Fidelity Savings v.

Cenzon | Chrissa  Philippine Deposit Insurance Corporation paid the plaintiffs the
April 5, 1990 amount P10k on the aggregate deposits of P100k pursuant to RA
FIDELITY SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. 5517, thereby leaving a deposit balance of P90k
PEDRO D. CENZON, in his capacity as Presiding Judge of the Court of  The Monetary Board issued its Resolution No. 2124 directing the
First Instance of Manila (Branch XL) and SPOUSES TIMOTEO AND liquidation of the affairs of defendant Fidelity Savings Bank;
OLIMPIA SANTIAGO, respondents.  The SolGen filed a "Petition for Assistance and Supervision in
REGALADO, J.: Liquidation" of the affairs of the bank with the CFI
NATURE: action for a sum of money with damages  The Liquidation Court promulgated the Bank Rules and
SUMMARY: Sps. Santiago deposited a total of 100k with Fidelity Savings Regulations to govern the liquidation of the affairs of defendant
Bank. The bank became insolvent and underwent liquidation proceedings. Fidelity Savings and Mortgage Bank, prescribing the rules on the
The Sps instituted an action for a sum of money and damages. CFI awarded conversion of the Bank's assets into money, processing of claims
the unpaid 90k with accrued interest until fully paid, as well as moral and against it and the manner and time of distributing the proceeds
exemplary damages and atty’s fees. SC reversed and held that cannot be from the assets of the Bank. The liquidation proceedings is still
held liable to pay interest on bank deposits which accrued during the period pending;
when the bank is actually closed and non-operational. Thus the bank was  The Sps. sent demand letters to herein defendants, demanding the
only liable for interests up to Feb 19, 1969 when the bank was prohibited to immediate payment of the aforementioned savings and time
continue with banking operations deposits.
DOCTRINE: Unless a bank can lend money, engage in international  Sps. Santiago instituted this present action for a sum of money
transactions, acquire foreclosed mortgaged properties or their proceeds and with damages against Fidelity Savings and Mortgage Bank, Central
generally engage in other banking and financing activities from which it can Bank of the Philippines, et al.BANKING
(the case vs et al were eventually
1 derive income, it is inconceivable how it can carry on as a depository DIGESTS 01-16-2020
dismissed )
obligated to pay stipulated interest…Tthe obligation to pay interest on the  CFI the bank to pay subject to the Bank Liquidation Rules and
deposit ceases the moment the operation of the bank is completely Regulations:
suspended by the duly constituted authority, the Central Bank. (a) P90,000.00 with accrued interest until fully paid;
FACTS: (b) P30,000,00 as exemplary damages; and
 May 16, 1968, Sps. Santiago deposited with Fidelity Savings Bank (c) P10,000.00 as and for attorney's fees.
P50,000.00. Sometime on July 6, 1968, Sps. Santiago,- deposited ISSUE 1: WON an insolvent bank like the Fidelity Savings and Mortgage
P50,000.00. total deposits = 100k Bank may be adjudged to pay INTEREST on unpaid deposits even after its
 February 18, 1969, the Monetary Board, after finding the report of closure by the Central Bank by reason of insolvency (NO)
the Superintendent of Banks, that the condition of the defendant RATIO 1:
Fidelity Savings and Mortgage Bank is one of insolvency, to be  It is settled jurisprudence that a banking institution which has been
true, issued Resolution No. 350 deciding: declared insolvent and subsequently ordered closed by the Central
1) To forbid the Fidelity Savings Bank to do business in Bank of the Philippines cannot be held liable to pay interest on
the Philippines; bank deposits which accrued during the period when the bank is
2) To instruct the Acting Superintendent of Banks to take actually closed and non-operational.
charge, in the name of the Monetary Board, of the Bank's  The Overseas Bank of Manila vs. Court of Appeals and Tony D.
assets Tapia:
 The Superintendent of Banks took charge in the name of the o It is a matter of common knowledge, which We take
Monetary Board, of the assets of the banks on February 19, 1969; judicial notice of, that what enables a bank to pay
 stipulated interest on money deposited with it is that thru  In the absence of fraud, bad faith, malice or wanton attitude,
the other aspects of its operation it is able to generate petitioner bank may, therefore, not be held responsible for damages
funds to cover the payment of such interest. Unless a which may be reasonably attributed to the non-performance of the
bank can lend money, engage in international obligation
transactions, acquire foreclosed mortgaged properties or ISSUE 3: WON Sps’ claim would be violative of the provisions on
their proceeds and generally engage in other banking and concurrence and preference of credits (NO)
financing activities from which it can derive income, it is  We agree that the Sps' claims should he been filed in the
inconceivable how it can carry on as a depository liquidation proceedings in Civil Case No. 86005, entitled "In Re:
obligated to pay stipulated interest. Conventional wisdom Liquidation of the Fidelity Savings and Mortgage Bank," in the
dictates this inexorable fair and just conclusion. And it CFI.
can be said that all who deposit money in banks are aware  However, we do not believe that the decision rendered in the
of such a simple economic proposition. Consequently, it instant case would be violative of the legal provisions on
should be deemed read into every contract of deposit with preference and concurrence of credits. As the trial court puts it:
a bank that the obligation to pay interest on the deposit o . . . But this order of payment should not be understood as
ceases the moment the operation of the bank is raising these deposits to the category of preferred credits
completely suspended by the duly constituted of the defendant Fidelity Savings and Mortgage Bank but
authority, the Central Bank. shall be paid in accordance with the Bank Liquidation
 It is manifest that petitioner cannot be held liable for interest Rules and Regulations embodied in the Order of the CFI
on bank deposits which accrued from the time it was
prohibited by the Central Bank to continue with its banking DISPOSITIVE: Decision MODIFIED. Bank to pay private respondents
2 operations, that is, when Resolution No. 350 to that effect was BANKING DIGESTS 01-16-2020
Timoteo and Olimpia Santiago the sum of P90,000.00, with accrued interest
issued on February 18, 1969. until February 18, 1969. Award for damages DELETED.
ISSUE 2: WON Sps. are entitled to damages (NO)
 We find the awards of moral and exemplary damages and
attorney's fees to be erroneous. Cancio vs. CA| Karl
 The trial court found, and it is not disputed, that there was no fraud October 22, 1987
or bad faith on the part of petitioner bank and the other defendants ROSA CANCIO, petitioner, vs.
in accepting the deposits of private respondents. HON. COURT OF TAX APPEALS and HON. COMMISSIONER OF
 Demand to pay was made and Civil Case No. 84800 was filed in CUSTOMS, respondents.
the trial court several months after the Central Bank had ordered MELENCIO-HERRERA, J.:
petitioner's closure.
 Further, this case is not one of the specified or analogous cases NATURE: MR of August 11 1986 Resolution
wherein moral damages may be recovered.  SUMMARY:
 There is no valid basis for the award of exemplary damages Cancio was leaving the Philippines with undeclared foreign currency. These
which is supposed to serve as a warning to other banks from were confiscated due to her failure to present a Central Bank Authority to
dissipating their assets in anomalous transactions as there was no transfer these funds. The CTA upheld the seizure. However, the Supreme
proof of such. Neither did the offending party act in a wanton, Court, finding that Cancio is a foreign currency depositor, reversed the CTA
fraudulent, reckless, oppressive or malevolent manner.  in so far as the money which was seized given that the Foreign Currency
 Neither may attorney's fees be awarded. Deposit Act grants the depositor unrestricted transferability of his/her funds.
Therefore, in this case, Cancio did not have to present any Central Bank
 Authority.  Subject currencies were placed and concealed inside the two fairly-
DOCTRINE (related to topic): sized carton boxes for local chocolates, securely wrapped and
 The transferability abroad of foreign currency deposits is taped with tin foil-back paper; and, that in view of claimant's
unrestricted. Only one exception is provided for therein, which is, failure, upon being required, to present the Central Bank Authority,
any restriction " from the contract between the depositor and the the said currencies were accordingly confiscated and a seizure
bank." Neither is a Central Bank authority required for the Receipt No. 013 was issued to her;
transferability abroad of foreign currency deposits. o Hence, this seizure proceedings.
 Indeed, given the underlying objective of the Foreign Currency  At the hearing of this case, Cancio, thru counsel, presented the
Deposit Act, as amended, which is to attract and invite the deposit following, attesting to the fact that claimant Rosa Cancio had
of foreign currencies which are acceptable as part of the withdrawn from her FCDU Account a certain amount of United
international reserve in duly authorized banks in order that they States currency which tended to show that claimant herein was a
may be put into the stream of the banking system, it would be to foreign currency depositor pursuant to the provisions of Republic
defeat the very purpose of the law to place undue restrictions on Act No. 6426, as implemented by Central Bank Circular No. 343.
