[G.R. No. 128996.February 15, 2002]
CARMEN LL. INTENGAN, ROSARIO LL. NERI, and RITA P.
BRAWNER,petitioners, vs. COURT OF APPEALS, DEPARTMENT OF JUSTICE,
AZIZ RAJKOTWALA, WILLIAM FERGUSON, JOVEN REYES, and VIC
LIM,respondents.
D E C I S I O N
DE LEON, JR.,J.:
Before us is a petition for review oncertiorari, seeking the
reversal of the Decision[1]datedJuly 8, 1996of the former Fifteenth
Division[2]of the Court of Appeals in CA-G.R. SP No. 37577 as well
as its Resolution[3]datedApril 16, 1997denying petitioners motion
for reconsideration. The appellate court, in its Decision,
sustained a resolution of the Department of Justice ordering the
withdrawal of informations for violation of Republic Act No. 1405
against private respondents.
The facts are:
On September 21, 1993, Citibank filed a complaint for violation
of section 31,[4]in relation to section 144[5]of the Corporation
Code against two (2) of its officers, Dante L. Santos and Marilou
Genuino. Attached to the complaint was an affidavit[6]executed by
private respondent Vic Lim, a vice-president of Citibank. Pertinent
portions of his affidavit are quoted hereunder:
2.1Sometime this year, the higher management of Citibank, N.A.
assigned me to assist in the investigation of certain
anomalous/highly irregular activities of the Treasurer of the
Global Consumer Group of the bank, namely, Dante L. Santos and the
Asst. Vice President in the office of Mr. Dante L. Santos, namely
Ms. Marilou (also called Malou) Genuino. Ms. Marilou Genuino apart
from being an Assistant Vice President in the office of Mr. Dante
L. Santos also performed the duties of an Account Officer. An
Account Officer in the office of Mr. Dante L.Santospersonally
attends to clients of the bank in the effort to persuade clients to
place and keep their monies in the products of Citibank, NA., such
as peso and dollar deposits, mortgage backed securities and money
placements, among others.
xxxxxxxxx
4.1The investigation in which I was asked to participate was
undertaken because the bank had found records/evidence showing that
Mr. Dante L. Santos and Ms. Malou Genuino, contrary to their
disclosures and the aforementioned bank policy, appeared to have
been actively engaged in business endeavors that were in conflict
with the business of the bank. It was found that with the use of
two (2) companies in which they have personal financial interest,
namely Torrance Development Corporation and Global Pacific
Corporation, they managed or caused existing bank
clients/depositors to divert their money from Citibank, N.A., such
as those placed in peso and dollar deposits and money placements,
to products offered by other companies that were commanding higher
rate of yields. This was done by first transferring bank clients
monies to Torrance and Global which in turn placed the monies of
the bank clients in securities, shares of stock and other
certificates of third parties. It also appeared that out of these
transactions, Mr. Dante L. Santos and Ms. Marilou Genuino derived
substantial financial gains.
5.1In the course of the investigation, I was able to determine
that the bank clients which Mr. Santos and Ms. Genuino
helped/caused to divert their deposits/money placements with
Citibank, NA. toTorranceand Global (their family corporations) for
subsequent investment in securities, shares of stocks and debt
papers in other companies were as follows:
xxx
b)Carmen Intengan
xxx
d)Rosario Neri
xxx
i)Rita Brawner
All the above persons/parties have long standing accounts with
Citibank, N.A. in savings/dollar deposits and/or in trust accounts
and/or money placements.
As evidence, Lim annexed bank records purporting to establish
the deception practiced bySantosand Genuino. Some of the documents
pertained to the dollar deposits of petitioners Carmen Ll.
Intengan, Rosario Ll. Neri, and Rita P. Brawner, as follows:
a)Annex A-6[7]- an Application for Money Transfer in the amount
of US $140,000.00, executed by Intengan in favor of Citibank $ S/A
No. 24367796, to be debited from her Account No. 22543341;
b)Annex A-7[8]- a Money Transfer Slip in the amount of US
$45,996.30, executed by Brawner in favor of Citibank $ S/A No.
24367796, to be debited from her Account No. 22543236; and
c)Annex A-9[9]- an Application for Money Transfer in the amount
of US $100,000.00, executed by Neri in favor of Citibank $ S/A No.
24367796, to be debited from her Account No. 24501018.
In turn, private respondent Joven Reyes, vice-president/business
manager of the Global Consumer Banking Group of Citibank, admits to
having authorized Lim to state the names of the clients involved
and to attach the pertinent bank records, including those of
petitioners.[10]He states that private respondents Aziz Rajkotwala
and William Ferguson, Citibank, N.A. Global Consumer Banking
Country Business Manager and Country Corporate Officer,
respectively, had no hand in the disclosure, and that he did so
upon the advice of counsel.
In his memorandum, the Solicitor General described the scheme as
having been conducted in this manner:
First step:Santosand/or Genuino would tell the bank client that
they knew of financial products of other companies that were
yielding higher rates of interests in which the bank client can
place his money. Acting on this information, the bank client would
then authorize the transfer of his funds from his Citibank account
to the Citibank account of eitherTorranceor Global.
The transfer of the Citibank clients deposits was done through
the accomplishment of either an Application For Managers Checks or
a Term Investment Application in favor of Global orTorrancethat was
prepared/filed by Genuino herself.
Upon approval of theApplication for Managers ChecksorTerm
Investment Application, the funds of the bank client covered
thereof were then deposited in the Citibank accounts
ofTorranceand/or Global.
Second step: Once the said fund transfers had been effected,
Global and/or Torrance would then issue its/ their checks drawn
against its/their Citibank accounts in favor of the other companies
whose financial products, such as securities, shares of stocks and
other certificates, were offering higher yields.
Third step: On maturity date(s) of the placements made
byTorranceand/or Global in the other companies, using the monies of
the Citibank client, the other companies would then. return the
placements to Global and/orTorrancewith the corresponding interests
earned.
Fourth step: Upon receipt by Global and/orTorranceof the
remittances from the other companies, Global and/orTorrancewould
then issue its/their own checks drawn against their Citibank
accounts in favor ofSantosand Genuino.
The amounts covered by the checks represent the shares
ofSantosand Genuino in the margins Global and/orTorrancehad
realized out of the placements [using the diverted monies of the
Citibank clients] made with the other companies.
Fifth step: At the same time, Global and/orTorrancewould also
issue its/their check(s) drawn against its/their Citibank accounts
in favor of the bank client.
The check(s) cover the principal amount (or parts thereof) which
the Citibank client had previously transferred, with the help of
Santos and/or Genuino, from his Citibank account to the Citibank
account(s) of Global and/or Torrance for placement in the other
companies, plus the interests or earnings his placements in other
companies had made less the spreads made by Global, Torrance,
Santos and Genuino.
The complaints which were docketed as I.S. Nos. 93-9969,
93-10058 and 94-1215 were subsequently amended to include a charge
ofestafaunder Article 315, paragraph 1(b)[11]of the Revised Penal
Code.
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.
In due time, Lim and Reyes filed their respective
counter-affidavits.[12]In separate Memoranda datedMarch 8,
1994andMarch 15, 19942nd Assistant Provincial Prosecutor Hermino T.
Ubana, Sr. recommended the dismissal of petitioners complaints. The
recommendation was overruled by Provincial Prosecutor Mauro M.
Castro who, in a Resolution datedAugust 18, 1994,[13]directed the
filing of informations against private respondents for alleged
violation of Republic Act No. 1405, otherwise known as the Bank
Secrecy Law.
Private respondents counsel then filed an appeal before the
Department of Justice (DOJ). OnNovember 17, 1994, then DOJ
Secretary Franklin M. Drilon issued a Resolution[14]ordering,inter
alia,the withdrawal of the aforesaid informations against private
respondents. Petitioners motion for reconsideration[15]was denied
by DOJ Acting Secretary Demetrio G. Demetria in a Resolution
datedMarch 6, 1995.[16]Initially, petitioners sought the reversal
of the DOJ resolutionsviaa petition forcertiorariandmandamusfiled
with this Court, docketed as G.R. No. 119999-120001.However, the
former First Division of this Court, in a Resolution datedJune 5,
1995,[17]referred the matter to the Court of the Appeals, on the
basis of the latter tribunals concurrent jurisdiction to issue the
extraordinary writs therein prayed for.The petition was docketed as
CA-G.R. SP No. 37577 in the Court of Appeals.
OnJuly 8, 1996, the Court of Appeals rendered judgment
dismissing the petition in CA-G.R. SP No. 37577 and declared
therein, as follows:
Clearly, the disclosure of petitioners deposits was necessary to
establish the allegation thatSantosand Genuino had violated Section
31 of the Corporation Code in acquiring any interest adverse to the
corporation in respect of any matter which has been reposed in him
in confidence. To substantiate the alleged scheme ofSantosand
Genuino, private respondents had to present the records of the
monies which were manipulated by the two officers which included
the bank records of herein petitioners.
Although petitioners were not the parties involved in IS. No.
