Sps. Lipana v.

Development Bank of Rizal

G.R. No. 73884 September 24, 1987
Topic: Custodia Legis/Execution, Levy, Attachment, Garnishment

Facts:
Petitioners opened and maintained both time and savings deposits with herein respondent bank. Upon maturity of some of
their time deposit certificates, petitioners were not able to cash them but instead were issued a managers check which was
dishonored upon presentment. Demands for the payment of deposits having failed, petitioners moved for the issuance of a
writ of preliminary attachment for collection of a sum of money. Respondent Judge ordered the issuance of a writ and
later, rendered judgment in favor of petitioners. Meanwhile, the Monetary Board finding that respondent bank was
insolvent, decided to place it under receivership. Petitioners then moved for the execution which was granted, but was
subsequently stayed upon reconsideration. Petitioners moved to lift the stay but were denied. Hence, the instant petition.
Issue:
Whether or not the stay of execution of judgment against a bank placed under receivership is valid.
Ruling: YES.
In the instant case, the stay of the execution of judgment is warranted by the fact that respondent bank was placed under
receivership. To execute the judgment would unduly deplete the assets of respondent bank to the obvious prejudice of
other depositors and creditors, since, as aptly stated in Central Bank of the Philippines vs. Morfe, after the Monetary
Board has declared that a bank is insolvent and has ordered it to cease operations, the Board becomes the trustee of its
assets for the equal benefit of all the creditors, including depositors. The assets of the insolvent banking institution are
held in trust for the equal benefit of all creditors, and after its insolvency, one cannot obtain an advantage or a preference
over another by an attachment, execution or otherwise.
The instant petition is hereby DISMISSED.
 Provident Savings Bank v. CA
G.R. No. 97218, May 17, 1993

Facts:
Spouses Guarin obtained a loan from petitioner bank and as a security, executed a REM in its favor over a parcel of land.
Then petitioner bank was placed under receivership until it was set aside. Guarin signified its willingness to pay its
obligation in exchange for the mortgaged title. Petitioner bank could not release said title as it also served as security for
another loan obtained by Guarin for his corporation. Private respondent Chua wrote petitioner bank saying that the
mortgaged property was offered to him as payment of judgment he obtained against the Guarins. The Guarins sold the
property to Chua with the latter assuming the obligations. Chua tried to pay the loan but petitioner would not release the
title unless the second loan of Guarin was also settled.
Issue:
Whether or not a bank being placed under receivership interrupts the prescription of actions it may institute.
Ruling: YES.
When a bank is prohibited to do business by the Central Bank and a receiver is appointed for such bank, that bank would
not be able to do new business, i.e., to grant new loans or to accept new deposits.
Having arrived at the conclusion that the foreclosure is part of bank's business activity which could not have been pursued
by the receiver then because of the circumstances discussed in the Central Bank case, we are thus convinced that the
prescriptive period was legally interrupted by fuerza mayor in 1972 on account on the prohibition imposed by the
Monetary Board against petitioner from transacting business, until the directive of the board was nullified in 1981. Indeed,
the period during which the obligee was prevented by a caso fortuito from enforcing his right is not reckoned against him
(Article 1154, New Civil Code). When prescription is interrupted, all the benefits acquired so far from the possession
cease and when prescription starts anew, it will be entirely a new one. This concept should not be equated with suspension
where the past period is included in the computation being added to the period after prescription is resumed.
Consequently, when the closure of was set aside in 1981, the period of ten years within which to foreclose under Article
1142 of the New Civil Code began to run again and, therefore, the action filed on August 21, 1986 to compel petitioner to
release the mortgage carried with it the mistaken notion that petitioner's own suit foreclosure had prescribed.

(In contrast to Larrobis v. Phil Veterans Bank; this is an exception to the general rule because of peculiar circumstances)
 Fidelity Savings and Mortgage Bank v. Cenzon
G.R. No. L-46208, April 5, 1990
Topic: Interest on Deposit

Facts:
Respondent spouses Santiago maintained a savings and time deposit with petitioner bank. The Monetary Board found
petitioner bank to be insolvent and ordered for its assets to be taken charged of by the Acting Superintendent. The PDIC
paid spouses for their deposits with petitioner bank but there was still a remaining balance. The Monetary Board then
directed the liquidation of the affairs of petitioner bank and a subsequent petition for assistance and supervision in
liquidation was filed in the court. The liquidation proceedings still pending, respondent spouses sent demand letters to
petitioner bank for the payment of their deposits. The court found in favor of respondent spouses.
Issue:
Whether or not petitioner bank may be adjudged to pay interest on unpaid deposits even after its closure by the Central
Bank by reason of insolvency
Ruling: NO.
It is settled jurisprudence that a banking institution which has been declared insolvent and subsequently ordered closed by
the Central Bank of the Philippines cannot be held liable to pay interest on bank deposits which accrued during the period
when the bank is actually closed and non-operational.
In The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, we held that:
It is a matter of common knowledge, which We take judicial notice of, that what enables a bank to pay stipulated
interest on money deposited with it is that thru the other aspects of its operation it is able to generate funds to
cover the payment of such interest. Unless a bank can lend money, engage in international transactions, acquire
foreclosed mortgaged properties or their proceeds and generally engage in other banking and financing activities
from which it can derive income, it is inconceivable how it can carry on as a depository obligated to pay
stipulated interest. Conventional wisdom dictates this inexorable fair and just conclusion. And it can be said that
all who deposit money in banks are aware of such a simple economic proposition. Consequently, it should be
deemed read into every contract of deposit with a bank that the obligation to pay interest on the deposit ceases the
moment the operation of the bank is completely suspended by the duly constituted authority, the Central Bank.
From the aforecited authorities, it is manifest that petitioner cannot be held liable for interest on bank deposits which
accrued from the time it was prohibited by the Central Bank to continue with its banking operations.
The order, therefore, of the Central Bank as receiver/liquidator of petitioner bank allowing the claims of depositors and
creditors to earn interest up to the date of its closure is in line with the doctrine laid down in the jurisprudence above cited.
 Sps. Larrobis v. Philippine Veterans Bank
G.R. No. 135706, October 1, 2004
Topic: Foreclosure of Mortgage

Facts:
Petitioner spouses contracted a monetary loan with herein respondent bank secured by a REM executed on their lot.
Respondent bank then went bankrupt and was placed under receivership/liquidation by the Central Bank. Sometime after,
respondent bank sent a demand letter for the amount of the insurance premiums advanced by it over the mortgaged
property of petitioners. More than 14 years from the time the loan became due and demandable, respondent bank moved
for the extrajudicial foreclosure of the mortgaged property and was sold to it as being the lone bidder. Petitioners moved
to declare the foreclosure null and void contending that the respondent bank being placed under receivership did not
interrupt the running of the prescriptive period. RTC ruled in favor of respondents.
Issues:
(1) Whether or not foreclosure of mortgage is included in the acts prohibited during receivership/liquidation proceedings
(2) Whether or not the period within which the respondent bank was placed under receivership and liquidation
proceedings interrupted the running of the prescriptive period in bringing actions.
Ruling: NO.
(1) While it is true that foreclosure falls within the broad definition of "doing business," it should not be considered
included, however, in the acts prohibited whenever banks are "prohibited from doing business" during receivership and
liquidation proceedings. This is consistent with the purpose of receivership proceedings, i.e., to receive collectibles and
preserve the assets of the bank in substitution of its former management, and prevent the dissipation of its assets to the
detriment of the creditors of the bank.
There is also no truth to respondents claim that it could not continue doing business from the time it was under
receivership. As correctly pointed out by petitioner, respondent was even able to send petitioners a demand letter, through
Francisco Go, for the insurance premiums advanced by respondent bank over the mortgaged property of petitioners. How
it could send a demand letter on unpaid insurance premiums and not foreclose the mortgage during the time it was
"prohibited from doing business" was not adequately explained by respondent.
(2) A close scrutiny of the Provident case shows that the Court arrived at said conclusion, which is an exception to the
general rule, due to the peculiar circumstances of Provident Savings Bank at the time.
The Superintendent of Banks, which was instructed to take charge of the assets of the bank in the name of the Monetary
Board, had no power to act as a receiver of the bank and carry out the obligations specified in Sec. 29 of the Central Bank
Act.
In this case, it is not disputed that Philippine Veterans Bank was placed under receivership by the Monetary Board of the
Central Bank pursuant to Section 29 of the Central Bank Act on insolvency of banks. Unlike Provident Savings Bank,
there was no legal prohibition imposed upon herein respondent to deter its receiver and liquidator from performing their
obligations under the law. Thus, the ruling laid down in the Provident case cannot apply in the case at bar.