the transferability of such funds. o certified xerox copy of her Bank Book (Exhibit "I") for
 The countervailing effect would be to discourage prospective foreign currency deposit with the Philippine Commercial
foreign currency depositors to the detriment of the banking system. and Industrial Bank under Account FCDU No. 0265,
 In fine, Central Bank Circulars Nos. 265 and 534 requiring prior o dollar remittances in telegraphic transfers from abroad for
Central Bank authority for the taking out of the country of foreign deposits in her account from May 13, 1981 to May 21,
currency should not be made to encompass foreign currency 1981, and
depositors whose rights are expressly defined and guaranteed in a o withdrawal cards (Exhibit "l-A" to "1-E", inclusive),
3 special law, the Foreign Currency Deposit Act (RA 6426, as
BANKING DIGESTS 01-16-2020
 Cancio testified that because her foreign currency deposit could not
amended). As a foreign currency depositor, therefore, petitioner be withdrawn at one time, she made her withdrawal on several
cannot be adjudged to have violated the aforestated Central Bank occasions starting from May 14, 1981 up to May 27, 1981 when
Circulars. she closed her account preparatory to her departure which was
FACTS: scheduled in the morning of June 12, 1981 for Hongkong;
 Claimant Mrs. Rosa Cancio bearing Philippine Passport No. o From Hongkong, she and her family intended to proceed
11797799 while clearing through the Pre-Boarding (AVSECOM) to the United States for medical treatment of her heart
Area of MIA with her husband and three (3) children to board PR ailment as advised by her two attending physicians from
306 for Hongkong in the morning of June 12, 1981, was the UST Hospital;
apprehended with o The US currency that they were carrying and confiscated
o One Hundred Two Thousand Nine Hundred Dollars from them on June 12, 1981 was intended principally for
(US$102,900.00) in cash, such medical purpose and for other miscellaneous and
o six hundred dollars (US$600.00) in two travelers checks, necessary expenses, and, that the subject currencies were
and concealed and hidden by them inside the two chocolate
o one thousand five hundred (Pl,500.00) Pesos; boxes solely for security reasons.
 Such apprehension was effected only thru an alarm sounded by the  By reason of the forfeiture decreed by respondent Commissioner of
scanner (metal detecting device) of the AVSECOM men, when Customs of both the foreign and local currencies due to petitioner's
Mrs. Cancio who did not declare her currency had already passed failure to present a Central Bank (CB) authority to bring said
the Customs inspection area; currencies out of the country, petitioner appealed to respondent
 Court of Tax Appeals.
 CTA: affirmed the forfeiture of the US$102,900.00 in cash, and  Similarly, Central bank Circular No. 534, issued on July 19, 1976,
US$600.00 in travellers' checks for having been in violation of reiterates and provides in Sec. 3 thereof as follows:
Central Bank Circulars Nos. 265 and 534, in relation to Section o “Sec. 3. Unless specifically authorized by the Central
2530(f) of the Tariff and Customs Code, as amended. Bank or allowed under existing international agreements
o It reversed, however, the forfeiture of P1,500.00 on the or Central Bank regulations, no person shall take or
ground that since petitioner was travelling with her transmit or attempt to take or transmit foreign exchange,
husband and three (3) children, the said amount did not in any form out of the Philippines only, through other
exceed the P500.00 at that each traveller is allowed to persons, through the mails, or through international
bring out of the country without a CB permit pursuant to carriers.
paragraph 4 of CB Circular No. 383. o The provisions of this Section shall not apply to tourists
 Petitioner's unimpugned evidence shows that she was a foreign and non-resident temporary visitors who are taking or
currency depositor at the Philippine Commercial and Industrial sending out of the Philippines their own foreign exchange
Bank at Makati, Metro Manila, and that the subject foreign brought in by them.”
currency was part of the total amount of US$116,000.00 she had  However, peculiar to the present controversy is the fact that, as
withdrawn from said bank from May 14 to 27, 1981 for her travel stated previously, petitioner is a foreign currency depositor.
and medical expenses in the United States via Hongkong.  Relevant and applicable to her is the following provision of the
 Admitted, too, is the fact that petitioner failed to present to the "Foreign Currency Deposit Act of the Philip pines" (Republic Act
apprehending customs authorities a Central Bank authority to bring No. 6426, as amended), which took effect upon its approval on
out of the country the said currencies while at the pre-boarding April 4,1972:
4 area of the Manila International Airport on June 12, 1981 on her
BANKING DIGESTS 01-16-2020
SEC. 5. Withdrawability and transferability of deposits. — There shall be
scheduled flight to Hongkong together with her husband and three no restriction on the withdrawal by the depositor of his deposit or on the
children. transferability of the same abroad except those arising from the contract
between the depositor and the bank.
ISSUE : Whether or not respondent Court had committed reversible
error in upholding the forfeiture of the foreign currencies in question.--  Under the foregoing provision, the transferability abroad of foreign
YES currency deposits is unrestricted. Only one exception is provided
for therein, which is, any restriction " from the contract between
RATIO: the depositor and the bank." Neither is a Central Bank authority
 A second look at the facts and the equity of the case, the pertinent required for the transferability abroad of foreign currency deposits.
laws, and the CB Circulars involved constrains us to rule in the  Attention is called, however, to the implementing rules and
affirmative and, accordingly, to grant reconsideration of our regulations to said Republic Act 6426, as embodied in CB Circular
Resolution of August 11, 1986 denying review. No. 343 issued on April 24, 1972, which provides:
 It is true that in so far as the exportation or taking out of foreign
currency from the country is concerned, Central Bank Circular No. SEC. 11. Withdrawability and Liquidity of Deposits.
265, issued on November 20, 1968, particularly paragraph 3 a. x x x x x x x x x
thereof, mandates: b. Subject only to the terms of the contract between the bank and the
“3. No person shall take out or export from the Philippines foreign depositor, the latter shall have a general license to withdraw his deposit,
currency or any other foreign exchange except as otherwise authorized notwithstanding any change in policy or regulations.
by the Central Bank.”
 xxx xxx xxx carry with them the certificate of withdrawal. At any rate,
respondent Court has found that petitioner has presented in
 Respondent Court has taken the position that the foregoing evidence her foreign currency bank book and her withdrawal cards.
provision its the right of the depositor to that of withdrawal and o These may be considered as substantial compliance for
withholds from him the right of transferability abroad. purposes of this case.
o That is not so. Circular-Letter, dated August 3, 1978,  Indeed, given the underlying objective of the Foreign Currency
issued by the Central Bank reads in explicit terms: Deposit Act, as amended, which is to attract and invite the
TO: ALL BANKS AUTHORIZED TO ACCEPT FOREIGN deposit of foreign currencies which are acceptable as part of
CURRENCY DEPOSITS UNDER THE PROVISIONS OF RA 6426, the international reserve in duly authorized banks in order
AS AMENDED AND PRESIDENTIAL DECREE NO. 1035. that they may be put into the stream of the banking system, it
Effective immediately, the banks authorized to accept foreign currency would be to defeat the very purpose of the law to place undue
deposits under the provisions of RA 6426, as amended, and PD 1035 and restrictions on the transferability of such funds.
as implemented by Central Bank Circular 343 and 547, are hereby  The countervailing effect would be to discourage prospective
instructed to advise their foreign currency depositors who are foreign currency depositors to the detriment of the banking system.
withdrawing funds for travel purposes to carry with them the certificate  In fine, Central Bank Circulars Nos. 265 and 534 requiring
of withdrawal that the banks shall issue. The travellers shall present the prior Central Bank authority for the taking out of the country
certifications to the Customs and Central Bank personnel at the MIA, if of foreign currency should not be made to encompass foreign
requested. currency depositors whose rights are expressly defined and
The banks shall issue a uniform certification, as follows: guaranteed in a special law, the Foreign Currency Deposit Act
___________________ (RA 6426, as amended). As a foreign currency depositor,
5 Date
BANKING DIGESTS 01-16-2020
therefore, petitioner cannot be adjudged to have violated the
TO WHOM IT MAY CONCERN: aforestated Central Bank Circulars.
This certifies that ________________________whose signature appears  It follows that neither is there room for the application of Section
below has withdrawn today, the amount of ____________in cash (US$ 2530(f) of the Tariff and Customs Code, as amended, which
_______________) and Travellers Check provides for the forfeiture of any article and other objects, the
(US$___________________________) against his/her foreign currency exportation of which is effected or attempted contrary to law.
account maintained with us.  This is not to condone petitioner's failure to declare the foreign
