BANKING LAW CASES

GO vs BSP
 Director and the President and Chief Executive Officer of Orient Bank borrowed from the funds of the
bank and/or become a guarantor for loans without approval.
ISSUE: W/N Section 83 of RA 337 as penalizing a director or officer of a banking institution for either
borrowing the deposits or funds of the bank, or guaranteeing or indorsing loans to others, but not for
assuming both capacities

RULING: No. The prohibition is directed against a bank director or officer who becomes in any manner
an obligor for money borrowed from or loaned by the bank without the written approval of the majority
of the bank’s board of directors. The essence of the crime is becoming an obligor of the bank without
securing the necessary written approval of the majority of the bank’s directors.Under Section 83, RA 337,
the following elements must be present to constitute a violation of its first paragraph:

1. the offender is a director or officer of any banking institution;

2. the offender, either directly or indirectly, for himself or as representative or agent of another,
performs any of the following acts:

a. he borrows any of the deposits or funds of such bank; or

b. he becomes a guarantor, indorser, or surety for loans from such bank to others, or

c. he becomes in any manner an obligor for money borrowed from bank or loaned by it;

3. the offender has performed any of such acts without the written approval of the majority of the
directors of the bank, excluding the offender, as the director concerned.

Section 83 of RA 337 actually imposes three restrictions: approval (written approval of the majority of
the bank’s board of directors), reportorial (approval should be entered upon the records of the corporation,
and a copy of the entry be transmitted to the appropriate supervising department), and ceiling
requirements (amount equivalent to the respective outstanding deposits and book value of the paid-in
capital contribution in the bank).

SORIANO vs BSP
Soriano as president of Rural Bank of San Miguel Bulacan approved and obtained a loan named after sps
Carlos and was never authorized by the bank’s BOD. An estafawas filed against him.
ISSUE: W/N there can also be, at the same time, a charge for DOSRI violation in such a situation
wherein the accused bank officer did not secure a loan in his own name, but was alleged to have used the
name of another person in order to indirectly secure a loan from the bank.

RULING: Yes, informations filed do not negate each other. A bank officer violates the DOSRI2 law
when he acquires bank funds for his personal benefit, even if such acquisition was facilitated by a
fraudulent loan application. Directors, officers, stockholders, and their related interests cannot be allowed
to interpose the fraudulent nature of the loan as a defense to escape culpability for their circumvention of
Section 83 of Republic Act (RA) No. 337. The foregoing information describes the manner of securing
the loan as indirect; names petitioner as the benefactor of the indirect loan; and states that the
requirements of the law were not complied with. It contains all the required elements54 for a violation of
Section 83, even if petitioner did not secure the loan in his own name.

The broad interpretation of the prohibition in Section 83 is justified by the fact that it even expressly
covers loans to third parties where the third parties are aware of the transaction (such as principals
represented by the DOSRI), and where the DOSRI’s interest does not appear to be beneficial but even
burdensome (such as in cases when the DOSRI acts as a mere guarantor or surety).
 CENTRAL BANK vs CA
Triumph Savings Bank was ordered by the Central Bank to close and be put to receivership, Tiaoqui as
receiver. TSB filed a complaint to annul the resolution challenging the constitutionality of Sec. 29 of R.A.
269, otherwise known as "The Central Bank Act," insofar as it authorizes the Central Bank to take over a
banking institution even if it is not charged with violation of any law or regulation, much less found guilty
thereof.
ISSUE: whether absence of prior notice and hearing may be considered acts of arbitrariness and bad faith
sufficient to annul a Monetary Board resolution enjoining a bank from doing business and placing it
under receivership. 
RULING: Sec. 29 does not contemplate prior notice and hearing before a bank may be directed to stop
operations and placed under receivership. When par. 4 (now par. 5, as amended by E.O. 289) provides for
the filing of a case within ten (10) days after the receiver takes charge of the assets of the bank, it is
unmistakable that the assailed actions should precede the filing of the case. This "close now and hear
later" scheme is grounded on practical and legal considerations to prevent unwarranted dissipation of the
bank's assets and as a valid exercise of police power to protect the depositors, creditors, stockholders and
the general public.

