Secrecy Case 1-3.docx

I. SHORT TITLE:

BSP GROUP, INC. VS. GO

II. FULL TITLE:

BSB GROUP, INC., represented by its President, Mr. RICARDO BANGAYAN,Petitioner,-versus-SALLY GO a.k.a. SALLY GOBANGAYAN,Respondent.; G.R. No. 168644; February 16, 2010;

III. PONENTE:

PERALTA, J.

IV. TOPIC:

Law on Secrecy of Bank Deposits

V. STATEMENT OF FACTS: Petitioner, the BSB Group, Inc., is a duly organized domestic corporation presided by its herein representative, Ricardo Bangayan (Bangayan). Respondent Sally Go, alternatively referred to as Sally Sia Go and Sally Go-Bangayan, is Bangayans wife, who was employed in the company as a cashier, and was engaged, among others, to receive and account for the payments made by the various customers of the company. In 2002, Bangayan filed with the Manila Prosecutors Office a complaint for estafa and/or qualified theft against respondent, alleging that several checks representing the aggregate amount of P1,534,135.50 issued by the 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 and Trust Company (Security Bank). VI. STATEMENT OF THE CASE Accordingly, respondent was charged before the Regional Trial Court of Manila. Respondent entered a negative plea when arraigned. The trial ensued. On the premise that respondent had allegedly encashed the subject checks and deposited the corresponding amounts thereof to her personal banking account, the prosecution moved for the issuance of subpoena duces tecum /ad testificandum against the respective managers or records custodians of Security Banks Divisoria Branch, as well as of the Asian Savings Bank (now Metropolitan Bank & Trust Co. [Metrobank]). The trial court granted the motion and issued the corresponding subpoena. Respondent filed a motion to quash the subpoena, addressed to Metrobank, noting to the court that in the complaint-affidavit filed with the prosecutor, there was no mention made of the said bank account, to which respondent, in addition to the Security Bank account, allegedly deposited the proceeds of the supposed checks. Petitioner, opposing respondents move, argued for the relevancy of the Metrobank account on the ground that the complaint-affidavit showed that there were two checks which respondent allegedly deposited in an account with the said bank. To this, respondent filed a supplemental motion to quash, invoking the absolutely confidential nature of the Metrobank account under the provisions of Republic Act (R.A.) No. 1405. The trial court did not sustain respondent; hence, it denied the motion to quash for lack of merit.

Meanwhile, the prosecution was able to present in court the testimony of Elenita Marasigan (Marasigan), the representative of Security Bank. In a nutshell, Marasigans testimony sought to prove that between 1988 and 1989, respondent, while engaged as cashier at the BSB Group, Inc., was able to run away with the checks issued to the company by its customers, endorse the same, and credit the corresponding amounts to her personal deposit account with Security Bank. In the course of the testimony, the subject checks were presented to Marasigan for identification and marking as the same checks received by respondent, endorsed, and then deposited in her personal account with Security Bank. But before the testimony could be completed, respondent filed a Motion to Suppress, seeking the exclusion of Marasigans testimony and accompanying documents thus far received, bearing on the subject Security Bank account. This time respondent invokes, in addition to irrelevancy, the privilege of confidentiality under R.A. No. 1405. The Trial court denied said motion as well as the motion for reconsideration filed by the respondent. CA reversed the decision and ordered that the witness’ testimony be stricken out from the record. In this Petition under Rule 45, petitioner averred in the main that the Court of Appeals had seriously erred in reversing the assailed orders of the trial court, and in effect striking out Marasigans testimony dealing with respondents deposit account with Security Bank. It asserted that apart from the fact that the said evidence had a direct relation to the subject matter of the case for qualified theft and, hence, brings the case under one of the exceptions to the coverage of confidentiality under R.A. 1405. For her part, respondent claimed that the money represented by the Security Bank account was neither relevant nor material to the case, because nothing in the criminal information suggested that the money therein deposited was the subject matter of the case. Thus, the checks which the prosecution had Marasigan identify, as well as the testimony itself of Marasigan, should be suppressed by the trial court at least for violating respondents right to due process. More in point, respondent opined that admitting the testimony of Marasigan, as well as the evidence pertaining to the Security Bank account, would violate the secrecy rule under R.A. No. 1405. VII. ISSUES: (1) WON the testimony of Marasigan and the accompanying documents are irrelevant to the case, and whether they are also violative of the absolutely confidential nature of bank deposits and, hence, excluded by operation of R.A. No. 1405. VIII. RULING: YES. The Court, after deliberative estimation, finds the subject evidence to be indeed inadmissible. It is conceded that while the fundamental law has not bothered with the triviality of specifically addressing privacy rights relative to banking accounts, there, nevertheless, exists in our jurisdiction a legitimate expectation of privacy governing such accounts. The source of this right