93-8469, their accounts were relevant to the complete prosecution
of the case against Santos and Genuino and the respondent DOJ
properly ruled that the disclosure of the same falls under the last
exception of R.A. No. 1405. That ruling is consistent with the
principle laid down in the case of Mellon Bank, N.A. vs. Magsino
(190 SCRA 633) where the Supreme Court allowed the testimonies on
the bank deposits of someone not a party to the case as it found
that said bank deposits were material or relevant to the
allegations in the complaint. Significantly, therefore, as long as
the bank deposits are material to the case, although not
necessarily the direct subject matter thereof, a disclosure of the
same is proper and falls within the scope of the exceptions
provided for by R.A. No. 1405.
xxxxxxxxx
Moreover, the language of the law itself is clear and cannot be
subject to different interpretations. A reading of the provision
itself would readily reveal that the exception or in cases where
the money deposited or invested is the subject matter of the
litigation is not qualified by the phrase upon order of competent
Court which refers only to cases of bribery or dereliction of duty
of public officials.
Petitioners motion for reconsideration was similarly denied in a
Resolution datedApril 16, 1997. Appeal was made in due time to this
Court.
The instant petition was actually denied by the former Third
Division of this Court in a Resolution[18]datedJuly 16, 1997, on
the ground that petitioners had failed to show that a reversible
error had been committed. On motion, however, the petition was
reinstated[19]and eventually given due course.[20]In assailing the
appellate courts findings, petitioners assert that the disclosure
of their bank records was unwarranted and illegal for the following
reasons:
I.
IN BLATANT VIOLATION OF R.A. NO. 1405, PRIVATE RESPONDENTS
ILLEGALLY MADE DISCLOSURES OF PETITIONERS CONFIDENTIAL BANK
DEPOSITS FOR THEIR SELFISH ENDS IN PROSECUTING THEIR COMPLAINT IN
IS. NO. 93-8469 THAT DID NOT INVOLVE PETITIONERS.
II.
PRIVATE RESPONDENTS DISCLOSURES DO NOT FALL UNDER THE FOURTH
EXCEPTION OF R.A. NO. 1405 (i.e., in cases where the money
deposited or invested is the subject matter of the litigation), NOR
UNDER ANY OTHER EXCEPTION:
(1)
PETITIONERS DEPOSITS ARE NOT INVOLVED IN ANY LITIGATION BETWEEN
PETITIONERS AND RESPONDENTS. THERE IS NO LITIGATION BETWEEN THE
PARTIES, MUCH LESS ONE INVOLVING PETITIONERS DEPOSITS AS THE
SUBJECT MATTER THEREOF.
(2)
EVEN ASSUMINGARGUENDOTHAT THERE IS A LITIGATION INVOLVING
PETITIONERS DEPOSITS AS THE SUBJECT MATTER THEREOF, PRIVATE
RESPONDENTS DISCLOSURES OF PETITIONERS DEPOSITS ARE NEVERTHELESS
ILLEGAL FOR WANT OF THE REQUISITE COURT ORDER, IN VIOLATION OF R.A.
NO. 1405.
III.
THEREFORE, PETITIONERS ARE ENTITLED TO PROSECUTE PRIVATE
RESPONDENTS FOR VIOLATIONS OF R.A. NO. 1405 FOR HAVING ILLEGALLY
DISCLOSED PETITIONERS CONFIDENTIAL BANK DEPOSITS AND RECORDS IN IS.
NO. 93-8469.
Apart from the reversal of the decision and resolution of the
appellate court as well as the resolutions of the Department of
Justice, petitioners pray that the latter agency be directed to
issue a resolution ordering the Provincial Prosecutor of Rizal to
file the corresponding informations for violation of Republic Act
No. 1405 against private respondents.
The petition is not meritorious.
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 asingle factwhich 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 isnotRepublicAct
No. 1405butRepublic Act (RA) No. 6426,known as the Foreign Currency
Deposit Act of thePhilippines, section 8 of which provides:
Sec. 8.Secrecy of Foreign Currency Deposits.-All foreign
currency deposits authorized under this Act, as amended by
Presidential Decree No. 1035, as well as foreign currency deposits
authorized under Presidential Decree No. 1034, are hereby declared
as and considered of an absolutely confidential nature and,except
upon the written permission of the depositor, in no instance shall
such foreign currency deposits be examined, inquired or looked into
by any person, government official bureau or office whether
judicial or administrative or legislative or any other entity
whether public or private:Provided, however, that said foreign
currency deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body,
government agency or any administrative body
whatsoever.[21](italics supplied)
Thus, under R.A. No. 6426 there is only asingleexception 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 onSeptember 29, 2001of R.A. No. 9160
otherwise known as the Anti-Money Laundering Act of 2001.
A case for violation ofRepublic Act No. 6426should have been the
proper case brought against private respondents. Private
respondents Lim and Reyes admitted that they had disclosed details
of petitioners dollar depositswithout 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, calledmalum prohibitum.In this regard,
it has been held that:
While it is true that, as a rule and on principles of abstract
justice, men are not and should not be held criminally responsible
for acts committed by them without guilty knowledge and criminal or
at least evil intent xxx, the courts have always recognized the
power of the legislature, on grounds of public policy and compelled
by necessity, the great master of things, to forbid in a limited
class of cases the doing of certain acts, and to make their
commission criminal without regard to the intent of the doer. xxx
In such cases no judicial authority has the power to require, in
the enforcement of the law, such knowledge or motive to be shown.
As was said in the case of Statevs.McBrayer xxx:
It is a mistaken notion that positive, willful intent, as
distinguished from a mere intent, to violate the criminal law, is
an essential ingredient in every criminal offense, and that where
there is the absence of such intent there is no offense; this is
especially so as to statutory offenses. When the statute plainly
forbids an act to be done, and it is done by some person, the law
implies conclusively the guilty intent, although the offender was
honestly mistaken as to the meaning of the law he violates. When
the language is plain and positive, and the offense is not made to
depend upon the positive, willful intent and purpose, nothing is
left to interpretation.[22]Ordinarily, the dismissal of the instant
petition would have been without prejudice to the filing of the
proper charges against private respondents. The matter would have
ended here were it not for the intervention of time, specifically
the lapse thereof. So as not to unduly prolong the settlement of
the case, we are constrained to rule on a material issue even
though it was not raised by the parties. We refer to the issue of
prescription.
Republic Act No. 6426 being a special law, the provisions of Act
No. 3326,[23]as amended by Act No. 3763, are applicable:
SECTION 1.Violations penalized by special acts shall, unless
otherwise provided in such acts, prescribe in accordance with the
following rules: (a) after a year for offences punished only by a
fine or by imprisonment for not more than one month, or both: (b)
after four years for those punished by imprisonment for more than
one month, but less than two years; (c) after eight years for those
punished by imprisonment for two years or more, but less than six
years; and (d) after twelve years for any other offence punished by
imprisonment for six years or more, except the crime of treason,
which shall prescribe after twenty years:Provided, however,That all
offences against any law or part of law administered by the Bureau
of Internal Revenue shall prescribe after five years. Violations
penalized by municipal ordinances shall prescribe after two
months.
Violations of the regulations or conditions of certificates of
public convenience issued by the Public Service Commission shall
prescribe after two months.
SEC. 2. Prescription shall begin to run from the day of the
commission of the violation of the law, and if the same be not
known at the time, from the discovery thereof and the institution
of judicial proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty person, and shall begin to run again
if the proceedings are dismissed for reasons not constituting
jeopardy.
A violation of Republic Act No. 6426 shall subject the offender
to imprisonment of not less than one year nor more than five years,
or by a fine of not less than five thousand pesos nor more than
twenty-five thousand pesos, or both.[24]Applying Act No. 3326, the
offense prescribes in eight years.[25]Per available records,
private respondents may no longer be haled before the courts for
violation of Republic Act No. 6426. Private respondent Vic Lim made
the disclosure in September of 1993 in his affidavit submitted
before the Provincial Fiscal.[26]In her
complaint-affidavit,[27]Intengan stated that she learned of the
revelation of the details of her foreign currency bank account
onOctober 14, 1993. On the other hand, Neri asserts that she
discovered the disclosure onOctober 24, 1993.[28]As to Brawner, the
material date isJanuary 5, 1994.[29]Based on any of these dates,
prescription has set in.[30]The filing of the complaint or
information in the case at bar for alleged violation of Republic
Act No. 1405 did not have the effect of tolling the prescriptive
period. For it is the filing of the complaint or information
corresponding to the correct offense which produces that
effect.[31]It may well be argued that the foregoing disquisition
would leave petitioners with no remedy in law. We point out,
however, that the confidentiality of foreign currency deposits
mandated by Republic Act No. 6426, as amended by Presidential
Decree No. 1246, came into effectas far back as 1977.Hence,
ignorance thereof cannot be pretended. On one hand, the existence
of laws is a matter of mandatory judicial notice;[32]on the
other,ignorantia legis non excusat.[33]Even during the pendency of
this appeal, nothing prevented the petitioners from filing a
complaint charging the correct offense against private respondents.
This was not done, as everyone involved was content to submit the
case on the basis of an alleged violation of Republic Act No. 1405
(Bank Secrecy Law), however, incorrectly invoked.[34]WHEREFORE, the
petition is hereby DENIED. No pronouncement as to costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing,andBuena,
JJ.,concur.
G.R. No. 90027 March 3, 1993
CA AGRO-INDUSTRIAL DEVELOPMENT CORP.,petitioner,vs.THE HONORABLE
COURT OF APPEALS and SECURITY BANK AND TRUST
COMPANY,respondents.
Dolorfino & Dominguez Law Offices for petitioner.
Danilo B. Banares for private respondent.
