and severally with C. G. Dizon Construction. C. G. Dizon Construction defaulted in the payment of the remaining installments, prompting ASIA PACIFIC to send a Statement of Account to Cenen Dizon for the unpaid balance. As the demand was unheeded, ASIA PACIFIC sued Teodoro Bañas, C. G. Dizon Construction and Cenen Dizon. While petitioners admitted the genuineness and due execution of the Promissory Note, the Deed of Chattel Mortgage and the Continuing Undertaking, they nevertheless maintained that these documents were never intended by the parties to be legal, valid and binding but a mere subterfuge to conceal the loan with usurious interests. The trial court issued a writ of replevin against C. G. Dizon Construction for the surrender of the bulldozer crawler tractors subject of the Deed of Chattel Mortgage. Of the three (3) bulldozer crawler tractors, only two (2) were actually turned over by defendants which units were subsequently foreclosed by ASIA PACIFIC to satisfy the obligation. The other bulldozer was sold for P120,000.00 and the other for P60,000.00 both to ASIA PACIFIC as the highest bidder. During the pendency of the case, Teodoro Bañas passed away, and on motion of the remaining defendants, the trial court dismissed the case against him. On the other hand, ASIA PACIFIC was substituted as party plaintiff by International Corporate Bank after the disputed Promissory Note was assigned and/or transferred by ASIA PACIFIC to International Corporate Bank. Later, International Corporate Bank merged with Union Bank of the Philippines. As the surviving entity after the merger, and having succeeded to

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all the rights and interests of International Corporate Bank in this case, Union Bank of the Philippines was substituted as a party in lieu of International Corporate Bank. Regional Trial Court ruled in favor of ASIA PACIFIC holding the defendants jointly and severally liable for the unpaid balance of the obligation under the Promissory Note. Court of Appeals AFFIRMED.

ISSUE: 1. Whether or not the disputed transaction between petitioners and ASIA PACIFIC violated banking laws, hence, null and void.

2. Whether or not the surrender of the bulldozer crawler tractors to respondent resulted in the extinguishment of petitioners' obligation.

HELD: The decision of the Court of Appeals is AFFIRMED. On the first issue, petitioners insist that ASIA PACIFIC was organized as an investment house which could not engage in the lending of funds obtained from the public through receipt of deposits. The disputed Promissory Note, Deed of Chattel Mortgage and Continuing Undertaking were not intended to be valid and binding on the parties as they were merely devices to conceal their real intention which was to enter into a contract of loan in violation of banking laws. On the second issue, there was no binding and perfected contract between petitioners and respondent regarding the settlement of the obligation, but only a conditional one, a mere conjecture in fact, depending on whether the value of the tractors to be surrendered would equal the balance of the loan plus interests. Finally, while we empathize with petitioners, we cannot close our eyes to the overriding considerations of the law on obligations and contracts which must be upheld and honored at all times. Petitioners have undoubtedly benefited from the transaction; they cannot now be allowed to impugn its validity and legality to escape the fulfillment of a valid and binding obligation.

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SIMEX INTERNATIONAL (MANILA), INCORPORATED  vs. COURT OF APPEALS and TRADERS ROYAL BANK 183 SCRA 361 March 19, 1990 CRUZ, J. FACTS: Petitioner is a private corporation engaged in the exportation of food products. It buys these products from various local suppliers and then sells them abroad, particularly in the United States, Canada and the Middle East. Most of its exports are purchased by the petitioner on credit. The petitioner was a depositor of the respondent bank and maintained a checking account in its branch at Romulo Avenue, Cubao, Quezon City. The petitioner deposited to its account in the said bank the amount of P100,000.00, thus increasing its balance as of that date to P190,380.74. Subsequently, the petitioner issued several checks against its deposit but was suprised to learn later that they had been dishonored for insufficient funds. The petitioner complained to the respondent bank. Investigation disclosed that the sum of P100,000.00 deposited by the petitioner, had not been credited to it. The error was rectified and the dishonored checks were paid after they were re-deposited. Petitioner demanded reparation from the respondent bank for its "gross and wanton negligence." This demand was not met. Petitioner then filed a complaint in the Court of First Instance claiming from the private respondent moral damages and exemplary damages plus 25% attorney's fees, and costs. The respondent court found with the trial court that the private respondent was guilty of negligence but agreed that the petitioner was nevertheless not entitled to moral damages.

ISSUE: Whether or not respondent bank is guilty of negligence which warrants petitioner a reparation for damages.