of expectation is statutory, and it is found in R.A. No. 1405, otherwise known as the Bank Secrecy Act of 1955. R.A. No. 1405 has two allied purposes. It hopes to discourage private hoarding and at the same time encourage the people to deposit their money in banking institutions, so that it may be utilized by way of authorized loans and thereby assist in economic development. Owing to this piece of legislation, the confidentiality of bank deposits remains to be a basic state policy in the Philippines. In taking exclusion from the coverage of the confidentiality rule, petitioner in the instant case posits that the account maintained by respondent with Security Bank contains the proceeds of the checks that she has fraudulently appropriated to herself and, thus, falls under one of the exceptions in Section 2 of R.A. No. 1405 that the money kept in said account is the subject matter in litigation. To highlight this thesis, petitioner avers, citing Mathay v. Consolidated Bank and Trust Co] that the subject matter of the action refers to the physical facts; the things real or personal; the money, lands, chattels and the like, in relation to which the suit is prosecuted, which in the instant case should refer to the money deposited in the Security Bank account. On the surface, however, it seems that petitioners theory is valid to a point, yet a deeper treatment tends to show that it has argued quite off-tangentially. This, because, while Mathay did explain what the subject matter of an action is, it nevertheless did so only to determine whether the class suit in that case was properly brought to the court. 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. 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 amounting to P1,534,135.50 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. In sum, we hold that the testimony of Marasigan on the particulars of respondents supposed bank account with Security Bank and the documentary evidence represented by the checks adduced in support thereof, are not only incompetent for being excluded by operation of R.A. No. 1405. They are likewise irrelevant to the case, inasmuch as they do not appear to have any logical and reasonable connection to the prosecution of respondent for qualified theft. We find full merit in and affirm respondents objection to the evidence of the prosecution. The Court of Appeals was, therefore, correct in reversing the assailed orders of the trial court. IX. DISPOSITIVE PORTION: WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 87600 dated April 20, 2005, reversing the September 13, 2004 and November 5, 2004

Orders of the Regional Trial Court of Manila, Branch 36 in Criminal Case No. 02-202158, is AFFIRMED. X. PREPARED BY: Imson, Kamille V. I. SHORT TITLE:

CHINA BANKING CORP. VS. ORTEGA

II. FULL TITLE:

CHINA BANKING CORPORATION and TAN KIM LIONG, petitionersappellants, vs. HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Manila, Branch VIII, and VICENTE G. ACABAN, respondents-appellees.; G.R. No. L-34964; January 31, 1973;

III. PONENTE:

MAKALINTAL, J.

IV. TOPIC:

Law on Secrecy of Bank Deposits

V. STATEMENT OF FACTS: Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc., B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. Upon motion of the plaintiff the trial court declared the defendants in default for failure to answer within the reglementary period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. 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.

VI. STATEMENT OF THE CASE In an order 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 and not 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 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 Section 5 and the bank exposed to a possible damage suit by B & B Forest Development Corporation.

VII. ISSUES: WON 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.

VIII. RULING: NO. 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. 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.

IX. DISPOSITIVE PORTION: WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively, are hereby affirmed, with costs against the petitioners-appellants. X. PREPARED BY: Imson, Kamille V.