DAVIDE, JR.,J.:Is the contractual relation between a commercial
bank and another party in a contract of rent of a safety deposit
box with respect to its contents placed by the latter one of bailor
and bailee or one of lessor and lessee?
This is the crux of the present controversy.
On 3 July 1979, petitioner (through its President, Sergio
Aguirre) and the spouses Ramon and Paula Pugao entered into an
agreement whereby the former purchased from the latter two (2)
parcels of land for a consideration of P350,625.00. Of this amount,
P75,725.00 was paid as downpayment while the balance was covered by
three (3) postdated checks. Among the terms and conditions of the
agreement embodied in a Memorandum of True and Actual Agreement of
Sale of Land were that the titles to the lots shall be transferred
to the petitioner upon full payment of the purchase price and that
the owner's copies of the certificates of titles thereto, Transfer
Certificates of Title (TCT) Nos. 284655 and 292434, shall be
deposited in a safety deposit box of any bank. The same could be
withdrawn only upon the joint signatures of a representative of the
petitioner and the Pugaos upon full payment of the purchase price.
Petitioner, through Sergio Aguirre, and the Pugaos then rented
Safety Deposit Box No. 1448 of private respondent Security Bank and
Trust Company, a domestic banking corporation hereinafter referred
to as the respondent Bank. For this purpose, both signed a contract
of lease (Exhibit "2") which contains,inter alia, the following
conditions:
13. The bank is not a depositary of the contents of the safe and
it has neither the possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except
herein expressly provided, and it assumes absolutely no liability
in connection therewith.1After the execution of the contract, two
(2) renter's keys were given to the renters one to Aguirre (for the
petitioner) and the other to the Pugaos. A guard key remained in
the possession of the respondent Bank. The safety deposit box has
two (2) keyholes, one for the guard key and the other for the
renter's key, and can be opened only with the use of both keys.
Petitioner claims that the certificates of title were placed inside
the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to buy from
the petitioner the two (2) lots at a price of P225.00 per square
meter which, as petitioner alleged in its complaint, translates to
a profit of P100.00 per square meter or a total of P280,500.00 for
the entire property. Mrs. Ramos demanded the execution of a deed of
sale which necessarily entailed the production of the certificates
of title. In view thereof, Aguirre, accompanied by the Pugaos, then
proceeded to the respondent Bank on 4 October 1979 to open the
safety deposit box and get the certificates of title. However, when
opened in the presence of the Bank's representative, the box
yielded no such certificates. Because of the delay in the
reconstitution of the title, Mrs. Ramos withdrew her earlier offer
to purchase the lots; as a consequence thereof, the petitioner
allegedly failed to realize the expected profit of P280,500.00.
Hence, the latter filed on 1 September 1980 a complaint2for damages
against the respondent Bank with the Court of First Instance (now
Regional Trial Court) of Pasig, Metro Manila which docketed the
same as Civil Case No. 38382.In its Answer with
Counterclaim,3respondent Bank alleged that the petitioner has no
cause of action because of paragraphs 13 and 14 of the contract of
lease (Exhibit "2"); corollarily, loss of any of the items or
articles contained in the box could not give rise to an action
against it. It then interposed a counterclaim for exemplary damages
as well as attorney's fees in the amount of P20,000.00. Petitioner
subsequently filed an answer to the counterclaim.4In due course,
the trial court, now designated as Branch 161 of the Regional Trial
Court (RTC) of Pasig, Metro Manila, rendered a decision5adverse to
the petitioner on 8 December 1986, the dispositive portion of which
reads:WHEREFORE, premises considered, judgment is hereby rendered
dismissing plaintiff's complaint.
On defendant's counterclaim, judgment is hereby rendered
ordering plaintiff to pay defendant the amount of FIVE THOUSAND
(P5,000.00) PESOS as attorney's fees.
With costs against plaintiff.6The unfavorable verdict is based
on the trial court's conclusion that under paragraphs 13 and 14 of
the contract of lease, the Bank has no liability for the loss of
the certificates of title. The court declared that the said
provisions are binding on the parties.
Its motion for reconsideration7having been denied, petitioner
appealed from the adverse decision to the respondent Court of
Appeals which docketed the appeal as CA-G.R. CV No. 15150.
Petitioner urged the respondent Court to reverse the challenged
decision because the trial court erred in (a) absolving the
respondent Bank from liability from the loss, (b) not declaring as
null and void, for being contrary to law, public order and public
policy, the provisions in the contract for lease of the safety
deposit box absolving the Bank from any liability for loss, (c) not
concluding that in this jurisdiction, as well as under American
jurisprudence, the liability of the Bank is settled and (d)
awarding attorney's fees to the Bank and denying the petitioner's
prayer for nominal and exemplary damages and attorney's fees.8In
its Decision promulgated on 4 July 1989,9respondent Court affirmed
the appealed decision principally on the theory that the contract
(Exhibit "2") executed by the petitioner and respondent Bank is in
the nature of a contract of lease by virtue of which the petitioner
and its co-renter were given control over the safety deposit box
and its contents while the Bank retained no right to open the said
box because it had neither the possession nor control over it and
its contents. As such, the contract is governed by Article 1643 of
the Civil Code10which provides:Art. 1643. In the lease of things,
one of the parties binds himself to give to another the enjoyment
or use of a thing for a price certain, and for a period which may
be definite or indefinite. However, no lease for more than
ninety-nine years shall be valid.
It invokedTolentino vs. Gonzales11which held that the owner of
the property loses his control over the property leased during the
period of the contract and Article 1975 of the Civil Code which
provides:Art. 1975. The depositary holding certificates, bonds,
securities or instruments which earn interest shall be bound to
collect the latter when it becomes due, and to take such steps as
may be necessary in order that the securities may preserve their
value and the rights corresponding to them according to law.
The above provision shall not apply to contracts for the rent of
safety deposit boxes.
and then concluded that "[c]learly, the defendant-appellee is
not under any duty to maintain the contents of the box. The
stipulation absolving the defendant-appellee from liability is in
accordance with the nature of the contract of lease and cannot be
regarded as contrary to law, public order and public policy."12The
appellate court was quick to add, however, that under the contract
of lease of the safety deposit box, respondent Bank is not
completely free from liability as it may still be made answerable
in case unauthorized persons enter into the vault area or when the
rented box is forced open. Thus, as expressly provided for in
stipulation number 8 of the contract in question:8. The Bank shall
use due diligence that no unauthorized person shall be admitted to
any rented safe and beyond this, the Bank will not be responsible
for the contents of any safe rented from it.13Its motion for
reconsideration14having been denied in the respondent Court's
Resolution of 28 August 1989,15petitioner took this recourse under
Rule 45 of the Rules of Court and urges Us to review and set aside
the respondent Court's ruling. Petitioner avers that both the
respondent Court and the trial court (a) did not properly and
legally apply the correct law in this case, (b) acted with grave
abuse of discretion or in excess of jurisdiction amounting to lack
thereof and (c) set a precedent that is contrary to, or is a
departure from precedents adhered to and affirmed by decisions of
this Court and precepts in American jurisprudence adopted in the
Philippines. It reiterates the arguments it had raised in its
motion to reconsider the trial court's decision, the brief
submitted to the respondent Court and the motion to reconsider the
latter's decision. In a nutshell, petitioner maintains that
regardless of nomenclature, the contract for the rent of the safety
deposit box (Exhibit "2") is actually a contract of deposit
governed by Title XII, Book IV of the Civil Code of
thePhilippines.16Accordingly, it is claimed that the respondent
Bank is liable for the loss of the certificates of title pursuant
to Article 1972 of the said Code which provides:Art. 1972. The
depositary is obliged to keep the thing safely and to return it,
when required, to the depositor, or to his heirs and successors, or
to the person who may have been designated in the contract. His
responsibility, with regard to the safekeeping and the loss of the
thing, shall be governed by the provisions of Title I of this
Book.
If the deposit is gratuitous, this fact shall be taken into
account in determining the degree of care that the depositary must
observe.
Petitioner then quotes a passage from American
Jurisprudence17which is supposed to expound on the prevailing rule
in the United States, to wit:The prevailing rule appears to be that
where a safe-deposit company leases a safe-deposit box or safe and
the lessee takes possession of the box or safe and places therein
his securities or other valuables, the relation of bailee and bail
or is created between the parties to the transaction as to such
securities or other valuables; the fact that thesafe-deposit
company does not know, and that it is not expected that it shall
know, the character or description of the property which is
deposited in such safe-deposit box or safe does not change that
relation. That access to the contents of the safe-deposit box can
be had only by the use of a key retained by the lessee ( whether it
is the sole key or one to be used in connection with one retained
by the lessor) does not operate to alter the foregoing rule. The
argument that there is not, in such a case, a delivery of exclusive
possession and control to the deposit company, and that therefore
the situation is entirely different from that of ordinary bailment,
has been generally rejected by the courts, usually on the ground
that as possession must be either in the depositor or in the
company, it should reasonably be considered as in the latter rather
than in the former, since the company is, by the nature of the
contract, given absolute control of access to the property, and the
depositor cannot gain access thereto without the consent and active
participation of the company. . . . (citations omitted).
and a segment from Words and Phrases18which states that a
contract for the rental of a bank safety deposit box in
consideration of a fixed amount at stated periods is a bailment for
hire.Petitioner further argues that conditions 13 and 14 of the
questioned contract are contrary to law and public policy and
should be declared null and void. In support thereof, it cites
Article 1306 of the Civil Code which provides that parties to a
contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public
policy.