HELD: The appealed judgment is hereby MODIFIED and the private respondent is ordered to pay the petitioner, in lieu of nominal damages, moral damages and exemplary damages plus the original award of attorney's fees and costs. The petitioner is seeking such damages for the prejudice sustained by it as a result of the private respondent's fault. The respondent court said that the claimed losses are Page | 4

purely speculative and are not supported by substantial evidence, but if failed to consider that the amount of such losses need not be established with exactitude precisely because of their nature. Moral damages are not susceptible of pecuniary estimation. Article 2216 of the Civil Code specifically provides that "no proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated." That is why the determination of the amount to be awarded (except liquidated damages) is left to the sound discretion of the court, according to "the circumstances of each case." We shall recognize that the petitioner did suffer injury because of the private respondent's negligence that caused the dishonor of the checks issued by it. The immediate consequence was that its prestige was impaired because of the bouncing checks and confidence in it as a reliable debtor was diminished. The private respondent makes much of the one instance when the petitioner was sued in a collection case, but that did not prove that it did not have a good reputation that could not be marred, more so since that case was ultimately settled. It does not appear that, as the private respondent would portray it, the petitioner is an unsavory and disreputable entity that has no good name to protect.

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FULTRON IRON WORKS CO. vs. CHINA BANKING CORPORATION, ET AL. G.R. No. 32576 November 6, 1930 STREET, J. FACTS: March, 1921, the plaintiff the Fulton Iron Works Co., of St. Louis, Missouri, sold to the Binalbagan Estate, Inc., a Philippine corporation, machinery for a sugar mill, for which the purchaser executed three notes amounting to about $80,000. The first of these notes became due October 1, 1921, and the other two on April 1, 1922. Neither of the three notes was paid at maturity, owing to the fact that, before the notes fell due, the Binalbagan Estate, Inc. suspended payments and passed into the hands of the Philippine National Bank, its principal creditor, for administration. The consequently delay in the payments of the notes caused the plaintiff to employ a firm of lawyers in Manila, of which S. C. Schwarzkopf was then a member, to represent the plaintiff in an effort to obtain security for the indebtedness, with a view to its later collection. At the time this retainer was effect, Schwarzkopf was in St. Louis, on a visit to the United States, and in order that the plaintiff might comply with the laws of the Philippine Islands in the matter of obtaining a license to transact business here, the plaintiff executed a formal power of attorney authorizing the members of Schwarzkopf's firm jointly and severally to accept service in actions and to do other things necessary to enable the plaintiff to secure the contemplated license. It is noteworthy that the authority of Schwarzkopf's firm to represent the plaintiff in the collection of the claims above mentioned did not proceed from this power, but had its origin in the employment of said firm as attorneys in the matter. Schwarzkopf returned to Manila in the early part of November, 1921, and the law firm to which he pertained was dissolved on November 15, 1921. Under the dissolution agreement the matter of handling this collection devolved upon Schwarzkopf, and he alone was thereafter concerned in the matter. On December 13, 1921, Schwarzkopf opened a personal account, as a depositor, in the China Banking Corporation by making a deposit, on that date, of the sum of P578. This account was at all times modest in sized, and on January 1, 1922, the credit balance therein was P543.35. This account has little or no significance in the case, and it became defunct by September 1, 1922. It may be observed, however, that a few of the deposits in this account appear to have been taken from account No. 2 to which reference will presently be made. In the early part of the year 1922, the financial condition of the Binalbagan Estate, Inc. began to improve; and on January 13, 1922, D. M. Semple, manager of the Philippine Sugar Centrals Agency, a department of the Philippine National Bank, drew check No. 574 for the sum of P10,000, payable to the order of Sydney C. Schwarzkopf, and delivered the same to him in part payment of the indebtedness owing to the plaintiff from the Binalbagan Estate, Inc. Upon receiving this check Schwarzkopf signed a receipt as "attorney-in-fact of Fulton Iron Works Co." The character of attorney-in-fact, thus assumed by Schwarzkopf, was of course a mere fiction, as the power of attorney which he really possessed was limited to other matters. Page | 6

ISSUE: Whether or not China Bank can be held liable for the money paid out by it in ordinary checks, in regular form, drawn by Schwarzkopf on the number 2 account.

HELD: NO. The defendant cannot be held liable for money paid out by it in ordinary course on checks, in regular form, drawn by Schwarzkopf on the No. 2 account. The specialized function of bank is to serve as a place of deposit for money, to keep it safely while on deposit, and to pay it out, upon demand to the person who effected the deposit or upon his order. A bank is not a guardian of trust funds deposited with it in the sense that it must see to their proper application nor is it its business to pry into the uses to which moneys on deposit in its vault are being put; and so long as it serves its function and pays the money out in good faith to the person who deposited it, or upon his order, without knowledge or notice that it is in fact assisting in the misappropriation of the fund, the bank will be protected. It would seriously interfere with commercial transactions to charge banks with the duty of supervising the administration of trust funds, when, in due course of business, they receive checks and drafts in proper form drawn upon such funds in their custody. The law imposes no such duty upon them. The bank has the right to presume that the fiduciary will apply a trust fund to its proper purpose, and at any rate the bank is not required to send a courier with the money to see that it reaches a proper destination. Furthermore, it is undeniable that a bank may incur liability by assisting the fiduciary to accomplish a misappropriation, although the bank does not actually profit by the misappropriation.

