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G.R. No. 71479 October 18, 1990

MELLON BANK, N.A., petitioner,vs.HON. CELSO L. MAGSINO

The issue in the instant special civil action of certiorari iswhether or not, by virtue of the principle of election of remedies, an action filed in California, U.S.A., to recover realproperty located therein and to constitute a constructive truston said property precludes the filing in our jurisdiction of anaction to recover the purchase price of said real property.

On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First National Bank of Moundsville, WestVirginia, U.S.A. to Victoria Javier in Manila through thePrudential Bank. Accordingly, the First National Bank requestedthe petitioner, Mellon Bank, to effect the transfer. Unfortunatelythe wire sent by Mellon Bank to Manufacturers Hanover Bank, acorrespondent of Prudential Bank, indicated the amounttransferred as "US$1,000,000.00" instead of US$1,000.00.Hence Manufacturers Hanover Bank transferred one milliondollars less bank charges of $6.30 to the Prudential Bank forthe account of Victoria Javier.

On June 3, 1977, Javier opened a new dollar account (No. 343)in the Prudential Bank and deposited $999,943.70.Immediately their, Victoria Javier and her husband, MelchorJavier, Jr., made withdrawals from the account, deposited themin several banks only to withdraw them later in an apparentplan to conceal, "launder" and dissipate the erroneously sentamount.

On June 14, 1977, Javier withdrew $475,000 from account No.343 and converted it into eight cashier's checks made out tothe following: (a) F.C. Hagedorn & Co., Inc., two cheeks for thetotal amount of P1,000,000; (b) Elnor Investment Co., Inc.,two checks for P1,000,000; (c) Paramount Finance Corporation,two checks for P1,000,000; and (d) M. Javier, Jr., two checksfor P496,000. The first six checks were delivered to JoseMarquez and Honorio Poblador, Jr.

It appears that Melchor Javier, Jr. had requested Jose Marquez,a realtor, to look for properties for sale in the United States.Marquez offered a 160-acre lot in the Mojave desert inCalifornia City which was owned by Honorio Poblador, Jr. Javier,without having seen the property, agreed to buy it forP3,236,800 (US$437,405) although it was actually appraised ataround $38,500. Consequently, as Poblador's agent, Marquezexecuted in Makati a deed of absolute sale in favor of theJaviers and had the document notarized in Manila before anassociate of Poblador. Marquez executed another deed of saleindicating receipt of the purchase price and sent the deed tothe Kern County Registrar in California for registration.

Inasmuch as Poblador had requested that the purchase priceshould not be paid directly to him, the payment of P3,000,000was coursed through Elnor Investment Co., Inc., allegedlyPoblador's personal holding company; Paramount Finance,allegedly headed by Poblador's brother, and F.C. Hagedorn,allegedly a stock brokerage with extensive dealings withPoblador. The payment was made through the aforementionedsix cashier's checks while the balance of P236,000 was paid incash by Javier who did not even ask for a receipt.

The two checks totalling P1,000,000 was delivered by Pobladorto F.C. Hagedorn with specific instructions to purchase Atlas,SMC and Philex shares. The four checks for P2,000,000 withElnor Investment and Paramount Finance as payees weredelivered to the latter to purchase "bearer" notes.

Meanwhile, in July, 1977, Mellon Bank filed a complaintdocketed as No. 148056 in the Superior Court of California,County of Kern, against Melchor Javier, Jane Doe Javier,Honorio Poblador, Jrn, and Does I through V. In its firstamended complaint to impose constructive trust dated July 14,1977, 1 Mellon Bank alleged that it had mistakenly andinadvertently cause the transfer of the sum of $999,000.00 toJane Doe Javier; that it believes that the defendants hadwithdrawn said funds; that "the defendants and each of themhave used a portion of said funds to purchase real propertylocated in Kern County, California"; and that because of

defendants' knowledge of Mellon Bank's mistake andinadvertence and their use of the funds to purchase theproperty, they and "each of them are involuntary orconstructive trustees of the real property and of any profitstherefrom, with a duty to convey the same to plaintiff forthwith." It prayed that the defendants and each of them bedeclared as holders of the property in trust for the plaintiff; thatdefendants be compelled to transfer legal title and possessionof the property to the plaintiff; that defendants be made to paythe costs of the suit, and that other reliefs be granted them.

On July 29, 1977, Mellon Bank also filed in the Court of FirstInstance of Rizal, Branch X, a complaint against the Javierspouses, Honorio Poblador, Jr., Domingo L. Jhocson, Jr., JoseMarquez, Roberto Gario, Elnor Investment Co., Inc., F.C.Hagedorn & Co., Inc. and Paramount Finance Corporation. Afterits amendment, Rafael Caballero and Tri-Arc Investment & Management Company, Inc. were also named defendants. 2

The amended and supplemental complaint alleged the facts setforth above and added that Roberto Gario, chief accountant of Prudential Bank, and who was the reference of Mrs. Ventosa'sdollar remittances to Victoria Javier, immediately informed theJaviers of the receipt of US$1,000,000.00; that knowing thefinancial circumstances of Mrs. Ventosa and the fact that amistake had been committed, the Javiers, with undue haste,took unlawful advantage of the mistake, withdrew the wholeamount and transferred the same to a "343 dollar account";that, aided and abetted by Poblador and Domingo L. Jhocson,the Javiers "compounded and completed the conversion" of thefunds by withdrawing from the account dollars or pesosequivalent to US $975,000; that by force of law, the Javiershad been constituted trustees of an implied trust for the benefitof Mellon Bank with a clear duty to return to said bank themoneys mistakenly paid to them; that, upon request of MellonBank and Manufacturers Hanover Bank, Prudential Bankinformed the Javiers of the erroneous transmittal of one milliondollars first orally and later by letter-demand; that conferencesbetween the representatives of the Javiers, led by Jhocson andPoblador, in the latter's capacity as legal and financial counsel,and representatives of Mellon Bank, proved futile as the Javiersclaimed that most of the moneys had been irretrievably spent;that the Javiers could only return the amount if the Mellon Bankshould agree to make an absolute quitclaim and waiver of future rights against them, and that in a scheme to conceal anddissipate the funds, through the active participation of JoseMarquez, the Javiers bought the California property of Poblador.

It further alleged that trust fund moneys totallingP3,000,000.00 were made payable to Hagedorn Paramount andElnor; that Hagedorn on instructions of Poblador, purchasedshares of stock at a stock exchange for P1,000,000.00 butlater, it hastily sold said shares at a loss of approximatelyP150,000.00 to the prejudice of the plaintiff; that proceeds of the sale were deposited by Hagedorn in the name of Pobladorand/or the law office of Poblador, Nazareno, Azada, Tomacruzand Paredes; that dividends declared on the shares weredelivered by Hagedorn to Caballero after the complaint hadbeen filed and thereafter, Caballero deposited the dividends inhis personal account; that after receiving the P1,000,000.00trust money, Paramount issued promissory notes upon maturity

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of which Paramount released the amount to unknown persons;that Elnor also invested P1,000,000.00 in Paramount for whichthe latter also issued promissory notes; that after the filing of the complaint, counsel for plaintiff requested Paramount not torelease the amount after maturity; that in evident bad faith,Elnor transferred the non-negotiable Paramount promissorynotes to Tri-Arc. that when the notes matured, Paramountdelivered the proceeds of P1,000,000.00 to Tri-Arc; thatPoblador knew or should have known that the attorney's feeshe received from the Javiers came from the trust funds; andthat despite formal demands even after the filing of the

complaint, the defendants refused to return the trust fundswhich they continued concealing and dissipating.

It prayed that: (a) the Javiers, Poblador, Elnor, Jhocson andGario be ordered to account for and pay jointly and severallyunto the plaintiff US$999,000.00 plus increments, additions,fruits and interests earned by the funds from receipt thereof until fully paid; (b) the other defendants be ordered to accountfor and pay unto the plaintiff jointly and severally with theJaviers to the extent of the amounts which each of them mayhave received directly or indirectly from the US$999,000.00plus increments, additions, fruits and interests; (c) Marquez beheld jointly and severally liable with Poblador for the amountreceived by the latter for the sale of the 160-acre lot inCalifornia City; and (d) defendants be likewise held liable jointlyand severally for attomey's fees and litigation expenses plusexemplary damages.