After the respondent Bank filed its comment, this Court gave due
course to the petition and required the parties to simultaneously
submit their respective Memoranda.
The petition is partly meritorious.
We agree with the petitioner's contention that the contract for
the rent of the safety deposit box is not an ordinary contract of
lease as defined in Article 1643 of the Civil Code. However, We do
not fully subscribe to its view that the same is a contract of
deposit that is to be strictly governed by the provisions in the
Civil Code on deposit;19the contract in the case at bar is a
special kind of deposit. It cannot be characterized as an ordinary
contract of lease under Article 1643 because the full and absolute
possession and control of the safety deposit box was not given to
the joint renters the petitioner and the Pugaos. The guard key of
the box remained with the respondent Bank; without this key,
neither of the renters could open the box. On the other hand, the
respondent Bank could not likewise open the box without the
renter's key. In this case, the said key had a duplicate which was
made so that both renters could have access to the box.Hence, the
authorities cited by the respondent Court20on this point do not
apply. Neither could Article 1975, also relied upon by the
respondent Court, be invoked as an argument against the deposit
theory. Obviously, the first paragraph of such provision cannot
apply to a depositary of certificates, bonds, securities or
instruments which earn interest if such documents are kept in a
rented safety deposit box. It is clear that the depositary cannot
open the box without the renter being present.We observe, however,
that the deposit theory itself does not altogether find unanimous
support even in American jurisprudence. We agree with the
petitioner that under the latter, the prevailing rule is that the
relation between a bank renting out safe-deposit boxes and its
customer with respect to the contents of the box is that of a bail
or and bailee, the bailment being for hire and mutual
benefit.21This is just the prevailing view because:There is,
however, some support for the view that the relationship in
question might be more properly characterized as that of landlord
and tenant, or lessor and lessee. It has also been suggested that
it should be characterized as that of licensor and licensee. The
relation between a bank, safe-deposit company, or storage company,
and the renter of a safe-deposit box therein, is often described as
contractual, express or implied, oral or written, in whole or in
part. But there is apparently no jurisdiction in which any rule
other than that applicable to bailments governs questions of the
liability and rights of the parties in respect of loss of the
contents of safe-deposit boxes.22(citations omitted)In the context
of our laws which authorize banking institutions to rent out safety
deposit boxes, it is clear that in this jurisdiction, the
prevailing rule in the United States has been adopted. Section 72
of the General Banking Act23pertinently provides:Sec. 72. In
addition to the operations specifically authorized elsewhere in
this Act, banking institutions other than building and loan
associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects,
and rent safety deposit boxes for the safeguarding of such
effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections
(a), (b) and (c) of this section asdepositoriesor as agents. . .
.24(emphasis supplied)Note that the primary function is still found
within the parameters of a contract ofdeposit,i.e., the receiving
in custody of funds, documents and other valuable objects for
safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this
principal function. A contract of deposit may be entered into
orally or in writing25and, pursuant to Article 1306 of the Civil
Code, the parties thereto may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are
not contrary to law, morals, good customs, public order or public
policy. The depositary's responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book
IV of the Civil Code. Accordingly, the depositary would be liable
if, in performing its obligation, it is found guilty of fraud,
negligence, delay or contravention of the tenor of the
agreement.26In the absence of any stipulation prescribing the
degree of diligence required, that of a good father of a family is
to be observed.27Hence, any stipulation exempting the depositary
from any liability arising from the loss of the thing deposited on
account of fraud, negligence or delay would be void for being
contrary to law and public policy. In the instant case, petitioner
maintains that conditions 13 and 14 of the questioned contract of
lease of the safety deposit box, which read:13. The bank is not a
depositary of the contents of the safe and it has neither the
possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except
herein expressly provided, and it assumes absolutely no liability
in connection therewith.28are void as they are contrary to law and
public policy. We find Ourselves in agreement with this proposition
for indeed, said provisions are inconsistent with the respondent
Bank's responsibility as a depositary under Section 72(a) of the
General Banking Act. Both exempt the latter from any liability
except as contemplated in condition 8 thereof which limits its duty
to exercise reasonable diligence only with respect to who shall be
admitted to any rented safe, to wit:
8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank will
not be responsible for the contents of any safe rented from
it.29Furthermore, condition 13 stands on a wrong premise and is
contrary to the actual practice of the Bank. It is not correct to
assert that the Bank has neither the possession nor control of the
contents of the box since in fact, the safety deposit box itself is
located in its premises and is under its absolute control;
moreover, the respondent Bank keeps the guard key to the said box.
As stated earlier, renters cannot open their respective boxes
unless the Bank cooperates by presenting and using this guard key.
Clearly then, to the extent above stated, the foregoing conditions
in the contract in question are void and ineffective. It has been
said:
With respect to property deposited in a safe-deposit box by a
customer of a safe-deposit company, the parties, since the relation
is a contractual one, may by special contract define their
respective duties or provide for increasing or limiting the
liability of the deposit company, provided such contract is not in
violation of law or public policy. It must clearly appear that
there actually was such a special contract, however, in order to
vary the ordinary obligations implied by law from the relationship
of the parties; liability of the deposit company will not be
enlarged or restricted by words of doubtful meaning. The company,
in rentingsafe-deposit boxes, cannot exempt itself from liability
for loss of the contents by its own fraud or negligence or that of
its agents or servants, and if a provision of the contract may be
construed as an attempt to do so, it will be held ineffective for
the purpose. Although it has been held that the lessor of a
safe-deposit box cannot limit its liability for loss of the
contents thereof through its own negligence, the view has been
taken that such a lessor may limits its liability to some extent by
agreement or stipulation.30(citations omitted)Thus, we reach the
same conclusion which the Court of Appeals arrived at, that is,
that the petition should be dismissed, but on grounds quite
different from those relied upon by the Court of Appeals. In the
instant case, the respondent Bank's exoneration cannot, contrary to
the holding of the Court of Appeals, be based on or proceed from a
characterization of the impugned contract as a contract of lease,
but rather on the fact that no competent proof was presented to
show that respondent Bank was aware of the agreement between the
petitioner and the Pugaos to the effect that the certificates of
title were withdrawable from the safety deposit box only upon both
parties' joint signatures, and that no evidence was submitted to
reveal that the loss of the certificates of title was due to the
fraud or negligence of the respondent Bank. This in turn flows from
this Court's determination that the contract involved was one of
deposit. Since both the petitioner and the Pugaos agreed that each
should have one (1) renter's key, it was obvious that either of
them could ask the Bank for access to the safety deposit box and,
with the use of such key and the Bank's own guard key, could open
the said box, without the other renter being present.
Since, however, the petitioner cannot be blamed for the filing
of the complaint and no bad faith on its part had been established,
the trial court erred in condemning the petitioner to pay the
respondent Bank attorney's fees. To this extent, the Decision
(dispositive portion) of public respondent Court of Appeals must be
modified.
WHEREFORE, the Petition for Review is partially GRANTED by
deleting the award for attorney's fees from the 4 July 1989
Decision of the respondent Court of Appeals in CA-G.R. CV No.
15150. As modified, and subject to the pronouncement We made above
on the nature of the relationship between the parties in a contract
of lease of safety deposit boxes, the dispositive portion of the
said Decision is hereby AFFIRMED and the instant Petition for
Review is otherwise DENIED for lack of merit.
No pronouncement as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave.
G.R. No. 102970 May 13, 1993
LUZAN SIA,petitioner,vs.COURT OF APPEALS and SECURITY BANK and
TRUST COMPANY,respondents.
Asuncion Law Offices for petitioner.
Cauton, Banares, Carpio & Associates for private
respondent.
DAVIDE, JR.,J.:The Decision of public respondent Court of
Appeals in CA-G.R. CV No. 26737, promulgated on 21 August
1991,1reversing and setting aside the Decision, dated 19 February
1990,2of Branch 47 of the Regional Trial Court (RTC) of Manila in
Civil Case No. 87-42601, entitled "LUZAN SIAvs.SECURITY BANK and
TRUST CO.," is challenged in this petition for review
oncertiorariunder Rule 45 of the Rules Court.Civil Case No.
87-42601 is an action for damages arising out of the destruction or
loss of the stamp collection of the plaintiff (petitioner herein)
contained in Safety Deposit Box No. 54 which had been rented from
the defendant pursuant to a contract denominated as a Lease
Agreement.3Judgment therein was rendered in favor of the
dispositive portion of which reads:WHEREFORE, premises considered,
judgment is hereby rendered in favor of the plaintiff and against
the defendant, Security Bank & Trust Company, ordering the
defendant bank to pay the plaintiff the sum of
a) Twenty Thousand Pesos (P20,000.00), Philippine Currency, as
actual damages;
b) One Hundred Thousand Pesos (P100,000.00), Philippine
Currency, as moral damages; and
c) Five Thousand Pesos (P5,000.00), Philippine Currency, as
attorney's fees and legal expenses.
The counterclaim set up by the defendant are hereby dismissed
for lack of merit.
No costs.