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TEOFISTO GUINGONA, JR. vs. THE CITY FISCAL OF MANILA G.R. No. L-60033 April 4, 1984 MAKASIAR, Actg. C.J. FACTS: From March 1979 to March 1981, Clement David made several investments with the National Savings and Loan Association. On March 21, 1981, the bank was placed under receivership by the Bangko Sentral. Upon David’s request, petitioners Guingona and Martin issued a joint promissory note, absorbing the obligations of the bank. On July 17, 1981, they divided the indebtedness. David filed a complaint for estafa and violation of Central Bank Circular No. 364 and related regulations regarding foreign exchange transactions before the Office of the City Fiscal of Manila. Petitioners filed the herein petition for prohibition and injunction with a prayer for immediate issuance of restraining order and/or writ of preliminary injunction to enjoin the public respondents to proceed with the preliminary investigation on the ground that the petitioners’ obligation is civil in nature.

ISSUE: Whether there was a violation of Central Bank Circular No. 364

HELD: Petitioner Guingona merely accommodated the request of the Nation Savings and loan Association in order to clear the bank draft through his dollar account because the bank did not have a dollar account. Immediately after the bank draft was cleared, petitioner Guingona authorized Nation Savings and Loan Association to withdraw the same in order to be utilized by the bank for its operations. It is safe to assume that the U.S. dollars were converted first into Philippine pesos before they were accepted and deposited in Nation Savings and Loan Association, because the bank is presumed to have followed the ordinary course of the business which is to accept deposits in Philippine currency only, and that the transaction was regular and fair, in the absence of a clear and convincing evidence to the contrary. In conclusion, considering that the liability of the petitioners is purely civil in nature and that there is no clear showing that they engaged in foreign exchange transactions, We hold that the public respondents acted without jurisdiction when they investigated the charges against the petitioners. Consequently, public respondents should be restrained from further proceeding with the criminal case for to allow the case to continue, even if the petitioners could have appealed to the Ministry of Justice, would work great injustice to petitioners and would render meaningless the proper administration of justice.

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PAULINO GULLAS vs. THE PHILIPPINE NATIONAL BANK G.R. No. L-43191 - November 13, 1935 MALCOLM, J. FACTS: The parties to the case are Paulino Gullas and the Philippine National Bank. The first named is a member of the Philippine Bar, resident in the City of Cebu. The second named is a banking corporation with a branch in the same city. Attorney Gullas has had a current account with the bank. It appears from the record that on August 2, 1933, the Treasurer of the United States for the United States Veterans Bureau issued a Warrant in the amount of $361, payable to the order of Francisco Sabectoria Bacos. Paulino Gullas and Pedro Lopez signed as endorsers of this check. Thereupon it was cashed by the Philippine National Bank. Subsequently the treasury warrant was dishonored by the Insular Treasurer. At that time the outstanding balance of Attorney Gullas on the books of the bank was P509. Against this balance he had issued certain cheeks which could not be paid when the money was sequestered by the On August 20, 1933, Attorney Gullas left his residence for Manila. The bank on learning of the dishonor of the treasury warrant sent notices by mail to Mr. Gullas which could not be delivered to him at that time because he was in Manila. In the bank's letter of August 21, 1933, addressed to Messrs. Paulino Gulla and Pedro Lopez, they were informed that the United States Treasury warrant No. 20175 in the name of Francisco Sabectoria Bacos for $361 or P722, the payment for which had been received has been returned by our Manila office with the notation that the payment of his check has been stopped by the Insular Treasurer. "In view of this therefore we have applied the outstanding balances of your current accounts with us to the part payment of the foregoing check", namely, Mr. Paulino Gullas P509. On the return of Attorney Gullas to Cebu on August 31, 1933, notice of dishonor was received and the unpaid balance of the United States Treasury warrant was immediately paid by him. As a consequence of these happenings, two occurrences transpired which inconvenienced Attorney Gullas. In the first place, as above indicated, checks including one for his insurance were not paid because of the lack of funds standing to his credit in the bank. In the second place, periodicals in the vicinity gave prominence to the news to the great mortification of Gullas.

ISSUE: Whether or not the right of the Philippine National Bank to apply a deposit to the debt of the depositor to the bank.

HELD: As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part of a depositor. As to a depositor who has Page | 9

funds sufficient to meet payment of a check drawn by him in favor of a third party, it has been held that he has a right of action against the bank for its refusal to pay such a check in the absence of notice to him that the bank has applied the funds so deposited in extinguishment of past due claims held against him. The decision cited represents the minority doctrine, for on principle it would seem that notice is not necessary to a maker because the right is based on the doctrine that the relationship is that of creditor and debtor. However this may be, as to an indorser the situation is different, and notice should actually have been given him in order that he might protect his interests.

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VITUG vs. COURT OF APPEALS G.R. No. 82927 March 29, 1990 SARMIENTO, J. FACTS: This case is a chapter in an earlier suit decided by this Court involving the probate of the two wills of the late Dolores Luchangco Vitug, who died in New York, U. S.A. naming private respondent Rowena Faustino-Corona executrix. In said decision, the court upheld the appointment of Nenita Alonte as co- special administrator of Mrs. Vitug’s estate with her (Mrs. Vitug’s) widowe r, petitioner Romarico G. Vitug, pending probate.