(In contrast to Provident Savings Bank v. CA; this is the general rule)
 Vivas v. Monetary Board
G.R. No. 191424, August 7, 2013
Topic: Close Now, Hear Later Scheme

Facts:
Petitioner Vivas and his principals acquired the controlling interest in Rural Bank Faire, a bank whose corporate life has
already expired. BSP authorized extending the banks corporate life and was later renamed to EuroCredit Community
Bank (ECBI). Through a series of examinations conducted by the BSP, the findings bore that ECBI was illiquid,
insolvent, and was performing transactions which are considered unsafe and unsound banking practices. Consequently
ECBI was placed under receivership. Petitioner contends that the implementation of the questioned resolution was tainted
with arbitrariness and bad faith, stressing that ECBI was placed under receivership without due and prior hearing in
violation of his and the banks right to due process.
Issue:
Whether or not ECBI was entitled to due and prior hearing before its being placed under receivership.
Ruling: YES.
In the case of Bangko Sentral Ng Pilipinas Monetary Board v. Hon. Antonio-Valenzuela, the Court reiterated the doctrine
of "close now, hear later," stating that it was justified as a measure for the protection of the public interest. Thus:
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.
In Rural Bank of Buhi, Inc. v. Court of Appeals, the Court also wrote that
x x x due process does not necessarily require a prior hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire consequences of a prior hearing: bank runs would be the
order of the day, resulting in panic and hysteria. In the process, fortunes may be wiped out and disillusionment
will run the gamut of the entire banking community.
The doctrine is founded on practical and legal considerations to obviate unwarranted dissipation of the banks assets and
as a valid exercise of police power to protect the depositors, creditors, stockholders, and the general public. Swift,
adequate and determined actions must be taken against financially distressed and mismanaged banks by government
agencies lest the public faith in the banking system deteriorate to the prejudice of the national economy.
 Cornista-Domingo v. NLRC
G.R. No. 156761, October 17, 2006
Topic: Receivership

Facts:
Respondent Philippine Veterans Banks was placed under receivership and as a consequence adopted a retrenchment and
reorganization program. The Monetary Board then ordered for respondent banks liquidation which resulted to the
termination of employment of all its employees and the payment of separation pays and other benefits. The labor union
moved for the prohibition of the liquidation proceedings. Then, Congress passed a law authorizing the Central Bank to
reopen respondent bank. Thereafter several former employees of respondent bank initiated a series of cases for
reinstatement. Respondent bank and the Union entered into a Compromise Agreement for the amicable settlements of all
other cases and claims pending with the NLRC. A number of the employees, herein petitioners, contested the compromise
agreement. Separate petitions were then filed by respondent bank, Union and herein petitioners which were remanded to
the CA and thereafter consolidated. CA declared the compromise agreement null and void. Petitioners argue that the law
which reopened and rehabilitated respondent bank gave them right to be reinstated.
Issue:
Whether or not the law which reopened and rehabilitated respondent bank entitled petitioners herein for reinstatement.
Ruling: NO.
As we see it, upon implementation of Monetary Board Resolution No. 612 and prior to the passage of R.A. No. 7169, the
Bank ceased to exist. Its subsequent rehabilitation was not an ordinary rehabilitation. R.A. No. 7169 had to be passed as a
legislative fiat to breathe life into the Bank. While it is true that the Bank used its old name, a new law had to be enacted
to restructure its outstanding liabilities. As it is, the Bank's present state of finances, the enormous cost of backwages and
other benefits that have to be paid its employees seeking to be reinstated would surely put an end to the economic viability
of the Bank.
The enactment of R.A. No. 7169 did not nullify Monetary Board Resolution No. 612 which earlier placed the Bank under
liquidation and caused the termination of employment of the petitioners. The Bank's subsequent rehabilitation did not, by
any test of reason, "revive" what was already a dead relationship between the petitioners and the Bank. Neither did such
rehabilitation affect the Court's pronouncement in Philippine Veterans Bank Employees Union-NUBE v. Philippine
Veterans Bank that the actions of the Monetary Board and its duly appointed liquidator were valid and that the former
employees' claim for back wages must be rejected as they were lawfully separated. Reinstatement is a relief accorded only
to an employee who was illegally dismissed.
 Rural Bank of San Miguel v. Monetary Board
G.R. No. 150886, February 16, 2007
Topic: Receivership

Facts:
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.
Banco Filipino and other cases petitioners cite were decided using Section 29 of the old law. Thus in Banco Filipino, we
ruled that an "examination [conducted] by the head of the appropriate supervising or examining department or his
examiners or agents into the condition of the bank" is necessary before the MB can order its closure.
However, RA 265, including Section 29 thereof, was expressly repealed by RA 7653 which took effect in 1993.
Resolution No. 105 was issued on January 21, 2000. Hence, petitioners reliance on Banco Filipino which was decided
under RA 265 was misplaced.
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. We cannot make it a requirement in the absence of legal basis.
 In Re: Petition for Assistance in the Liquidation of the Rural Bank of Bokod v. BIR
G.R. No. 158261, December 18, 2006
Topic: Receivership

Facts:
Rural Bank of Bokod (RBBI) was placed under receivership following the special examination conducted by the BSP
wherein various loan irregularities were uncovered. It was later then concluded that RBBI remained in insolvent financial
condition and can no longer safely resume into business hence its liquidation ordered. Subsequently, the Monetary Board
transferred to herein petitioner PDIC the receivership/liquidation of RBBI. PDIC then filed a Motion for Approval of
Project Distribution before the RTC. Respondent BIR manifested that PDIC should first secure a tax clearance certificate
before it could proceed with the dissolution of RBBI. RTC ruled in favor of BIR.
Issue:
Whether or not a bank placed under receivership still needs to secure a tax clearance certificate before its project of
distribution of assets is approved.
Ruling: NO.
First, Section 52(C) of the Tax Code of 1997 and the BIR-SEC Regulations No. 1 regulate the relations only as between
the SEC and the BIR, making a certificate of tax clearance a prior requirement before the SEC could approve the
dissolution of a corporation. In Spec. Proc. No. 91-SP-0060 pending before the RTC, RBBI was placed under receivership
and ordered liquidated by the BSP, not the SEC; and the SEC is not even a party in the said case, although the BIR is.
This Court cannot find any basis to extend the SEC requirements for dissolution of a corporation to the liquidation
proceedings of RBBI before the RTC when the SEC is not even involved therein.
Section 30 of the New Central Bank Act lays down the proceedings for receivership and liquidation of a bank. The said
provision is silent as regards the securing of a tax clearance from the BIR. The omission, nonetheless, cannot compel this
Court to apply by analogy the tax clearance requirement of the SEC, as stated in Section 52(C) of the Tax Code of 1997
and BIR-SEC Regulations No. 1, since, again, the dissolution of a corporation by the SEC is a totally different proceeding
from the receivership and liquidation of a bank by the BSP. This Court cannot simply replace any reference by Section
52(C) of the Tax Code of 1997 and the provisions of the BIR-SEC Regulations No. 1 to the "SEC" with the "BSP." To do
so would be to read into the law and the regulations something that is simply not there, and would be tantamount to
judicial legislation.
It should be noted that there are substantial differences in the procedure for involuntary dissolution and liquidation of a
corporation under the Corporation Code, and that of a banking corporation under the New Central Bank Act, so that the
requirements in one cannot simply be imposed in the other.
 Central Bank of the Philippines v. CA
G.R. No. 88353, May 8, 1992
Topic: Judicial Review of Close Now, Hear Later

