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7/26/2019 Digest Banking

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Mellon Bank vs. Magsino

G.R. No. 71479

October 18, 1990

Section 2 of said law allows the disclosure of bank deposits in cases where the money

deposited is the subject matter of the litigation. Inasmuch as Civil Case No. 26899 is aimed

at recovering the amount converted by the Javiers for their own benefit, necessarily, an

inquiry into the whereabouts of the illegally acquired amount extends to whatever is

concealed by being held or recorded in the name of persons other than the one responsible

for the illegal acquisition.

Facts:On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First

National Bank of Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the

Prudential Bank. Accordingly, the First National Bank requested the petitioner, Mellon

Bank, to effect the transfer. Unfortunately the wire sent by Mellon Bank to Manufacturers

Hanover Bank, a correspondent of Prudential Bank, indicated the amount transferred as

US$1,000,000.00 instead of US$1,000.00. Hence Manufacturers Hanover Bank

transferred one million dollars less bank charges of $6.30 to the Prudential Bank for the

account of Victoria Javier.

Javier withdrew $475,000 from account No. 343 and converted it into eight cashiers

checks made out to the following: (a) F.C. Hagedorn & Co., Inc., two cheeks for the total

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

checks for P496,000. Javier also brought several properties in the United States including

the one of his lawyer, Poblador.

Mellon Bank filed a complaint docketed 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 first amended complaint to impose constructive trust. The testimonies of

these witnesses were objected to by the defense on the grounds of res inter alios acta,

immateriality, irrelevancy and confidentiality due to RA 1405. The Javier spouses also

contend that inasmuch as the Mellon Bank had filed in California an action to impose

constructive trust on the California property and to recover the same.

Issue: (1) Whether or not an account deposit which is relevant and material to the

resolution of the case may be covered under R.A. No. 1405. (2) Whether or not the

principle of election of remedies bars recovery of Mellon Bank

Held:

1) Whether or not an account deposit which is relevant and material to the resolution of

the case may be covered under R.A. No. 1405.

Yes. Section 2 of said law allows the disclosure of bank deposits in cases where the money

deposited is the subject matter of the litigation. 24 Inasmuch as Civil Case No. 26899 is

aimed at recovering the amount converted by the Javiers for their own benefit, necessarily,

an inquiry into the whereabouts of the illegally acquired amount extends to whatever is

concealed by being held or recorded in the name of persons other than the one

responsible for the illegal acquisition.

2) Whether or not the principle of election of remedies bars recovery of Mellon Bank

The spouses Javiers reliance on the procedural principle of election of remedies as part of

their ploy to terminate Civil Case No. 26899 prematurely. With the exception of the Javiers,

respondents failed to raise it as a defense in their answers and therefore, by virtue of

Section 2, Rule 9 of the Rules of Court, such defense is deemed waived. 26

Notwithstanding its lengthy and thorough discussion during the hearing and in pleadings


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subsequent to the answers, the issue of election of remedies has not, contrary to the

lower courts assertion, been elevated to a substantive one. Having been waived as a

defense, it cannot be treated as if it has been raised in a motion to dismiss based on the

nonexistence of a cause of action.

Moreover, granting that the defense was properly raised, it is inapplicable in this case. In

its broad sense, election of remedies refers to the choice by a party to an action of one of

two or more coexisting remedial rights, where several such rights arise out of the same

facts, but the term has been generally limited to a choice by a party between inconsistent

remedial rights, the assertion of one being necessarily repugnant to, or a repudiation of,

the other. In its technical and more restricted sense, election of remedies is the adoption

of one of two or more coexisting remedies, with the effect of precluding a resort to the

others.


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LOURDES T. MARQUEZ vs. HON. ANIANO A. DESIERTO, et al.