BANCO FILIPINO SAVINGS vs MONETARY BOARD

These are nine (9) consolidated cases concerning the legality of the closure and receivership of petitioner
Banco Filipino Savings and Mortgage Bank (Banco Filipino for brevity) pursuant to the order of
respondent Monetary Board.
ISSUE: W/N the liquidator appointed by the respondent Central Bank (CB for brevity) has the authority
to prosecute as well as to defend suits, and to foreclose mortgages for and in behalf of the bank while the
issue on the validity of the receivership and liquidation of the latter is pending resolution; whether or not
the Central Bank and the Monetary Board acted arbitrarily and in bad faith in finding and thereafter
concluding that petitioner bank is insolvent
RULING: Yes. Section 29 of the Republic Act No. 265, provides that when a bank is placed under
receivership, the person designated as receiver shall immediately take charge of the bank’s assets and
liabilities, as expeditiously as possible, collect and gather all the assets and administer the same for the
benefit of its creditors, and represent the bank personally or through counsel as he may retain in all
actions or proceedings for or against the institution, exercising all the powers necessary for these purposes
including, but not limited to, bringing and foreclosing mortgages in the name of the bank. If the Monetary
Board shall later determine and confirm that the banking institution is insolvent or cannot resume
business with safety to depositors, creditors and the general public, it shall, if public interest requires,
order its liquidation and appoint a liquidator who shall take over and continue the functions of the
receiver previously appointed by Monetary Board. Section 29 of the Central Bank Act, the following are
the mandatory requirements to be complied with before a bank found to be insolvent is ordered closed
and forbidden to do business in the Philippines: Firstly, an examination shall be conducted by the head of
the appropriate supervising or examining department or his examiners or agents into the condition of the
bank; secondly, it shall be disclosed in the examination that the condition of the bank is one of
insolvency, or that its continuance in business would involve probable loss to its depositors or creditors;
thirdly, the department head concerned shall inform the Monetary Board in writing, of the facts; and
lastly, the Monetary Board shall find the statements of the department head to be true.Tiaoqui based his
report on an incomplete examination of petitioner bank and outrightly concluded therein that the latter’s
financial status was one of insolvency or illiquidity. It is evident from the foregoing circumstances that
the examination contemplated in Sec. 29 of the CB Act as a mandatory requirement was not completely
and fully complied with.The closure of the petitioner bank was arbitrary and committed with grave abuse
of discretion. Granting in gratia argumenti that the closure was based on justified grounds to protect the
public, the fact that petitioner bank was suffering from serious financial problems should not
automatically lead to its liquidation.
 CENTRAL BANK OF THE PHILIPPINES vs COURT OF APPEALS
Central Bank discovered that certain questionable loans extended by Producer’s Bank of the Philippines
(PBP)were fictitious as they were extended, without collateral, to certain interests related to PBP owners
themselves. Monetary Board (MB), placed PBP under conservatorship.
ISSUE: W/N the order of conservatorship still be assailed by PBP
RULING: No. The following requisites must be present before the order of conservatorship may be set
aside by a court: (1) The appropriate pleading must be filed by the stockholders of record representing the
majority of the capital stock of the bank in the proper court; (2) Said pleading must be filed within ten
(10) days from receipt of notice by said majority stockholders of the order placing the bank under
conservatorship; and (3) There must be convincing proof, after hearing, that the action is plainly arbitrary
and made in bad faith.In the instant case, the original complaint was filed more than 3 years after PBP
was placed under conservator, long after the expiration of the 10-day period deferred to above.

RURAL BANK OF SAN MIGUEL vs MONETARY BOARD

Petitioner bank was a domestic corporation engaged in banking. Respondent Monetary Board issued a
resolution prohibiting petitioner from doing business in the Philippines and placed it under receivership
with PDIC as its receiver. On the basis of reports prepared by the PDIC stating that petitioner bank could
not resume business, the Monetary Board directed PDIC to proceed with the liquidation.  Petitioner filed
a special civil action for certiorari and prohibition with the CA, contending that there was no complete
examination conducted before the bank was closed.

ISSUE: Whether Section 30 of RA 7653 require a current and complete examination of the bank before it
can be closed and placed under receivership

RULING: No. In RA 7653, only a “report of the head of the supervising or examining department” is
necessary. This Court cannot look for or impose another meaning on the term “report” or to construe it as
synonymous with “examination.” From the words used in Section 30, it is clear that RA 7653 no longer
requires that an examination be made before the MB can issue a closure order.