In due course, the defendants filed their answers and hearingof the case ensued. In his testimony, Jose Marquez stated thatPrudential Bank and Trust Company checks Nos. 2530 and2531 in the respective amounts of P100,000 and P900,000payable to F. C. Hagedorn were delivered to him by MelchorJavier, Jr. as partial consideration for the sale of Poblador'sproperty in California. After receiving the checks, Hagedornpurchased shares of Atlas Mining, Philex, Marcopper and SanMiguel Corporation for Account No. 3000, which, according toFred Hagedorn belonged to the law office of Poblador. 3

F.C. Hagedorn & Co., Inc. then sold the shares for P874,490.75as evidenced by HSBC check No. 339736 for P400,000 andHSBC check No. 339737 for P474,490.75 payable to "cash".Mellon Bank traced these checks to Account 2825-1 of thePhilippine Veterans Bank in the name of Cipriano Azada,Poblador's law partner and counsel to the Javiers. 4

An employee of the Philippine Veterans Bank thereafterintroduced the specimen signature cards for Account No. 2825-1 thereby confirming Azada's ownership of the account.Defendants objected to this testimony on the grounds of Azada's absence, the confidentiality of the bank account, andthe best evidence rule. The court overruled the objection.Another employee of the Philippine Veterans Bank thenpresented the ledger card for Account No. 2825-1, a checkdeposit slip and a daily report of returned items. Thedefendants objected but they were again overruled by thecourt.

Mellon Bank then subpoenaed Erlinda Baylosis of the PhilippineVeterans Bank to show that Azada deposited HSBC checks No.339736 and 339737 amounting to P874,490.75 in his personalcurrent account with said bank. It also subpoenaed PilologoRed, Jr. of Hongkong & Shanghai Banking Corporation to provethat said amount was returned by Azada to Hagedorn.

The testimonies of these witnesses were objected to by thedefense on the grounds of res inter alios acta , immateriality,irrelevancy and confidentiality. To resolve the matter, the courtordered the parties to submit memoranda. The defendants'objections were also discussed at the hearing on July 13, 1982.

For the first time, Poblador's counsel raised the matter of "election of remedies." 5

At the July 20, 1982 hearing, the lower court, then presided byJudge Eficio Acosta, conditionally allowed the testimonies of Baylosis and Red. Baylosis afffirmed that Azada depositedchecks Nos. 339736 and 339737 in the total amount of P874,490.75 in his personal account with the PhilippineVeterans Bank but almost simultaneously, Azada issued his PVBcheck for the same amount in favor of Hagedorn Consequently,Azada's check initially bounced. For his part, Red testified that

Azada's check for P874,490.75 was received by the Hongkong& Shanghai Banking Corporation and credited to the account of Hagedorn .

The defendants then moved to strike off the testimonies of Baylosis and Red from the record. Defendant ParamountFinance Corporation, which is not a party to the California case,thereafter filed its memorandum raising the matter of "electionof remedies". It averred that inasmuch as the Mellon Bank hadfiled in California an action to impose constructive trust on theCalifornia property and to recover the same, Mellon Bank canno longer try to regain the purchase price of the same propertythrough Civil Case No. 26899. The other defendants adoptedParamount's stand.

After Mellon Bank filed its reply to the memorandum of Paramount, on September 10, 1982, Judge Acosta issued aresolution ordering that the testimonies of Baylosis and Redand the documents they testified on, which were conditionallyallowed, be stricken from the records. 6 Judge Acostaexplained:

After a judicious evaluation of the argumentsof the parties the Court is of the view that in caseswhere money held in trust was diverted by the trustee,under the "rule of trust pursuit" the beneficiary "mayelect whether to accept the trust estate in its new formor hold the trustee responsible for it in its originalcondition" (Lathrop vs. Hampton, 31 Cal. 17; Zodosvs. Marefalos 48 Idaho 291; Bahle vs. Hasselbrach 64

NW Eq. 334, 51 Sections 508-76 Am Jur. 2d p. 475),and that "an election to pursue one remedy waivesand bars pursuit of any inconsistent remedy"(76 AmJur. 2d S253). The instant complaint among others isfor the recovery of the purchase price of the Kernproperty as held in trust for the plaintiff while in theCalifornia case the plaintiff maintains that the Kernproperty is held in trust for the plaintiff, whichpositions are inconsistent with each other. Neither canthe plaintiff now abandon his complaint for therecovery of the Kern property and pursue hiscomplaint for the recovery of the purchase price of said property for "if he has first sought to follow theres, the plaintiff cannot thereafter hold the trusteepersonally responsible" and "when once there hasbeen an election to do one of two things, you cannotretract it and do the other thing. The election oncemade is finally made." (Fowler vs. Bowvery SavingsBank 113 N.Y. 450, 21 N.E. 172, 4 LRA 145, 10 Am.S.R. 479. 2 Silv. 280, 23, Abb. N. Cos. 133065 C. J. p.980 Note 32).

The fact that the California case has beenstayed pending determination of the instant case onlymeans that should this case be dismissed, theCalifornia case can proceed to its final determination.

Furthermore, when the plaintiff filed theCalifornia case for the transfer of legal title andpossession of the Kern property to the plaintiff it in

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of remedies that precludes pursuit of alternative courses, thebetter rule is that no binding election occurs before a decisionon the merits is had or a detriment to the other partysupervenes. 31 This is because the principle of election of remedies is discordant with the modern procedural conceptsembodied in the Code of Civil Procedure which Permits a partyto seek inconsistent remedies in his claim for relief withoutbeing required to elect between them at the pleading stage of the litigation. 32

It should be noted that the remedies pursued in the California

case and in Civil Case No. 26899 are not exactly repugnant orinconsistent with each other. If ever, they are merelyalternative in view of the inclusion of parties in the latter casewho are not named defendants in the former. The causes of action, although they all stem from the erroneous transmittal of dollars, are distinct as shown by the complaints lengthily setout above. The bar of an election of remedies does not apply tothe assertion of distinct causes of action against differentpersons arising out of independent transactions. 33

As correctly pointed out by the petitioner, the doctrine of election of remedies is not favored in the United States forbeing harsh. 34 Its application with regard to two cases filed intwo different jurisdictions is also circumscribed by jurisprudenceon abatement of suits. Thus, in Brooks Erection Co. v. William

R. Montgomery & Associates, Inc .,35

it is held:

The pendency of an action in the courts of one state or country is not a bar to the institution of another action between the same parties and for thesame cause of action in a court of another state orcountry, nor is it the duty of the court in which thelatter action is brought to stay the same pending adetermination of the earlier action, even though thecourt in which the earlier action is brought has

jurisdiction sufficient to dispose of the entirecontroversy. Nevertheless, sometimes stated as amatter of comity not of right, it is usual for the court inwhich the later action is brought to stay proceedingsunder such circumstances until the earlier action isdetermined.

However, in view of the fact that the California court whereinthe case for recovery of the Kern property was first filed againstthe Javiers had stayed proceedings therein until after thetermination of Civil Case No. 26899, the court below can do noless than expedite the disposition of said case.

We cannot dispose of this case without condemning in thestrongest terms possible the acts of chicanery so apparent fromthe records. The respective liabilities of the respondents are stillbeing determined by the court below. We must warn, however,against the use of technicalities and obstructive tactics to delaya just settlement of this case. The taking advantage of thepetitioner's mistake to gain sudden and undeserved wealth is

marked by circumstances so brazen and shocking that anyfurther delay will reflect poorly on the kind of justice our courtsdispense. The possible involvement of lawyers in this sorryscheme stamps a black mark on the legal profession. TheIntegrated Bar of the Philippines (IBP) must be made aware of the ostensible participation, if not instigation, in the spiritingaway of the missing funds. The IBP must take the proper actionat the appropriate time against all lawyers involved in anymisdeeds arising from this case.

WHEREFORE, the resolution of September 10, 1982 and theorders of October 28, 1982 and July 9, 1985 are herebyannulled. The lower court is ordered to proceed with dispatch inthe disposition of Civil case No. 26899, considering that

thirteen (13) years have gone by since the original erroneousremittance.

Service of this decision on the Javier spouses shall be inaccordance with Section 6, Rule 13 of the Rules of Court. Acopy of this decision shall be served on the Integrated Bar of the Philippines.

The decision is immediately executory. Costs against privaterespondents

G.R. No. L-34964 January 31, 1973

CHINA BANKING CORPORATION vs.HON. WENCESLAO ORTEGA,

The only issue in this petition for certiorari to review the ordersdated March 4, 1972 and March 27, 1972, respectively, of theCourt of First Instance of Manila in its Civil Case No. 75138, iswhether or not a banking institution may validly refuse tocomply with a court process garnishing the bank deposit of a

judgment debtor, by invoking the provisions of Republic Act No.1405. *

On December 17, 1968 Vicente Acaban filed a complaint in thecourt a quo against Bautista Logging Co., Inc., B & B ForestDevelopment Corporation and Marino Bautista for the collectionof a sum of money. Upon motion of the plaintiff the trial courtdeclared the defendants in default for failure to answer withinthe reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence.On January 20, 1970 judgment by default was rendered againstthe 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, anotice of garnishment was issued by the Deputy Sheriff of thetrial court and served on said bank through its cashier, Tan KimLiong. In reply, the bank' cashier invited the attention of theDeputy Sheriff to the provisions of Republic Act No. 1405which, it was alleged, prohibit the disclosure of any informationrelative to bank deposits. Thereupon the plaintiff filed a motionto cite Tan Kim Liong for contempt of court.