Facts:
Petitioner Central Bank and conservator claims that during the regular examination of herein respondent Producers Bank
of the Philippines (PBP) it stumbled upon some highly questionable loans which the latter extended to PBP owners
themselves without collateral. At the height of controversy of discovering these anomalous loans, it triggered a bank-run
in PBP which resulted in continuous over-drawings on the banks demand deposit account with the CB. The over-
drawings continued increase prompted the MB to place PBP under conservatorship. PBP failing to submit a rehabilitation
plan, the MB proposed its own which it considers as viable but PBP made no response. A few days later, PBP filed a
complaint before the RTC contending that its placement under conservatorship was unwarranted, ill-motivated, illegal,
utterly unnecessary and unjustified and that the appointed conservators committed bank frauds and abuses. RTC ruled all
the way in favor of PBP. Hence petitioners filed separate petitions which were then consolidated before the Court.
Issue:
Whether or not PBP was deprived of due process before being placed under conservatorship
Ruling: NO.
The fact that PBP is grossly overdrawn on its reserve account with the CB (up to P1.233 billion as of 13 February 1990) is
not disputed by PBP. This enormous overdraft evidences the patent inability of the bank's management to keep PBP
liquid. This fact alone sufficiently justifies the remedial measures taken by the Monetary Board.
MB Resolutions Nos. 649 and 751 were not promulgated to arbitrarily divest the present stockholders of control over
PBP, as is claimed by the latter. The same contemplates an effective and viable plan to revive and restore PBP. It is to be
noted that before issuing these resolutions, the MB gave the management of PBP ample opportunity to submit a viable
rehabilitation plan for the bank. MB Resolution Nos. 751 merely reiterated the requirement set forth in Resolution No.
649 for PBP to identify and submit the list of new stockholders who will infuse new capital into the bank for CB approval.
In this Resolution, the MB gave PBP's stockholders one (1) week from notice within which to signify their acceptance or
rejection of the proposed rehabilitation plan.
The foregoing resolutions refer to a recommended rehabilitation plan. What was conveyed to PBP was a mere proposal.
There was nothing in the resolutions to indicate that the plan was mandatory. On the contrary, PBP was given a specific
period within which to accept or reject the plan. And, as petitioners correctly pointed out, the plan was not self-
implementing. The warning given by the MB that should said proposal be rejected, the CB "will take appropriate
alternative actions on the matter," does not make the proposed rehabilitation plan compulsory. Whether or not there is a
rehabilitation plan agreed upon between PBP and the MB, the CB is authorized under R.A. No. 265 to take appropriate
measures to protect the interest of the bank's depositors as well as of the general public.
There is nothing objectionable to the actions of the MB. We, therefore, find to be completely without legal or evidentiary
basis the contention that the impugned resolutions are arbitrary, illegal and made in bad faith.
 Simex International v. CA
G.R. No. 88013, March 19, 1990
Topic: Fiduciary Nature

Facts:
Petitioner, a private corporation engaged in the exportation of food products, was a depositor maintaining a checking
account with respondent Traders Royal Bank. Petitioner deposited to its account increasing its balance and subsequently,
issued several checks but was surprised to learn that it had been dishonored for insufficient funds. As a consequence,
petitioner received demand letters from its suppliers for the dishonored checks. Investigation disclosed that the deposit
was not credited to it. The error was rectified and the dishonored checks were consequently paid. Petitioner demanded
reparation from respondent bank for its gross and wanton negligence but the later did not heed. Petitioner then filed before
the RTC which later held that respondent bank was guilty of negligence but petitioner nonetheless was not entitled to
moral damages. CA affirmed.
Issue:
Whether or not petitioner is entitled to damages due to respondent banks negligence.
Ruling: YES.
As the Court sees it, the initial carelessness of the respondent bank, aggravated by the lack of promptitude in repairing its
error, justifies the grant of moral damages. This rather lackadaisical attitude toward the complaining depositor constituted
the gross negligence, if not wanton bad faith, that the respondent court said had not been established by the petitioner. We
shall recognize that the petitioner did suffer injury because of the private respondent's negligence that caused the dishonor
of the checks issued by it. The immediate consequence was that its prestige was impaired because of the bouncing checks
and confidence in it as a reliable debtor was diminished.
The point is that as a business affected with public interest and because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their
relationship. In the case at bar, it is obvious that the respondent bank was remiss in that duty and violated that relationship.
What is especially deplorable is that, having been informed of its error in not crediting the deposit in question to the
petitioner, the respondent bank did not immediately correct it but did so only one week later or twenty-three days after the
deposit was made. It bears repeating that the record does not contain any satisfactory explanation of why the error was
made in the first place and why it was not corrected immediately after its discovery. Such ineptness comes under the
concept of the wanton manner contemplated in the Civil Code that calls for the imposition of exemplary damages.
 Citibank v. Sps. Cabamongan
G.R. No. 146918, May 2, 2006
Topic: Fiduciary Nature

Facts:
Respondent spouses opened a joint foreign currency time deposit in trust for their sons at petitioners Makati branch. Prior
to maturity, a person claiming to be Carmelita Cabamongan pre-terminated the said account upon presenting identification
cards. Though not being able to surrender the Original Certificate of Deposit, the money was released to her despite the
release and waiver documents not being notarized. Respondent spouses learned of the incident and informed petitioner
bank that Carmelita could not have pre-terminated the account since she was in the US at that time. The spouses made a
formal demand of payment of the deposit and consequently, filed a complaint when petitioner refused to pay. Petitioner
bank insists that it was not negligent of its duties since the deposit was released upon proper identification and
verification. RTC ruled in favor of the spouses. CA affirmed.
Issue:
Whether or not petitioner bank was negligent in its duties as to be liable for damages
Ruling: YES.
The Court has repeatedly emphasized that, since the banking business is impressed with public interest, of paramount
importance thereto is the trust and confidence of the public in general. Consequently, the highest degree of diligence is
expected, and high standards of integrity and performance are even required, of it. By the nature of its functions, a bank is
"under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature
of their relationship."
In this case, it has been sufficiently shown that the signatures of Carmelita in the forms for pretermination of deposits are
forgeries. Citibank, with its signature verification procedure, failed to detect the forgery. Its negligence consisted in the
omission of that degree of diligence required of banks. The Court has held that a bank is "bound to know the signatures of
its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot
ordinarily charge the amount so paid to the account of the depositor whose name was forged." Such principle equally
applies here.
The Court agrees with the observation of the CA that Citibank, thru Account Officer San Pedro, openly courted disaster
when despite noticing discrepancies in the signature and photograph of the person claiming to be Carmelita and the failure
to surrender the original certificate of time deposit, the pretermination of the account was allowed. Even the waiver
document was not notarized, a procedure meant to protect the bank. For not observing the degree of diligence required of
banking institutions, whose business is impressed with public interest, Citibank is liable for damages.
 China Bank v. Lagon
G.R. No. 160843, July 11, 2006
Topic: Fiduciary Nature