SO ORDERED.4The antecedent facts of the present controversy are
summarized by the public respondent in its challenged decision as
follows:The plaintiff rented on March 22, 1985 the Safety Deposit
Box No. 54 of the defendant bank at its Binondo Branch located at
the Fookien Times Building, Soler St., Binondo, Manila wherein he
placed his collection of stamps. The said safety deposit box leased
by the plaintiff was at the bottom or at the lowest level of the
safety deposit boxes of the defendant bank at its aforesaid Binondo
Branch.
During the floods that took place in 1985 and 1986, floodwater
entered into the defendant bank's premises, seeped into the safety
deposit box leased by the plaintiff and caused, according to the
plaintiff, damage to his stamps collection. The defendant bank
rejected the plaintiff's claim for compensation for his damaged
stamps collection, so, the plaintiff instituted an action for
damages against the defendant bank.
The defendant bank denied liability for the damaged stamps
collection of the plaintiff on the basis of the "Rules and
Regulations Governing the Lease of Safe Deposit Boxes" (Exhs.
"A-1", "1-A"), particularly paragraphs 9 and 13, which reads
(sic):
"9. The liability of the Bank by reason of the lease, is limited
to the exercise of the diligence to prevent the opening of the safe
by any person other than the Renter, his authorized agent or legal
representative;
xxx xxx xxx
"13. The Bank is not a depository of the contents of the safe
and it has neither the possession nor the control of the same. The
Bank has no interest whatsoever in said contents, except as herein
provided, and it assumes absolutely no liability in connection
therewith."
The defendant bank also contended that its contract with the
plaintiff over safety deposit box No. 54 was one of lease and not
of deposit and, therefore, governed by the lease agreement (Exhs.
"A", "L") which should be the applicable law; that the destruction
of the plaintiff's stamps collection was due to a calamity beyond
obligation on its part to notify the plaintiff about the
floodwaters that inundated its premises at Binondo branch which
allegedly seeped into the safety deposit box leased to the
plaintiff.
The trial court then directed that an ocular inspection on (sic)
the contents of the safety deposit box be conducted, which was done
on December 8, 1988 by its clerk of court in the presence of the
parties and their counsels. A report thereon was then submitted on
December 12, 1988 (Records, p. 98-A) and confirmed in open court by
both parties thru counsel during the hearing on the same date
(Ibid., p. 102) stating:
"That the Safety Box Deposit No. 54 was opened by both plaintiff
Luzan Sia and the Acting Branch Manager Jimmy B. Ynion in the
presence of the undersigned, plaintiff's and defendant's counsel.
Said Safety Box when opened contains two albums of different sizes
and thickness, length and width and a tin box with printed word
'Tai Ping Shiang Roast Pork in pieces with Chinese designs and
character."
Condition of the above-stated Items
"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in length, 8 inches in
width and 3/4 in thick. The leaves of the album are attached to
every page and cannot be lifted without destroying it, hence the
stamps contained therein are no longer visible.
2. The second album measure 12 1/2 inches in length, 9 3/4 in
width 1 inch thick. Some of its pages can still be lifted. The
stamps therein can still be distinguished but beyond restoration.
Others have lost its original form.
3. The tin box is rusty inside. It contains an album with
several pieces of papers stuck up to the cover of the box. The
condition of the album is the second abovementioned album."5The
SECURITY BANK AND TRUST COMPANY, hereinafter referred to as SBTC,
appealed the trial court's decision to the public respondent Court
of Appeals. The appeal was docketed as CA-G.R. CV No. 26737.In
urging the public respondent to reverse the decision of the trial
court, SBTC contended that the latter erred in (a) holding that the
lease agreement is a contract of adhesion; (b) finding that the
defendant had failed to exercise the required diligence expected of
a bank in maintaining the safety deposit box; (c) awarding to the
plaintiff actual damages in the amount of P20,000.00, moral damages
in the amount of P100,000.00 and attorney's fees and legal expenses
in the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its decision the
dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby REVERSED and
instead the appellee's complaint is hereby DISMISSED. The appellant
bank's counterclaim is likewise DISMISSED. No costs.6In reversing
the trial court's decision and absolving SBTC from liability, the
public respondent found and ruled that:a) the fine print in the
"Lease Agreement " (Exhibits "A" and "1" ) constitutes the terms
and conditions of the contract of lease which the appellee (now
petitioner) had voluntarily and knowingly executed with SBTC;
b) the contract entered into by the parties regarding Safe
Deposit Box No. 54 was not a contract of deposit wherein the bank
became a depositary of the subject stamp collection; hence, as
contended by SBTC, the provisions of Book IV, Title XII of the
Civil Code on deposits do not apply;
c) The following provisions of the questioned lease agreement of
the safety deposit box limiting SBTC's liability:
9. The liability of the bank by reason of the lease, is limited
to the exercise of the diligence to prevent the opening of the Safe
by any person other than the Renter, his authorized agent or legal
representative.
xxx xxx xxx
13. The bank is not a depository of the contents of the Safe and
it has neither the possession nor the control of the same. The Bank
has no interest whatsoever in said contents, except as herein
provided, and it assumes absolutely no liability in connection
therewith.
are valid since said stipulations are not contrary to law,
morals, good customs, public order or public policy; and
d) there is no concrete evidence to show that SBTC failed to
exercise the required diligence in maintaining the safety deposit
box; what was proven was that the floods of 1985 and 1986, which
were beyond the control of SBTC, caused the damage to the stamp
collection; said floods were fortuitous events which SBTC should
not be held liable for since it was not shown to have participated
in the aggravation of the damage to the stamp collection; on the
contrary, it offered its services to secure the assistance of an
expert in order to save most of the stamps, but the appellee
refused; appellee must then bear the lose under the principle of
"res perit domino."
Unsuccessful in his bid to have the above decision reconsidered
by the public respondent,7petitioner filed the instant petition
wherein he contends that:I
IT WAS A GRAVE ERROR OR AN ABUSE OF DISCRETION ON THE PART OF
THE RESPONDENT COURT WHEN IT RULED THAT RESPONDENT SBTC DID NOT
FAIL TO EXERCISE THE REQUIRED DILIGENCE IN MAINTAINING THE SAFETY
DEPOSIT BOX OF THE PETITIONER CONSIDERING THAT SUBSTANTIAL EVIDENCE
EXIST (sic) PROVING THE CONTRARY.
II
THE RESPONDENT COURT SERIOUSLY ERRED IN EXCULPATING PRIVATE
RESPONDENT FROM ANY LIABILITY WHATSOEVER BY REASON OF THE
PROVISIONS OF PARAGRAPHS 9 AND 13 OF THE AGREEMENT (EXHS. "A" AND
"A-1").
III
THE RESPONDENT COURT SERIOUSLY ERRED IN NOT UPHOLDING THE AWARDS
OF THE TRIAL COURT FOR ACTUAL AND MORAL DAMAGES, INCLUDING
ATTORNEY'S FEES AND LEGAL EXPENSES, IN FAVOR OF THE PETITIONER.8We
subsequently gave due course the petition and required both parties
to submit their respective memoranda, which they complied
with.9Petitioner insists that the trial court correctly ruled that
SBTC had failed "to exercise the required diligence expected of a
bank maintaining such safety deposit box . . . in the light of the
environmental circumstance of said safety deposit box after the
floods of 1985 and 1986." He argues that such a conclusion is
supported by the evidence on record, to wit: SBTC was fully
cognizant of the exact location of the safety deposit box in
question; it knew that the premises were inundated by floodwaters
in 1985 and 1986 and considering that the bank is guarded
twenty-four (24) hours a day , it is safe to conclude that it was
also aware of the inundation of the premises where the safety
deposit box was located; despite such knowledge, however, it never
bothered to inform the petitioner of the flooding or take any
appropriate measures to insure the safety and good maintenance of
the safety deposit box in question.SBTC does not squarely dispute
these facts; rather, it relies on the rule that findings of facts
of the Court of Appeals, when supported by substantial exidence,
are not reviewable on appeal bycertiorari.10The foregoing rule is,
of course, subject to certain exceptions such as when there exists
a disparity between the factual findings and conclusions of the
Court of Appeals and the trial court.11Such a disparity obtains in
the present case.As We see it, SBTC's theory, which was upheld by
the public respondent, is that the "Lease Agreement " covering Safe
Deposit Box No. 54 (Exhibit "A and "1") is just that a contract of
lease and not a contract of deposit, and that paragraphs 9 and 13
thereof, which expressly limit the bank's liability as follows:
9. The liability of the bank by reason of the lease, is limited
to the exercise of the diligence to prevent the opening of the Safe
by any person other than the Renter, his autliorized agent or legal
representative;
xxx xxx xxx
13. The bank is not a depository of the contents of the Safe and
it has neither the possession nor the control of the same. The Bank
has no interest whatsoever said contents, except as herein
provided, and it assumes absolutely no liability in connection
therewith.12are valid and binding upon the parties. In the
challenged decision, the public respondent further avers that even
without such a limitation of liability, SBTC should still be
absolved from any responsibility for the damage sustained by the
petitioner as it appears that such damage was occasioned by a
fortuitous event and that the respondent bank was free from any
participation in the aggravation of the injury.We cannot accept
this theory and ratiocination. Consequently, this Court finds the
petition to be impressed with merit.