In an order dated March 4, 1972 the trial court denied theplaintiff's motion. However, Tan Kim Liong was ordered "toinform the Court within five days from receipt of this orderwhether or not there is a deposit in the China BankingCorporation of defendant B & B Forest DevelopmentCorporation, and if there is any deposit, to hold the same intact

and not allow any withdrawal until further order from thisCourt." Tan Kim Liong moved to reconsider but was turneddown by order of March 27, 1972. In the same order he wasdirected "to comply with the order of this Court dated March 4,1972 within ten (10) days from the receipt of copy of thisorder, otherwise his arrest and confinement will be ordered bythe Court." Resisting the two orders, the China BankingCorporation and Tan Kim Liong instituted the instant petition.

The pertinent provisions of Republic Act No. 1405 relied uponby the petitioners reads:

Sec. 2. All deposits of whatever nature with banks orbanking institutions in the Philippines including

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investments in bonds issued by the Government of thePhilippines, its political subdivisions and itsinstrumentalities, are hereby considered as of absolutely confidential nature and may not beexamined, inquired or looked into by any person,government official, bureau or office, except uponwritten permission of the depositor, or in cases of impeachment, or upon order of a competent court incases of bribery or dereliction of duty of publicofficials, or in cases where the money deposited orinvested is the subject matter of the litigation.

Sec 3. It shall be unlawful for any official or employeeof a banking institution to disclose to any person otherthan those mentioned in Section two hereof anyinformation concerning said deposits.

Sec. 5. Any violation of this law will subject offenderupon conviction, to an imprisonment of not more thanfive years or a fine of not more than twenty thousandpesos or both, in the discretion of the court.

The petitioners argue that the disclosure of the informationrequired by the court does not fall within any of the four (4)exceptions enumerated in Section 2, and that if the questionedorders are complied with Tan Kim Liong may be criminally liableunder Section 5 and the bank exposed to a possible damagesuit by B & B Forest Development Corporation. Specificallyreferring to this case, the position of the petitioners is that thebank deposit of judgment debtor B & B Forest DevelopmentCorporation cannot be subject to garnishment to satisfy a final

judgment against it in view of the aforequoted provisions of law.

We do not view the situation in that light. The lower court didnot order an examination of or inquiry into the deposit of B & BForest Development Corporation, as contemplated in the law. Itmerely required Tan Kim Liong to inform the court whether ornot the defendant B & B Forest Development Corporation had adeposit in the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold the

same intact and not allow any withdrawal until further order. Itwill be noted from the discussion of the conference committeereport on Senate Bill No. 351 and House Bill No. 3977, whichlater became Republic Act 1405, that it was not the intention of the lawmakers to place bank deposits beyond the reach of execution to satisfy a final judgment. Thus:

Mr. MARCOS. Now, for purposes of the record, I shouldlike the Chairman of the Committee on Ways andMeans to clarify this further. Suppose an individual hasa tax case. He is being held liable by the Bureau of Internal Revenue for, say, P1,000.00 worth of taxliability, and because of this the deposit of thisindividual is attached by the Bureau of InternalRevenue.

Mr. RAMOS. The attachment will only apply after thecourt has pronounced sentence declaring the liabilityof such person. But where the primary aim is todetermine whether he has a bank deposit in order tobring about a proper assessment by the Bureau of Internal Revenue, such inquiry is not authorized bythis proposed law.Mr. MARCOS. But under our rules of procedure andunder the Civil Code, the attachment or garnishmentof money deposited is allowed. Let us assume, forinstance, that there is a preliminary attachment whichis for garnishment or for holding liable all moneysdeposited belonging to a certain individual, but suchattachment or garnishment will bring out into the open

the value of such deposit. Is that prohibited by thisamendment or by this law?Mr. RAMOS. It is only prohibited to the extent that theinquiry is limited, or rather, the inquiry is made onlyfor the purpose of satisfying a tax liability alreadydeclared for the protection of the right in favor of thegovernment; but when the object is merely to inquirewhether he has a deposit or not for purposes of taxation, then this is fully covered by the law.Mr. MARCOS. And it protects the depositor, does itnot?

Mr. RAMOS. Yes, it protects the depositor.Mr. MARCOS. The law prohibits a mere investigationinto the existence and the amount of the deposit.Mr. RAMOS. Into the very nature of such deposit.Mr. MARCOS. So I come to my original question.Therefore, preliminary garnishment or attachment of the deposit is not allowed?Mr. RAMOS. No, without judicial authorization.Mr. MARCOS. I am glad that is clarified. So that theestablished rule of procedure as well as thesubstantive law on the matter is amended?Mr. RAMOS. Yes. That is the effect.Mr. MARCOS. I see. Suppose there has been adecision, definitely establishing the liability of anindividual for taxation purposes and this judgment issought to be executed ... in the execution of that

judgment, does this bill, or this proposed law, if approved, allow the investigation or scrutiny of thebank deposit in order to execute the judgment?Mr. RAMOS. To satisfy a judgment which has becomeexecutory.Mr. MARCOS. Yes, but, as I said before, suppose thetax liability is P1,000,000 and the deposit is half amillion, will this bill allow scrutiny into the deposit inorder that the judgment may be executed?Mr. RAMOS. Merely to determine the amount of suchmoney to satisfy that obligation to the Government,but not to determine whether a deposit has been madein evasion of taxes.xxx xxx xxxMr. MACAPAGAL. But let us suppose that in anordinary civil action for the recovery of a sum of money the plaintiff wishes to attach the properties of the defendant to insure the satisfaction of the

judgment. Once the judgment is rendered, does thegentleman mean that the plaintiff cannot attach thebank deposit of the defendant?Mr. RAMOS. That was the question raised by thegentleman from Pangasinan to which I replied thatoutside the very purpose of this law it could bereached by attachment.Mr. MACAPAGAL. Therefore, in such ordinary civilcases it can be attached?Mr. RAMOS. That is so.(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27,1955).

It is sufficiently clear from the foregoing discussion of theconference committee report of the two houses of Congressthat the prohibition against examination of or inquiry into abank deposit under Republic Act 1405 does not preclude itsbeing garnished to insure satisfaction of a judgment. Indeedthere is no real inquiry in such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to theexecution process. It is hard to conceive that it was ever withinthe intention of Congress to enable debtors to evade paymentof their just debts, even if ordered by the Court, through theexpedient of converting their assets into cash and depositingthe same in a bank.

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WHEREFORE, the orders of the lower court dated March 4 and27, 1972, respectively, are hereby affirmed, with costs againstthe petitioners-appellants.

G.R. No. L-18343 September 30, 1965

PHILIPPINE NATIONAL BANK and EDUARDO Z.ROMUALDEZ, in his capacity as President of thePhilippine National Bank, plaintiffs-appellants,vs.EMILIO A. GANCAYCO and FLORENTINO FLOR, SpecialProsecutors of the Dept. of Justice, defendants-appellees.

REGALA, J.:

The principal question presented in this case is whethera bank can be compelled to disclose the records of accounts of a depositor who is under investigation for unexplained wealth.

This question arose when defendants Emilio A. Gancaycoand Florentino Flor, as special prosecutors of the Department of Justice, required the plaintiff Philippine National Bank toproduce at a hearing to be held at 10 a.m. on February 20,1961 the records of the bank deposits of Ernesto T. Jimenez,former administrator of the Agricultural Credit and CooperativeAdministration, who was then under investigation forunexplained wealth. In declining to reveal its records, theplaintiff bank invoked Republic Act No. 1405 which provides:

SEC. 2. All deposits of whatever nature withbanks or banking institutions in the Philippinesincluding investments in bonds issued by theGovernment of the Philippines, its political subdivisionsand its instrumentalities, are hereby considered as of an absolutely confidential nature and may not beexamined, inquired or looked into by any person,government official, bureau or office, except uponwritten permission of the depositor, or in cases of impeachment, or upon order of a competent court incases of bribery or dereliction of duty of public

officials, or in cases where the money deposited orinvested is the subject matter of the litigation.

The plaintiff bank also called attention to the penalprovision of the law which reads:

SEC. 5. Any violation of this law will subject theoffender upon conviction, to an imprisonment of notmore than five years or a fine of not more than twentythousand pesos or both, in the discretion of the court.

On the other hand, the defendants cited the Anti-Graftand Corrupt Practices Act (Republic Act No. 3019) in support of their claim of authority and demanded anew that plaintiff Eduardo Z. Romualdez, as bank president, produce the recordsor he would be prosecuted for contempt. The law invoked bythe defendant states:

SEC. 8. Dismissal due to unexplained wealth . If in accordance with the provisions of Republic ActNumbered One thousand three hundred seventy-nine,a public official has been found to have acquiredduring his incumbency, whether in his name or in thename of other persons, an amount of property and/ormoney manifestly out of proportion to his salary and tohis other lawful income, that fact shall be a ground fordismissal or removal. Properties in the name of thespouse and unmarried children of such public officialmay be taken into consideration, when their

acquisition through legitimate means cannot besatisfactorily shown. Bank deposits shall be taken intoconsideration in the enforcement of this section,notwithstanding any provision of law to the contrary.