The funds herein withdrawn are represented to be used in connection currency she was carrying out of the country but just to stress that
with the depositor's foreign travel scheduled on or about the Foreign Currency Deposit Act grants petitioner the right of
____________________197_________. transferability of her funds abroad except that she was not advised
___________________________ by her bank to secure, and consequently was unable to present, the
(Signature of Authorized necessary certificate of withdrawal from said bank.
Official OverPrinted Name)
_______________________ DISPOSITION: CTA Decision is set aside in so far as it upheld the
(Signature of Depositor) forfeiture by respondent Commissioner of Customs of the sums of
Please be guided accordingly. US$102,900.00 in cash, and US$600.00 in traveller's checks, which
(SGD amounts should now be returned to petitioner's heirs, but AFFIRMED in so
far as it reversed the forfeiture by the same official of the sum of P1,500.00.
 As instructed in the Circular-Letter abovequoted, it is the
authorized depository bank which should advise its depositors to
 Fair Makati Cinema Square, with her friend Edna Tangile whiling
Salvacion v. Central Bank / Ish away her free time.
August 21, 1997  She was approached by an American, Greg Bartelli (Bartelli), who
KAREN E. SALVACION, MINOR, thru FEDERICO N. told her that he had a niece about her age back at his house along
SALVACION, JR., FATHER AND NATURAL GUARDIAN, and Kalayaan Ave.
SPOUSES FEDERICO N. SALVACION, JR., and EVELINA E.  Bartelli gave Salvacion a stuffed toy in order to convince her to go
SALVACION, petitioners, vs. CENTRAL BANK OF THE back to his house with him, purportedly to teach his niece Filipino.
PHILIPPINES, CHINA BANKING CORPORATION and GREG  When they arrived at his home, there was no niece. Bartelli tied
BARTELLI Y NORTHCOTT, respondents. Salvacion’s hands and covered her mouth with packing tape. He
TORRES, JR., J. first inserted his finger into her sex organ and later proceeded to
have carnal knowledge with her, using Johnson’s Baby Oil as
NATURE: Declaratory relief lubricant.
SUMMARY: Karen Salvacion, then 12 years old, was raped by Greg  For the following three days, following breakfast consisting of
Bartelli, an American. A criminal case was filed against him, but as Bartelli biscuits and coke, Bartelli raped Salvacion. The rapes took place
escaped from detention, it was archived. Salvacion filed a civil case for thrice a day.
damages. In that case, the court issued a writ of preliminary attachment  On February 6, Salvacion was able to cry for help through a
covering certain foreign currency deposits with Chinabank. The writ of window in the bathroom of Bartelli’s house. However, the
attachment was unsatisfied because foreign currency deposits are exempt neighbor who heard her got angry and called her “istorbo.”
from attachment under CB Circular No. 960. The trial court eventually  Finally, on February 7, 1989, policemen came to Bartelli’s house
ruled in favor of Salvacion. The writ of execution also remained unsatisfied and Karen was finally rescued.BANKING
Bartelli was arrested01-16-2020
and taken to
6 in view of the CB Circular. The SC ruled in favor of Salvacion, holding that DIGESTS
the police station. Among the items recovered from Bartelli was a
the CB Circular does not apply to transient depositors like Bartelli. Chinabank passbook for a dollar account.
DOCTRINE:  Karen’s sworn statement was taken by the police and made the
 One reason for exempting the foreign currency deposits from basis of a criminal complaint for four (4) counts of rape filed
attachment, garnishment or any other order process of any court, is against Bartelli. An Information for Serious Illegal Detention was
to assure the development and speedy growth of the Foreign also filed against him.
Currency Deposit System and the Offshore Banking System in the  Simultaneously with the criminal cases, herein petitioners also
Philippines. filed a civil case for damages with the RTC of Makati with prayer
 Another reason is to encourage the inflow of foreign currency for preliminary attachment.
deposits into the banking institutions thereby placing such  Bartelli escaped from jail. As a result, the criminal cases were
institutions more in a position to properly channel the same to archived.
loans and investments in the Philippines, thus directly contributing
 Meanwhile, in the civil case, the judge issued an Order dated
to the economic development of the country.
February 22, 1989 granting the application of herein petitioners,
 Obviously, the foreign currency deposit made by a transient or for the issuance of the writ of preliminary attachment.
tourist is not the kind of deposit given incentives and protection by
 On March 1, 1989, the Deputy Sheriff of Makati served a Notice of
our laws because such depositor stays only for a few days in the
Garnishment on China Banking Corporation.
country and, therefore, will maintain his deposit in the bank only
o Chinabank resisted the same invoking Act No. 1405 (The
for a short time.
Secrecy of Bank Deposits Law).
FACTS:
o Later, it invoked invoked Section 113 of Central Bank
 On February 4, 1989, Karen Salvacion (Salvacion) was at the Plaza
 Circular No. 960 to the effect that the dollar deposits which authorized certain banks to accept foreign currency deposits.
of defendant Greg Bartelli are exempt from  The exemption [from garnishment] as well as certain incentives
attachment, garnishment, or any other order or were provided for under RA 6426, as amended by PD 1426, and
process of any court, legislative body, government PD 1034 (authorizing the establishment of an offshore banking
agency or any administrative body, whatsoever. system in the PH), in order order to assure the development and
o The Circular provides: speedy growth of the Foreign Currency Deposit System and the
Offshore Banking System in the Philippines.
Exemption from attachment. — Foreign currency  As stated in the WHEREAS clauses of said laws, the purposes of
deposits shall be exempt from attachment, according protection to foreign currency deposits against court
garnishment, or any other order or process of any processes are:
court, legislative body, government agency or any o To encourage the inflow of foreign currency deposits into
administrative body whatsoever. the banking institutions authorized to accept such deposits
in the Philippines thereby placing such institutions more
 The Salvacions wrote to the Central Bank (CB) seeking in a position to properly channel the same to loans and
clarification on whether Section 113 of CB Circular No. 960 has investments in the Philippines, thus directly contributing
any exception or whether said section has been repealed or to the economic development of the country;
amended. o To have as wide access as possible to the sources of
o In reply, the CB stated that the cited provision is absolute capital funds for economic development;
in application. It does not admit of any exception, nor has o To develop the Philippines as another financial center in
the same been repealed nor amended. Asia, among others.
7 BANKING DIGESTS 01-16-2020
 Meanwhile, on April 10, 1989, the trial court granted petitioners’  Obviously, the foreign currency deposit made by a transient or
motion for leave to serve summons by publication in the civil case. a tourist is not the kind of deposit encourage by PD Nos. 1034
 Bartelli was declared in default and judgment was rendered in and 1035 and given incentives and protection by said laws
favor of Salvacion, awarding a total of P1 million in moral because such depositor stays only for a few days in the country
damages, P100k in exemplary damages, 25% attorney’s fees, and, therefore, will maintain his deposit in the bank only for a
litigation expenses of P10,000 and the costs of the suit. short time.
 The Salvacions petitioners tried to execute on Bartelli’s dollar o Respondent Greg Bartelli, as stated, is just a tourist or a
deposit with China Banking Corporation. Likewise, the bank transient. He deposited his dollars with respondent China
invoked Section 113 of Central Bank Circular No. 960. Banking Corporation only for safekeeping during his
 Hence, this petition. temporary stay in the Philippines.
 If the Court rules that the Circular is applicable to a foreign
ISSUE #1 (MAIN): transient, injustice would result especially to a citizen aggrieved by
 W/N Section 113 of Central Bank Circular No. 960 may be a foreign guest like accused Greg Bartelli.
invoked to defeat the garnishment of Bartelli’s foreign o This would negate Article 10 of the New Civil Code
currency deposits (NO) which provides that “in case of doubt in the interpretation
or application of laws, it is presumed that the lawmaking
RATIO #1 (MAIN): body intended right and justice to prevail.”
 The Circular is inapplicable to a transient or tourist.
 §113 was copied from §8 of RA 6426, as amended by PD 1426, ISSUE #2:
  W/N the Court has original jurisdiction over a petition for
declaratory relief (NO)
RATIO #2:
 Salvacion deserves to receive the damages awarded to her by the
court. But this petition for declaratory relief can only be
entertained and treated as a petition for mandamus to require
respondents to honor and comply with the writ of execution in the
civil case.
 The Court has no original and exclusive jurisdiction over a petition
for declaratory relief. There are, however, exceptions to this rule.
 Thus, where the petition has far-reaching implications and raises
questions that should be resolved, it may be treated as one for
mandamus.
DISPOSITION:
The provisions of Section 113 of CB Circular No. 960 and PD No. 1246,
insofar as it amends Section 8 of R.A. 6426 are hereby held to
be INAPPLICABLE to this case because of its peculiar circumstances