In the recent caseCA Agro-Industrial Development Corp. vs. Court
of Appeals,13this Court explicitly rejected the contention that a
contract for the use of a safety deposit box is a contract of lease
governed by Title VII, Book IV of the Civil Code. Nor did We fully
subscribe to the view that it is a contract of deposit to be
strictly governed by the Civil Code provision on deposit;14it is,
as We declared, a special kind of deposit. The prevailing rule in
American jurisprudence that the relation between a bank renting out
safe deposit boxes and its customer with respect to the contents of
the box is that of a bailor and bailee, the bailment for hire and
mutual benefit15 has been adopted in this jurisdiction, thus:In the
context of our laws which authorize banking institutions to rent
out safety deposit boxes, it is clear that in this jurisdiction,
the prevailing rule in the United States has been adopted. Section
72 of the General Banking Act [R.A. 337, as amended] pertinently
provides:
"Sec. 72. In addition to the operations specifically authorized
elsewhere in this Act, banking institutions other than building and
loan associations may perform the following services:
(a) Receive in custody funds, documents, and valuable objects,
and rent safety deposit boxes for the safequarding of such
effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections
(a), (b) and (c) of this section asdepositoriesor as agents. . .
."(emphasis supplied)
Note that the primary function is still found within the
parameters of a contract ofdeposit,i.e., the receiving in custody
of funds, documents and other valuable objects for safekeeping. The
renting out of the safety deposit boxes is not independent from,
but related to or in conjunction with, this principal function. A
contract of deposit may be entered into orally or in writing (Art.
1969, Civil Code] and, pursuant to Article 1306 of the Civil Code,
the parties thereto may establish such stipulations, clauses, terms
and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order or public
policy. The depositary's responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book
IV of the Civil Code. Accordingly, the depositary would be liable
if, in performing its obligation, it is found guilty of fraud,
negligence, delay or contravention of the tenor of the agreement
[Art. 1170,id.]. In the absence of any stipulation prescribing the
degree of diligence required, that of a good father of a family is
to be observed [Art. 1173,id.]. Hence, any stipulation exempting
the depositary from any liability arising from the loss of the
thing deposited on account of fraud, negligence or delay would be
void for being contrary to law and public policy. In the instant
case, petitioner maintains that conditions 13 and l4 of the
questioned contract of lease of the safety deposit box, which
read:
"13. The bank is a depositary of the contents of the safe and it
has neither the possession nor control of the same.
"14. The bank has no interest whatsoever in said contents,
except as herein expressly provided, and it assumes absolutely no
liability in connection therewith."
are void as they are contrary to law and public policy. We find
Ourselves in agreement with this proposition for indeed, said
provisions are inconsistent with the respondent Bank's
responsibility as a depositary under Section 72 (a) of the General
Banking Act. Both exempt the latter from any liability except as
contemplated in condition 8 thereof which limits its duty to
exercise reasonable diligence only with respect to who shall be
admitted to any rented safe, to wit:
"8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank will
not be responsible for the contents of any safe rented from
it."
Furthermore condition 13 stands on a wrong premise and is
contrary to the actual practice of the Bank. It is not correct to
assert that the Bank has neither the possession nor control of the
contents of the box since in fact, the safety deposit box itself is
located in its premises and is under its absolute control;
moreover, the respondent Bank keeps the guard key to the said box.
As stated earlier, renters cannot open their respective boxes
unless the Bank cooperates by presenting and using this guard key.
Clearly then, to the extent above stated, the foregoing conditions
in the contract in question are void and ineffective. It has been
said:
"With respect to property deposited in a safe-deposit box by a
customer of a safe-deposit company, the parties, since the relation
is a contractual one, may by special contract define their
respective duties or provide for increasing or limiting the
liability of the deposit company, provided such contract is not in
violation of law or public policy. It must clearly appear that
there actually was such a special contract, however, in order to
vary the ordinary obligations implied by law from the relationship
of the parties; liability of the deposit company will not be
enlarged or restricted by words of doubtful meaning. The company,
in renting safe-deposit boxes, cannot exempt itself from liability
for loss of the contents by its own fraud or negligence or that, of
its agents or servants, and if a provision of the contract may be
construed as an attempt to do so, it will be held ineffective for
the purpose. Although it has been held that the lessor of a
safe-deposit box cannot limit its liability for loss of the
contents thereof through its own negligence, the view has been
taken that such a lessor may limit its liability to some extent by
agreement or stipulation ."[10 AM JUR 2d., 466]. (citations
omitted) 16
It must be noted that conditions No. 13 and No. 14 in the
Contract of Lease of Safety Deposit Box inCA Agro-Industrial
Development Corp.are strikingly similar to condition No. 13 in the
instant case. On the other hand, both condition No. 8 inCA
Agro-Industrial Development Corp.and condition No. 9 in the present
case limit the scope of the exercise of due diligence by the banks
involved to merely seeing to it that only the renter, his
authorized agent or his legal representative should open or have
access to the safety deposit box. In short, in all other
situations, it would seem that SBTC is not bound to exercise
diligence of any kind at all. Assayed in the light of Our
aforementioned pronouncements inCA Agro-lndustrial Development
Corp.,it is not at all difficult to conclude that both conditions
No. 9 and No. 13 of the "Lease Agreement" covering the safety
deposit box in question (Exhibits "A" and "1") must be stricken
down for being contrary to law and public policy as they are meant
to exempt SBTC from any liability for damage, loss or destruction
of the contents of the safety deposit box which may arise from its
own or its agents' fraud, negligence or delay. Accordingly, SBTC
cannot take refuge under the said conditions.
Public respondent further postulates that SBTC cannot be held
responsible for the destruction or loss of the stamp collection
because the flooding was a fortuitous event and there was no
showing of SBTC's participation in the aggravation of the loss or
injury. It states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the
obligation requires the assumption of risk, no person shall be
responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable.'
In its dissertation of the phrase"caso fortuito"theEnciclopedia
Jurisdicada Espaola17says: "In a legal sense and, consequently,
also in relation to contracts, a"caso fortuito"prevents (sic)18the
following essential characteristics: (1) the cause of the
unforeseen ands unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be independent of the
human will; (2) it must be impossible to foresee the event which
constitutes the"caso fortuito,"or if it can be foreseen, it must be
impossible to avoid; (3) the occurrence must be such as to render
it impossible for one debtor to fulfill his obligation in a normal
manner; and (4) the obligor must be free from any participation in
the aggravation of the injury resulting to the creditor." (cited in
Servandovs.Phil., Steam Navigation Co.,supra).19Here, the
unforeseen or unexpected inundating floods were independent of the
will of the appellant bank and the latter was not shown to have
participated in aggravating damage (sic) to the stamps collection
of the appellee. In fact, the appellant bank offered its services
to secure the assistance of an expert to save most of the then good
stamps but the appelle refused and let (sic) these recoverable
stamps inside the safety deposit box until they were ruined.20Both
the law and authority cited are clear enough and require no further
elucidation. Unfortunately, however, the public respondent failed
to consider that in the instant case, as correctly held by the
trial court, SBTC was guilty of negligence. The facts constituting
negligence are enumerated in the petition and have been summarized
in thisponencia.SBTC's negligenceaggravatedthe injury or damage to
the stamp collection. SBTC was aware of the floods of 1985 and
1986; it also knew that the floodwaters inundated the room where
Safe Deposit Box No. 54 was located. In view thereof, it should
have lost no time in notifying the petitioner in order that the box
could have been opened to retrieve the stamps, thus saving the same
from further deterioration and loss. In this respect, it failed to
exercise the reasonable care and prudence expected of a good father
of a family, thereby becoming a party to the aggravation of the
injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent Article 1170 of the
Civil Code, which reads:Those who in the performance of their
obligation are guilty of fraud, negligence, or delay, and those who
in any manner contravene the tenor thereof, are liable for
damages,
thus comes to the succor of the petitioner. The destruction or
loss of the stamp collection which was, in the language of the
trial court, the "product of 27 years of patience and
diligence"21caused the petitioner pecuniary loss; hence, he must be
compensated therefor.We cannot, however, place Our imprimatur on
the trial court's award of moral damages. Since the relationship
between the petitioner and SBTC is based on a contract, either of
them may be held liable for moral damages for breach thereof only
if said party had acted fraudulently or in bad faith.22There is
here no proof of fraud or bad faith on the part of SBTC.WHEREFORE,
the instant petition is hereby GRANTED. The challenged Decision and
Resolution of the public respondent Court of Appeals of 21 August
1991 and 21 November 1991, respectively, in CA-G.R. CV No. 26737,
are hereby SET ASIDE and the Decision of 19 February 1990 of Branch
47 of the Regional Trial Court of Manila in Civil Case No. 87-42601
is hereby REINSTATED in full, except as to the award of moral
damages which is hereby set aside.
Costs against the private respondent.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.G.R. No. 189206
June 8, 2011GOVERNMENT SERVICE INSURANCE SYSTEM,Petitioner,vs.THE
HONORABLE 15th DIVISION OF THE COURT OF APPEALS and INDUSTRIAL BANK
OF KOREA, TONG YANG MERCHANT BANK, HANAREUM BANKING CORP., LAND
BANK OF THE PHILIPPINES, WESTMONT BANK and DOMSAT HOLDINGS,
INC.,Respondents.