Because of the threat of prosecution, plaintiffs filed anaction for declaratory judgment in the Manila Court of FirstInstance. After trial, during which Senator Arturo M. Tolentino,author of the Anti-Graft and Corrupt Practices Act testified, thecourt rendered judgment, sustaining the power of thedefendants to compel the disclosure of bank accounts of ACCFA

Administrator Jimenez. The court said that, by enacting section8 of, the Anti-Graft and Corrupt Practices Act, Congress clearlyintended to provide an additional ground for the examination of bank deposits. Without such provision, the court addedprosecutors would be hampered if not altogether frustrated inthe prosecution of those charged with having acquiredunexplained wealth while in public office. 1awphl.nt

From that judgment, plaintiffs appealed to this Court. Inbrief, plaintiffs' position is that section 8 of the Anti-Graft Law"simply means that such bank deposits may be included oradded to the assets of the Government official or employee forthe purpose of computing his unexplained wealth if and whenthe same are discovered or revealed in the manner authorizedby Section 2 of Republic Act 1405, which are (1) Upon written

permission of the depositor; (2) In cases of impeachment; (3)Upon order of a competent court in cases of bribery ordereliction of duty of public officials; and (4) In cases where themoney deposited or invested is the subject matter of thelitigation."

In support of their position, plaintiffs contend, first, thatthe Anti-Graft Law (which took effect on August 17, 1960) is ageneral law which cannot be deemed to have impliedly repealedsection 2 of Republic Act No. 1405 (which took effect on Sept.9, 1955), because of the rule that repeals by implication arenot favored. Second, they argue that to construe section 8 of the Anti-Graft Law as allowing inquiry into bank deposits wouldbe to negate the policy expressed in section 1 of Republic ActNo. 1405 which is "to give encouragement to the people todeposit their money in banking institutions and to discourageprivate hoarding so that the same may be utilized by banks inauthorized loans to assist in the economic development of thecountry."

Contrary to their claim that their position effects areconciliation of the provisions of the two laws, plaintiffs areactually making the provisions of Republic Act No. 1405 prevailover those of the Anti-Graft Law, because even without thelatter law the balance standing to the depositor's credit can beconsidered provided its disclosure is made in any of the casesprovided in Republic Act No. 1405.

The truth is that these laws are so repugnant to eachother than no reconciliation is possible. Thus, while Republic Act

No. 1405 provides that bank deposits are "absolutelyconfidential ... and [therefore] may not be examined, inquiredor looked into," except in those cases enumerated therein, theAnti-Graft Law directs in mandatory terms that bank deposits"shall be taken into consideration in the enforcement of thissection, notwithstanding any provision of law to the contrary."The only conclusion possible is that section 8 of the Anti-GraftLaw is intended to amend section 2 of Republic Act No. 1405 byproviding additional exception to the rule against the disclosureof bank deposits.

Indeed, it is said that if the new law is inconsistent withor repugnant to the old law, the presumption against the intentto repeal by implication is overthrown because theinconsistency or repugnancy reveals an intent to repeal the

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existing law. And whether a statute, either in its entirety or inpart, has been repealed by implication is ultimately a matter of legislative intent. (Crawford, The Construction of Statutes,Secs. 309-310. Cf. Iloilo Palay and Corn Planters Ass'n v.Feliciano, G.R. No. L-24022, March 3, 1965).

The recent case of People v. De Venecia , G.R. No. L-20808, July 31, 1965 invites comparison with this case. There itwas held:

The result is that although sec. 54 [Rev.Election Code] prohibits a classified civil serviceemployee from aiding any candidate, sec. 29 [CivilService Act of 1959] allows such classified employee toexpress his views on current political problems orissues, or to mention the name of his candidate forpublic office, even if such expression of views ormention of names may result in aiding one particularcandidate. In other words, the last paragraph of sec.29 is an exception to sec. 54; at most, an amendmentto sec. 54.

With regard to the claim that disclosure would becontrary to the policy making bank deposits confidential, it isenough to point out that while section 2 of Republic Act 1405declares bank deposits to be "absolutely confidential," itnevertheless allows such disclosure in the following instances:(1) Upon written permission of the depositor; (2) In cases of impeachment; (3) Upon order of a competent court in cases of bribery or dereliction of duty of public officials; (4) In caseswhere the money deposited is the subject matter of thelitigation. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why thesetwo classes of cases cannot be excepted from the rule makingbank deposits confidential. The policy as to one cannot bedifferent from the policy as to the other. This policy express themotion that a public office is a public trust and any person whoenters upon its discharge does so with the full knowledge thathis life, so far as relevant to his duty, is open to public scrutiny.

WHEREFORE, the decision appealed from is affirmed,

without pronouncement as to costs.

G.R. No. L-56429 May 28, 1988

BANCO FILIPINO SAVINGS AND MORTGAGEBANK, petitioner,vs.HON. FIDEL PURISIMA, etc., and HON. VICENTE ERICTAand JOSE DEL FIERO, etc., respondents.

NARVASA, J.:

The verdict in this special civil action of certiorari turns uponthe question of whether or not the "Law on Secrecy of BankDeposits" 1 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 allegedlyacquired property manifestly out of proportion to his salary andother lawful income, in violation of the "Anti-Graft and CorruptPractices Act." 2

The Customs special agent involved is Manuel Caturla, and theaccusation against him was filed by the Bureau of InternalRevenue. 3 In the course of the preliminary investigationthereof, the Tanodbayan issued a subpoena duces tecum to the

Banco Filipino Savings & Mortgage Bank, commanding itsrepresentative to appear at a specified time at the Office of the Tanodbayan and furnish the latter with duly certified copiesof the records in all its branches and extension offices, of theloans, savings and time deposits and other bankingtransactions, 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. 4

Caturla moved to quash the subpoena duces tecum 5 arguingthat compliance therewith would result in a violation of Sections

2 and 3 of the Law on Secrecy of Bank Deposits.Then Tanodbayan Vicente Ericta not only denied the motion forlack of merit, and directed compliance with the subpoena , 6 butalso expanded its scope through a second subpoena ducestecum, 7 this time requiring production by Banco Filipino of thebank records in all its branches and extension offices, of Siargao Agro-Industrial Corporation, Pedro Escuyos or his wife,Emeterio Escuyos, Purita Caturla, Lucia Escuyos or herhusband, Romeo Escuyos, Emerson Escuyos, Fraterno Caturla,Amparo Montilla, Cesar Caturla, Manuel Caturla or his children,Manuel Jr., Marilyn and Michael, LTD Pub/Restaurant, and JoseBuo or his wife, Evelyn. Two other subpoena of substantiallythe same tenor as the second were released bythe Tanodbayan's Office. 8 The last required obedience undersanction of contempt.

The Banco Filipino Savings & Mortgage Bank, hereafter referredto simply as BF Bank, took over from Caturla in the effort tonullify the subpoenae . It filed a complaint for declaratory relief with the Court of First Instance of Manila, 9 which was assignedby raffle to the sala of respondent Judge Fidel Purisima. BFBank prayed for a judicial declaration as to whether itscompliance with the subpoenae duces tecum would constitutean infringement of the provisions of Sections 2 and 3 of R.A.No. 1405 in relation to Section 8 of R.A. No. 3019. It also askedthat pending final resolution of the question,the Tanodbayan be provisionally restrained from exactingcompliance with the subpoenae .

Respondent Judge Purisima issued an Order denying for lack of merit the application by BF Bank for a preliminary injunctionand/or restraining order. 10

This Order is now impugned in the instant certiorari actioninstituted by BF Bank before this Court, as having been issuedwith grave abuse of discretion, amounting to lack of

jurisdiction. It is the bank's theory that the order declining togrant that remedy operated as a premature adjudication of thevery issue raised in the declaratory suit, and as judicialsufferance of a transgression of the bank deposits statute, andso constituted grievous error correctible by certiorari . It furtherargues that subpoenae in question are in the nature of "fishingexpeditions" or "general warrants" since they authorizeindiscriminate inquiry into bank records; that, assuming thatsuch an inquiry is allowed as regards public officials underinvestigation for a violation of the Anti-Graft & Corrupt PracticesAct, it is constitutionally impermissible with respect to privateindividuals or public officials not under investigation on acharge of violating said Act; and that while prosecution of offenses should not, as a rule, be enjoined, there arerecognized exceptions to the principle one of which is herepresent, i.e. to avoid multiplicity of suits, similar subpoenaehaving been directed to other banks as well.

It is difficult to see how the refusal by the Court a quo to issuethe temporary restraining order applied for by the petitioner in other words, its disagreement with the petitioner's advocatedtheory could be deemed so whimsical, capricious, despotic oroppressive an act as to constitute grave abuse of discretion.Obviously, the writ of certiorari cannot issue simply on a

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G.R. No. 135882 June 27, 2001

LOURDES T. MARQUEZ , in her capacity as BranchManager, UNION BANK OF THE PHILIPPINES , petitioner,vs.HONORABLE ANIANO A. DESIERTO , in his capacity as

OMBUDSMAN, ANGEL C. MAYOR-ALGO, JR., MARY ANNCORPUZ-MANALAC AND JOSE T. DE JESUS, JR. , in theircapacity as Chairman and Members of the Panel, respectively,respondents.