Romarico G. Vitug filed a motion asking for authority from the probate court to sell certain shares of stock and real properties belonging to the estate to cover allegedly his advances to the estate, plus interests, which he claimed were personal funds. As found by the CA the alleged advances were spent for the payment of estate tax, deficiency estate tax, and “increment thereto.” Rowena Corona opposed the motion to sell on the ground that the same funds withdrawn were conjugal partnership properties and part of the estate, and hence, there was allegedly no ground for reimbursement. She also sought his ouster for failure to include the sums in question for inventory and for “concealment of funds belonging to the estate.” Vitug insists that the said funds are his exclusive property having acquired the same through a survivorship agreement executed with his late wife and the bank. The trial courts upheld the validity of such agreement.On the other hand, the CA held that the survivorship agreement constitutes a conveyance mortis causa which “did not comply with the formalities of a valid will as prescribed by Article 805 of the Civil Code,” and secondly, assuming that it is a mere donation inter vivos, it is a prohibited donation under the provisions of Article 133 of the Civil Code.

ISSUE: Whether or not the survivorship agreement between the spouses Vitug constitutes a donation?

HELD: NO. The conveyance in question is not, first of all, one of mortis causa, which should be embodied in a will. A will has been defined as “a personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights and declares or complies with duties to take effect after his death.” In other wo rds, the bequest or device must pertain to the testator. In this case, the monies subject of savings account No. 35342-038 were in the nature of conjugal funds In the case relied on, Rivera v. People’s Bank and Trust Page | 11

Co., we rejected claims that a survivorship agreement purports to deliver one party’s separate properties in favor of the other, but simply, their joint holdings. There is no showing that the funds exclusively belonged to one party, and hence it must be presumed to be conjugal, having been acquired during the existence of the marital relations. Neither is the survivorship agreement a donation inter vivos, for obvious reasons, because it was to take effect after the death of one party. Secondly, it is not a donation between the spouses because it involved no conveyance of a spouse’s own properties to the other. It is also our opinion that the agreement involves no modification petition of the conjugal partnership, as held by the Court of Appeals, by “mere stipulation” and that it is no “cloak” to circumvent the law on conjugal property relations. Certainly, the spouses are not prohibited by law to invest conjugal property, say, by way of a joint and several bank account, more commonly denominated in banking parlance as an “and/or” account. In t he case at bar, when the spouses Vitug opened savings account No. 35342-038, they merely put what rightfully belonged to them in a money-making venture. They did not dispose of it in favor of the other, which would have arguably been sanctionable as a prohibited donation. The conclusion is accordingly unavoidable that Mrs. Vitug having predeceased her husband, the latter has acquired upon her death a vested right over the amounts under savings account No. 35342-038 of the Bank of America. Insofar as the respondent court ordered their inclusion in the inventory of assets left by Mrs. Vitug, we hold that the court was in error. Being the separate property of petitioner, it forms no more part of the estate of the deceased.

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BANCO FILIPINO SAVINGS AND MORTGAGE BANK vs. PURISIMA ET AL 161 SCRA 576 MAY 28, 1988 NARVASA, J. FACTS: Customs special agent Manuel Caturla is accused by the Bureau of Internal Revenue of having violated R.A. No. 3019 of the "Anti-Graft and Corrupt Practices Act" for having allegedly acquired property manifestly out of proportion to his salary and other lawful income. In the course of the preliminary investigation thereof, the Tanodbayan issued a subpoena duces tecum to the Banco Filipino Savings & Mortgage Bank, commanding its representative to appear at a specified time at the Office of the Tanodbayan and furnish the latter with duly certified copies of the records in all its branches and extension offices, of the loans, savings and time deposits and other banking transactions, dating back to 1969, appearing in the names of Caturla, his wife, Purita Caturla, their children — Manuel, Jr., Marilyn and Michael — and/or Pedro Escuyos. Caturla moved to quash the subpoena duces tecum but was denied by Tanodbayan Vicente Ericta.Petitioner Banco Filipino filed a complaint for declaratory relief with the Court of First Instance of Manila but was denied for lack of merit by respondent Judge Purisima.

ISSUE: Whether or not the RA 1405 "Law on Secrecy of Bank Deposits" precludes production by subpoena duces tecum of bank records of transactions by or in the names of the wife, children and friends of a special agent of the Bureau of Customs, accused before the Tanodbayan of having allegedly acquired property manifestly out of proportion to his salary and other lawful income, in violation of the "Anti-Graft and Corrupt Practices Act".