G.R. No. 135882

June 27, 2001

FACTS:In May 1998, petitioner Marquez received an Order from the Ombudsman Aniano

A. Desierto dated April 29, 1998, to produce several bank documents for purposes of

inspection in camera relative to various accounts maintained at Union Bank of the

Philippines (UBP) Julia Vargas Branch where petitioner was the branch manager. The

accounts to be inspected were involved in a case pending with the Ombudsman entitled,

Fact-Finding and Intelligence Bureau (FFIB) v. Amado Lagdameo, et. al, for violation of RA

3019 Sec. 3 (e) and (g) relative to the Joint Venture Agreement between the Public Estates

Authority and AMARI. The Order was grounded on Section 15 of RA 6770 (Ombudsman

Act of 1989) which provides, among others, the following powers, functions and duties of

the Ombudsman, to wit:

(8) Administer oaths, issue subpoena and subpoena duces tecum and take testimony in

any investigation or inquiry, including the power to examine and have access to bank

accounts and records;

(9) Punish for contempt in accordance with the Rules of Court and under the same

procedure and with the same penalties provided therein.

Clearly, the specific provision of R.A. 6770, a later legislation, modifies the law on theSecrecy of Bank Deposits (R.A. 1405) and places the office of the Ombudsman in the same

footing as the courts of law in this regard.

The basis of the Ombudsman in ordering an in camera inspection of the accounts was a

trail of managers checks (MCs) purchased by one George Trivinio, a respondent in

OMB-0-97-0411, pending with the office of the Ombudsman. It appeared that Trivinio

purchased on May 2 and 3, 1995, 51 MCs for a total amount of P272.1 Million at Traders

Royal Bank (TRB) UN Ave. Branch. Out of the 51 MCs, eleven 11 MCs in the amount of

P70.6M were deposited and credited to an account maintained at the UBP.

On May 26, 1998, the FFIB panel met with petitioner Marquez and Atty. Fe B. Macalino at

the banks main office in Makati City, for the purpose of allowing petitioner and Atty.

Macalino to view the checks furnished by TRB. After convincing themselves of the veracity

of the checks, Atty. Macalino advised Ms. Marquez to comply with the order of the

Ombudsman. Petitioner agreed to an in camera inspection set on June 3, 1998. However,

on June 4, 1998, Marquez wrote the Ombudsman that the accounts in question could not

readily be identified since the checks were issued in cash or bearer, and asked for time to

respond to the order. Marquez surmised that these accounts had long been dormant,

hence were not covered by the new account number generated by the UB system, thus

sought to verify from the Interbank records archives for the whereabouts of these

accounts.

The Ombudsman, responding to the request of Marquez for time to comply with the order,

stated that UBP-Julia Vargas, not Interbank, was the depositary bank of the subject TRB

MCs as shown at its dorsal portion and as cleared by the Philippine Clearing House.

Notwithstanding the fact that the checks were payable to cash or bearer, the name of the

depositor(s) could easily be identified since the account numbers where said checks were

deposited were identified in the order.

Even assuming that the accounts were already classified as dormant accounts, the bank

was still required to preserve the records pertaining to the accounts within a certain

period of time as required by existing banking rules and regulations.

On June 16, 1998, the Ombudsman issued an order directing Marquez to produce the

bank documents relative to the accounts in issue, stating that her persistent refusal to


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comply with the order is unjustified, was merely intended to delay the investigation of the

case, constitutes disobedience of or resistance to a lawful order issued by the office and is

punishable as Indirect Contempt under Section 3(b) of R.A. 6770.

On July 10, 1998, Marquez together with UBP filed a petition for declaratory relief,

prohibition and injunction with the Makati RTC against the Ombudsman allegedly because

the Ombudsman and other persons acting under his authority were continuously

harassing her to produce the bank documents relative to the accounts in question.

Moreover, on June 16, 1998, the Ombudsman issued another order stating that unless she

appeared before the FFIB with the documents requested, Marquez would be charged with

indirect contempt and obstruction of justice.

The lower court denied petitioners prayer for a temporary restraining order stating that

since petitioner failed to show prima facie evidence that the subject matter of the

investigation is outside the jurisdiction of the Office of the Ombudsman, no writ of

injunction may be issued by the RTC to delay the investigation pursuant to Section 14 of

the Ombudsman Act of 1989.

Petitioner filed a motion for reconsideration but was denied.

On August 21, 1998, petitioner received a copy of the motion to cite her for contempt. On

August 31, 1998, petitioner filed with the Ombudsman an opposition to the motion to cite

her in contempt on the ground that the filing thereof was premature due to the petitionpending in the lower court. Petitioner likewise reiterated that she had no intention to

disobey the orders of the Ombudsman. However, she wanted to be clarified as to how she

would comply with the orders without her breaking any law, particularly RA 1405.