8 BANKING DIGESTS 01-16-2020

 GSIS v. CA | Nice specialibus non derogant. Therefore, it is beyond cavil that RA
June 8, 2011 6426 applies in this case.
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner, vs. FACTS:
THE HONORABLE 15th DIVISION OF THE COURT OF APPEALS  This case is incident to Civil Case No. 99-1853, which is the main
and INDUSTRIAL BANK OF KOREA, TONG YANG MERCHANT case for collection of sum of money with damages filed by
BANK, HANAREUM BANKING CORP., LAND BANK OF THE Industrial Bank of Korea, Tong Yang Merchant Bank, First
PHILIPPINES, WESTMONT BANK and DOMSAT HOLDINGS, Merchant Banking Corporation, Land Bank of the Philippines, and
INC., Respondents. Westmont Bank (the Banks) against Domsat Holdings, Inc.
PEREZ, J. (Domsat) and the GSIS.
 The collection case stemmed from a Loan Agreement, whereby the
NATURE: Petition for certiorari of CA decision Banks agreed to lend USD 11 Million to Domsat for the purpose of
SUMMARY: Domsat Holdings (Domsat) obtained a USD 11 M loan from financing the lease and/or purchase of a Gorizon Satellite from the
several banks to lease or purchase a Gorizon Satellite. To facilitate said International Organization of Space Communications
loan, the GSIS executed a surety bond on the condition that the loan (Intersputnik).
proceeds would be used as payment for said lease/purchase. When Domsat  To secure the payment of the loan, Domsat obtained a surety bond
failed to pay, the Banks sued Domsat and GSIS for the money. GSIS from GSIS. Said surety bond provided:
refused to pay, alleging that Domsat deposited the amount with Westmont THE CONDITIONS OF THE OBLIGATION ARE AS FOLLOWS:
Bank (one of the creditor banks) and its obligation was contingent upon the
use of the money to lease/purchase the satellite. During trial, GSIS WHEREAS, the above bounden PRINCIPAL, on the 12th day of
requested for the issuance of subpoenas duces tecum covering Domsat’s December, 1996 entered into a contract agreement with the
9 accounts with Westmont. Domsat and the Banks opposed, alleging that the BANKING
aforementioned OBLIGEES to fully and faithfully:DIGESTS 01-16-2020
secrecy of said deposits were protected under the Foreign Currency Deposit
Act. The RTC at first issued the subpoenas, but then reversed itself. CA Guarantee the repayment of the principal and interest on the loan granted
upheld. SC affirmed CA, holding that the deposits were covered by the the PRINCIPAL to be used for the financing of the two (2) year lease of
Foreign Currency Deposit Act as a special law, and the Bank Secrecy Act a Russian Satellite from INTERSPUTNIK, in accordance with the terms
did not apply. and conditions of the credit package entered into by the parties.
DOCTRINE (related to topic):
 These two laws both support the confidentiality of bank deposits. This bond shall remain valid and effective until the loan including
RA 1405 was enacted for the purpose of giving encouragement to interest has been fully paid and liquidated,
the people to deposit their money in banking institutions and to a copy of which contract/agreement is hereto attached and made part
discourage private hoarding so that the same may be properly hereof;
utilized by banks in authorized loans to assist in the economic
development of the country. It covers all bank deposits in the WHEREAS, the aforementioned OBLIGEES require said PRINCIPAL
Philippines and no distinction was made between domestic and to give a good and sufficient bond in the above stated sum to secure the
foreign deposits. Thus, RA 1405 is considered a law of general full and faithful performance on his part of said contract/agreement.
application.
 On the other hand, RA 6426 was intended to encourage deposits NOW, THEREFORE, if the PRINCIPAL shall well and truly perform
from foreign lenders and investors. It is a special law designed and fulfill all the undertakings, covenants, terms, conditions, and
especially for foreign currency deposits in the Philippines. A agreements stipulated in said contract/agreements, then this obligation
general law does not nullify a specific or special law. Generalia shall be null and void; otherwise, it shall remain in full force and effect.
  When Domsat failed to pay, GSIS refused pay as well, arguing that Secrecy of Bank Deposits; and
Domsat did not use the loan proceeds for the payment of rental for o 3) GSIS failed to advance the reasonable cost of
the satellite. GSIS alleged that: production of the documents.
o Domsat, with Westmont Bank as the conduit, transferred  9 April 2003: the RTC issued an Order denying the motion to
the USD 11 M loan proceeds from the Industrial Bank of quash, ruling that the case was for the collection of a sum of
Korea to Citibank New York account of Westmont Bank money initiated by the banks against Domsat and GSIS, the latter
and from there to the Binondo Branch of Westmont Bank. being surety. The RTC considered the contention of GSIS that the
 The Banks filed a complaint before the RTC of Makati against proceeds of the loan was deviated to purposes other than to what
Domsat and GSIS. the loan was extended, hence, it ruled that quashal of the subpoena
 During hearing, GSIS requested for the issuance of a subpoena would deny GSIS its right to prove its defenses.
duces tecum to the custodian of records of Westmont Bank to  The Banks filed first MR; denied. The Banks filed 2 nd MR, which
produce the following documents: the RTC granted, quashing the subpoenas. The RTC invoked the
o Ledger covering the account of DOMSAT with Westmont ruling in Intengan v. Court of Appeals, where it was ruled that
Bank (now United Overseas Bank), any and all foreign currency deposits are absolutely confidential and may be
documents, records, files, books, deeds, papers, notes and examined only when there is a written permission from the
other data and materials relating to the account or depositor.
transactions of DOMSAT with or through Westmont from  GSIS filed MR; denied.
January 1997 to December 2002;  Upon appeal, the CA partially ruled in favor of the Banks, ruling
o All applications for cashier’s/ manager’s checks and bank that that Domsat’s deposit in Westmont Bank is covered by
transfers funded by the account of DOMSAT with or Republic Act No. 6426 (Foreign Currency Deposit Act of the
10 BANKING DIGESTS 01-16-2020
through Westmont from January 1997 to December 2002, Philippines) or the Bank Secrecy Law. It held that:
and all other data and materials covering said o the ruling in Van Twest vs. Court of Appeals (relied upon
applications; by GSIS) was rendered during the effectivity of CB
o Ledger covering the account of Philippine Agila Satellite, Circular 960, and under Sec. 102 thereof, transfer to
Inc. with Westmont, any and all documents, records, files, foreign currency deposit account or receipt from another
books, deeds, papers, notes and other data and materials foreign currency deposit account, whether for payment of
relating to the account or transactions of Philippine Agila legitimate obligation or otherwise, are not eligible for
Satellite, Inc. with or through Westmont for the same deposit under the System.
period; o However, said CB Circular has already been superseded
o All applications for cashier’s/manager’s checks funded by by CB Circular 1318 and later by CB Circular 1389, and
the account of Philippine Agila Satellite, Inc. with or CB Circular 960 has not been re-enacted. Hence, the
through Westmont for the same period, and all other data ruling in Intengan v. CA (the case used by the RTC and
and materials covering said applications. relied upon by the Banks) is the applicable case.
 The RTC issued a subpoena decus tecum on 21 November 2002. o Moreover, GSIS had inappropriately invoked the
 A motion to quash was filed by the banks (and joined by Domsat) provisions of CB Circular 343 which has already been
on three grounds: superseded by more recently issued CB Circulars. CB
o 1) the subpoena is unreasonable, oppressive and does not Circular 343 requires the surrender to the banking system
establish the relevance of the documents sought; of foreign exchange, including proceeds of foreign
o 2) request for the documents will violate the Law on borrowings. This requirement, however, can no longer be
found in later circulars.
 o As to GSIS’ argument that “assuming CB Circular 1389 cover the surety bond issued.
was the applicable circular, Domsat violated it since under ISSUE #1 (MAIN):
Section 27 thereof, the USD 11 M should have been paid  W/N the subpoena for the bank ledger of Domsat’s account
directly to Intersputnik and not deposited to Westmont,” should issue (NO)
the CA held that Section 27 does not prescribe the RATIO #1:
conditions before any foreign currency deposit can be  GSIS invokes Republic Act No. 1405 to justify the issuance of the