HELD: No. The inquiry into illegally acquired property — or property NOT "legitimately acquired" — extends to cases where such property is concealed by being held by or recorded in the name of other persons. This proposition is made clear by R.A. No. 3019 which quite categorically states that the term, "legitimately acquired property of a public officer or employee shall not include property unlawfully acquired by the respondent, but its ownership is concealed by its being recorded in the name of, or held by, respondent's spouse, ascendants, descendants, relatives or any other persons." To sustain the petitioner's theory, and restrict the inquiry only to property held by or in the name of the government official or employee, or his spouse and unmarried children is unwarranted in the light of the provisions of the statutes in question, and would make available to persons in government who illegally acquire property an easy and fool-proof means of evading investigation and prosecution; all they would have to do would be to Page | 13

simply place the property in the possession or name of persons other than their spouse and unmarried children. This is an absurdity that we will not ascribe to the lawmakers

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JOSEPH VICTOR G. EJERCITO vs. SANDIGANBAYAN 509 SCRA 190, November 19, 2001 BELLOSILLO, J.: FACTS: The Office of the Ombudsman requested the Sandiganbayan to issue subpoena duces tecum against the Urban Bank relative to the case against President Joseph Estrada. Ms. Dela Paz, receiver of the Urban Bank, furnished the Office of the Ombudsman certified copies of manager checks detailed in thesubpoena duces tecum. The Sandiganbayan granted the same. However, Ejercito claims that the subpoenas issued by the Sandiganbayan are invalid and may not be enforced because the information found therein, given their ―extremely detailed‖ character and could only have been obtained by the Special Prosecution Panel through an illegal disclosure by the bank officials. Ejercito thus contended that, following the ―fruit of the poisonous tree‖ doctrine, the subpoenas must be quashed. Moreover, the ―extremely-detailed information obtained by the Ombudsman from the bank officials concerned during a previous investigation of the charges against him, such inquiry into his bank accounts would itself be illegal.

ISSUE: Whether or not subpoena duces tecum/ad testificandum may be issued to order the production of statement of bank accounts even before a case for plunder is filed in court

HELD: The Supreme Court held that plunder is analogous to bribery, and therefore, the exception to R.A. 1405 must also apply to cases of plunder. The court also reiterated the ruling in Marquez v. Desierto that before an in camera inspection may be allowed there must be a pending case before a court of competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject matter of pending case before the court of competent jurisdiction. As no plunder case against then President Estrada had yet been filed before a court of competent jurisdiction at the time the Ombudsman conducted an investigation, he concludes that the information about his bank accounts were acquired illegally, hence, it may not be lawfully used to facilitate a subsequent inquiry into the same bank accounts. Thus, his attempt to make the exclusionary rule applicable to the instant case fails. The high Court, however, rejected the arguments of the petitioner Ejercito that the bank accounts which where demanded from certain banks even before the case was filed before the proper court is inadmissible in evidence being fruits of poisonous tree. This is because the Ombudsman issued the subpoenas bearing on the bank accounts of Ejercito about four months before Marquez was promulgated on June 27, 2001. While judicial interpretations Page | 15

of statutes, such as that made in Marquez with respect to R.A. No. 6770 or the Ombudsman Act of 1989, are deemed part of the statute as of the date it was originally passed, the rule is not absolute. Thus, the Court referred to the teaching of Columbia Pictures Inc., v. Court of Appeals, that: It is consequently clear that a judicial interpretation becomes a part of the law as of the date that law was originally passed, subject only to the qualification that when a doctrine of this Court is overruled and a different view is adopted, and more so when there is a reversal thereof, the new doctrine should be applied prospectively and should not apply to parties who relied on the old doctrine and acted in good faith.

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BSB GROUP, INC. vs. SALLY GO G.R. No. 168644 February 16, 2010 PERALTA,  J . FACTS: Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided by its herein representative, Ricardo Bingaman (Bangayan). Respondent Sally Go, alternatively referred to as Sally Sia Go and Sally Go-Bangayan, is Bangayan's wife, who was employed in the company as a cashier, and was engaged, among others, to receive and account for the payments made by the various customers of the company. In 2002, Bangayan filed with the Manila Prosecutor's Office a complaint for estafa and/or qualified theft against respondent, alleging that several checks representing the aggregate amount of P1,534,135.50 issued by the company's customers in payment of their obligation were, instead of being turned over to the company’s coffers, indorse d by respondent who deposited the same to her personal banking account maintained at Security Bank and Trust Company (Security Bank) in Divisoria, Manila Branch. Upon a finding that the evidence adduced was uncontroverted, the assistant city prosecutor recommended the filing of the Information for qualified theft against respondent. Accordingly, respondent was charged before the Regional Trial Court of Manila. She was found guilty; that in the commission of the said offense, said accused acted with grave abuse of confidence, being then employed as cashier by said complainant at the time of the commission of the said offense and as such she was entrusted with the said amount of money. Respondent entered a negative plea when arraigned. The trial ensued. On the premise that respondent had allegedly enchased the subject checks and deposited the corresponding amounts thereof to her personal banking account. Petitioner, opposing respondent's move, argued for the relevancy of the Metrobank account on the ground that the complaint-affidavit showed that there were two checks which respondent allegedly deposited in an account with the said bank. To this, respondent filed a supplemental motion to quash, invoking the absolutely confidential nature of the Metrobank account under the provisions of Republic Act (R.A.) No. 1405. The trial court did not sustain respondent; hence, it denied the motion to quash for lack of merit. Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan (Marasigan), the representative of Security Bank. In a nutshell, Marasigan's testimony sought to prove that between 1988 and 1989, respondent, while engaged as cashier at the BSB Group, Inc., was able to run away with the checks issued to the company by its customers, endorse the same, and credit the corresponding amounts to her personal deposit account with Security Bank. In the course of the testimony, the subject checks were presented to Marasigan for identification and marking as the same checks received by respondent, endorsed, and then deposited in her personal account with Security Bank. CA affirmed RTC’s decision. Page | 17

ISSUE:  Whether or not there is no difference between cash and check for purposes of prosecuting respondent for theft of cash.