I. SHORT TITLE:

OÑATE VS. ABROGAR

II. FULL TITLE:

EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, petitioners, vs. HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, respondents.; G.R. No. 107303; February 21, 1994

III. PONENTE:

NOCON, J.:

IV. TOPIC:

Law on Secrecy of Bank Deposits

V. STATEMENT OF FACTS: Respondent Sun Life Assurance Company of Canada (Sun Life, for brevity) filed a complaint for a sum of money with a prayer for the immediate issuance of a writ of attachment against petitioners, and Noel L. Diño. The following day, respondent Judge issued an order granting the issuance of a writ of attachment, and the writ was actually issued on December 27, 1991. Upon Sun Life's ex-parte motion, the trial court amended the writ of attachment to reflect the alleged amount of the indebtedness. That same day, Deputy Sheriff, accompanied by a representative of Sun Life, attempted to serve summons and a copy of the amended writ of attachment upon petitioners at their known office address but was not able to do so since there was no responsible officer to receive the same. Nonetheless, Sheriff Flores proceeded, over a period of several days, to serve notices of garnishment upon several commercial banks and financial institutions, and levied on attachment a condominium unit and a real property belonging to petitioner Oñate. VI. STATEMENT OF THE CASE Petitioners filed an "Urgent Motion to Discharge/Dissolve Writ of Attachment." That same day, Sun Life filed an ex-parte motion to examine the books of accounts and ledgers of petitioner Brunner Development Corporation (Brunner, for brevity) at the Urban Bank and to obtain copies thereof, which motion was granted by respondent Judge. Petitioners filed a motion to nullify the proceedings taken thereat since they were not present. Petitioners and their co-defendants filed a memorandum in support of the motion to discharge attachment. Also on that same day, Sun Life filed another motion for examination of bank

accounts, this time seeking the examination of Account with the Bank of Philippine Islands (BPI) — which, incidentally, petitioners claim not to be owned by them — and the records of Philippine National Bank (PNB) with regard to checks payable to Brunner. Sun Life asked the court to order both banks to comply with the notice of garnishment. Respondent Judge issued an order (1) denying petitioners' and the co-defendants' motion to discharge the amended writ of attachment, (2) approving Sun Life's additional attachment, (3) granting Sun Life's motion to examine the BPI account, and (4) denying petitioners' motion to nullify the proceedings of January 23, 1992. VII. ISSUES: WON respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in allowing the examination of the bank records though no notice was given. VIII. RULING: NO. Sun Life grounded its requests for the examination of the bank accounts on Section 10, Rule 57 of the Rules of Court, which provided, to wit: Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer. — Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the person so required to attend before the court, to be delivered to the clerk or court, sheriff, or other proper officer on such terms as may be just, having reference to any lien thereon or claim against the same, to await the judgment in the action. 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.

IX. DISPOSITIVE PORTION: WHEREFORE, the instant petitions are hereby DISMISSED. The temporary restraining order issued on June 28, 1993 is hereby lifted. X. PREPARED BY: Imson, Kamille V.

I. SHORT TITLE:

OÑATE VS. ABROGAR

II. FULL TITLE:

EMMANUEL C. OÑATE and ECON HOLDINGS CORPORATION, petitioners, vs. HON. ZUES C. ABROGAR, as Presiding Judge of Branch 150 of the Regional Trial Court of Makati, and SUN LIFE ASSURANCE COMPANY OF CANADA, respondents.; G.R. No. 107303; February 23, 1995;

III. PONENTE:

MENDOZA, J.:

IV. TOPIC:

Law on Secrecy of Bank Deposits

V. STATEMENT OF FACTS: Petitioners maintain that, in accordance with prior decisions of this Court, the attachment of their properties was void because the trial court had not at that time acquired jurisdiction over them and that the subsequent service of summons on them did not cure the invalidity of the levy. They further contend that the examination of the books and ledgers of the Bank of the Philippine Islands (BPI), the Philippine National Bank (PNB) and the Urban Bank was a "fishing expedition" which the trial court should not have authorized because petitioner Emmanuel C. Oñate, whose accounts were examined, was not a signatory to any of the documents evidencing the transaction between Sun Life Assurance of Canada (Sun Life) and Brunner Development Corporation (Brunner). On the other hand private respondent Sun Life stresses the fact that the trial court eventually acquired jurisdiction over petitioners and contends that this cured the invalidity of the attachment of petitioners' properties. With respect to the second contention of petitioners, private respondent argues that the examination of petitioner Oñate's bank account was justified because it was he who signed checks transferring huge amounts from Brunner's account in the Urban Bank to the PNB and the BPI.