Facts:
Jao asked for a credit accommodation from petitioner bank to be secured by a parcel of land in the name of Maria Lago,
as authorized by a SPA. Jao obtained more various loans on the same line, all of which were secured by mortgage over the
lots of Maria Lago again allegedly through a SPA. The loans matured but were unpaid and petitioner bank moved for the
extra-judicial foreclosure of the said properties but were prevented by a TRO of the court. During the pendency of the
case, Jao and Maria Lagon died. The court then rendered a decision in favor of petitioner bank finding that the signatures
in the SPA were authentic. CA reversed the decision and declared the SPA and mortagages null and void.
Issue:
Whether or not petitioner bank exercised due diligence in extending the loan to Jao.
Ruling: NO.
Moreover, petitioner could not be considered a mortgagee in good faith. It had knowledge that respondent was in the
United States at the time the SPAs were allegedly executed, yet, it did not question their due execution. Though petitioner
is not expected to conduct an exhaustive investigation on the history of the mortgagor's title, it cannot be excused from the
duty of exercising the due diligence required of a banking institution. Banks are expected to exercise more care and
prudence than private individuals in their dealings, even those that involve registered lands, for their business is affected
with public interest.
 Gonzales v. PCIB
G.R. No. 180257, February 23, 2011
Topic: Fiduciary Nature

Facts:
Petitioner was a client of PCIB for a good 15 years and was granted a credit line with the aggregate amount of his
accounts as collateral for the availment of the said line. Petitioner served as an accommodation party to spouses Panlilio
who obtained loans covered by promissory notes, notably stating that petitioner is solidary liable with the spouses for the
payment of the loans. The loan was granted and the spouses received the proceeds but subsequently defaulted in the
payment of said dues. As a result, the credit line was terminated and the FCD account of petitioner was frozen. In the
meantime, Gonzales issued a check but was dishonored which resulted to a falling out and a heated argument causing him
great embarrassment and humiliation. Petitioner filed a case with the RTC on account of the alleged unjust dishonor of the
check. RTC ruled in favor of PCIB. CA affirmed in toto.
Issue:
Whether or not PCIB acted in bad faith by dishonoring the check of petitioner.
Ruling: YES.
In the instant case, Gonzales suffered from the negligence and bad faith of PCIB. From the testimonies of Gonzales
witnesses, particularly those of Dominador Santos and Freddy Gomez, the embarrassment and humiliation Gonzales has
to endure not only before his former close friend Unson but more from the members and families of his friends and
associates in the PCA, which he continues to experience considering the confrontation he had with Unson and the
consequent loss of standing and credibility among them from the fact of the apparent bouncing check he issued. Credit is
very important to businessmen and its loss or impairment needs to be recognized and compensated.
Even in the absence of malice or bad faith, a depositor still has the right to recover reasonable moral damages, if the
depositor suffered mental anguish, serious anxiety, embarrassment, and humiliation. Although incapable of pecuniary
estimation, moral damages are certainly recoverable if they are the proximate result of the defendants wrongful act or
omission. The factual antecedents bolstered by undisputed testimonies likewise show the mental anguish and anxiety
Gonzales had to endure with the threat of Unson to file a suit. Gonzales had to pay Unson PhP 250,000, while his FCD
account in PCIB was frozen, prompting Gonzales to demand from PCIB and to file the instant suit.
 Ursal v. CA
G.R. No. 142411, October 14, 2005
Topic: Fiduciary Nature

Facts:
Spouses Moneset are registered owners of a parcel of land and they executed on it a Contract to Sell in favor of petitioner
Ursal. Petitioner paid the monthly installments but stopped due to the spouses failure to deliver the TCT. The land was
subject of an absolute deed of sale in favor of Dr. Canora, Jr. and was sold again with pacto de retro. The land was
mortgaged with respondent Rural Bank of Larena and corresponding annotations to the title were made. For failure of the
spouses to pay the loan, the bank served a notice of extra-judicial foreclosure. Petitioner moved for the declaration of the
non-effectivity of the mortgage and the payment of damages alleging that there was fraud/bad faith in the part of the
spouses and with the bank for granting the REM in spite knowing that the property was in possession of petitioner. RTC
ruled in favor of petitioner but maintained that the property be foreclosed. CA affirmed in toto.
Issue:
Whether or not respondent bank acted in bad faith by failing to look beyond the TCT of the property before a loan may be
extended upon it.
Ruling: YES.
We agree. Banks cannot merely rely on certificates of title in ascertaining the status of mortgaged properties; as their
business is impressed with public interest, they are expected to exercise more care and prudence in their dealings than
private individuals. Indeed, the rule that persons dealing with registered lands can rely solely on the certificate of title does
not apply to banks.
As enunciated in Cruz vs. Bancom:
Respondent is not an ordinary mortgagee; it is a mortgagee-bank. As such, unlike private individuals, it is
expected to exercise greater care and prudence in its dealings, including those involving registered lands. A
banking institution is expected to exercise due diligence before entering into a mortgage contract. The
ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and
indispensable part of its operations.
[Our agreement with petitioner on this point of law, notwithstanding, we are constrained to refrain from granting the
prayers of her petition. The reason is that, the contract between petitioner and the Monesets being one of "Contract to Sell
Lot and House," petitioner, under the circumstances, never acquired ownership over the property and her rights were
limited to demand for specific performance from the Monesets, which at this juncture however is no longer feasible as the
property had already been sold to other persons.]
 UCPB v. Basco
G.R. No. 142668, August 31, 2004
Topic: Fiduciary Nature