D E C I S I O N
PEREZ,J.:The subject of this petition for certiorari is the
Decision1of the Court of Appeals in CA-G.R. SP No. 82647 allowing
the quashal by the Regional Trial Court (RTC) of Makati of a
subpoena for the production of bank ledger. This case is incident
to Civil Case No. 99-1853, which is the main case for collection of
sum of money with damages filed by Industrial Bank of Korea, Tong
Yang Merchant Bank, First Merchant Banking Corporation, Land Bank
of the Philippines, and Westmont Bank (now United Overseas Bank),
collectively known as "the Banks" against Domsat Holdings, Inc.
(Domsat) and the Government Service Insurance System (GSIS). Said
case stemmed from a Loan Agreement,2whereby the Banks agreed to
lend United States (U.S.) $11 Million to Domsat for the purpose of
financing the lease and/or purchase of a Gorizon Satellite from the
International Organization of Space Communications
(Intersputnik).3The controversy originated from a surety agreement
by which Domsat obtained a surety bond from GSIS to secure the
payment of the loan from the Banks. We quote the terms of the
Surety Bond in its entirety.4Republic of the PhilippinesGOVERNMENT
SERVICE INSURANCE SYSTEMGENERAL INSURANCE FUNDGSIS Headquarters,
Financial CenterRoxas Boulevard, Pasay City
G(16) GIF Bond027461S U R E T Y B O N D
KNOW ALL MEN BY THESE PRESENTS:
That we, DOMSAT HOLDINGS, INC., represented by its President as
PRINCIPAL, and the GOVERNMENT SERVICE INSURANCE SYSTEM, as
Administrator of the GENERAL INSURANCE FUND, a corporation duly
organized and existing under and by virtue of the laws of the
Philippines, with principal office in the City of Pasay, Metro
Manila, Philippines as SURETY, are held and firmly bound unto the
OBLIGEES: LAND BANK OF THE PHILIPPINES, 7th Floor, Land Bank Bldg.
IV. 313 Sen. Gil J. Puyat Avenue, Makati City; WESTMONT BANK, 411
Quintin Paredes St., Binondo, Manila: TONG YANG MERCHANT BANK, 185,
2-Ka, Ulchi-ro, Chungk-ku, Seoul, Korea; INDUSTRIAL BANK OF KOREA,
50, 2-Ga, Ulchi-ro, Chung-gu, Seoul, Korea; and FIRST MERCHANT
BANKING CORPORATION, 199-40, 2-Ga, Euliji-ro, Jung-gu, Seoul,
Korea, in the sum, of US $ ELEVEN MILLION DOLLARS ($11,000,000.00)
for the payment of which sum, well and truly to be made, we bind
ourselves, our heirs, executors, administrators, successors and
assigns, jointly and severally, firmly by these presents.
THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS:
WHEREAS, the above bounden PRINCIPAL, on the 12th day of
December, 1996 entered into a contract agreement with the
aforementioned OBLIGEES to fully and faithfully
Guarantee the repayment of the principal and interest on the
loan granted the PRINCIPAL to be used for the financing of the two
(2) year lease of a Russian Satellite from INTERSPUTNIK, in
accordance with the terms and conditions of the credit package
entered into by the parties.
This bond shall remain valid and effective until the loan
including interest has been fully paid and liquidated,
a copy of which contract/agreement is hereto attached and made
part hereof;
WHEREAS, the aforementioned OBLIGEES require said PRINCIPAL to
give a good and sufficient bond in the above stated sum to secure
the full and faithful performance on his part of said
contract/agreement.
NOW, THEREFORE, if the PRINCIPAL shall well and truly perform
and fulfill all the undertakings, covenants, terms, conditions, and
agreements stipulated in said contract/agreements, then this
obligation shall be null and void; otherwise, it shall remain in
full force and effect.
WITNESS OUR HANDS AND SEALS this 13th day of December 1996 at
Pasay City, Philippines.
DOMSAT HOLDINGS, INC.PrincipalGOVERNMENT SERVICE INSURANCE
SYSTEMGeneral Insurance Fund
By:
CAPT. RODRIGO A. SILVERIOPresidentBy:
AMALIO A. MALLARISenior Vice-PresidentGeneral Insurance
Group
When Domsat failed to pay the loan, GSIS refused to comply with
its obligation reasoning that Domsat did not use the loan proceeds
for the payment of rental for the satellite. GSIS alleged that
Domsat, with Westmont Bank as the conduit, transferred the U.S. $11
Million loan proceeds from the Industrial Bank of Korea to Citibank
New York account of Westmont Bank and from there to the Binondo
Branch of Westmont Bank.5The Banks filed a complaint before the RTC
of Makati against Domsat and GSIS.
In the course of the hearing, GSIS requested for the issuance of
a subpoena duces tecum to the custodian of records of Westmont Bank
to produce the following documents:
1. Ledger covering the account of DOMSAT Holdings, Inc. with
Westmont Bank (now United Overseas Bank), any and all documents,
records, files, books, deeds, papers, notes and other data and
materials relating to the account or transactions of DOMSAT
Holdings, Inc. with or through the Westmont Bank (now United
Overseas Bank) for the period January 1997 to December 2002, in
his/her direct or indirect possession, custody or control (whether
actual or constructive), whether in his/her capacity as Custodian
of Records or otherwise;
2. All applications for cashiers/ managers checks and bank
transfers funded by the account of DOMSAT Holdings, Inc. with or
through the Westmont Bank (now United Overseas Bank) for the period
January 1997 to December 2002, and all other data and materials
covering said applications, in his/her direct or indirect
possession, custody or control (whether actual or constructive),
whether in his/her capacity as Custodian of Records or
otherwise;
3. Ledger covering the account of Philippine Agila Satellite,
Inc. with Westmont Bank (now United Overseas Bank), any and all
documents, records, files, books, deeds, papers, notes and other
data and materials relating to the account or transactions of
Philippine Agila Satellite, Inc. with or through the Westmont bank
(now United Overseas Bank) for the period January 1997 to December
2002, in his/her direct or indirect possession, custody or control
(whether actual or constructive), whether in his/her capacity as
Custodian of Records or otherwise;
4. All applications for cashiers/managers checks funded by the
account of Philippine Agila Satellite, Inc. with or through the
Westmont Bank (now United Overseas Bank) for the period January
1997 to December 2002, and all other data and materials covering
said applications, in his/her direct or indirect possession,
custody or control (whether actual or constructive), whether in
his/her capacity as Custodian of Records or otherwise.6The RTC
issued a subpoena decus tecum on 21 November 2002.7A motion to
quash was filed by the banks on three grounds: 1) the subpoena is
unreasonable, oppressive and does not establish the relevance of
the documents sought; 2) request for the documents will violate the
Law on Secrecy of Bank Deposits; and 3) GSIS failed to advance the
reasonable cost of production of the documents.8Domsat also joined
the banks motion to quash through its Manifestation/Comment.9On 9
April 2003, the RTC issued an Order denying the motion to quash for
lack of merit. We quote the pertinent portion of the Order,
thus:
After a careful consideration of the arguments of the parties,
the Court did not find merit in the motion.
The serious objection appears to be that the subpoena is
violative of the Law on Secrecy of Bank Deposit, as amended. The
law declares bank deposits to be "absolutely confidential" except:
x x x (6) In cases where the money deposited or invested is the
subject matter of the litigation.
The case at bench is for the collection of a sum of money from
defendants that obtained a loan from the plaintiff. The loan was
secured by defendant GSIS which was the surety. It is the
contention of defendant GSIS that the proceeds of the loan was
deviated to purposes other than to what the loan was extended. The
quashal of the subpoena would deny defendant GSIS its right to
prove its defenses.
WHEREFORE, for lack of merit the motion is DENIED.10On 26 June
2003, another Order was issued by the RTC denying the motion for
reconsideration filed by the banks.11On 1 September 2003 however,
the trial court granted the second motion for reconsideration filed
by the banks. The previous subpoenas issued were consequently
quashed.12The trial court invoked the ruling in Intengan v. Court
of Appeals,13where it was ruled that foreign currency deposits are
absolutely confidential and may be examined only when there is a
written permission from the depositor. The motion for
reconsideration filed by GSIS was denied on 30 December 2003.
Hence, these assailed orders are the subject of the petition for
certiorari before the Court of Appeals. GSIS raised the following
arguments in support of its petition:
I.
Respondent Judge acted with grave abuse of discretion when it
favorably considered respondent banks (second) Motion for
Reconsideration dated July 9, 2003 despite the fact that it did not
contain a notice of hearing and was therefore a mere scrap of
paper.
II.
Respondent judge capriciously and arbitrarily ignored Section 2
of the Foreign Currency Deposit Act (RA 6426) in ruling in his
Orders dated September 1 and December 30, 2003 that the
US$11,000,000.00 deposit in the account of respondent Domsat in
Westmont Bank is covered by the secrecy of bank deposit.
III.
Since both respondent banks and respondent Domsat have disclosed
during the trial the US$11,000,000.00 deposit, it is no longer
secret and confidential, and petitioner GSIS right to inquire into
what happened to such deposit can not be suppressed.14The Court of
Appeals addressed these issues in seriatim.
The Court of Appeals resorted to a liberal interpretation of the
rules to avoid miscarriage of justice when it allowed the filing
and acceptance of the second motion for reconsideration. The
appellate court also underscored the fact that GSIS did not raise
the defect of lack of notice in its opposition to the second motion
for reconsideration. The appellate court held that failure to
timely object to the admission of a defective motion is considered
a waiver of its right to do so.
The Court of Appeals declared that Domsats deposit in Westmont
Bank is covered by Republic Act No. 6426 or the Bank Secrecy Law.