HELD: In theft, the act of unlawful taking connotes deprivation of personal property of one by another with intent to gain, and it is immaterial that the offender is able or unable to freely dispose of the property stolen because the deprivation relative to the offended party has already ensued from such act of execution. The allegation of theft of money, hence, necessitates that evidence presented must have a tendency to prove that the offender has unlawfully taken money belonging to another. 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 for being excluded by operation of R.A. No. 1405. They are likewise irrelevant to the case, inasmuch as they do not appear to have any logical and reasonable connection to the prosecution of respondent for qualified theft. We find full merit in and affirm respondent’s objection t o the evidence of the prosecution. The Court of Appeals was, therefore, correct in reversing the assailed orders of the trial court. A final note. In any given jurisdiction where the right of privacy extends its scope to include an individual's financial privacy rights and personal financial matters, there is an intermediate or heightened scrutiny given by courts and legislators to laws infringing such rights. Should there be doubts in upholding the absolutely confidential nature of bank deposits against affirming the authority to inquire into such accounts, then such doubts must be resolved in favor of the former. This attitude persists unless congress lifts its finger to reverse the general state policy respecting the absolutely confidential nature of bank deposits. Petition denied.

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CARMEN LL. INTENGAN, ET AL. vs. COURT OF APPEALS, ET AL. G.R. No. 128996 February 15, 2002 PERALTA,  J .: FACTS: On September 21, 1993, Citibank filed a complaint for violation of section 31 in relation to section 144 of the Corporation Code against two (2) of its officers, Dante L. Santos and Marilou Genuino. Attached to the complaint was an affidavit executed by private respondent Vic Lim, a vice-president of Citibank. As evidence, Lim annexed bank records purporting to establish the deception practiced by Santos and Genuino. Some of the documents pertained to the dollar deposits of petitioners Carmen Ll. Intengan, Rosario Ll. Neri, and Rita P. Brawner. In turn, private respondent Joven Reyes, vice-president/business manager of the Global Consumer Banking Group of Citibank, admits to having authorized Lim to state the names of the clients involved and to attach the pertinent bank records, including those of petitioners’. Petitioners aver that respondents violated RA 1405.

ISSUE: Whether or not Respondents are liable for violation of Secrecy of Bank Deposits Act, RA 1405.

HELD: No. The accounts in question are U.S. dollar deposits; consequently, the applicable law is not Republic Act No. 1405 but Republic Act (RA) No. 6426, known as the “Foreign Currency Deposit Act of the Philippines,” However, applying Act No. 3326, the offense prescribes in eight years, therefore, per available records, private respondents may no longer be hauled before the courts for violation of Republic Act No. 6426.

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PHILIPPINE COMMERCIAL & INDUSTRIAL BANK vs. COURT OF APPEALS G.R. No. 84526 January 28, 1991 SARMIENTO,  J . FACTS: A group of laborers obtained a favorable judgment against the Marinduque Mining and Industrial Corporation for the payment of backwages amounting to P205, 853 before the National Labor Relations Commission. A writ of execution was issued and the Deputy Sheriff served the writ, but it was unsatisfied. The sheriff prepared on his own a Notice of Garnishment addressed to six banks in Bacolod City, including petitioner PCIB, directing the bank concerned to issue a check in satisfaction of the judgment. While the in house lawyer of the Corporation warned the PCIB to withhold any release of its deposit with the bank, the bank issued a manager’s check in the amount of P37, 466 which was the exact balance of the private respondent’s account as of that day. The said check was also encashed by the sheriff the next day. Marinduque Mining thus filed a complaint before the RTC of Manila against PCIB and the deputy sheriff, alleging that its current deposit with the petitioner bank was levied upon, garnished, and with undue haste unlawfully allowed to be withdrawn, and notwithstanding the alleged unauthorized disclosure of the said current deposit and unlawful release thereof, the latter have failed and refused to restore the amount of P37, 466 to the former’s account despite repeated demands. Trial court rendered judgment in favor of Marinduque Mining Corporation. On appeal, the Court of Appeals initially reversed the trial court’s order but later affirmed it. Thus, this petition to the SC.

ISSUE: Whether or not the petitioners violated RA 1405, otherwise known as the Secrecy of Bank Deposits Act, when they allowed the sheriff to garnish the deposit of Marinduque Mining Corporation.