KORUGA vs ARCENAS

Koruga's Complaint charged defendants with violation of Sections 31 to 34 of the Corporation Code,
prohibiting self-dealing and conflict of interest of directors and officers; invoked her right to inspect the
corporation's records under Sections 74 and 75 of the Corporation Code; and prayed for Receivership and
Creation of a Management Committee, pursuant to Rule 59 of the Rules of Civil Procedure, the Securities
Regulation Code, the Interim Rules of Procedure Governing Intra-Corporate Controversies, the General
Banking Law of 2000, and the New Central Bank Act. She accused the directors and officers of Banco
Filipino of engaging in unsafe, unsound, and fraudulent banking practices, more particularly, acts that
violate the prohibition on self-dealing.

ISSUE: W/N, the BSP has jurisdiction over the case

RULING: Yes. The law vests in the BSP the supervision over operations and activities of banks. The
New Central Bank Act provides:

Section 25. Supervision and Examination. - The BangkoSentral shall have supervision over, and conduct
periodic or special examinations of, banking institutions and quasi-banks, including their subsidiaries and
affiliates engaged in allied activities.24
Specifically, the BSP's supervisory and regulatory powers include:

4.1 The issuance of rules of conduct or the establishment of standards of operation for uniform
application to all institutions or functions covered, taking into consideration the distinctive character of
the operations of institutions and the substantive similarities of specific functions to which such rules,
modes or standards are to be applied;

4.2 The conduct of examination to determine compliance with laws and regulations if the
circumstances so warrant as determined by the Monetary Board;

4.3 Overseeing to ascertain that laws and Regulations are complied with;

4.4 Regular investigation which shall not be oftener than once a year from the last date of
examination to determine whether an institution is conducting its business on a safe or sound
basis: Provided, That the deficiencies/irregularities found by or discovered by an audit shall be
immediately addressed;

4.5 Inquiring into the solvency and liquidity of the institution (2-D); or

4.6 Enforcing prompt corrective action.

The authority to determine whether a bank is conducting business in an unsafe or unsound manner is also
vested in the Monetary Board.

CENTRAL BANK vs DELA CRUZ

It is noteworthy that the actions of the Monetary Board in proceedings on insolvency are explicitly
declared by law to be "final and executory." They may not be set aside, or restrained, or enjoined by the
courts, except upon "convincing proof that the action is plainly arbitrary and made in bad faith"

FACTS: Department of Rural Banks and Savings and Loan Associations (DRBSLA) of the Central Bank
of the Philippines (or CB) conducted examinations of the books and affairs of Libmanan Bank. They
found serious irregularities in its lending and deposit operations, including false entries and false
statements in the bank’s records to give it the appearance of solidity and soundness which it did not
possess. As a result of its questionable transactions, the bank became insolvent.  Judge De la Cruz
declared the CB, Et Al., in default for failure to file a responsive pleading to the petition in Civil Case No.
1309. He pointed out that "the projected move to bring the court’s denial of the motion to dismiss to the
Supreme Court on certiorari did not stop the period given to the respondents to answer

ISSUE: W/N there was disregard of the provision of Section 29 of Central Bank Act

RULING: Respondent Judge acted in plain disregard of the fourth paragraph of Section 29 of the Central
Bank Act, when he restrained the petitioners from closing and liquidating the Rural Bank of Libmanan,
prevented them from performing their functions, and ordered them to return the management and control
of the rural bank to its board of directors (p. 51, Rollo) without receiving convincing proof that the action
of the CB was plainly arbitrary and made in bad faith.

CENTRAL BANK OF THE PHILIPPINES vs CA

Central Bank discovered that certain questionable loans extended by Producer’s Bank of the Philippines
(PBP), were fictitious as they were extended, without collateral, to certain interests related to PBP owners
themselves.  Without responding to the communications of the CB, PBP filed a complaint with the
Regional Trial Court of Makati against the CB, the MB and CB Governor alleging that the resolutions
issued were arbitraty and made in bad faith. Respondent Judge issued a temporary restraining order and
subsequently a writ of preliminary injunction. CB filed a motion to dismiss but was denied and ruled that
the MB resolutions were arbitrarily issued.
ISSUE: W/N the trial court erred in declaring the MB resolutions as arbitrary
RULING: No. The following requisites must be present before the order of conservatorship may be set
aside by a court: (1) The appropriate pleading must be filed by the stockholders of record representing the
majority of the capital stock of the bank in the proper court; (2) Said pleading must be filed within ten
(10) days from receipt of notice by said majority stockholders of the order placing the bank under
conservatorship; and (3) There must be convincing proof, after hearing, that the action is plainly arbitrary
and made in bad faith.