Facts:
Respondent Basco had been employed with petitioner UCPB for 17 years and also worked as an underwriter with Coco
Life, a subsidiary of UCPB. Respondent was terminated of his employment with the bank for grave abuse of discretion
and authority and breach of trust as Bank Operations Manager and thereafter filed a complaint for illegal dismissal. The
FVP of UCPB issued a memorandum to its Security Department instructing it not to allow respondent access to all bank
premises. Respondents counsel requested for reconsideration but petitioner bank informed him that the request could not
be granted. Sometime after, respondent went to petitioners Makati branch to receive a check and deposit money for a
friend. Respondent alleges that while waiting for his transaction, two security guards approached him and told him to
leave the premises. Respondent pleaded that he be allowed to finish his transactions before leaving and was allowed.
Thereafter, respondent was motioned by a bank employee to get the check he was to receive but the security guard tapped
and prevented him from approaching. The bank employee then walked towards the respondent to hand him the check.
Because of tremendous humiliation and embarrassment, respondent instituted this action for damages against petitioner
with the RTC. The trial court ruled in favor of respondent. CA affirmed but deleted the awards for moral and exemplary
damages.
Issue:
Whether or not the petitioner bank abused its right when it issued, through petitioner Ongsiapco, the Memorandum
barring the respondent access to all bank premises;
Ruling: YES.
We agree with the respondent bank that it has the right to exclude certain individuals from its premises or to limit their
access thereto as to time, to protect, not only its premises and records, but also the persons of its personnel and its
customers/clients while in the premises. After all, by its very nature, the business of the petitioner bank is so impressed
with public trust; banks are mandated to exercise a higher degree of diligence in the handling of its affairs than that
expected of an ordinary business enterprise. Banks handle transactions involving millions of pesos and properties worth
considerable sums of money. The banking business will thrive only as long as it maintains the trust and confidence of its
customers/clients. Indeed, the very nature of their work, the degree of responsibility, care and trustworthiness expected of
officials and employees of the bank is far greater than those of ordinary officers and employees in the other business
firms. Hence, no effort must be spared by banks and their officers and employees to ensure and preserve the trust and
confidence of the general public and its customers/clients, as well as the integrity of its records and the safety and well
being of its customers/clients while in its premises. For the said purpose, banks may impose reasonable conditions or
limitations to access by non-employees to its premises and records, such as the exclusion of non-employees from the
working areas for employees, even absent any imminent or actual unlawful aggression on or an invasion of its properties
or usurpation thereof, provided that such limitations are not contrary to the law. [General Rule]
On its face, the Memorandum barred the respondent, a stockholder of the petitioner bank and one of its depositors, from
gaining access to all bank premises under all circumstances. The said Memorandum is all-embracing and admits of no
exceptions whatsoever. Moreover, the security guards were enjoined to strictly implement the same.
We agree that the petitioner may prohibit non-employees from entering the working area of the ATM section. However,
under the said Memorandum, even if the respondent wished to go to the bank to encash a check drawn and issued to him
by a depositor of the petitioner bank in payment of an obligation, or to withdraw from his account therein, or to transact
business with the said bank and exercise his right as a depositor, he could not do so as he was barred from entry into the
bank. Even if the respondent wanted to go to the petitioner bank to confer with the corporate secretary in connection with
his shares of stock therein, he could not do so, since as stated in the Memorandum of petitioner Ongsiapco, he would not
be allowed access to all the bank premises. The said Memorandum, as worded, violates the right of the respondent as a
stockholder or a depositor of the petitioner bank, for being capricious and arbitrary.
 BPI Family Savings v. First Metro Investment
G.R. No. 132390, May 21, 2004
Topic: Debtor Creditor

Facts:
Respondent FMIC an investment house, through its EVP Ong, opened a current account amounting P100M with
petitioners San Francisco Del Monte branch upon the request of his friend which is a close acquaintance of said banks
branch manager with the latters aim of increasing the deposit level in his branch. Petitioner through its SFDM branch
manager guaranteed the payment of deposit by the FMIC with interest on the condition that the interest is to be paid in
advance. An agreement was reached between the parties and subsequently petitioner paid FMIC upon clearance of the
latters check deposit. However, on the basis of an Authority to Debit signed by the EVP and Senior Manager of FMIC,
petitioner transferred P80M from FMCIs current account to the savings account of one Tevesteco, a stevedoring
company. FMIC denied having authorized the transfer of its funds claiming that the signatures were falsified. In order to
recover immediately its deposit, FMCI issued a check payable to itself and drawn on its deposit but was dishonored upon
upon presentation for payment. Thus, FMIC filed a complaint with the RTC which then ruled in their favor. CA affirmed.
Issue:
Whether petitioner was remiss in its fiduciary duty.
Ruling: YES.
Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million and the fixing of the
interest rate were pursuant to its (petitioners) internal procedures. Petitioners stance is a futile attempt to evade an
obligation clearly established by the intent of the parties. What transpires in the corporate board room is entirely an
internal matter. Hence, petitioner may not impute negligence on the part of respondents representative in failing to find
out the scope of authority of petitioners Branch Manager. Indeed, the public has the right to rely on the trustworthiness of
bank managers and their acts. Obviously, confidence in the banking system, which necessarily includes reliance on bank
managers, is vital in the economic life of our society.
Thus, we uphold the finding of both lower courts that petitioner failed to exercise that degree of diligence required by the
nature of its obligations to its depositors. A bank is under obligation to treat the accounts of its depositors with meticulous
care, whether such account consists only of a few hundred pesos or of million of pesos. Here, petitioner cannot claim it
exercised such a degree of care required of it and must, therefore, bear the consequence.
 Guingona, Jr. v. City Fiscal of Manila
G.R. No. L-60033, April 4, 1984
Topic: Debtor Credit Relationship

Facts:
Private respondent Clement David invested with the National Savings and Loan Association (NSLA) placed on 9 deposits
through the inducement of an Australian national who was allegedly a close associate of petitioners herein. NSLA was
then placed under receivership by the Central Bank. David filed claims for his and his sisters investments and received a
report that only a portion of the investments they claim were entered in the records of NSLA. David alleged that there was
misappropriation of funds and violation of Central Bank circulars, hence charged petitioners herein with estafa. Petitioners
moved to dismiss the charges on the ground that Davids claims comprised a purely civil obligation which was itself
novated.
Issue:
Whether or not the criminal complaint for estafa will prosper.
Ruling: NO.
It must be pointed out that when private respondent David invested his money on nine and savings deposits with the
aforesaid bank, the contract that was perfected was a contract of simple loan or mutuum and not a contract of deposit.
Hence, the relationship between the private respondent and the Nation Savings and Loan Association is that of creditor
and debtor; consequently, the ownership of the amount deposited was transmitted to the Bank upon the perfection of the
contract and it can make use of the amount deposited for its banking operations, such as to pay interests on deposits and to
pay withdrawals. While the Bank has the obligation to return the amount deposited, it has, however, no obligation to
return or deliver the same money that was deposited. And, the failure of the Bank to return the amount deposited will not
constitute estafa through misappropriation punishable under Article 315, par. l(b) of the Revised Penal Code, but it will
only give rise to civil liability over which the public respondents have no- jurisdiction.
But even granting that the failure of the bank to pay the time and savings deposits of private respondent David would
constitute a violation of paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any incipient criminal
liability was deemed avoided, because when the aforesaid bank was placed under receivership by the Central Bank,
petitioners Guingona and Martin assumed the obligation of the bank to private respondent David, thereby resulting in the
novation of the original contractual obligation arising from deposit into a contract of loan and converting the original trust
relation between the bank and private respondent David into an ordinary debtor-creditor relation between the petitioners
and private respondent. Consequently, the failure of the bank or petitioners Guingona and Martin to pay the deposits of
private respondent would not constitute a breach of trust but would merely be a failure to pay the obligation as a debtor.
 Paulino Gullas v. PNB
G.R. No. L-43191, November 13, 1935
Topic: Debtor Credit Relationship

Facts:
Petitioner Gullas maintains a current account with herein respondent PNB. He together with one Pedro Lopez signed as
endorsers of a Warrant issued by the US Veterans Bureau payable to the order of one Francisco Bacos. PNB cashed the
check but was subsequently dishonored by the Insular Treasurer. PNB then sent notices to petitioner which could not be
delivered to him at the time because he was in Manila. PNB in the letter informed the petitioner the outstanding balance
on his account was applied to the part payment of the dishonored check. Upon petitioners return, he received the notice
of dishonor and immediately paid the unpaid balance of the warrant. As a consequence of these, petitioner was
inconvenienced when his insurance was not paid due to lack of funds and was publicized widely at his area to his
mortification.
Issue:
Whether or not PNB has the right to apply petitioners deposit to his debt to the bank.
Ruling: GR YES. (But the case is an exception)
As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the
part of a depositor. The Civil Code contains provisions regarding compensation (set off) and deposit. The portions of
Philippine law provide that compensation shall take place when two persons are reciprocally creditor and debtor of each
other. In this connection, it has been held that the relation existing between a depositor and a bank is that of creditor and
debtor.
Starting, therefore, from the premise that the Philippine National Bank had with respect to the deposit of Gullas a right of
set off, we next consider if that remedy was enforced properly. The fact we believe is undeniable that prior to the mailing
of notice of dishonor, and without waiting for any action by Gullas, the bank made use of the money standing in his
account to make good for the treasury warrant.
Gullas was merely an indorser and had issued in good faith. As to an indorser, the situation is different and notice should
actually have been given him in order that he might protect his interests. We accordingly are of the opinion that the action
of the bank was prejudicial to Gullas.
 Lucman v. Malawi
G.R. No. 159794, December 19, 2006
Topic: Debtor Credit Relationship