VI. ISSUES: WON respondent Judge had acted with grave abuse of discretion amounting to lack or in excess of jurisdiction in allowing the examination of the bank records though no notice was given.

VII. RULING: YES. The records show that, on January 21, 1992, respondent judge ordered the examination of the books of accounts and ledgers of Brunner at the Urban Bank, Legaspi Village branch, and on January 30, 199 the records of account of petitioner Oñate at the BPI, even as he ordered the PNB to produce the records regarding certain checks deposited in it. First. Sun Life defends these court orders on the ground that the money paid by it to Brunner was subsequently withdrawn from the Urban Bank after it had been deposited by Brunner and then transferred to BPI and to the unnamed account in the petitioner Oñate's account in the BPI and to the unnamed account in the PNB. The issue before the trial court, however, concerns the nature of the transaction between petitioner Brunner and Sun Life. In its complaint, Sun Life alleges that Oñate, in his personal capacity and as president of Econ, offered to sell to Sun Life P46,990,000.00 worth of treasury bills owned by Econ and Brunner at the discounted price of P39,526,500.82; that on November 27, 1991, Sun Life paid the price by means of a check payable to Brunner; that Brunner, through its president Noel L. Diño, issued to it a receipt with undertaking to deliver the treasury bills to Sun Life; and that on December 4, 1991, Brunner and Diño delivered instead a promissory note, dated November 27, 1991, in which it was made to appear that the transaction was a money placement instead of sale of treasury bills. Thus the issue is whether the money paid to Brunner was the consideration for the sale of treasury bills, as Sun Life claims, or whether it was money intended for placement, as petitioners allege. Petitioners do not deny receipt of P39,526,500.82 from Sun Life. Hence, whether the transaction is considered a sale or money placement does not make the money the "subject matter of litigation" within the meaning of § 2 of Republic Act No. 1405 which prohibits the disclosure or inquiry into bank deposits except "in cases where the money deposited or invested is the subject matter of litigation." Nor will it matter whether the money was "swindled" as Sun Life contends. Second. The examination of bank books and records cannot be justified under Rule 57, § 10. This provision states: Sec. 10. Examination of party whose property is attached and persons indebted to him or controlling his property; delivery of property to officer. — Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party, may be required to attend before the court in which the action is pending, or before a commissioner appointed by the court, and be examined on oath respecting the same. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property, and may be examined on oath. The court may, after such examination, order personal property capable of manual delivery belonging to him, in the possession of the

person so required to attend before the court, to be delivered to the clerk of the court, sheriff, or other proper officer on such terms as may be just, having reference to any lien thereon or claims against the same, to await the judgment in the action. Since, as already stated, the attachment of petitioners' properties was invalid, the examination ordered in connection with such attachment must likewise be considered invalid. Under Rule 57, § 10, as quoted above, such examination is only proper where the property of the person examined has been validly attached. VIII. DISPOSITIVE PORTION: WHEREFORE, the decision dated February 21, 1994 is RECONSIDERED and SET ASIDE and another one is rendered GRANTING the petitions for certiorari and SETTING ASIDE the orders dated February 26, 1992 and September 9, 1992, insofar as they authorize the attachment of petitioners' properties and the examination of bank books and records pertaining to their accounts, and ORDERING respondent Judge Zeus C. Abrogar — (1) forthwith to issue an alias writ of attachment upon the same bond furnished by respondent Sun Life Assurance Company of Canada; (2) direct the sheriff to lift the levy under the original writ of attachment and simultaneously levy on the same properties pursuant to the alias writ so issued; and (3) take such steps as may be necessary to insure that there will be no intervening period between the lifting of the original attachment and the subsequent levy under the alias writ. Petitioners may file the necessary counterbond to prevent subsequent levy or to dissolve the attachment after such levy. IX. PREPARED BY: Imson, Kamille V