PARDO, J .:

In the petition at bar, petitioner seeks to --

a. Annul and set aside, for having been issued withoutor in excess of jurisdiction or with grave abuse of discretion amounting to lack of jurisdiction,respondents' order dated September 7, 1998 in OMB-0-97-0411, In Re: Motion to Cite Lourdes T. Marquezfor indirect contempt, received by counsel of September 9,1998, and their order dated October14,1998, denying Marquez's motion forreconsideration dated September 10, 1998, receivedby counsel on October 20, 1998.

b. Prohibit respondents from implementing their orderdated October 14, 1998, in proceeding with thehearing of the motion to cite Marquez for indirectcontempt, through the issuance by this Court of atemporary restraining order and/or preliminaryinjunction. 1

The antecedent facts are as follows:

Sometime in May 1998, petitioner Marquez received an Orderfrom 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 atUnion Bank of the Philippines, Julia Vargas Branch, wherepetitioner is the branch manager. The accounts to be inspectedare Account Nos. 011-37270, 240-020718, 245-30317-3 and245-30318-1, involved in a case pending with the Ombudsmanentitled, Fact-Finding and Intelligence Bureau (FFIB) v. AmadoLagdameo, et al. The order further states:

"It is worth mentioning that the power of theOmbudsman to investigate and to require theproduction and inspection of records and documents issanctioned by the 1987 Philippine Constitution,

Republic Act No. 6770, otherwise known asOmbudsman Act of 1989 and under existing jurisprudence on the matter. It must be noted thatR.A. 6770 especially Section 15 thereof provides,among others, the following powers, functions andduties of the Ombudsman, to wit:

x x x

(8) Administer oaths, issue subpoena duces tecum andtake testimony in any investigation or inquiry,including the power to examine and have access tobanks accounts and records;

(9) Punish for contempt in accordance with the Rulesof Court and under the same procedure and with thesame penalties provided therein.

Clearly, the specific provision of R.A. 6770, a laterlegislation, modifies the law on the Secrecy of BankDeposits (R.A.1405) and places the office of theOmbudsman in the same footing as the courts of lawin this regard." 2

The basis of the Ombudsman in ordering an incamera inspection of the accounts is a trail managers checkspurchased by one George Trivinio, a respondent in OMB-097-0411, pending with the office of the Ombudsman.

It would appear that Mr. George Trivinio, purchased fifty one(51) Managers Checks (MCs) for a total amount of P272.1Million at Traders Royal Bank, United Nations Avenue branch,on May 2 and 3, 1995. Out of the 51 MCs, eleven (11) MCs inthe amount of P70.6 million, were deposited and credited to anaccount maintained at the Union Bank, Julia Vargas Branch. 3

On May 26, 1998, the FFIB panel met in conference withpetitioner Lourdes T. Marquez and Atty. Fe B. Macalino at thebank's main office, Ayala Avenue, Makati City. The meeting was

for the purpose of allowing petitioner and Atty. Macalino to viewthe checks furnished by Traders Royal Bank. After convincingthemselves of the veracity of the checks, Atty. Macalino advisedMs. Marquez to comply with the order of the Ombudsman.Petitioner agreed to an in camera inspection set on June 3,1998. 4

However, on June 4,1998, petitioner wrote the Ombudsmanexplaining to him that the accounts in question cannot readilybe identified and asked for time to respond to the order. Thereason forwarded by the petitioner was that "despite diligentefforts and from the accounts numbers presented, we can notidentify these accounts since the checks are issued in cash orbearer. We surmised that these accounts have long beendormant, hence are not covered by the new account numbergenerated by the Union Bank system. We therefore have toverify from the Interbank records archives for the whereaboutsof these accounts. 5

The Ombudsman, responding to the request of the petitionerfor time to comply with the order, stated: "firstly, it must beemphasized that Union Bank, Julia Vargas Branch wasdepositary bank of the subject Traders Royal Bank Manager'sCheck (MCs), as shown at its dorsal portion and as cleared bythe Philippines Clearing House, not the International CorporateBank.

Notwithstanding the facts that the checks were payable to cashor bearer, nonetheless, the name of the depositor(s) couldeasily be identified since the account numbers x x x where said

checks were deposited are identified in the order.

Even assuming that the accounts xxx were already classified as"dormant accounts," the bank is still required to preserve therecords pertaining to the accounts within a certain period of time as required by existing banking rules and regulations.

And finally, the in camera inspection was already extendedtwice from May 13, 1998 to June 3,1998 thereby giving thebank enough time within which to sufficiently comply with theorder." 6

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Thus, on June 16, 1998, the Ombudsman issued an orderdirecting petitioner to produce the bank documents relative toaccounts in issue. The order states:

Viewed from the foregoing, your persistent refusal tocomply with Ombudsman's order in unjustified, and ismerely intended to delay the investigation of the case.Your act constitutes disobedience of or resistance to alawful order issued by this office and is punishable asIndirect Contempt under Section 3(b) of R.A. 6770.The same may also constitute obstruction in the lawful

exercise of the functions of the Ombudsman which ispunishable under Section 36 of R.A. 6770. 7

On July 10,1998, petitioner together with Union Bank of thePhilippines, filed a petition for declaratory relief, prohibition andinjunctions 8 with the Regional Trial Court, Makati City, againstthe Ombudsman.

The petition was intended to clear the rights and duties of petitioner. Thus, petitioner sought a declaration of her rightsfrom the court due to the clear conflict between RA No.6770,Section 15 and R.A. No. 1405, Sections 2 and 3.

Petitioner prayed for a temporary restraining order (TRO)

because the Ombudsman and the other persons acting underhis authority were continuously harassing her to produce thebank documents relatives to the accounts in question.Moreover, on June 16, 1998, the Ombudsman issued anotherorder stating that unless petitioner appeared before the FFIBwith the documents requested, petitioner manager would becharged with indirect contempt and obstruction of justice.

In the meantime, 9 on July 14, 1998, the lower court deniedpetitioner's prayer for a temporary restraining order and statedus:

"After hearing the arguments of the parties, the courtfinds the application for a Temporary Restraining Orderto be without merit.

"Since the application prays for restraint of therespondent, in the exercise of his contempt powersunder Section 15(9) in relation to paragraph (8) of RA.6770, known as " The Ombudsman Act of 1989", thereis no great or irreparable injury from which petitionersmay suffer, if respondent is not so restrained.Respondent should he decide to exercise his contemptpowers would still have to apply with the court. x x xAnyone who, without lawful excuse x x x refuses toproduce documents for inspection, when thereuntolawfully required shall be subject to discipline as incase of contempt of Court and upon application of theindividual or body exercising the power in questionshall be dealt with by the Judge of the First Instance

(now RTC) having jurisdiction of the case in a mannerprovided by the law (section 580 of the RevisedAdministrative Code). Under the present Constitutiononly judges may issue warrants, hence, respondentshould apply with the Court for the issuance of thewarrant needed for the enforcement of his contemptorders. It is in these proceedings where petitioner mayquestion the propriety of respondent's exercise of hiscontempt powers. Petitioners are not therefore leftwithout any adequate remedy.

"The questioned orders were issued with theinvestigation of the case of Fact-Finding andIntelligence Bureau vs. Amado Lagdameo, et. al.,OMB-0-97-0411, for violation of RA. 3019. Since

petitioner failed to show prima facie evidence that thesubject matter of the investigation is outside the

jurisdiction of the Office of the Ombudsman, no writ of injunction may be issued by this Court to delay thisinvestigation pursuant to section 14 of OmbudsmanAct of 1989." 10

On July 20,1998, petitioner filed a motion for reconsiderationbased on the following grounds:

a. Petitioners' application for filed TemporaryRestraining Order is not only to restrain theOmbudsman from exercising his contempt powers, butto stop him from implementing his Orders dated April29, 1998 and June 16, 1998: and

b. The subject matter of the investigation beingconducted by the Ombudsman at petitioners' premisesis outside his jurisdiction. 11

On July 23, 1998, the Ombudsman filed a motion to dismiss thepetition for declaratory relief 12 on the ground that the RegionalTrial Court has no jurisdiction to hear a petition for relief fromthe findings and orders of the Ombudsman, citing R.A. No.6770, Sections 14 and 27. On August 7, 1998, the Ombudsman

filed an opposition to petitioner's motion for reconsiderationdated July 20, 1998. 13

On August 19,1998, the lower court denied petitioner's motionfor reconsideration, 14 and also the Ombudsman's motion todismiss. 15

On August 21, 1998, petitioner received a copy of the motion tocite her for contempt, filed with the Office of the Ombudsmanby Agapito B. Rosales, Director, Fact Finding and IntelligenceBureau (FFIB). 16

On August 31, 1998, petitioner filed with the Ombudsman anopposition to the motion to cite her in contempt on the groundthat the filing thereof was premature due to the petitionpending in the lower court. 17 Petitioner likewise reiterated thatshe had no intention to disobey the orders of the Ombudsman.However, she wanted to be clarified as to how she wouldcomply with the orders without her breaking any law,particularly RA. No. 1405. 18

Respondent Ombudsman panel set the incident for hearing onSeptember 7, 1998. 19 After hearing, the panel issued an orderdated September 7, 1998, ordering petitioner and counsel toappear for a continuation of the hearing of the contemptcharges against her. 20

On September 10, 1998, petitioner filed with the Ombudsman amotion for reconsideration of the above order. 21 Her motion waspremised on the fact that there was a pending case with theRegional Trial Court, Makati City, 22 which would determinewhether obeying the orders of the Ombudsman to producebank documents would not violate any law.