entitled to the confidentiality provisions of R.A. 6426. subpoena while the banks cite Republic Act No. 6426 to oppose it.
o Lastly, as to the argument of GSIS that “since the The core issue is which of the two laws should apply in the instant
President of Westmont Bank had already testified during case.
trial as to the USD 11 M deposit, hence, it was no longer  RA 1405 was enacted in 1955. Section 2 thereof was first amended
confidential,” the CA ruled that it was not the written by PD 1792 in 1981 and further amended by RA 7653 in 1993. It
consent contemplated by R.A. 6426. reads:
 However, the CA upheld the issuance of subpoena praying for the Section 2. All deposits of whatever nature with banks or banking
production of applications for cashier’s or manager’s checks by institutions in the Philippines including investments in bonds issued by
Domsat through Westmont, as well as a copy of an the agreements the Government of the Philippines, its political subdivisions and its
between Domsat and/or Philippine Agila Satellite and Intersputnik instrumentalities, are hereby considered as of an absolutely confidential
for the acquisition and/or lease of a Gorizon Satellite. The CA held nature and may not be examined, inquired or looked into by any person,
that the production of these documents does not involve the government official, bureau or office, except upon written permission of
examination of Domsat’s account since it will never be known how the depositor, or in cases of impeachment, or upon order of a competent
much money was deposited into it or withdrawn therefrom and court in cases of bribery or dereliction of duty of public officials, or in
11 how much remains therein. BANKING
cases where the money deposited or invested DIGESTS
is the 01-16-2020
subject matter of the
 GSIS filed MR; denied. In its petition to the SC, it argues that: litigation.
o Domsat’s deposit with Westmont Bank can be examined  Section 8 of RA 6426, enacted in 1974, and amended by PD 1035
and inquired into, since the Bank Secrecy Act allows the and later by PD1246, provides:
disclosure of bank deposits in cases where the money Section 8. Secrecy of Foreign Currency Deposits. – All foreign currency
deposited is the subject matter of the litigation. deposits authorized under this Act, as amended by Presidential Decree
o the subject matter of the litigation is the USD 11 M No. 1035, as well as foreign currency deposits authorized under
obtained by Domsat from the Banks to supposedly Presidential Decree No. 1034, are hereby declared as and considered of
finance the lease of a Russian satellite from Intersputnik, an absolutely confidential nature and, except upon the written permission
and whether or not it should be held liable as a surety is of the depositor, in no instance shall foreign currency deposits be
contingent upon whether Domsat indeed utilized the examined, inquired or looked into by any person, government official,
amount to lease a Russian satellite as agreed upon. bureau or office whether judicial or administrative or legislative or any
o the whereabouts of the USD 11 M is the subject matter of other entity whether public or private; Provided, however, That said
the case and the disclosure of bank deposits relating to the foreign currency deposits shall be exempt from attachment, garnishment,
USD 11 M should be allowed. or any other order or process of any court, legislative body, government
o the concerted refusal of Domsat and the banks to divulge agency or any administrative body whatsoever.
the whereabouts of the USD 11 M will greatly prejudice  RA 1405 provides for four exceptions (actually 5, pero 4 yung
and burden the GSIS pension fund considering that a sabi ng SC) when records of deposits may be disclosed. These are
substantial portion of this fund is earmarked every year to under any of the following instances:
 o a) upon written permission of the depositor, therefore is not RA 1405 but RA 6426.
o (b) in cases of impeachment,  Applying Section 8 of RA 6426, absent the written permission
o (c) upon order of a competent court in the case of bribery from Domsat, Westmont Bank cannot be legally compelled to
or dereliction of duty of public officials or, disclose the bank deposits of Domsat, otherwise, it might expose
o (d) when the money deposited or invested is the subject itself to criminal liability under the same act.
matter of the litigation, and DISPOSITION
o e) in cases of violation of the Anti-Money Laundering Act  Petition for certiorari is DISMISSED. The Decision dated 29
(AMLA), the Anti-Money Laundering Council (AMLC) February 2008 and 19 June 2009 Resolution of the Court of
may inquire into a bank account upon order of any Appeals are hereby AFFIRMED.
competent court.
 The lone exception to the non-disclosure of foreign currency
deposits, under RA 6426, is disclosure upon the written permission
of the depositor.
 These two laws both support the confidentiality of bank deposits.
RA 1405 was enacted for the purpose of giving encouragement to
the people to deposit their money in banking institutions and to
discourage private hoarding so that the same may be properly
utilized by banks in authorized loans to assist in the economic
development of the country. It covers all bank deposits in the
12 Philippines and no distinction was made between domestic and BANKING DIGESTS 01-16-2020
foreign deposits. Thus, RA 1405 is considered a law of general
application.
 On the other hand, RA 6426 was intended to encourage deposits
from foreign lenders and investors. It is a special law designed
especially for foreign currency deposits in the Philippines. A
general law does not nullify a specific or special law. Generalia
specialibus non derogant. Therefore, it is beyond cavil that RA
6426 applies in this case.
 Intengan v. Court of Appeals affirmed the above-cited principle
and categorically declared that for foreign currency deposits, such
as U.S. dollar deposits, the applicable law is RA 6426.
o In said case, Citibank filed an action against its officers
for persuading their clients to transfer their dollar deposits
to competitor banks. Bank records, including dollar
deposits of petitioners, purporting to establish the
deception practiced by the officers, were annexed to the
complaint. Petitioners now complained that Citibank
violated RA 1405. The SC ruled that since the accounts in
question are U.S. dollar deposits, the applicable law
 In Matter of Intestate Estate Of Reynaldo Guzman Rodriguez V. interest in the property consent, expressly or impliedly, to the submission of
Rolando C. Rodriguez the question to the probate court for adjudgment.
GR No. 230404, Jan 31, 2018 FIRST DIVISION (Tijam, J.:)
In this case, the Court notes that the parties submitted to the
DOCTRINE: jurisdiction of the intestate court in settling the issue of the ownership of the
The exception to the general rule that while the probate court joint account. Furthermore, respondents sought affirmative relief from the
exercises limited jurisdiction, it may settle questions relating to ownership intestate court. Said affirmative relief is embodied in respondents' claim of
when the claimant and all other parties having legal interest in the property ownership over the funds in said joint account to the exclusion of Anita,
consent, expressly or impliedly, to the submission of the question to the when in fact said funds in the joint account was neither mentioned nor
probate court for adjudgment. included in the inventory of the intestate estate of the late Reynaldo.
Therefore, respondents impliedly agreed to submit the issue of ownership
FACTS: before the trial court, acting as an intestate court, when they raised an
Reynaldo and Ester left several properties to their surviving affirmative relief before it. To reiterate, the exercise of the trial court of its
children (herein respondents). Respondents executed an Extrajudicial limited jurisdiction is not jurisdictional, but procedural; hence, waivable.
Settlement of both deceased spouses. Meanwhile, Anita is a co-depositor in
a Joint Account under the name Anita Ong Tan and Reynaldo. BPI sent a
letter to Anita and informed her that her joint account with Reynaldo would
become dormant if no transaction will be made. As such, Anita decided to
withdraw her funds, hence, requiring the latter to submit the extrajudicial
settlement of respondents. Anita then approached respondents and asked
13 them to sign a waiver of rights to the said joint account but the latter refused BANKING DIGESTS 01-16-2020
to sign the alleging that the funds in the said joint account belonged to their
father. Respondents then submitted documents to BPI for the release of half
of the funds deposited in said joint account. BPI withheld the release of the
funds because of the conflicting claims between Anita and respondents.
Anita then filed settlement of the Intestate Estate of the late Reynaldo.