HELD: No. The SC first ruled that the release of the deposit by the bank was not done in undue and indecent haste. We find the immediate release of the funds by the petitioner bank on the strength of the notice of garnishment and writ of execution, whose issuance, absent any patent defect, enjoys the presumption of regularity. The SC likewise did not find any violation whatsoever by the petitioners of RA 1405, otherwise known as the Secrecy of Bank Deposits Act. The Court, in China Banking Corporation v. Ortega, had the occasion to dispose of this issue when it stated, to wit: Page | 20

“It is clear from the discussion of the conference committee report on Senat e Bill No. 351 and House Bill No. 3977, which later became Republic Act No. 1405, that the prohibition against examination of or inquiry into a bank deposit under Republic Act No. 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 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.”

Since there is no evidence that the petitioners themselves divulged the information that the private respondent had an account with the petitioner bank and it is undisputed that the said account was properly the object of the notice of garnishment and writ of execution carried out by the deputy sheriff, a duly authorized officer of the court, we can not therefore hold the petitioners liable under RA 1405.

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PHILIPPINE DEPOSIT INSURANCE CORPORATION vs. CITIBANK G.R. No. 170290 APRIL 11, 2011 MENDOZA, J.

FACTS: Petitioner Philippine Deposit Insurance Corporation (PDIC) conducted an examination of the books of account of respondents Citibank N.A. (Citibank) and Bank of America, S.T. and N.A. (BA). PDIC discovered that Citibank and BA received from its head office and other foreign branches certain amounts in dollars that were interest – bearing with corresponding maturity dates. These funds were not reported to PDIC as deposit liabilities that were subject to assessment for insurance; hence PDIC sought remittance of deficiency premium assessments for dollar deposits. On June 29, 1998, the Regional Trial Court, Branch 163, Pasig City (RTC)  promulgated its Decision in favor of Citibank and BA, ruling that the subject money placements were not deposits and did not give rise to insurable deposit liabilities, and that the deficiency assessments issued by PDIC were improper and erroneous. Therefore, Citibank and BA were not liable to pay the same. The RTC reasoned out that the money placements subject of the petitions were not assessable for insurance purposes under the PDIC Charter because said placements were deposits made outside of the Philippines and, under Section 3.05(b) of the PDIC Rules and Regulations, such deposits are excluded from the computation of deposit liabilities. Section 3(f) of the PDIC Charter likewise excludes from the definition of the term “deposit” any obligation of a bank payable at the office of the bank located outside the Philippines. The RTC further stated that there was no depositor-depository relationship between the respondents and their head of fice or other branches. As a result, such deposits were not included as third-party deposits that must be insured. Rather, they were considered inter-branch deposits which were excluded from the assessment base, in accordance with the practice of the United States Federal Deposit Insurance Corporation (FDIC) after which PDIC was patterned. Aggrieved, PDIC appealed to the CA which affirmed the ruling of the RTC in its October 27, 2005 Decision. Hence, this petition.

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ISSUE: Whether or not the money placements subject matter of these petitions are assessable for insurance purposes under the PDIC Act.

HELD: NO. The money placements subject of the petitions were not assessable for insurance purposes under the PDIC Charter because said placements were deposits made outside of the Philippines and, under Section 3.05(b) of the PDIC Rules and Regulations, such deposits are excluded from the computation of deposit liabilities. Section 3(f) of the PDIC Charter likewise excludes from the definition of the ter m “deposit” any obligation of a bank payable at the office of the bank located outside the Philippines. The Court further stated that there was no depositor-depository relationship between the respondents and their head office or other branches. As a result, such deposits were not included as third-party deposits that must be insured. Rather, they were considered interbranch deposits which were excluded from the assessment base, in accordance with the practice of the United States Federal Deposit Insurance Corporation (FDIC) after which PDIC was patterned. The petition is  DENIED. The October 27, 2005 Decision of the Court of Appeals in CA-G.R. CV No. 61316 is  AFFIRMED.

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PHILIPPINE DEPOSIT INSURANCE CORPORATION vs. COURT OF APPEALS 283 SCRA 462 DECEMBER 22, 1997 KAPUNAN, J.