The FFIB opposed the motion, 23 and on October 14, 1998, theOmbudsman denied the motion by order the dispositive portionof which reads:

"Wherefore, respondent Lourdes T. Marquez's motionfor reconsideration is hereby DENIED, for lack of merit.Let the hearing of the motion of the Fact FindingIntelligence Bureau (FFIB) to cite her for indirectcontempt to be intransferrably set to 29 October 1998at 2:00 o'clock p.m. at which date and time she should

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appear personally to submit her additional evidence.Failure to do so shall be deemed a waiver thereof." 24

Hence, the present petition. 25

The issue is whether petitioner may be cited for indirectcontempt for her failure to produce the documents requestedby the Ombudsman. And whether the order of the Ombudsmanto have an in camera inspection of the questioned account isallowed as an exception to the law on secrecy of bank deposits(R.A. No.1405).

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 casesagainst public officials;4. Deposit is subject of litigation;5. Sec. 8, R.A. No.3019, in cases of unexplainedwealth as held in the case of PNB vs. Gancayco. 26

The order of the Ombudsman to produce for incamera inspection the subject accounts with the Union Bank of the Philippines, Julia Vargas Branch, is based on a pendinginvestigation at the Office of the Ombudsman against AmadoLagdameo, et. al. for violation of R.A. No. 3019, Sec. 3 (e) and(g) relative to the Joint Venture Agreement between the PublicEstates Authority and AMARI.

We rule 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, theinspection limited to the subject matter of the pending casebefore the court of competent jurisdiction. The bank personneland the account holder must be notified to be present duringthe inspection, and such inspection may cover only the accountidentified in the pending case.

In Union Bank of the Philippines v. Court of Appeals, we heldthat "Section 2 of the Law on Secrecy of Bank Deposits, asamended, declares bank deposits to be "absolutely confidential"except:

(1) In an examination made in the course of a specialor general examination of a bank that is specificallyauthorized by the Monetary Board after being satisfiedthat there is reasonable ground to believe that a bankfraud or serious irregularity has been or is beingcommitted and that it is necessary to look into thedeposit to establish such fraud or irregularity,(2) In an examination made by an independent auditorhired by the bank to conduct its regular audit providedthat the examination is for audit purposes only and the

results thereof shall be for the exclusive use of thebank,(3) Upon written permission of the depositor,(4) In cases of impeachment,(5) Upon order of a competent court in cases of bribery or dereliction of duty of public officials, or(6) In cases where the money deposited or invested isthe subject matter of the litigation". 27

In the case at bar, there is yet no pending litigation before anycourt of competent authority. What is existing is aninvestigation by the Office of the Ombudsman. In short, whatthe office of the ombudsman would wish to do is to fish foradditional evidence to formally charge Amado Lagdameo, et.

al., with the Sandiganbayan. Clearly, there was no pendingcase in court which would warrant the opening of the bankaccount for inspection.

Zone of privacy are recognized and protected in our laws. TheCivil Code provides that" [e]very person shall respect thedignity, personality, privacy and peace of mind of his neighborsand other persons" and punishes as actionable torts severalacts for meddling and prying into the privacy of another. It alsoholds public officer or employee or any private individual liablefor damages for any violation of the rights and liberties of

another person, and recognizes the privacy of letters and otherprivate communications. The Revised Penal Code makes acrime of the violation of secrets by an officer, revelation of trade and industrial secrets, and trespass to dwelling. Invasionof privacy is an offense in special laws like the Anti-WiretappingLaw, the Secrecy of Bank Deposits Act , and the IntellectualProperty Code. 28

IN VIEW WHEREOF , we GRANT the petition. We order theOmbudsman to cease and desist from requiring Union BankManager Lourdes T. Marquez, or anyone in her place to complywith the order dated October 14,1998, and similar orders. Nocosts.

AREN E. SALVACION, minor, thru Federico N. Salvacion,Jr., father and Natural Guardian, and SpousesFEDERICO N. SALVACION, JR., and EVELINA E.SALVACION, petitioners, vs. CENTRAL BANK OFTHE PHILIPPINES, CHINA BANKINGCORPORATION and GREG BARTELLI yNORTHCOTT, respondents.

D E C I S I O N

TORRES, JR., J .:

In our predisposition to discover the original intent of astatute, courts become the unfeeling pillars of the statusquo . Little do we realize that statutes or even constitutions arebundles of compromises thrown our way by theirframers. Unless we exercise vigilance, the statute may alreadybe out of tune and irrelevant to our day.

The petition is for declaratory relief. It prays for thefollowing reliefs:

a.) Immediately upon the filing of this petition, anOrder be issued restraining the respondents fromapplying and enforcing Section 113 of Central BankCircular No. 960;

b.) After hearing, judgment be rendered:

1.) Declaring the respective rights and duties of

petitioners and respondents;2.) Adjudging Section 113 of Central Bank CircularNo. 960 as contrary to the provision of theConstitution, hence void; because its provisionthat Foreign currency deposits shall be exemptfrom attachment, garnishment, or any other orderto process of any court, legislative body,government agency or any administrative bodywhatsoever

i.) has taken away the right of petitioners tohave the bank deposit of defendant GregBartelli y Northcott garnished to satisfy the

judgment rendered in petitioners favor in

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That Monday evening, Karen had a chance to call for help,although defendant left but kept the door closed. She went tothe bathroom and saw a small window covered by styrofoamand she also spotted a small hole. She stepped on the bowland she cried for help through the hole. She cried : Maawa na

po kayo sa akin. Tulungan nyo akong makalabasdito. Kinidnap ako! Somebody heard her. It was a woman,probably a neighbor, but she got angry and said she was

istorbo . Karen pleaded for help and the woman told her tosleep and she will call the police. She finally fell asleep but nopoliceman came. (TSN, Aug. 15, 1989, pp. 15-16)

She woke up at 6:00 oclock the following morning, and shesaw defendant in bed, this time sleeping. She waited for him towake up. When he woke up, he again got some food but healways kept the door locked. As usual, she was merely fed withbiscuit and coke. On that day, February 7, 1989, she wasagain raped three times. The first at about 6:30 to 7:00 a.m.,the second at about 8:30 9:00, and the third was after lunchat 12:00 noon. After he had raped her for the second time heleft but only for a short while. Upon his return, he caught hershouting for help but he did not understand what she wasshouting about. After she was raped the third time, he left thehouse. (TSN, Aug. 15, 1989, pp. 16-17) She again went tothe bathroom and shouted for help. After shouting for aboutfive minutes, she heard many voices. The voices were askingfor her name and she gave her name as Karen Salvacion. Aftera while, she heard a voice of a woman saying they will just callthe police. They were also telling her to change herclothes. She went from the bathroom to the room but she didnot change her clothes being afraid that should the neighborscall the police and the defendant see her in different clothes, hemight kill her. At that time she was wearing a T-shirt of theAmerican bacause the latter washed her dress. ( Id ., p. 16)

Afterwards, defendant arrived and opened the door. He askedher if she had asked for help because there were manypolicemen outside and she denied it. He told her to change herclothes, and she did change to the one she was wearing onSaturday. He instructed her to tell the police that she lefthome and willingly; then he went downstairs but he locked thedoor. She could hear people conversing but she could notunderstand what they were saying. ( Id ., p. 19)

When she heard the voices of many people who wereconversing downstairs, she knocked repeatedly at the door ashard as she could. She heard somebody going upstairs andwhen the door was opened, she saw a policeman. Thepoliceman asked her name and the reason why she wasthere. She told him she was kidnapped. Downstairs, he sawabout five policemen in uniform and the defendant was talkingto them . Nakikipag-areglo po sa mga pulis, Karenadded. The policeman told him to just explain at theprecinct. ( Id ., p. 20)

They went out of the house and she saw some of herneighbors in front of the house. They rode the car of a certainperson she called Kuya Boy together with defendant, thepoliceman, and two of her neighbors whom she called KuyaBong Lacson and one Ate Nita. They were brought to Sub-Station I and there she was investigated by a policeman. Atabout 2:00 a.m., her father arrived, followed by her mothertogether with some of their neighbors. Then they were broughtto the second floor of the police headquarters. (Id ., p. 21)

At the headquarters, she was asked several questions by theinvestigator. The written statement she gave to the police wasmarked Exhibit A. Then they proceeded to the National Bureauof Investigation together with the investigator and herparents. At the NBI, a doctor, a medico-legal officer, examinedher private parts. It was already 3:00 in early morning, of the

following day when they reached the NBI, (TSN, Aug. 15, 1989,p. 22) The findings of the medico-legal officer has beenmarked as Exhibit B.