ISSUES:

1. Whether or not Marquez may be cited for indirect contempt for her failure to produce

the documents requested by the Ombudsman.

2. Whether or not the order of the Ombudsman to have an in camera inspection of the

questioned account is allowed as an exception to the law on secrecy of bank deposits (RA

1405).

HELD:An examination of the secrecy of bank deposits law (RA 1405) would reveal the

following exceptions:

1. Where the depositor consents in writing;

2. Impeachment case;

3. By court order in bribery or dereliction of duty cases against public officials;

4. Deposit is subject of litigation;

5. Sec. 8, R. A. No. 3019, in cases of unexplained wealth as held in the case of PNB vs.

Gancayco

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 Union Bank of the Philippines v. Court of Appeals, we held that Section 2 of the Law on

Secrecy of Bank Deposits, as amended, declares bank deposits to be absolutely

confidential except:

(1) In an examination made in the course of a special or general examination of a bank


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that is specifically authorized by the Monetary Board after being satisfied that there is

reasonable ground to believe that a bank fraud or serious irregularity has been or is being

committed and that it is necessary to look into the deposit to establish such fraud or

irregularity,

(2) In an examination made by an independent auditor hired by the bank to conduct its

regular audit provided that the examination is for audit purposes only and the results

thereof shall be for the exclusive use of the bank,

(3) Upon written permission of the depositor,

(4) In cases of impeachment,

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

officials, or

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

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 forinspection.

Zones of privacy are recognized and protected in our laws. The Civil Code provides that

every person shall respect the dignity, personality, privacy and peace of mind of his

neighbors and other persons and punishes as actionable torts several acts for meddling

and prying into the privacy of another. It also holds a public officer or employee or any

private individual liable for damages for any violation of the rights and liberties of another

person, and recognizes the privacy of letters and other private communications. The

Revised Penal Code makes a crime of the violation of secrets by an officer, the revelation

of trade and industrial secrets, and trespass to dwelling. Invasion of privacy is an offense

in special laws like the Anti-Wiretapping Law, the Secrecy of Bank Deposits Act, and the

Intellectual Property Code.

Ombudsman is ordered to cease and desist from requiring Union Bank Manager Lourdes T.

Marquez, or anyone in her place to comply with the order dated October 14, 1998, and

similar orders.


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CHINA BANKING CORPORATION and TAN KIM LIONG vs. HON. WENCESLAO ORTEGA, as

Presiding Judge of the Court of First Instance of Manila, Branch VIII, and VICENTE G.

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

FACTS:On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against

Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for

the collection of a sum of money. Upon motion of the plaintiff the trial court declared the

defendants in default for failure to answer within the reglementary period, and authorized

the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiffs evidence. On

January 20, 1970 judgment by default was rendered against the defendants.

To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the

defendant B & B Forest Development Corporation with the China Banking Corporation.

Accordingly, a notice of garnishment was issued by the Deputy Sheriff of the trial court

and served on said bank through its cashier, Tan Kim Liong. In reply, the bank cashier

invited the attention of the Deputy Sheriff to the provisions of Republic Act No. 1405

which, it was alleged, prohibit the disclosure of any information relative to bank deposits.

Thereupon the plaintiff filed a motion to cite Tan Kim Liong for contempt of court.

In an order dated March 4, 1972 the trial court denied the plaintiff s motion. However, Tan

Kim Liong was ordered to inform the Court within five days from receipt of this order

whether or not there is a deposit in the China Banking Corporation of defendant B & B

Forest Development Corporation, and if there is any deposit, to hold the same intact andnot allow any withdrawal until further order from this Court. Tan Kim Liong moved to

reconsider but was turned down by order of March 27, 1972. In the same order he was

directed to comply with the order of this Court dated March 4, 1972 within ten (10) days

from the receipt of copy of this order, otherwise his arrest and confinement will be

ordered by the Court. Resisting the two orders, the China Banking Corporation and Tan

Kim Liong instituted the instant petition.

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

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

Philippines including investments in bonds issued by the Government of the Philippines,

its political subdivisions and its instrumentalities, are hereby considered as of absolutely

confidential nature and may not be examined, inquired or looked into by any person,

government official, bureau or office, except upon written permission of the depositor, or

in cases of impeachment, or upon order of a competent court in cases of bribery or

dereliction of duty of public officials, or in cases where the money deposited or invested is

the subject matter of the litigation.

Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose

to any person other than those mentioned in Section two hereof any information

concerning said deposits.

Sec. 5. Any violation of this law will subject 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.

The petitioners argue that the disclosure of the information required by the court does

not fall within any of the four (4) exceptions enumerated in Section 2, and that if the

questioned orders are complied with Tan Kim Liong may be criminally liable under Section5 and the bank exposed to a possible damage suit by B & B Forest Development

Corporation. Specifically referring to this case, the position of the petitioners is that the

bank deposit of judgment debtor B & B Forest Development Corporation cannot be

subject to garnishment to satisfy a final judgment against it in view of the aforequoted

provisions of law.


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ISSUE:

Whether or not a banking institution may validly refuse to comply with a court process

garnishing the bank deposit of a judgment debtor, by invoking the provisions of Republic

Act No. 1405.

HELD:

We do not view the situation in that light. The lower court did not order an examination of

or inquiry into the deposit of B & B Forest Development Corporation, as contemplated in

the law. It merely required Tan Kim Liong to inform the court whether or not the

defendant B & B Forest Development Corporation had a deposit in the China Banking

Corporation only for purposes of the garnishment issued by it, so that the bank would

hold the same intact and not allow any withdrawal until further order. It will be noted

from the discussion of the conference committee report on Senate Bill No. 351 and House

Bill No. 3977, which later became Republic 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 should like the Chairman of the

Committee on Ways and Means to clarify this further. Suppose an individual has a tax case.

He is being held liable by the Bureau of Internal Revenue for, say, P1,000.00 worth of tax

liability, and because of this the deposit of this individual is attached by the Bureau ofInternal Revenue.

Mr. RAMOS. The attachment will only apply after the court has pronounced sentence

declaring the liability of such person. But where the primary aim is to determine whether

he has a bank deposit in order to bring about a proper assessment by the Bureau of

Internal Revenue, such inquiry is not authorized by this proposed law.

Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment

or garnishment of money deposited is allowed. Let us assume, for instance, that there is a

preliminary attachment which is for garnishment or for holding liable all moneys

deposited belonging to a certain individual, but such attachment or garnishment will bring

out into the open the value of such deposit. Is that prohibited by this amendment or by

this law?

Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the

inquiry is made only for the purpose of satisfying a tax liability already declared for the

protection of the right in favor of the government; but when the object is merely to

inquire whether 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 it not?

Mr. RAMOS. Yes, it protects the depositor.

Mr. MARCOS. The law prohibits a mere investigation into 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 the established rule of procedure as well


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as the substantive law on the matter is amended?

Mr. RAMOS. Yes. That is the effect.

Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the liability

of an individual for taxation purposes and this judgment is sought to be executed in the

execution of that judgment, does this bill, or this proposed law, if approved, allow the

investigation or scrutiny of the bank deposit in order to execute the judgment?

Mr. RAMOS. To satisfy a judgment which has become executory.

Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the

deposit is half a million, will this bill allow scrutiny into the deposit in order that the

judgment may be executed?

Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation to

the Government, but not to determine whether a deposit has been made in evasion of

taxes.

xxx xxx xxx

Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery of a

sum of money the plaintiff wishes to attach the properties of the defendant to insure thesatisfaction of the judgment. Once the judgment is rendered, does the gentleman mean

that the plaintiff cannot attach the bank deposit of the defendant?

Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to which I

replied that outside the very purpose of this law it could be reached by attachment.

Mr. MACAPAGAL. Therefore, in such ordinary civil cases i t can be attached?

Mr. RAMOS. That is so.

(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27,

1955).

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

the two houses of Congress that the prohibition against examination of or inquiry into a

bank deposit under Republic Act 1405 does not preclude its being garnished to insure

satisfaction of a judgment. Indeed there is no real inquiry in such a case, and if the

existence of the deposit is disclosed the disclosure is purely incidental to the execution

process. It is hard to conceive that it was ever within the intention of Congress to enable

debtors to evade payment of their just debts, even if ordered by the Court, through the

expedient of converting their assets into cash and depositing the same in a bank.

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