In the instant case, the original complaint was filed more than 3 years after PBP was placed under
conservator, long after the expiration of the 10-day period deferred to above. It is also beyond question
that the complaint and the amended complaint were not initiated by the stockholders of record
representing the majority of the capital stock. 

BANGKO SENTRAL vs VALENZUELA

BSP conducted examination of books of some banks, there were deficiencies discovered. RBPI filed a
complaint for nullification of the BSP ROE with application for a TRO and writ of preliminary
injunction. ruled that the banks were entitled to the writs of preliminary injunction prayed for. It held that
it had been the practice of the SED to provide the ROEs to the banks before submission to the MB. It
further held that as the banks are the subjects of examinations, they are entitled to copies of the ROEs.
The denial by petitioners of the banks' requests for copies of the ROEs was held to be a denial of the
banks' right to due process.

ISSUE: W/N exercise of PI grant be subject to judicial inquiry

RULING: It is well-settled that the closure of a bank may be considered as an exercise of police power.
The action of the MB on this matter is final and executory. Such exercise may nonetheless be subject to
judicial inquiry and can be set aside if found to be in excess of jurisdiction or with such grave abuse of
discretion as to amount to lack or excess of jurisdiction. The "close now, hear later" doctrine has already
been justified as a measure for the protection of the public interest. Swift action is called for on the part of
the BSP when it finds that a bank is in dire straits. Unless adequate and determined efforts are taken by
the government against distressed and mismanaged banks, public faith in the banking system is certain to
deteriorate to the prejudice of the national economy itself, not to mention the losses suffered by the bank
depositors, creditors, and stockholders, who all deserve the protection of the government.

BALLESTEROS vs RURAL BANK OF CANAMAN

FACTS: Ballesteros filed a complaint for Annulment of Deed of Extrajudicial Partition, Deed of

Mortgage and Damages with prayer for Preliminary Injunction against her children, Roy, Rito, Amy,
Arabel, Rico, Abe, Ponce Rex and Adden, all surnamed Ballesteros, and the Rural Bank of Canaman,
Inc., Baao Branch (RBCI) before the RTC-Iriga. Lucia alleged that her deceased husband, Eugenio, left
two (2) parcels of land located in San Nicolas, Baao, Camarines Sur, each with an area of 357 square
meters; that on March 6, 1995, without her knowledge and consent, her children executed a deed of
extrajudicial partition and waiver of the estate of her husband wherein all the heirs, including Lucia,
agreed to allot the two parcels to Rico Ballesteros (Rico); that, still, without her knowledge and consent,
Rico mortgaged Parcel B of the estate in favor of RBCI which mortgage was being foreclosed for failure
to settle the loan secured by the lot; and that Lucia was occupying Parcel B and had no other place to live.
She prayed that the deed of extrajudicial partition and waiver, and the subsequent mortgage in favor of
RBCI be declared null and void having been executed without her knowledge and consent. 

ISSUE: whether a liquidation court can take cognizance of a case wherein the main cause of action is not
a simple money claim against a bank ordered closed, placed under receivership of the PDIC, and
undergoing a liquidation proceeding.
RULING: Yes, Doctrine of Adherence not applicable in this case. This Court is not unmindful nor
unaware of the doctrine on the adherence of jurisdiction. However, the rule on adherence of jurisdiction is
not absolute and has exceptions. One of the exceptions is that when the change in jurisdiction is curative
in character. Section 30, R.A. 7653 is curative in character when it declared that the liquidation court shall
have jurisdiction in the same proceedings to assist in the adjudication of the disputed claims against the
Bank. Lucia's complaint involving annulment of deed of mortgage and damages falls within the purview
of a disputed claim in contemplation of Section 30 of R.A. 7653 (The New Central Bank Act). The
jurisdiction should be lodged with the liquidation court.