She was studying at the St. Marys Academy in Pasay City atthe time of the Incident but she subsequently transferred toApolinario Mabini, Arellano University, situated along TaftAvenue, because she was ashamed to be the subject of conversation in the school. She first applied for transfer to JoseAbad Santos, Arellano University along Taft Avenue near theLight Rail Transit Station but she was denied admission after

she told the school the true reason for her transfer. The reasonfor their denial was that they might be implicated in thecase. (TSN, Aug. 15, 1989, p. 46)

xxx xxx xxx

After the incident, Karen has changed a lot. She does not playwith her brother and sister anymore, and she is always in astate of shock; she has been absent-minded and is ashamedeven to go out of the house. (TSN, Sept. 12, 1989, p. 10) Sheappears to be restless or sad. ( Id ., p. 11) The father praysfor P500,000.00 moral damages for Karen for this shockingexperience which probably, she would always recall until shereaches old age, and he is not sure if she could ever recoverfrom this experience. (TSN, Sept. 24, 1989, pp. 10-11)

Pursuant to an Order granting leave to publish notice of decision, said notice was published in the Manila Bulletin once aweek for three consecutive weeks. After the lapse of fifteen(15) days from the date of the last publication of the notice of

judgment and the decision of the trial court had become final,petitioners tried to execute on Bartellis dollar deposit withChina Banking Corporation. Likewise, the bank invoked Section113 of Central Bank Circular No. 960.

Thus, petitioners decided to seek relief from this Court.

The issues raised and the arguments articulated by theparties boil down to two:

May this Court entertain the instant petition despite thefact that original jurisdiction in petitions for declaratory relief rests with the lower court? She Section 113 of Central BankCircular No. 960 and Section 8 of R.A. 6426, as amended byP.D. 1246, otherwise known as the Foreign Currency DepositAct be made applicable to a foreign transient?

Petitioners aver as heretofore stated that Section 113 of Central Bank Circular No. 960 providing that Foreign currencydeposits shall be exempt from attachment, garnishment, or anyother order or process of any court, legislative body,government agency or any administrative body whatsoever. should be adjudged as unconstitutional on the groundsthat: 1.) it has taken away the right of petitioners to have thebank deposit of defendant Greg Bartelli y Northcott garnishedto satisfy the judgment rendered in petitioners favor inviolation of substantive due process guaranteed by theConstitution; 2.) it has given foreign currency depositors anundue favor or a class privilege n violation of the equalprotection clause of the Constitution; 3.) it has provided asafe haven for criminals like the herein respondent Greg Bartelliy Northcott since criminal could escape civil liability for theirwrongful acts by merely converting their money to a foreigncurrency and depositing it in a foreign currency deposit accountwith an authorized bank; and 4.) The Monetary Board, inissuing Section 113 of Central Bank Circular No. 960 hasexceeded its delegated quasi- legislative power when it tookaway: a.) the plaintiffs substantive right to have the claimsought to be enforced by the civil action secured by way of thewrit of preliminary attachment as granted by Rule 57 of theRevised Rules of Court; b.) the plaintiffs substantive right tohave the judgment credit satisfied by way of the writ of

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execution out of the bank deposit of the judgment debtor asgranted to the judgment creditor by Rule 39 of the RevisedRules of Court, which is beyond its power to do so.

On the other hand, respondent Central Bank, in itsComment alleges that the Monetary Board in issuing Section113 of CB Circular No. 960 did not exceed its power orauthority because the subject Section is copied verbatim from aportion of R.A. No. 6426 as amended by P.D. 1246. Hence, itwas not the Monetary Board that grants exemption fromattachment or garnishment to foreign currency deposits, butthe law (R.A. 6426 as amended) itself; that it does not violatethe substantive due process guaranteed by the Constitutionbecause a.) it was based on a law; b.) the law seems to bereasonable; c.) it is enforced according to regular methods of procedure; and d.) it applies to all members of a class.

Expanding, the Central Bank said; that one reason forexempting the foreign currency deposits from attachment,garnishment or any other order process of any court, is toassure the development and speedy growth of the ForeignCurrency Deposit System and the Offshore Banking System inthe Philippines; that another reason is to encourage the inflowof foreign currency deposits into the banking institutionsthereby placing such institutions more in a position to properlychannel the same to loans and investments in the Philippines,thus directly contributing to the economic development of thecountry; that the subject section is being enforced according tothe regular methods of procedure; and that it applies to allcurrency deposits made by any person and therefore does notviolate the equal protection clause of the Constitution.

Respondent Central Bank further avers that thequestioned provision is needed to promote the public interestand the general welfare; that the State cannot just stand idlyby while a considerable segment of the society suffers fromeconomic distress; that the State had to take some measuresto encourage economic development; and that in so doingpersons and property may be subjected to some kinds of restraints or burdens to secure the general welfare or publicinterest. Respondent Central Bank also alleges that Rule 39and Rule 57 of the Revised Rules of Court provide that someproperties are exempted from execution/attachment especiallyprovided by law and R.A. No. 6426 as amended is such a law,in that it specifically provides, among others, that foreigncurrency deposits shall be exempted from attachment,garnishment, or any other order or process of any court,legislative body, government agency or any administrativebody whatsoever.

For its part, respondent China Banking Corporation, asidefrom giving reasons similar to that of respondent Central Bank,also stated that respondent China Bank is not unmindful of theinhuman sufferings experienced by the minor Karen E.Salvacion from the beastly hands of Greg Bartelli; that it is notonly too willing to release the dollar deposit of Bartelli whichmay perhaps partly mitigate the sufferings petitioner hasundergone; but it is restrained from doing so in view of R.A.No. 6426 and Section 113 of Central Bank Circular No. 960;and that despite the harsh effect to these laws on petitioners,CBC has no other alternative but to follow the same.

This court finds the petition to be partly meritorious.

Petitioner deserves to receive the damages awarded toher by the court. But this petition for declaratory relief canonly be entertained and treated as a petition for mandamus torequire respondents to honor and comply with the writ of execution in Civil Case No. 89-3214.

The Court has no original and exclusive jurisdiction over apetition for declatory relief. [2] However, exceptions to this rulehave been recognized. Thus, where the petition has far-reaching implications and raises questions that should beresolved, it may be treated as one for mandamus. [3]

Here is a child, a 12-year old girl, who in her belief that allAmericans are good and in her gesture of kindness by teachinghis alleged niece the Filipino language as requested by theAmerican, trustingly went with said stranger to his apartment,and there she was raped by said American tourist GregBartelli. Not once, but ten times. She was detained therein forfour (4) days. This American tourist was able to escape fromthe jail and avoid punishment. On the other hand, the child,having received a favorable judgment in the Civil Case fordamages in the amount of more than P1,000,000.00, whichamount could alleviate the humiliation, anxiety, and

besmirched reputation she had suffered and may continue tosuffer for a long, long time; and knowing that this person whohad wronged her has the money, could not, however get theaward of damages because of this unreasonable law. Thisquestioned law, therefore makes futile the favorable judgmentand award of damages that she and her parents fullydeserve. As stated by the trial court in its decision,

Indeed, after hearing the testimony of Karen, theCourt believes that it was indoubtedly a shocking andtraumatic experience she had undergone which couldhaunt her mind for a long, long time, the mere recallof which could make her feel so humiliated, as in factshe had been actually humiliated once when she wasrefused admission at the Abad Santos High School,Arellano University, where she sought to transfer

from another school, simply because the schoolauthorities of the said High School learned aboutwhat happened to her and allegedly feared that theymight be implicated in the case.

xxx

The reason for imposing exemplary or correctivedamages is due to the wanton and bestial mannerdefendant had committed the acts of rape during aperiod of serious illegal detention of his haplessvictim, the minor Karen Salvacion whose only faultwas in her being so naive and credulous to believeeasily that defendant, an American national, couldnot have such a bestial desire on her nor capable of committing such heinous crime. Being only 12 yearsold when that unfortunate incident happened, she hasnever heard of an old Filipino adage that in everyforest there is a snake, xxx. [4]

If Karens sad fate had happened to anybodys own kin, itwould be difficult for him to fathom how the incentive forforeign currency deposit could be more important than hischilds right to said award of damages; in this case, the victimsclaim for damages from this alien who had the gall to wrong achild of tender years of a country where he is merevisitor. This further illustrates the flaw in the questionedprovisions.