Facts:
Respondents were the incumbent barangay chairmen of their respective barangays prior to the May 1997 barangay
elections. The May 1997 failed barangay elections resulted to a special election which likewise failed. Consequently,
respondents remained in office in a holdover capacity. Then, LBP was selected as the government depositary bank for the
IRAs of the barangays headed by respondents. Respondents had to open new accounts in behalf of their government units
with the proper LBP branch to withdraw their IRAs but were refused by petitioner unless the requirements were met
Respondents were eventually allowed to open but were not allowed to withdraw the IRA funds in the absence of the
requisite Accountants advice. Thereafter, some other persons presented themselves before petitioner as the new
barangays and to them, petitioner released the IRA funds. Respondents moved to compel petitioner to release to them the
IRA funds. RTC and CA ruled in favor of respondents.
Issue:
Whether or not respondents have no legal personality to institute the petition for mandamus in their own names since the
IRAs rightfully belong to the respective barangays and not to them.
Ruling:
By virtue of the deposits, there exists between the barangays as depositors and LBP a creditor-debtor relationship. Fixed,
savings, and current deposits of money in banks and similar institutions are governed by the provisions concerning simple
loan. In other words, the barangays are the lenders while the bank is the borrower.
This Court elucidated on the matter in Guingona, Jr., et al. v. The City Fiscal of Manila, et al., citing Serrano v. Central
Bank of the Philippines, thus:
Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of
bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on
loans (Art. 1980, Civil Code; Gullas v. Phil. National Bank, 62 Phil. 519). Current and savings deposits are loans
to a bank because it can use the same. The petitioner here in making time deposits that earn interest with
respondent Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner. Failure of the respondent Bank to honor the time deposit is
failure to pay its obligation as a debtor and not a breach of trust arising from a depository's failure to return the
subject matter of the deposit.
The relationship being contractual in nature, mandamus is therefore not an available remedy since mandamus does not lie
to enforce the performance of contractual obligations.
 Ejercito v. Sandiganbayan
G.R. Nos. 157294-95, November 30, 2006
Topic: Trust Accounts Protected R.A. No. 1405

Facts:
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.
Issue:
(1) Whether or not the trust accounts of petitioner are covered by the term deposits as used in R.A. No. 1405
(2) Whether or not plunder is neither bribery nor dereliction of duty not exempted from protection of R.A. No. 1405
(3) Whether or not the unlawful examination of bank accounts shall render the evidence obtained therefrom inadmissible
in evidence.
Ruling:
(1) 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.
The policy behind the law is laid down in Section 1. If the money deposited under an account may be used by banks for
authorized loans to third persons, then such account, regardless of whether it creates a creditor-debtor relationship
between the depositor and the bank, falls under the category of accounts which the law precisely seeks to protect for the
purpose of boosting the economic development of the country.
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.
(2) NO. Cases of unexplained wealth are similar to cases of bribery or dereliction of duty and no reason is seen why these
two classes of cases cannot be excepted from the rule making bank deposits confidential. The policy as to one cannot be
different from the policy as to the other. This policy expresses the notion that a public office is a public trust and any
person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to his duty, is open to
public scrutiny.
The crime of bribery and the overt acts constitutive of plunder are crimes committed by public officers, and in either case
the noble idea that "a public office is a public trust and any person who enters upon its discharge does so with the full
knowledge that his life, so far as relevant to his duty, is open to public scrutiny" applies with equal force.
Plunder being thus analogous to bribery, the exception to R.A. 1405 applicable in cases of bribery must also apply to
cases of plunder.
(3) NO. Petitioners attempt to make the exclusionary rule applicable to the instant case fails. R.A. 1405, it bears noting,
nowhere provides that an unlawful examination of bank accounts shall render the evidence obtained therefrom
inadmissible in evidence. Section 5 of R.A. 1405 only states that "[a]ny violation of this law will subject the offender
upon conviction, to an imprisonment of not more than five years or a fine of not more than twenty thousand pesos or both,
in the discretion of the court."
Even assuming arguendo, however, that the exclusionary rule applies in principle to cases involving R.A. 1405, the Court
finds no reason to apply the same in this particular case. Clearly, the "fruit of the poisonous tree" doctrine presupposes a
violation of law. If there was no violation of R.A. 1405 in the instant case, then there would be no "poisonous tree" to
begin with, and, thus, no reason to apply the doctrine.

Additional Note: (in contrast to Marquez v. Desierto)

The Marquez ruling notwithstanding, the above-described examination by the Ombudsman of petitioners bank accounts,
conducted before a case was filed with a court of competent jurisdiction, was lawful.
For the Ombudsman issued the subpoenas bearing on the bank accounts of petitioner about four months before
Marquez was promulgated on June 27, 2001.
When this Court construed the Ombudsman Act of 1989, in light of the Secrecy of Bank Deposits Law in Marquez, that
"before an in camera inspection may be allowed there must be a pending case before a court of competent jurisdiction", it
was, in fact, reversing an earlier doctrine found in Banco Filipino Savings and Mortgage Bank v. Purisima.
Banco Filipino involved subpoenas duces tecum issued by the Office of the Ombudsman, then known as the Tanodbayan,
in the course of its preliminary investigation of a charge of violation of the Anti-Graft and Corrupt Practices Act. As the
subpoenas subject of Banco Filipino were issued during a preliminary investigation, in effect this Court upheld the power
of the Tandobayan under P.D. 1630 to issue subpoenas duces tecum for bank documents prior to the filing of a case before
a court of competent jurisdiction.
Marquez, on the other hand, practically reversed this ruling in Banco Filipino despite the fact that the subpoena power of
the Ombudsman under R.A. 6770 was essentially the same as that under P.D. 1630.
The Marquez ruling that there must be a pending case in order for the Ombudsman to validly inspect bank records in
camera thus reversed a prevailing doctrine. Hence, it may not be retroactively applied. The Ombudsmans inquiry into the
subject bank accounts prior to the filing of any case before a court of competent jurisdiction was therefore valid at the
time it was conducted. In fine, the subpoenas issued by the Ombudsman in this case were legal, hence, invocation of the
"fruit of the poisonous tree" doctrine is misplaced.
 Marquez v. Desierto
G.R. No. 135882, June 27, 2001
Topic: Violation of R.A. No. 3109 in relation to R.A. No. 1405

Facts:
Petitioner Lourdes Marquez received an Order from respondent Ombudsman Aniano Desierto to produce several bank
documents for purposes of inspection in camera relative to various accounts maintained at the bank where petitioner is the
branch manager. The accounts to be inspected are involved in a case pending with the Ombudsman entitled, Fact-Finding
and Intelligence Bureau (FFIB) v. Amado Lagdameo. It appears that a certain George Trivinio purchased trail managers
check and deposited some of it to an account maintained at petitioners branch. Petitioner after meeting with the FFIB
Panel to ensure the veracity of the checks agreed to the in camera inspection. Petitioner being unable to readily identify
the accounts in question, the Ombudsman issued an order directing petitioner to produce the bank documents. Thus,
petitioner sought a declaration of her rights from the court due to the clear conflict between RA 6770 and RA 1405.
Meanwhile, FFIB moved to cite petitioner in contempt before the Ombudsman.
Issue:
Whether or not the order of Ombudsman to have an in camera inspection of the accounts is an allowable exception of
R.A. No. 1405.
Ruling: NO.
The order of the Ombudsman to produce for in camera inspection the subject accounts with the Union Bank of the
Philippines, Julia Vargas Branch, is based on a pending investigation at the Office of the Ombudsman against Amado
Lagdameo, et. al. for violation of R.A. No. 3019, Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the
Public Estates 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, 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.