ISSUE:
May the probate court determine issues of ownership in a bank
account deposit?

RULING:
Yes. The Court finds the ruling of the trial court that Anita is the
sole owner of the funds in question proper. Noteworthy is the fact that even
if the probing arms of an intestate court is limited, it is equally important to
consider the call of the exercise of its power of adjudication especially so
when the case calls for the same. The exception to the general rule that
while the probate court exercises limited jurisdiction, it may settle questions
relating to ownership when the claimant and all other parties having legal
 EJERCITO V. SANDIGANBAYAN G.R. NO. 157294-95 1. YES. The contention that trust accounts are not covered by the term
Ejercito v. Sandiganbayan “deposits,”as used in R.A. 1405, by the mere fact that they do not entail a
G.R. NO. 157294-95 creditor-debtor relationship between the trustor and the bank, does not lie.
DATE: November 30, 2006 An examination of the law shows that the term “deposits”used therein is to
PONENTE: CARPIO-MORALES be understood broadly and not limited only to accounts which give rise to a
creditor-debtor relationship between the depositor and the bank. If the
money deposited under an account may be used by banks for authorized
FACTS: loans to third persons, then such account, regardless of whether it creates a
The Special Prosecution Panel filed before the Sandiganbayan a Request for creditor-debtor relationship between the depositor and the bank, falls under
Issuance of Subpoena Duces Tecum for the issuance of a subpoena the category of accounts which the law precisely seeks to protect for the
directing the President of Export and Industry Bank (EIB, formerly Urban purpose of boosting the economic development of the country.
Bank) or his/her authorized representative to produce documents relating to
Trust Account No. 858 and Savings Account of President Estrada. The SB Trust Account No. 858 is, without doubt, one such account. The Trust
granted the request. Agreement between Estrada and Urban Bank provides that the trust account
covers “deposit, placement or investment of funds”by Urban Bank for and
Estrada filed a Motion to Quash the subpoenas claiming that his bank in behalf of Estrada. The money deposited under Trust Account No. 858,
accounts are covered by R.A. No. 1405 (The Secrecy of Bank Deposits was, therefore, intended not merely to remain with the bank but to be
14 Law) and do not fall under any of the exceptions stated therein. He further invested by it elsewhere. To hold that this type of account
BANKING is not
DIGESTS protected
01-16-2020
claimed that the specific identification of documents in the questioned by R.A. 1405 would encourage private hoarding of funds that could
subpoenas, including details on dates and amounts, could only have been otherwise be invested by banks in other ventures, contrary to the policy
made possible by an earlier illegal disclosure thereof by the EIB and the behind the law.
Philippine Deposit Insurance Corporation (PDIC) in its capacity as receiver
of the then Urban Bank. The disclosure being illegal, petitioner concluded, The phrase “of whatever nature”proscribes any restrictive interpretation of
the prosecution in the case may not be allowed to make use of the “deposits.”Moreover, it is clear from the immediately quoted provision that,
information. The SB denied the motion. generally, the law applies not only to money which is deposited but also to
those which are invested. This further shows that the law was not intended
ISSUE/S: to apply only to “deposits”in the strict sense of the word. Otherwise, there
1. Is the Trust Account covered by the term “deposit”under the Bank would have been no need to add the phrase “or invested.” Clearly, therefore,
Secrecy Law? R.A. 1405 is broad enough to cover Trust Account No. 858.
2. Are the Trust and Savings Accounts of Estrada excepted from the
protection of the Bank Secrecy Law? 2. YES. The protection afforded by the law is, however, not absolute, there
3. Does the fruit of poisonous tree principle apply? being recognized exceptions thereto, as abovequoted Section 2 provides. In
the present case, two exceptions apply, to wit: (1) the examination of bank
RULING: accounts is upon order of a competent court in cases of bribery or
 dereliction of duty of public officials, and (2) the money deposited or secondary or derivative evidence (the “fruit”) derived from it is also
invested is the subject matter of the litigation. inadmissible, does not apply in this case. In the first place, R.A. 1405 does
not provide for the application of this rule. R.A. 1405, it bears noting,
Estrada contends that since plunder is neither bribery nor dereliction of nowhere provides that an unlawful examination of bank accounts shall
duty, his accounts are not excepted from the protection of R.A. 1405. He is render the evidence obtained therefrom inadmissible in evidence. Moreover,
wrong. Cases of unexplained wealth are similar to cases of bribery or there is no basis for applying the same in this case since the primary source
dereliction of duty and no reason is seen why these two classes of cases for the detailed information regarding petitioner’s bank accounts—the
cannot be excepted from the rule making bank deposits confidential. The investigation previously conducted by the Ombudsman—was lawful.
policy as to one cannot be different from the policy as to the other. This
policy expresses the notion that a public office is a public trust and any
person who enters upon its discharge does so with the full knowledge that
his life, so far as relevant to his duty, is open to public scrutiny. An
examination of the “overt or criminal acts as described in Section 1(d)”of
R.A. No. 7080 would make the similarity between plunder and bribery even
more pronounced since bribery is essentially included among these criminal
acts. Plunder being thus analogous to bribery, the exception to R.A. 1405
applicable in cases of bribery must also apply to cases of plunder.
15 BANKING DIGESTS 01-16-2020
The plunder case now pending with the SB necessarily involves an inquiry
into the whereabouts of the amount purportedly acquired illegally by former
President Joseph Estrada. In light then of this Court’s pronouncement in
Union Bank, the subject matter of the litigation cannot be limited to bank
accounts under the name of President Estrada alone, but must include those
accounts to which the money purportedly acquired illegally or a portion
thereof was alleged to have been transferred. Trust Account No. 858 and
Savings Account No. 0116-17345-9 in the name of petitioner fall under this
description and must thus be part of the subject matter of the litigation.