MIRANDA vs PDIC

FACTS: Leticia G. Miranda was a depositor of Prime Savings Bank, Santiago City Branch. On June 3,
1999, she withdrew substantial amounts from her account, but instead of cash she opted to be issued a
crossed cashier's check. She was thus issued cashier's check no. 0000000518 in the sum of P2,500,000.00
and cashier's check no. 0000000514 in the amount of P3,002,000.00.4

Petitioner deposited the two checks into her account in another bank on the same day,
however, BangkoSentral ng Pilipinas (BSP) suspended the clearing privileges of Prime Savings Bank
effective 2:00 p.m. of June 3, 1999. The two checks of petitioner were returned to her unpaid.5

On June 4, 1999, Prime Savings Bank declared a bank holiday. On January 7, 2000, the BSP placed
Prime Savings Bank under the receivership of the Philippine Deposit Insurance Corporation
(PDIC).Petitioner filed a civil action for sum of money in the Regional Trial Court of Santiago

ISSUE: W/N the case should be under the jurisdiction of the liquidation court

RULING: The claim lodged by the petitioner qualifies as a disputed claim subject to the jurisdiction of
the liquidation court. Regular courts do not have jurisdiction over actions filed by claimants against an
insolvent bank, unless there is a clear showing that the action taken by the BSP, through the Monetary
Board in the closure of financial institutions was in excess of jurisdiction, or with grave abuse of
discretion.

PDIC vs BIR

FACTS: The Monetary Board of the BSP prohibited the Rural Bank of Tuba (Benguet), Inc. (RBTI)
from doing business in the Philippines, placed it under receivership and designated the PDIC as
receiver. PDIC conducted an evaluation of RBTI’s financial condition and determined that RBTI
remained insolvent. Monetary Board issued Resolution directing PDIC to proceed with the liquidation of
RBTI.

ISSUE/S: Whether a bank placed under liquidation has to secure a tax clearance from the BIR before the
project of distribution of the assets of the bank can be approved by the liquidation court.

RULING: NO. Section 52(C) of the Tax Code of 1997 is not applicable to banks ordered placed under
liquidation by the Monetary Board, and a tax clearance is not a prerequisite to the approval of the project
of distribution of the assets of a bank under liquidation by the PDIC.

Thus, this Court has held that the RTC, acting as liquidation court under Section 30 of the New Central
Bank Act, commits grave abuse of discretion in ordering the PDIC, as liquidator of a bank ordered closed
by the Monetary Board, to first secure a tax clearance from the appropriate BIR Regional Office, and
holding in abeyance the approval of the project of distribution of the assets of the closed bank by virtue
thereof. Three reasons have been given.

First, Section 52(C) of the Tax Code of 1997 pertains only to a regulation of the relationship between the
SEC and the BIR with respect to corporations contemplating dissolution or reorganization. On the other
hand, banks under liquidation by the PDIC as ordered by the Monetary Board constitute a special case
governed by the special rules and procedures provided under Section 30 of the New Central Bank Act,
which does not require that a tax clearance be secured from the BIR.
Second, only a final tax return is required to satisfy the interest of the BIR in the liquidation of a closed
bank, which is the determination of the tax liabilities of a bank under liquidation by the PDIC. In view of
the timeline of the liquidation proceedings under Section 30 of the New Central Bank Act, it is
unreasonable for the liquidation court to require that a tax clearance be first secured as a condition for the
approval of project of distribution of a bank under liquidation.

To our mind, what the BIR should have requested from the RTC, and what was within the discretion of
the RTC to grant, is not an order for PDIC, as liquidator of RBBI, to secure a tax clearance; but, rather,
for it to submit the final return of RBBI. The first paragraph of Section 30(C) of the Tax Code of 1997,
read in conjunction with Section 54 of the same Code, clearly imposes upon PDIC, as the receiver and
liquidator of RBBI, the duty to file such a return.

The filing by PDIC of a final tax return, on behalf of RBBI, should already address the supposed concern
of the BIR and would already enable the latter to determine if RBBI still had outstanding tax liabilities.

The unreasonableness and impossibility of requiring a tax clearance before the approval by the RTC of
the Project of Distribution of the assets of the RBBI becomes apparent when the timeline of the
proceedings is considered.

The BIR can only issue a certificate of tax clearance when the taxpayer had completely paid off his tax
liabilities. The certificate of tax clearance attests that the taxpayer no longer has any outstanding tax
obligations to the Government.