*In contrast to Ejercito v. Sandiganbayan. Interestingly, time is of the essence. A different ruling in Ejercito was
enunciated because there was already a pending investigation months before the ruling made in this case as to the
exemption in the power of the Ombudsman.
 China Bank v.CA
G.R. No. 140687, December 18, 2006
Topic: May a co-depositor inquire into the deposit without a written consent of the other co-depositor?

Facts:
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 Hac Vice 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.
We agree in the conclusion arrived at by the Court of Appeals.
Thus, with this, 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.
On this score, the observations of the Court of Appeals are worth reiterating:
Furthermore, it is indubitable that the Citibank checks were drawn against the foreign currency account with
Citibank, NA. The monies subject of said checks originally came from the 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.
All things considered and in view of the distinctive circumstances attendant to the present case, we are constrained to
render a limited pro hac vice ruling. Clearly it was not the intent of the legislature when it enacted the law on secrecy on
foreign currency deposits to perpetuate injustice. This Court is of the view that the allowance of the inquiry would be in
accord with the rudiments of fair play, the upholding of fairness in our judicial system and would be an avoidance of
delay and time-wasteful and circuitous way of administering justice.
 BSB Group v. Sally Go
G.R. No. 168644, February 16, 2010
Topic: Exception to General Rule Under R.A. No. 1405 Subject Matter of Litigation

Facts:
Petitioner is a duly organized domestic corporation presided by its representative, Ricardo Bangayan, husband of herein
respondent Sally Go. Respondent was employed as a cashier, and was engaged, among others, to receive and account for
the payments made by the various customers of the company. Bangayan filed with the Manila Prosecutors Office a
complaint for estafa/qualified theft against respondent alleging that several checks issued by the companys customers in
payment of their obligation were, instead of being turned over to the companys coffers, indorsed by respondent who
deposited the same to her personal banking account maintained at Security Bank. Accordingly, respondent was charged
and the prosecution moved for the issuance of subpoena duces tecum/ad testificandum against the respective managers or
records custodians of Security Bank and Asian Savings Bank. Respondent opposed and meanwhile, prosecution was able
to present in court the testimony of one Security Bank representative. Petitioner moved to exclude the testimony but was
denied by the trial court. CA reversed and set aside the order.
Issue:
Whether or not the testimony on the particulars of respondents account with Security Bank, as well as of the
corresponding evidence of the checks allegedly deposited in said account, constitutes an unallowable inquiry under R.A.
1405.
Ruling: YES.
The Court found guidance in the relevant portions of the legislative deliberations on Senate Bill No. 351 and House Bill
No. 3977, which later became the Bank Secrecy Act, and it held that the absolute confidentiality rule in R.A. No. 1405
actually aims at protection from unwarranted inquiry or investigation if the purpose of such inquiry or investigation is
merely to determine the existence and nature, as well as the amount of the deposit in any given bank account.
What indeed constitutes the subject matter in litigation in relation to Section 2 of R.A. No. 1405 has been pointedly and
amply addressed in Union Bank of the Philippines v. Court of Appeals, in which the Court noted that the inquiry into bank
deposits allowable under R.A. No. 1405 must be premised on the fact that the money deposited in the account is itself the
subject of the action. Given this perspective, we deduce that the subject matter of the action in the case at bar is to be
determined from the indictment that charges respondent with the offense, and not from the evidence sought by the
prosecution to be admitted into the records. In the criminal Information filed with the trial court, respondent, unqualifiedly
and in plain language, is charged with qualified theft by abusing petitioners trust and confidence and stealing cash. The
said Information makes no factual allegation that in some material way involves the checks subject of the testimonial and
documentary evidence sought to be suppressed. Neither do the allegations in said Information make mention of the
supposed bank account in which the funds represented by the checks have allegedly been kept.
In other words, it can hardly be inferred from the indictment itself that the Security Bank account is the ostensible subject
of the prosecutions inquiry. Without needlessly expanding the scope of what is plainly alleged in the Information, the
subject matter of the action in this case is the money alleged to have been stolen by respondent, and not the money
equivalent of the checks which are sought to be admitted in evidence. Thus, it is that, which the prosecution is bound to
prove with its evidence, and no other.
It comes clear that the admission of testimonial and documentary evidence relative to respondents Security Bank account
serves no other purpose than to establish the existence of such account, its nature and the amount kept in it. It constitutes
an attempt by the prosecution at an impermissible inquiry into a bank deposit account the privacy and confidentiality of
which is protected by law. On this score alone, the objection posed by respondent in her motion to suppress should have
indeed put an end to the controversy at the very first instance it was raised before the trial court.
 Onate v. Abrogar
G.R. No. 107303, February 21, 1994
Topic: Exception to General Rule Under R.A. No. 1405 Subject Matter of Litigation

Facts:
Sun Life filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against
petitioners Onate and Dino. Respondent Judge granted the prayer and the writ was correspondingly issued. After the
summons were eventually served upon petitioners, the latter filed motions to discharge/dissolve the attachment.
Meanwhile, Sun Life filed motions for examination of petitioners bank accounts. Respondent judge ruled in all the
motions in favor of Sun Life. Petitioners moved for reconsideration but were denied.
Issue:
Whether or not respondent judge erred in allowing the examination of the bank accounts of herein petitioners.
Ruling:
We find both petitions unmeritorious.
It is clear from the foregoing provision that notice need only be given to the garnishee, but the person who is holding
property or credits belonging to the defendant. The provision does not require that notice be furnished the defendant
himself, except when there is a need to examine said defendant "for the purpose of giving information respecting his
property.
Furthermore, Section 10 Rule 57 is not incompatible with Republic Act No. 1405, as amended, "An Act Prohibiting
Disclosure or Inquiry Into, Deposits With Any Banking Institution and Providing Penalty Therefore," for Section 2
therefore provides an exception "in cases where the money deposited or invested is the subject matter of the litigation."
The examination of the bank records is not a fishing expedition, but rather a method by which Sun Life could trace the
proceeds of the check it paid to petitioners.
 Dona Adela Export International v. Trade and Investment Development Corp
G.R. No. 201931, February 11, 2015
Topic: Consent/Waiver