It is worth mentioning that R.A. No. 6426 was enacted in1983 or at a time when the countrys economy was in ashambles; when foreign investments were minimal andpresumably, this was the reason why said statute wasenacted. But the realities of the present times show that thecountry has recovered economically; and even if not, thequestioned law still denies those entitled to due process of lawfor being unreasonable and oppressive. The intention of thequestioned law may be good when enacted. The law failed toanticipate the inquitous effects producing outright injustice andinequality such as as the case before us.

It has thus been said that-

But I also know , [5] that laws and institutions must gohand in hand with the progress of the humanmind. As that becomes more developed, moreenlightened, as new discoveries are made, new truthsare disclosed and manners and opinions change with

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the change of circumstances, institutions mustadvance also, and keep pace with the times Wemight as well require a man to wear still the coatwhich fitted him when a boy, as civilized society toremain ever under the regimen of their barbarousancestors.

In his comment, the Solicitor General correctly opined,thus:

"The present petition has far-reaching implications onthe right of a national to obtain redress for a wrong

committed by an alien who takes refuge under a lawand regulation promulgated for a purpose which doesnot contemplate the application thereof envisaged bythe allien. More specifically, the petition raises thequestion whether the protection against attachment,garnishment or other court process accorded toforeign currency deposits PD No. 1246 and CBCircular No. 960 applies when the deposit does notcome from a lender or investor but from a meretransient who is not expected to maintain the depositin the bank for long.

The resolution of this question is important for theprotection of nationals who are victimized in theforum by foreigners who are merely passing through.

xxx xxx Respondents China Banking Corporation andCentral Bank of the Philippines refused to honor thewrit of execution issued in Civil Case No. 89-3214 onthe strength of the following provision of CentralBank Circular No. 960:

Sec. 113 Exemption from attachment. Foreign currency deposits shall beexempt from attachment, garnishment,or any other order or process of anycourt, legislative body, governmentagency or any administrative bodywhatsoever.

Central Bank Circular No. 960 was issued pursuant to Section7 of Republic Act No. 6426:

Sec. 7. Rules and Regulations. TheMonetary Board of the Central Bank shallpromulgate such rules and regulations asmay be necessary to carry out theprovisions of this Act which shall takeeffect after the publication of such rulesand regulations in the Official Gazetteand in a newspaper of national circulationfor at least once a week for threeconsecutive weeks. In case the CentralBank promulgates new rules andregulations decreasing the rights of

depositors, the rules and regulations atthe time the deposit was made shallgovern.

The aforecited Section 113 was copied from Section8 of Republic Act No. 6426. As amended by P.D.1246, thus:

Sec. 8. Secrecy of Foreign Currency Deposits. -- All foreigncurrency deposits authorized under thisAct, as amended by Presidential DecreeNo. 1035, as well as foreign currencydeposits authorized under PresidentialDecree No. 1034, are hereby declared asand considered of an absolu tely

confidential nature and, except upon thewritten permission of the depositor, in noinstance shall such foreign currencydeposits be examined, inquired or lookedinto by any person, government official,bureau or office whether judicial oradministrative or legislative or any otherentity whether public orprivate: Provided, however, that saidforeign currency deposits shall be exemptfrom attachment, garnishment, or any

other order or process of any court,legislative body, government agency orany administrative body whatsoever.

The purpose of PD 1246 in according protectionagainst attachment, garnishment and other courtprocess to foreign currency deposits is stated in itswhereases, viz .:

WHEREAS, under Republic Act No. 6426,as amended by Presidential Decree No.1035, certain Philippine bankinginstitutions and branches of foreignbanks are authorized to accept depositsin foreign currency;

WHEREAS, under provisions of Presidential Decree No. 1034 authorizingthe establishment of an offshore bankingsystem in the Philippines, offshorebanking units are also authorized toreceive foreign currency deposits incertain cases;

WHEREAS, in order to assure thedevelopment and speedy growth of theForeign Currency Deposit System and theOffshore Banking System in thePhilippines, certain incentives wereprovided for under the two Systems suchas confidentiality subject to certainexceptions and tax exemptions on theinterest income of depositors who arenonresidents and are not engaged intrade or business in the Philippines;

WHEREAS, making absolute theprotective cloak of confidentiality oversuch foreign currency deposits,exempting such deposits from tax, andguaranteeing the vested right of depositors would better encourage theinflow of foreign currency deposits intothe banking institutions authorized toaccept such deposits in the Philippinesthereby placing such institutions more ina position to properly channel the sameto loans and investments in thePhilippines, thus directly contributing tothe economic development of thecountry;

Thus, one of the principal purposes of the protectionaccorded to foreign currency deposits is to assure thedevelopment and speedy growth of the ForeignCurrency Deposit system and the Offshore Banking inthe Philippines (3 rd Whereas).

The Offshore Banking System was established by PDNo. 1034. In turn, the purposes of PD No. 1034 areas follows:

WHEREAS, conditions conducive to theestablishment of an offshore banking

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system, such as political stability, agrowing economy and adequatecommunication facilities, among others,exist in the Philippines;

WHEREAS, it is in the interest of developing countries to have as wideaccess as possible to the sources of capital funds for economic development;

WHEREAS, an offshore banking systembased in the Philippines will be

advantageous and beneficial to thecountry by increasing our links withforeign lenders, facilitating the flow of desired investments into the Philippines,creating employment opportunities andexpertise in international finance, andcontributing to the national developmenteffort.

WHEREAS, the geographical location,physical and human resources, and otherpositive factors provide the Philippineswith the clear potential to develop asanother financial center in Asia;

On the other hand, the Foreign Currency Deposit

system was created by PD No. 1035. Its purpose areas follows:

WHEREAS, the establishment of anoffshore banking system in thePhilippines has been authorized under aseparate decree;

WHEREAS, a number of local commercialbanks, as depository bank under theForeign Currency Deposit Act (RA No.6426), have the resources andmanagerial competence to more activelyengage in foreign exchange transactionsand participate in the grant of foreigncurrency loans to resident corporations

and firms; WHEREAS, it is timely to expand theforeign currency lending authority of thesaid depository banks under RA 6426 andapply to their transactions the sametaxes as would be applicable totransaction of the proposed offshorebanking units;

It is evident from the above [Whereas clauses] thatthe Offshore Banking System and the ForeignCurrency Deposit System were designed to drawdeposits from foreign lenders and investors (Videsecond Whereas of PD No. 1034; third Whereas of PDNo. 1035). It is these depositors that are induced bythe two laws and given protection and incentives bythem.

Obviously, the foreign currency deposit made by atransient or a tourist is not the kind of depositencourage by PD Nos. 1034 and 1035 and givenincentives and protection by said laws because suchdepositor stays only for a few days in the countryand, therefore, will maintain his deposit in the bankonly for a short time.

Respondent Greg Bartelli, as stated, is just a touristor a transient. He deposited his dollars withrespondent China Banking Corporation only forsafekeeping during his temporary stay in thePhilippines.

For the reasons stated above, the Solicitor Generalthus submits that the dollar deposit of respondentGreg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PDNo. 1246 against attachment, garnishment or othercourt processes. [6]

In fine, the application of the law depends on the extentof its justice. Eventually, if we rule that the questioned Section113 of Central Bank Circular No. 960 which exempts fromattachment, garnishment, or any other order or process of anycourt. Legislative body, government agency or anyadministrative body whatsoever, is applicable to a foreigntransient, injustice would result especially to a citizen aggrievedby a foreign guest like accused Greg Bartelli. This wouldnegate Article 10 of the New Civil Code which provides that incase of doubt in the interpretation or application of laws, it ispresumed that the lawmaking body intended right and justiceto prevail . Ninguno non deue enriquecerse tortizerzmente condamo de otro. Simply stated, when the statute is silent orambiguous, this is one of those fundamental solutions thatwould respond to the vehement urge of conscience. (Padilla vsPadilla, 74 Phil. 377)

It would be unthinkable, that the questioned Section 113of Central Bank No. 960 would be used as a device by accusedGreg Bartelli for wrongdoing, and in so doing, acquitting theguilty at the expense of the innocent.

Call it what it may but is there no conflict of legal policyhere? Dollar against Peso? Upholding the final and executory

judgment of the lower court against the Central Bank Circularprotecting the foreign depositor? Shielding or protecting thedollar deposit of a transient alien depositor against injustice toa national and victim of a crime? This situation calls forfairness legal tyranny.

We definitely cannot have both ways and rest in the belief that we have served the ends of justice.

IN VIEW WHEREOF , the provisions of Section 113 of CBCircular No. 960 and PD No. 1246, insofar as it amends Section8 of R.A. 6426 are hereby held to be INAPPLICABLE to this casebecause of its peculiar circumstances. Respondents are hereby

REQUIRED to COMPLY with the writ of execution issued in CivilCase No. 89-3214, Karen Salvacion, et al. vs. Greg Bartelli yNorthcott, by Branch CXLIV, RTC Makati and to RELEASE topetitioners the dollar deposit of respondent Greg Bartelli yNorthcott in such amount as would satisfy the judgment.

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