Third, it is not for this Court to fill in any gap, whether perceived or evident, in current statutes and
regulations as to the relations among the BIR, as tax collector of the National Government; the BSP, as
regulator of the banks; and the PDIC, as the receiver and liquidator of banks ordered closed by the BSP. It
is up to the legislature to address the matter through appropriate legislation, and to the executive to
provide the regulations for its implementation.

The law expressly provides that debts and liabilities of the bank under liquidation are to be paid in
accordance with the rules on concurrence and preference of credit under the Civil Code. Duties, taxes,
and fees due the Government enjoy priority only when they are with reference to a specific movable
property, under Article 2241(1) of the Civil Code, or immovable property, under Article 2242(1) of the
same Code. However, with reference to the other real and personal property of the debtor, sometimes
referred to as "free property," the taxes and assessments due the National Government, other than those in
Articles 2241(1) and 2242(1) of the Civil Code, such as the corporate income tax, will come only in ninth
place in the order of preference.

GSIS vs CA

FACTS: RTC Makati quashed a subpoena for the production of a bank ledger from a case instituted by
United Overseas Bank vs Domsat and GSIS which stemmed from non payment of a Loan Agreement.

Republic Act No. 1405 provides for four (4) exceptions when records of deposits may be disclosed. These
are under any of the following instances: a) upon written permission of the depositor, (b) in cases of
impeachment, (c) upon order of a competent court in the case of bribery or dereliction of duty of public
officials or, (d) when the money deposited or invested is the subject matter of the litigation, and e) in
cases of violation of the Anti-Money Laundering Act (AMLA), the Anti-Money Laundering Council
(AMLC) may inquire into a bank account upon order of any competent court.22 On the other hand, the
lone exception to the non-disclosure of foreign currency deposits, under Republic Act No. 6426, is
disclosure upon the written permission of the depositor.These two laws both support the confidentiality of
bank deposits. There is no conflict between them. Republic Act No. 1405 was enacted for the purpose of
giving encouragement to the people to deposit their money in banking institutions and to discourage
private hoarding so that the same may be properly utilized by banks in authorized loans to assist in the
economic development of the country.23 It covers all bank deposits in the Philippines and no distinction
was made between domestic and foreign deposits. Thus, Republic Act No. 1405 is considered a law of
general application. On the other hand, Republic Act No. 6426 was intended to encourage deposits from
foreign lenders and investors.24 It is a special law designed especially for foreign currency deposits in the
Philippines. A general law does not nullify a specific or special law. Generaliaspecialibusnon derogant.
Therefore, it is beyond cavil that Republic Act No. 6426 applies in this case.
 CHINABANK vs CA

Jose Gotianuy accused his daughter Mary Margaret Dee of stealing, among his other properties, US dollar
deposits with Citibank N.A. Mary Margaret Dee received these amounts from Citibank through checks
which she allegedly deposited at petitioner China Bank. Jose Gotianuy, died during the pendency of the
case and was substituted by his daughter, Elizabeth Gotianuy Lo. The latter presented the US Dollar
checks withdrawn by Mary Margaret Dee from his US dollar placement with Citibank. Upon motion of
Elizabeth Gotianuy Lo, the trial court issued a subpoena to employees of China Bank to testify on the
case. China Bank moved for reconsideration. The trial court resolved by directing the employees to
appear at the trial of the case only for the purpose of disclosing in whose name/s is the foreign currency
fund deposited with. CA affirmed the order of the trial court.

Issue: Whether or not a co-depositor may inquire into the deposit without a written consent of the other
co-depositor?

Ruling: YES. [Pro HacVice Ruling] The Court of Appeals, in allowing the inquiry, considered Jose
Gotianuy, a co-depositor of Mary Margaret Dee. It reasoned that since Jose Gotianuy is the named co-
payee of the latter in the subject checks, which checks were deposited in China Bank, then, Jose Gotianuy
is likewise a depositor thereof. On that basis, no written consent from Mary Margaret Dee is necessitated.
There is no issue as to the source of the funds. Mary Margaret Dee declared the source to be Jose
Gotianuy. There is likewise no dispute that these funds in the form of Citibank US dollar Checks are now
deposited with China Bank. As the owner of the funds unlawfully taken and which are undisputably now
deposited with China Bank, Jose Gotianuy has the right to inquire into the said deposits. Citibank checks
were drawn against the foreign currency account with Citibank, NA. The monies subject of said checks
originally came from the late Jose Gotianuy, the owner of the account. Thus, he also has legal rights and
interests in the CBC account where said monies were deposited. More importantly, the Citibank checks
readily demonstrate that the late Jose Gotianuy is one of the payees of said checks. Being a co-payee
thereof, then he or his estate can be considered as a co-depositor of said checks. Ergo, since the late Jose
Gotianuy is a co-depositor of the CBC account, then his request for the assailed subpoena is tantamount
to an express permission of a depositor for the disclosure of the name of the account holder. SC is of the
view that the allowance of the inquiry would be in accord with the rudiments of fair play, the upholding
of fairness in our judicial system and would be an avoidance of delay and time-wasteful and circuitous
way of administering justice.