FACTS: Petitioner Philippine Deposit Insurance Corporation (PDIC) seeks the reversal of the decision of the Court of Appeals affirming with modification the decision of the Regional Trial Court holding petitioner liable for the value of thirteen (13) certificates of time deposit (CTDs) in the possession of private respondents. On September 22, 1983, plaintiffs-appellees invested in money market placements with the Premiere Financing Corporation (PFC) in the sum of P10,000.00 each for which they were issued by the PFC corresponding promissory notes and checks. On the same date, John Francis Cotaoco, for and in behalf of plaintiffs-appellees, went to the PFC to encash the promissory notes and checks, but the PFC referred him to the Regent Saving Bank (RSB). Instead of paying the promissory notes and checks, the RSB, upon agreement of Cotaoco, issued the subject 13 certificates of time deposit; and that the maturity date thereof is on November 3, 1983. On the aforesaid maturity dated (November 3, 1983), Cotaoco went to the RSB to encash the said certificates. Thereat, RSB Executive Vice President Jose M. Damian requested Cotaoco for a deferment or an extension of a few days to enable the RSB to raise the amount to pay for the same. Cotaoco agreed. Despite said extension, the RSB still failed to pay the value of the certificates. Instead, RSB advised Cotaoco to file a claim with the PDIC. On June 15, 1984, the Monetary Board of the Central Bank issued Resolution No. 788 suspending the operations of the RSB. Eventually, the records of RSB were secured and its deposit liabilities were eventually determined. On December 7, 1984, the Monetary Board issued Resolution No. 1496 liquidating the RSB. Subsequently, a masterlist or inventory of the RSB assets and liabilities was prepared. However, the certificates of time deposit of plaintiffs-appellees were not included in the list on the ground that the certificates were not funded by the PFC or duly recorded as liabilities of RSB. Consequently, on March 31, 1987, private respondents filed an action for collection against PDIC, RSB and the Central Bank. On May 29, 1989, the trial court rendered its decision ordering the defendants therein to pay plaintiffs, j ointly and severally, the amount corresponding to the latter’s certificates of time deposit. Both PDIC and RSB appealed. The Central Bank, on the other hand, filed a petition for certiorari, prohibition and mandamus  before the Court of Appeals praying that the writ of execution issued by the trial court against it be set aside. Page | 24

On February 8, 1995, the Court of Appeals rendered its decision granting the Central Bank’s petition but dismissing the appeals of PDIC and RSB. Hence, this petition.

ISSUE: Whether or not Petitioner should be held liable for the CTDs that were stated to be insured.

HELD: NO. The fact that the certificates state that the certificates are insured by PDIC does not ipso facto  make the latter liable for the same should the contingency insured against arise. As stated earlier, the deposit liability of PDIC is determined by the provisions of R.A. No. 3519, and statements in the certificates that the same are insured by PDIC are not binding upon the latter. The mere fact that a certificate recites on its face that a certain sum has been deposited, or that officers of the bank may have stated that the deposit is protected by the guaranty law, does not make the guaranty fund liable for payment, if in fact a deposit has not been made xxx. The banks have nothing to do with the guaranty fund as such. It is a fund raised by assessments against all state banks, administered by officers of the state to protect deposits in banks. The instant petition is hereby GRANTED and the decision of the Court of Appeals REVERSED. Petitioner is absolved from any liability to private respondents.

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PHILIPPINE DEPOSIT INSURANCE CORPORATION vs. COURT OF APPEALS G.R. No. 126911 APRIL 30, 2003 CARPIO-MORALES, J.

FACTS: Prior to May 22, 1997, respondents had 71 certificates of time deposits denominated as "Golden Time Deposits" (GTD) with an aggregate face value of P1,115,889.96. May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now Bangko Sentral ng Pilipinas, issued Resolution 5052 prohibiting Manila Banking Corporation to do business in the Philippines, and placing its assets and affairs under receivership. The Resolution, however, was not served on MBC until Tuesday the following week, or on May 26, 1987, when the designated Receiver took over. On May 25, 1987 - the next banking day following the issuance of the MB Resolution, respondent Jose Abad was at the MBC at 9:00 a.m. for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing the fund represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the names of herein respondents individually or jointly with each other. a. Of the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew the value thereof in the total amount of P320,000.00. Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20 insured GTDs. February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after Washington Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC that there was massive conversion and substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo. Because of the report, PDIC entertained serious reservation in recognizing respondents' GTDs as deposit liabilities of MBC-Iloilo. Thus, PDIC filed a petition for declaratory relief against respondents with the RTCof Iloilo City, for a judicial declaration determination of the insurability of respondents' GTDs at MBC-Iloilo. In their Answer respondents set up a counterclaim against PDIC whereby they asked for payment of their insured deposits. The Trial Court ordered petitioners to pay the balance of the deposit insurance to respondents. The Court of Appeals affirmed the decision of the lower court. Petitioner posits that the trial court erred in ordering it to pay the balance of the deposit insurance to respondents, maintaining that the instant petition stemmed from a petition for declaratory relief which does not essentially entail an executory process, and the only relief that should have been granted by the trial court is a declaration of the parties' rights and duties. As such, petitioner continues, no order of payment may arise from the case as this is beyond the office of declaratory relief proceedings. Page | 26

ISSUE: Can the trial court order the payment of the balance even if the petition stemmed from a petition for declaratory relief which does not essentially entail an executory process?

HELD: YES. Without doubt, a petition for declaratory relief does not essentially entail an executory process. There is nothing in its nature, however, that prohibits a counterclaim from being set-up in the same action. There is nothing in the nature of a special civil action for declaratory relief that proscribes the filing of a counterclaim based on the same transaction, deed or contract subject of the complaint. A special civil action is after all not essentially different from an ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals with a special subject matter which makes necessary some special regulation. But the identity between their fundamental nature is such that the same rules governing ordinary civil suits may and do apply to special civil actions if not inconsistent with or if they may serve to supplement the provisions of the peculiar rules governing special

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