In sum, exception (1) applies since the plunder case pending against former
President Estrada is analogous to bribery or dereliction of duty, while
exception (2) applies because the money deposited in petitioner’s bank
accounts is said to form part of the subject matter of the same plunder case.

3. NO. The “fruit of the poisonous tree”principle, which states that once the
primary source (the “tree”) is shown to have been unlawfully obtained, any
 China Banking Corp. v. Court of Appeals G.R. NO. 140687 1246, Presidential Decree No. 1035, as well as foreign currency deposits
China Banking Corp. v. Court of Appeals authorized under Presidential Decree No. 1034 are considered absolutely
G.R. NO. 140687 DATE18 Dec. 2006 confidential in nature and may not be inquired into. There is only one
PONENTE CHICO-NAZARIO, J.: exception to the secrecy of foreign currency deposits, that is, disclosure is
allowed upon the written permission of the depositor.

FACTS: Jose Gotianuy accused his daughter Mary Margaret Dee of

stealing, among his other properties, US dollar deposits with Citibank N.A.
amounting to not less than P35,000,000.00 and US$864,000.00. Mary In the case at bar, there is no issue as to the source of the funds. Mary
Margaret Dee received these amounts from Citibank N.A. through checks Margaret Dee declared the source to be Jose Gotianuy. There is likewise no
which she allegedly deposited at China Banking Corporation (China Bank). dispute that these funds in the form of Citibank US dollar Checks are now
He likewise accused his son-in-law, George Dee, husband of his daughter, deposited with China Bank. As the owner of the funds unlawfully taken and
Mary Margaret, of transferring his real properties and shares of stock in which are undisputably now deposited with China Bank, Jose Gotianuy has
George Dees name without any consideration. Jose Gotianuy, died during the right to inquire into the said deposits.
the pendency of the case before the trial court. He was substituted by his
daughter, Elizabeth Gotianuy Lo. The latter presented the US Dollar checks
withdrawn by Mary Margaret Dee from his US dollar placement with
16 Citibank. BANKING DIGESTS 01-16-2020

RTC ruling: As the foreign currency fund is deposited with the movant
China Banking Corporation, the disclosure only as to the name or in whose
name the said fund is deposited is not violative of the law.

China Bank filed a Petition for Certiorari with the Court of Appeals.

ISSUE/S:
Whether or not petitioner China Bank is correct in its submission that the
Citibank dollar checks with both Jose Gotianuy and/or Mary Margaret Dee
as payees, deposited with China Bank, may not be looked into under the law
on secrecy of foreign currency deposits.

RULING: NO.

The law provides that all foreign currency deposits authorized under
Republic Act No. 6426, as amended by Sec. 8, Presidential Decree No.
 [G.R. No. 47757. April 17, 1942]
Know All Men by These Presents:
Ana Rivera, plaintiff and appellant, vs. Peoples Bank and Trust Co.,
defendant and appellee. Minnie Stephenson, in her capacity as That we hereby agree with each other and with the PEOPLES BANK
administratrix of the intestate estate of Edgar Stephenson, intervenor and AND TRUST COMPANY, Manila, Philippine Islands (hereinafter called
appellee. the Bank), that all moneys now or hereafter deposited by us or either of
us with the Bank in our savings account shall be deposited in and
1. Banks and Banking; Validity of Survivorship Agreement; Joint received by the Bank with the understanding and upon the condition that
Deposits.—The survivorship agreement here involves is prima facie valid. said money be deposited without consideration of its previous ownership,
It is an aleatory contract supported by a lawful consideration—the mutual and that said money and all interest thereon, if any there be, shall be the
property of both of us joint tenants, and shall be payable to and
agreement of the joint depositors permitting either of them to withdraw the
collectible by either of us during our joint lives, and after the death of
whole deposit during their lifetime, and transferring the balance to the one of us shall belong to and be the sole property of the survivor, and
survivor upon the death of one of them. It is covered by Article 1790 of the shall be payable to and collectible by such survivor.
Civil Code. Furthermore, it is well established that a bank account may be
so created that two persons shall be joint owners thereof during their mutual And we further covenant and agree with each other and the Bank, its
lives, and the survivor take the whole on the death of the other. The right to successors or assigns, that the receipt or check of either of us during our
make such joint deposits has generally been held not to be done away with joint lives, or the receipt or check of the survivor, for any payment made
by statutes abolishing joint tenancy and survivorship generally as they from this account, and shall be valid and sufficient and discharge to the
17 existed at common law. Bank for such payment. BANKING DIGESTS 01-16-2020

2. Id.; Id., Id.—But although the survivorship agreement is per se not The Bank is hereby authorized to accept and deposit to this account all
contrary to law, its operation or effect may be violative of the law. For checks made payable to either or both of us, when endorsed by either or
both of us or one for the other.
instance, if it be shown in a given case that such agreement is a mere cloak
to hide an inofficious donation, to transfer property in fraud of creditors, or
This is a joint and several agreement and is binding upon each of us, our
to defeat the legitime of a forced heir, it may be assailed and annulled upon heirs, executors, administrators, and assigns.
such grounds. No such vice has been imputed and established against the
agreement involved in this case. In witness whereof we have signed our names here to this 17th day of
October, 1931.
FACTS:

The question raised in this appeal is the validity of the survivorship

agreement made by and between Edgar Stephenson, now deceased, and Ana (Sgd.) EDGAR STEPHENSON
Rivera, appellant herein. (Sgd.) Ana Rivera
Address: 799 Sta. Mesa, Manila
SURVIVORSHIP AGREEMENT         Witness:
        (Sgd.) FRED W. BOHLER
         (Sgd.) Y. E. Cox The Court in this case found no basis for the conclusion that the
        S. A. #4146 survivorship agreement was a mere power of attorney from Stephenson to
Ana, or that it is a gift mortis causa from him to her. Such conclusion is
Ana Rivera was employed by Edgar Stephenson as housekeeper from the evidently predicated on the assumption that Stephenson was the exclusive
year 1920 until his death on June 8, 1939. On December 24, Stephenson owner of the funds deposited in the bank, which assumption was in turn
opened an account in his name with the defendant Peoples Bank by based on the facts (1) that the account was originally opened in the name of
depositing therein the sum of P1,000. On October 17, 1931, when there was Stephenson alone and (2) that Ana Rivera "served only as housemaid of the
a balance of P2,072 in said account, the survivorship agreement in question deceased." But it not infrequently happens that a person deposits money in
was executed and the said account was transferred to the name of "Edgar the bank in the name of another; and in the instant case it also appears that
Stephenson and/or Ana Rivera." At the time of Stephenson's death Ana Ana Rivera served her master for about nineteen years without actually
Rivera held the deposit book, and there was a balance in said account of receiving her salary from him. The fact that subsequently Stephenson
P701.43, which Ana Rivera claimed but which the bank refused to pay to transferred the account to the name of himself and/or Ana Rivera and
her upon advice of its attorneys who gave the opinion that the survivorship executed with the latter the survivorship agreement in question although
agreement was of doubtful validity. Thereupon Ana Rivera instituted the there was no relation of kinship between them but only that of master and
present action against the bank, and Minnie Stephenson, administratix of the servant, nullifies the assumption that Stephenson was the exclusive owner
estate of the deceased, intervened and claimed the amount for the estate, of the bank account. In the absence, then, of clear proof of the contrary, we
alleging that the money deposited in said account was and is the exclusive must give full faith and credit to the certificate of deposit, which recites in
property of the deceased. effect that the funds in question belonged to Edgar Stephenson and Ana
18 BANKING DIGESTS 01-16-2020
Rivera; that they were joint owners thereof; and that either of them could
TC: Held that the agreement in question, viewed from its effect during
withdraw any part or the whole of said account during the lifetime of both,
the lives of the parties, was a mere power of attorney authorizing
and the balance, if any, upon the death of either, belonged to the survivor.
Ana Rivera to withdraw the said deposit, which power terminated
upon the death of the principal, Edgar Stephenson; but that, viewed ISSUE:
from its effect after the death of either parties, that the agreement
was a donation mortis causa with reference to the balance WON the survivorship agreement is valid.
remaining at the death of one of them, which, not having been
executed with the formalities of a testamentary disposition as HELD:
required by Article 620 of the Civil Code, was of no legal effect.
YES. It was found by the Court to be prima facie valid. It is an aleatory
Defendant bank contention: None, did not appear in Court. contract supported by law a lawful consideration — the mutual agreement
of the joint depositors permitting either of them to withdraw the whole
Minnie Stephenson’s contention: the survivorship agreement was a deposit during their lifetime, and transferring the balance to the survivor
donation mortis causa from Stephenson to Ana Rivera of the bank upon the death of one of them. The trial court said that the Civil Code
account in question and that, since it was not executed with the "contains no provisions sanctioning such an agreement" The SC opined that
it is covered by article 1790 of the Civil Code, which provides as follows:
formalities of a will, it can have no legal effect.
 ART. 1790. By an aleatory contract one of the parties binds
himself, or both reciprocally bind themselves, to give or to do
something as an equivalent for that which the other party is to give
or do in case of the occurrence of an event which is uncertain or
will happen at an indeterminate time.

Furthermore, "it is well established that a bank account may be so created

that two persons shall be joint owners thereof during their mutual lives, and
the survivor take the whole on the death of the other. The right to make such
joint deposits has generally been held not to be done with by statutes
abolishing joint tenancy and survivorship generally as they existed at
common law." (7 Am. Jur., 299.)

But although the survivorship agreement is per se not contrary to law, its
operation or effect may be violative of the law. For instance, if it be shown
in a given case that such agreement is a mere cloak to hide an inofficious
donation, to transfer property in fraud of creditors, or to defeat the legitime
of a forced heir, it may be assailed and annulled upon such grounds. No
such vice has been imputed and established against the agreement involved
19 in the case. BANKING DIGESTS 01-16-2020
WHEREFORE, the agreement appealed from is reversed and another
judgment will be entered in favor of the plaintiff ordering the defendant
bank to pay to her the sum of P701.43, with legal interest thereon from the
date of the complaint, and the costs in both instances. So ordered.
 Vitug v. CA agreement is per se not contrary to law and thus is valid unless its operation
or effect may be violative of a law such as in the following instances: (1) it
G.R. No. 82027, March 29, 1990 is used as a mere cloak to hide an inofficious donation; (2) it is used to
transfer property in fraud of creditors; or (3) it is used to defeat the legitime
Spouses Dolores and Romarico Vitug entered into a survivorship agreement of a compulsory heir. In the instant case, none of the
with the Bank of American National Trust and Savings Association. The foregoing instances were present. Consequently, the Court upheld the
said agreement contained the following stipulations: validity of the survivorship agreement entered into by the spouses Vitug. As
such, Romarico, being the surviving spouse, acquired a vested right over the
amounts under the savings account, which became his exclusive property
(1) All money deposited and to be deposited with the Bank in their joint upon the death of his wife pursuant to the survivorship agreement. Thus, the
savings current account shall be both their property and shall be payable to funds of the savings account are not conjugal partnership properties and not
and collectible or withdrawable by either or any of them during their part of the estate of the deceased Dolores.
lifetime; and

(2) After the death of one of them, the same shall belong to and be the sole
property of the surviving spouse and payable to and collectible or
withdrawable by such survivor

Dolores died naming Rowena Corona in her wills as executrix. Romarico

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later filed a motion asking authority to sell certain shares of stock and real
property belonging to the estate to cover his advances to the estate which he
claimed were personal funds withdrawn from their savings account.
Rowena opposed on the ground that the same funds withdrawn from the
savings account were conjugal partnership properties and part of the estate.
Hence, there should be no reimbursement. On the other hand, Romarico
insists that the same are his exclusive property acquired through the
survivorship agreement.

ISSUE: Whether or not the funds of the savings account subject of the

survivorship agreement were conjugal partnership properties and part of the
estate

No. The Court ruled that a Survivorship Agreement is neither a donation

mortis causa nor a donation inter vivos. It is in the nature of an aleatory
contract whereby one or both of the parties reciprocally bind themselves to
give or to do something in consideration of what the other shall give or do
upon the happening of an event which is to occur at an indeterminate time
or is uncertain, such as death. The Court further ruled that a survivorship
 BDO vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 198756, Case eventually own the instruments, then it becomes indubitable that funds
Digest would be obtained from the “public” as defined in Section 22(Y) of the
The term ‘deposit substitutes’ shall mean an alternative form of obtaining NIRC.”171  Indeed, in the context of the financial market, the words “at any
funds from the public (the term 'public' means borrowing from twenty (20) one time” create an ambiguity.
or more individual or corporate lenders at any one time) other than
deposits, through the issuance, endorsement, or acceptance of debt
instruments for the borrower’s own account, for the purpose of relending or Meaning of “at any one time”
purchasing of receivables and other obligations, or financing their own
needs or the needs of their agent or dealer. Thus, from the point of view of the financial market, the phrase “at any one
time” for purposes of determining the “20 or more lenders” would mean
Under the 1997 National Internal Revenue Code, Congress specifically every transaction executed in the primary or secondary market in
defined “public” to mean “twenty (20) or more individual or corporate connection with the purchase or sale of securities.
21 BANKING DIGESTS 01-16-2020
lenders at any one time.”  Hence, the number of lenders is determinative of
whether a debt instrument should be considered a deposit substitute and For example, where the financial assets involved are government securities
consequently subject to the 20% final withholding tax. like bonds, the reckoning of “20 or more lenders/investors” is made at any
transaction in connection with the purchase or sale of the Government
20-lender rule Bonds.

Petitioners contend that “there [is] only one (1) lender (i.e. RCBC) to whom
the BTr issued the Government Bonds.”169  On the other hand, respondents
theorize that the word “any” “indicates that the period contemplated is the
entire term of the bond and not merely the point of origination or
issuance[,]”170 such that if the debt instruments “were subsequently sold in
secondary markets and so on, in such a way that twenty (20) or more buyers