INTENGAN vs CA

Citibank filed a complaint for violation of the Corporation Code against 2 of its officers. The complaint
was attached with the affidavit of Vic Lim, VP of Citibank, who was then instructed by the higher
management of the bank to investigate the anomalous/highly irregular activities of the said officers. As
evidence, Lim annexed bank records purporting to establish the deception practiced by the officers. Some
of the documents pertained to the dollar deposits of petitioners. As an incident to the foregoing,
petitioners filed respective motions for the exclusion and physical withdrawal of their bank records that
were attached to Lim’s affidavit. The filing of Informations against private respondents was
recommended for alleged violation of Republic Act No. 1405. Private respondents appealed before the
DOJ which ruled in their favor. Resort to the Court, referred the matter to the CA which then held that the
disclosure was proper and falls under the exception under R.A. No. 1405.

Issue: Whether or not the disclosure falls under the exception under R.A. No. 1405.

Ruling: NO. Actually, this case should have been studied more carefully by all concerned. The finest
legal minds in the country – from the parties’ respective counsel, the Provincial Prosecutor, the
Department of Justice, the Solicitor General, and the Court of Appeals – all appear to have overlooked a
single fact which dictates the outcome of the entire controversy. A circumspect review of the record
shows us 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 as the “Foreign Currency Deposit
Act of the Philippines.”
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 of the depositor. Incidentally, the acts of
private respondents complained of happened before the enactment on September 29, 2001 of R.A. No.
9160 otherwise known as the Anti-Money Laundering Act of 2001.

CHINABANK vs ORTEGA

Vicente Acaban won in a civil case for sum of money against B & B Forest Development Corporation. To
satisfy the judgment, the Acaban sought the garnishment of the bank deposit of the B & B Forest
Development Corporation with the China Banking Corporation (CBC). 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. Liong was ordered to inform the Court whether or not there is a deposit in the
CBC of B & B Forest Development Corporation, and if there is any deposit, to hold the same intact and
not allow any withdrawal until further order from the Court. CBC and Liong refuse to comply with a
court process garnishing the bank deposit of a judgment debtor by invoking the provisions of Republic
Act No. 1405 ( Secrecy of Bank Deposits Act) which allegedly prohibits the disclosure of any
information concerning to bank deposits.

ISSUES: Whether or not a banking institution may validly refuse to comply with a court processes
garnishing the bank deposit of a judgment debtor, by invoking the provisions of Republic Act No. 1405.

RULING: NO. The lower court did not order an examination of or inquiry into deposit of B & B Forest
Development Corporation, as contemplated in the law. It merely required Tan Kim Liong to inform the
court whether or not the defendant B & B Forest Development Corporation had a deposit in the China
Banking Corporation only for the purposes of the garnishment issued by it, so that the bank would hold
the same intact and not allow any withdrawal until further order. It is sufficiently clear that the prohibition
against examination of or inquiry into bank deposit under RA 1405 does not preclude its being garnished
to insure satisfaction of a judgment. Indeed there is no real inquiry in such a case, and 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.

MARQUEZ vs DESIERTO

Marquez received an Order from the Ombudsman Aniano A. Desierto dated April 29, 1998, to produce
several bank documents for purposes of inspection in camera relative to various accounts maintained at
Union Bank of the Philippines, Julia Vargas Branch, where petitioner is the branch manager. Managers
checks purchased by one George Trivinio were deposited in the said bank. She sought a declaration of her
rights from the court due to the clear conflict between R. A. No. 6770, Section 15 and R. A. No. 1405,
Sections 2 and 3.