We quote the pertinent portion of the Decision:
It is our considered opinion that Domsats deposit of
$11,000,000.00 in Westmont Bank is covered by the Bank Secrecy Law,
as such it cannot be examined, inquired or looked into without the
written consent of its owner. The ruling in Van Twest vs. Court of
Appeals was rendered during the effectivity of CB Circular No. 960,
Series of 1983, under Sec. 102 thereof, transfer to foreign
currency deposit account or receipt from another foreign currency
deposit account, whether for payment of legitimate obligation or
otherwise, are not eligible for deposit under the System.
CB Circular No. 960 has since been superseded by CB Circular
1318 and later by CB Circular 1389. Section 102 of Circular 960 has
not been re-enacted in the later Circulars. What is applicable now
is the decision in Intengan vs. Court of Appeals where the Supreme
Court has ruled that the under R.A. 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. Petitioner, therefore, had inappropriately invoked the
provisions of Central Bank (CB) Circular Nos. 343 which has already
been superseded by more recently issued CB Circulars. CB Circular
343 requires the surrender to the banking system of foreign
exchange, including proceeds of foreign borrowings. This
requirement, however, can no longer be found in later
circulars.
In its Reply to respondent banks comment, petitioner appears to
have conceded that what is applicable in this case is CB Circular
1389. Obviously, under CB 1389, proceeds of foreign borrowings are
no longer required to be surrendered to the banking system.
Undaunted, petitioner now argues that paragraph 2, Section 27 of
CB Circular 1389 is applicable because Domsats $11,000,000.00 loan
from respondent banks was intended to be paid to a foreign supplier
Intersputnik and, therefore, should have been paid directly to
Intersputnik and not deposited into Westmont Bank. The fact that it
was deposited to the local bank Westmont Bank, petitioner claims
violates the circular and makes the deposit lose its
confidentiality status under R.A. 6426. However, a reading of the
entire Section 27 of CB Circular 1389 reveals that the portion
quoted by the petitioner refers only to the procedure/conditions of
drawdown for service of debts using foreign exchange. The
above-said provision relied upon by the petitioner does not in any
manner prescribe the conditions before any foreign currency deposit
can be entitled to the confidentiality provisions of R.A.
6426.15Anent the third issue, the Court of Appeals ruled that the
testimony of the incumbent president of Westmont Bank is not the
written consent contemplated by Republic Act No. 6426.
The Court of Appeals however upheld the issuance of subpoena
praying for the production of applications for cashiers or managers
checks by Domsat through Westmont Bank, as well as a copy of an
Agreement and/or Contract and/or Memorandum between Domsat and/or
Philippine Agila Satellite and Intersputnik for the acquisition
and/or lease of a Gorizon Satellite. The appellate court believed
that the production of these documents does not involve the
examination of Domsats account since it will never be known how
much money was deposited into it or withdrawn therefrom and how
much remains therein.
On 29 February 2008, the Court of Appeals rendered the assailed
Decision, the decretal portion of which reads:
WHEREFORE, the petition is partially GRANTED. Accordingly, the
assailed Order dated December 30, 2003 is hereby modified in that
the quashal of the subpoena for the production of Domsats bank
ledger in Westmont Bank is upheld while respondent court is hereby
ordered to issue subpoena duces tecum ad testificandum directing
the records custodian of Westmont Bank to bring to court the
following documents:
a) applications for cashiers or managers checks by respondent
Domsat through Westmont Bank from January 1997 to December
2002;
b) bank transfers by respondent Domsat through Westmont Bank
from January 1997 to December 2002; and
c) copy of an agreement and/or contract and/or memorandum
between respondent Domsat and/or Philippine Agila Satellite and
Intersputnik for the acquisition and/or lease of a Gorizon
satellite.
No pronouncement as to costs.16GSIS filed a motion for
reconsideration which the Court of Appeals denied on 19 June 2009.
Thus, the instant petition ascribing grave abuse of discretion on
the part of the Court of Appeals in ruling that Domsats deposit
with Westmont Bank cannot be examined and in finding that the banks
second motion for reconsideration in Civil Case No. 99-1853 is
procedurally acceptable.17This Court notes that GSIS filed a
petition for certiorari under Rule 65 of the Rules of Court to
assail the Decision and Resolution of the Court of Appeals.
Petitioner availed of the improper remedy as the appeal from a
final disposition of the Court of Appeals is a petition for review
under Rule 45 and not a special civil action under Rule
65.18Certiorari under Rule 65 lies only when there is no appeal,
nor plain, speedy and adequate remedy in the ordinary course of
law. That action is not a substitute for a lost appeal in general;
it is not allowed when a party to a case fails to appeal a judgment
to the proper forum.19Where an appeal is available, certiorari will
not prosper even if the ground therefor is grave abuse of
discretion. Accordingly, when a party adopts an improper remedy,
his petition may be dismissed outright.20lauuphilYet, even if this
procedural infirmity is discarded for the broader interest of
justice, the petition sorely lacks merit.
GSIS insists that Domsats deposit with Westmont Bank can be
examined and inquired into. It anchored its argument on Republic
Act No. 1405 or the "Law on Secrecy of Bank Deposits," which allows
the disclosure of bank deposits in cases where the money deposited
is the subject matter of the litigation. GSIS asserts that the
subject matter of the litigation is the U.S. $11 Million obtained
by Domsat from the Banks to supposedly finance the lease of a
Russian satellite from Intersputnik. Whether or not it should be
held liable as a surety for the principal amount of U.S. $11
Million, GSIS contends, is contingent upon whether Domsat indeed
utilized the amount to lease a Russian satellite as agreed in the
Surety Bond Agreement. Hence, GSIS argues that the whereabouts of
the U.S. $11 Million is the subject matter of the case and the
disclosure of bank deposits relating to the U.S. $11 Million should
be allowed.
GSIS also contends that the concerted refusal of Domsat and the
banks to divulge the whereabouts of the U.S. $11 Million will
greatly prejudice and burden the GSIS pension fund considering that
a substantial portion of this fund is earmarked every year to cover
the surety bond issued.
Lastly, GSIS defends the acceptance by the trial court of the
second motion for reconsideration filed by the banks on the grounds
that it is pro forma and did not conform to the notice requirements
of Section 4, Rule 15 of the Rules of Civil Procedure.21Domsat
denies the allegations of GSIS and reiterates that it did not give
a categorical or affirmative written consent or permission to GSIS
to examine its bank statements with Westmont Bank.
The Banks maintain that Republic Act No. 1405 is not the
applicable law in the instant case because the Domsat deposit is a
foreign currency deposit, thus covered by Republic Act No. 6426.
Under said law, only the consent of the depositor shall serve as
the exception for the disclosure of his/her deposit.
The Banks counter the arguments of GSIS as a mere rehash of its
previous arguments before the Court of Appeals. They justify the
issuance of the subpoena as an interlocutory matter which may be
reconsidered anytime and that the pro forma rule has no application
to interlocutory orders.
It appears that only GSIS appealed the ruling of the Court of
Appeals pertaining to the quashal of the subpoena for the
production of Domsats bank ledger with Westmont Bank. Since neither
Domsat nor the Banks interposed an appeal from the other portions
of the decision, particularly for the production of applications
for cashiers or managers checks by Domsat through Westmont Bank, as
well as a copy of an agreement and/or contract and/or memorandum
between Domsat and/or Philippine Agila Satellite and Intersputnik
for the acquisition and/or lease of a Gorizon satellite, the latter
became final and executory.
GSIS invokes Republic Act No. 1405 to justify the issuance of
the subpoena while the banks cite Republic Act No. 6426 to oppose
it. The core issue is which of the two laws should apply in the
instant case.
Republic Act No. 1405 was enacted in 1955. Section 2 thereof was
first amended by Presidential Decree No. 1792 in 1981 and further
amended by Republic Act No. 7653 in 1993. It now reads:
Section 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
an 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.
Section 8 of Republic Act No. 6426, which was enacted in 1974,
and amended by Presidential Decree No. 1035 and later by
Presidential Decree No. 1246, provides:
Section 8. Secrecy of Foreign Currency Deposits. All foreign
currency deposits authorized under this Act, as amended by
Presidential Decree No. 1035, as well as foreign currency deposits
authorized under Presidential Decree No. 1034, are hereby declared
as and considered of an absolutely confidential nature and, except
upon the written permission of the depositor, in no instance shall
foreign currency deposits be examined, inquired or looked into by
any person, government official, bureau or office whether judicial
or administrative or legislative or any other entity whether public
or private; Provided, however, That said foreign currency deposits
shall be exempt from attachment, garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body whatsoever. (As amended by PD No. 1035, and
further amended by PD No. 1246, prom. Nov. 21, 1977.)
On the one hand, Republic Act No. 1405 provides for four (4)
exceptions when records of deposits may be disclosed. These are
under any of the following instances: a) upon written permission of
the depositor, (b) in cases of impeachment, (c) upon order of a
competent court in the case of bribery or dereliction of duty of
public officials or, (d) when the money deposited or invested is
the subject matter of the litigation, and e) in cases of violation
of the Anti-Money Laundering Act (AMLA), the Anti-Money Laundering
Council (AMLC) may inquire into a bank account upon order of any
competent court.22On the other hand, the lone exception to the
non-disclosure of foreign currency deposits, under Republic Act