Facts:
Petitioner Dona Adela filed a Petition for Voluntary Insolvency before the RTC. After finding the petition sufficient in
form and substance, RTC declared petitioner herein as insolvent and stayed all civil proceedings against it. Thereafter,
Atty. Arlene Gonzales was appointed as a receiver and proceeded to make the necessary report, to engage appraisers and
require the creditors to submit proof of their respective claims. Atty. Gonzales then filed a Motion for Parties to Enter Into
Compromise Agreement incorporating therein her proposed terms of compromise. Then, TIDCORP and BPI also filed a
Joint Motion to Approve Agreement which was approved. Petitioner filed a motion for partial reconsideration claiming
that TIDCORP and BPIs agreement imposes upon it several obligations such as payment of expenses and taxes and
waiver of confidentiality of bank deposits when it is not a party and signatory to the said agreement. RTC denied the
motion.
Issue:
Whether or not petitioner is bound by the provision in the BPI-TIDCORP Joint Motion to Approve Agreement to waive
its rights to confidentiality of its bank deposits under R.A. No. 1405.
Ruling: NO.
R.A. No. 1405 provides for 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, the Anti-Money Laundering
Council may inquire into a bank account upon order of any competent court.
In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP only. There was no written
consent given by petitioner or its representative, Epifanio Ramos, Jr., that petitioner is waiving the confidentiality of its
bank deposits. The provision on the waiver of the confidentiality of petitioners bank deposits was merely inserted in the
agreement. It is clear therefore that petitioner is not bound by the said provision since it was without the express consent
of petitioner who was not a party and signatory to the said agreement.
Clearly, the waiver of confidentiality of petitioners bank deposits in the BPI-TIDCORP Joint Motion to Approve
Agreement lacks the required written consent of petitioner and conformity of the receiver. We, thus, hold that petitioner is
not bound by the said provision.
 Salvacion v. Central Bank of the Philippines
G.R. No. 94723, August 21, 1997
Topic: Exemption of Foreign Currency Deposits

Facts:
Greg Bartelli y Northcott, an American tourist, was charged with serious Illegal detention and Rape of herein petitioner
Karen Salvacion. Upon his arrest, it was recovered from him among others, bank books and a dollar account with China
Bank Corp. On the day of the hearing of his petition for bail, he was able to escape from jail. Pending his arrest the
criminal cases were archived. Meanwhile, in the Civil Case against Bartelli, the Judge granted the prayer of attachment
and a notice of garnishment was served on China Bank. China Bank invoked R.A. No. 1405 and later on, Section 113
Central Bank Circular No. 960 to the effect that the dollar deposits of Bartelli are exempt from attachment, garnishment,
or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.
This prompted petitioners counsel to inquire herein respondent whether the said circular has any exception or has been
repealed/amended. Respondent cited that the provision is absolute in application. Meanwhile, the court has rendered
judgment in favor of petitioners. Petitioners tried to execute on Bartelli's dollar deposit with China Bank but the bank
invoked the CB Circular. Thus, petitioners decided to seek relief from this Court.
Issue:
Whether or not the secrecy of foreign currency deposits should be made applicable to a foreign transient?
Ruling: NO. [INAPPLICABLE to this case]
This Court finds the petition to be partly meritorious.
It is worth mentioning that R.A. No. 6426 was enacted in 1983 or at a time when the country's economy was in a
shambles; when foreign investments were minimal and presumably, this was the reason why said statute was enacted. But
the realities of the present times show that the country has recovered economically; and even if not, the questioned law
still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the questioned law
may be good when enacted. The law failed to anticipate the iniquitous effects producing outright injustice and inequality
such as the case before us.
In his Comment, the Solicitor General correctly opined, thus:
It is evident from the above [Whereas clauses] that the Offshore Banking System and the Foreign Currency
Deposit System were designed to draw deposits from foreign lenders and investors (Vide second Whereas of PD
No. 1034; third Whereas of PD No. 1035). It is these deposits that are induced by the two laws and given
protection and incentives by them. Obviously, 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.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with respondent China
Banking Corporation only for safekeeping during his temporary stay in the Philippines.
For the reasons stated above, the Solicitor General thus submits that the dollar deposit of respondent Greg Bartelli
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.
In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that the questioned Section
113 of Central Bank Circular No. 960 which exempts from attachment, garnishment, or any other order or process of any
court, legislative body, government agency or any administrative body whatsoever, is applicable to a foreign transient,
injustice would result especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that "in case of doubt in the interpretation or application of laws, it is
presumed that the lawmaking body intended right and justice to prevail. "Ninguno non deue enriquecerse tortizeramente
con dano de otro." Simply stated, when the statute is silent or ambiguous, this is one of those fundamental solutions that
would respond to the vehement urge of conscience.
IN VIEW WHEREOF, the provisions of Section 113 of CB Circular No. 960 and PD No. 1246, insofar as it amends
Section 8 of R.A. No. 6426 are hereby held to be INAPPLICABLE to this case because of its peculiar circumstances.
 Union Bank of the Philippines v. CA
G.R. No. 134699, December 23, 1999

Facts:
A check in the amount of P1M was drawn against an account with private respondent Allied Bank payable to the order of
one Jose Ch. Alvarez. The payee deposited the check with petitioner Union Bank who credited the P1M to the account of
Mr. Alvarez. Petitioner sent the check for clearing and when the check was presented for payment, a clearing discrepancy
was committed by Union Bank's clearing staff when the amount P1M was erroneously "under-encoded" to P1,000 only.
Petitioner only discovered the under-encoding almost a year later. Thus, Union Bank notified Allied Bank of the
discrepancy by way of a charge slip for P999,000.00 for automatic debiting against Allied Bank. The latter, however,
refused to accept the charge slip "since [the] transaction was completed per your [Union Bank's] original instruction and
client's account is now insufficiently funded." Union Bank filed a complaint against Allied Bank before the PCHC
Arbitration Committee (Arbicom). Thereafter, Union Bank filed before the RTC a petition for the examination of the
account with respondent bank. Judgment on the arbitration case was held in abeyance pending the resolution of said
petition. The RTC dismissed Union Bank's petition. CA affirmed the dismissal ruling that the case was not one where the
money deposited is the subject matter of the litigation.
Issue:
Whether the discrepancy amount is the subject matter of litigation.
Ruling: NO.
The petition before this Court reveals that the true purpose for the examination is to aid petitioner in proving the extent of
Allied Bank's liability.
In other words, only a disclosure of the pertinent details and information relating to the transactions involving subject
account will enable petitioner to prove its allegations in the pending Arbicom case.
Petitioner is fishing for information so it can determine the culpability of private respondent and the amount of damages it
can recover from the latter. It does not seek recovery of the very money contained in the deposit. The subject matter of the
dispute may be the amount of P999,000.00 that petitioner seeks from private respondent as a result of the latter's alleged
failure to inform the former of the discrepancy; but it is not the P999,000.00 deposited in the drawer's account. By the
terms of R.A. No. 1405, the "money deposited" itself should be the subject matter of the litigation.
That petitioner feels a need for such information in order to establish its case against private respondent does not, by itself,
warrant the examination of the bank deposits. The necessity of the inquiry, or the lack thereof, is immaterial since the case
does not come under any of the exceptions allowed by the Bank Deposits Secrecy Act.
 Intengan v. CA
G.R. No. 128996, February 15, 2002

Facts:
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 Lims 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.
A case for violation of Republic Act No. 6426 should have been the proper case brought against private respondents.
Private respondents Lim and Reyes admitted that they had disclosed details of petitioners dollar deposits without the
latters written permission. It does not matter if that such disclosure was necessary to establish Citibanks case against
Dante L. Santos and Marilou Genuino. Lims act of disclosing details of petitioners bank records regarding their foreign
currency deposits, with the authority of Reyes, would appear to belong to that species of criminal acts punishable by
special laws, called malum prohibitum.

*The decision however was still unfavorable to the petitioner since there is an issue as to prescription. The action to
assail the disclosure of herein private respondents has already prescribed.