ISSUE: whether the order of the Ombudsman to have an in camera inspection of the questioned account
is allowed as an exception to the law on secrecy of bank deposits (R. A. No. 1405).

RULING: An examination of the secrecy of bank deposits law (R. A. No. 1405) would reveal the
following exceptions:
1. Where the depositor consents in writing;
2. Impeachment case;
3. By court order in bribery or dereliction of duty cases against public officials;
4. Deposit is subject of litigation;
5. Sec. 8, R. A. No. 3019, in cases of unexplained wealth as held in the case of PNB vs. Gancayco
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
the pending case before the court of competent jurisdiction. The bank personnel and the account holder
must be notified to be present during the inspection, and such inspection may cover only the account
identified in the pending case. 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.
 SALVACION vs CENTRAL BANK

FACTS: Greg Bartelli, an was arrested for committing four counts of rape and serious illegal detention
against Karen Salvacion. Police recovered from him several dollar checks and a dollar account in the
China Banking Corp. Salvacion tried to execute the judgment on the dollar deposit of Bartelli with the
China Banking Corp. but the latter refused arguing that Section 11 of Central Bank Circular No. 960
exempts foreign currency deposits from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body whatsoever. Salvacion therefore
filed this action for declaratory relief in the Supreme Court.

ISSUE: Should Section 113 of Central Bank Circular No. 960 and Section 8 of Republic Act No. 6426, as
amended by PD 1246, otherwise known as the Foreign Currency Deposit Act be made applicable to a
foreign transient?

HELD: NO. The provisions of Section 113 of Central Bank Circular No. 960 and PD No. 1246, insofar
as it amends Section 8 of Republic Act No. 6426, are hereby held to be INAPPLICABLE to this case
because of its peculiar circumstances. Respondents are hereby required to comply with the writ of
execution issued in the civil case and to release to petitioners the dollar deposit of Bartelli in such amount
as would satisfy the judgment.  The foreign currency deposit made by a transient or a tourist is not the
kind of deposit encouraged by PD Nos. 1034 and 1035 and given incentives and protection by said laws
because such depositor stays only for a few days in the country and, therefore, will maintain his deposit in
the bank only for a short time. Considering that Bartelli is just a tourist or a transient, he is not entitled to
the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment,
garnishment or other court processes.

EJECITO V SANDIGANBAYAN

In lieu of the Criminal Case “People v. Estrada” for plunder, the Special Prosecution Panel filed before
the Sandiganbayan a request for issuance of Subpoena Duces Tecum directing the President of Export and
Industry Bank or his/her authorized representative to produce documents namely, Trust Account and
Savings Account belonging to petitioner and statement of accounts of one named “Jose Velarde” and to
testify thereon during the hearings. Sandiganbayan granted both requests and subpoenas were accordingly
issued. Sandiganbayan also granted and issued subpoenas prayed for by the Prosecution Panel in another
later date. Petitioner now assisted by his counsel filed two separate motions to quash the two subpoenas
issued. Sandiganbayan denied both motions and the consequent motions for reconsideration of petitioner.

Issues: Whether or not the trust accounts of petitioner are covered by the term “deposits” as used in R.A.
No. 1405

Ruling: YES. An examination of the law shows that the term “deposits” used therein is to be understood
broadly and not limited only to accounts which give rise to a creditor-debtor relationship between the
depositor and the bank. Trust Account No. 858 is, without doubt, one such account. The Trust Agreement
between petitioner and Urban Bank provides that the trust account covers “deposit, placement or
investment of funds” by Urban Bank for and in behalf of petitioner. The money deposited under Trust
Account No. 858, was, therefore, intended not merely to remain with the bank but to be invested by it
elsewhere. To hold that this type of account is not protected by R.A. 1405 would encourage private
hoarding of funds that could otherwise be invested by banks in other ventures, contrary to the policy
behind the law.

Section 2 of the same law in fact even more clearly shows that the term “deposits” was intended to be
understood broadly. The phrase “of whatever nature” proscribes any restrictive interpretation of
“deposits.” Moreover, it is clear from the immediately quoted provision that, generally, the law applies
not only to money which is deposited but also to those which are invested. This further shows that the law
was not intended to apply only to “deposits” in the strict sense of the word. Otherwise, there would have
been no need to add the phrase “or invested.” Clearly, therefore, R.A. 1405 is broad enough to cover
Trust Account No. 858.