CASE SUMMARIES:

Lim vs. People of the Philippines (G.R. No. 143231, October 26, 2001)

Lim filed a petition to set aside the decision of the court of appeals of 24 April 2000 in CA-G.R. No.
21016 which found him guilty of guilty of twelve (12) counts of violation of Batas Pambansa Blg. 22,
otherwise known as the Bouncing Checks Law. ch

Well knowingly that he issued a postdated check the complainant Robert Lu (250,000) which does not
have a sufficient fund and that after the notice of dishonor from the bank he still failed to pay after 5
banking days.

When the complainant tried to deposit the 12 checks they were dishonored by the bank because of
“account closed” and he then immediately informed Lim about it, Lim then promised to pay within 2-3
weeks but still failed to do so which made Lu on endorsing it to his lawyer. ALBERTO received the
demand letter on 9 January 1993. For failure to settle his account within the seven days grace period
provided in the demand letter, ALBERTO caused the filing of the twelve information subject of the
instant case.ch an rob 1 es virt u a1 1 aw 1 ib rary

Lim alleged that Sarangani, Inc already issued payment to Lu but the checks bounced but as a
replacement Lim issued more than 300 checks to Lu claiming that Lu already received a total amount of
P4,021,000 which covered the full amount of the said payment.

The trial court rejected the defense. 10 October 1996

He was sentenced: to suffer six (6) months of imprisonment in each of these twelve (12) cases and to
pay Lu the twelve (12) checks in question in these cases in the total amount of P1,392,500.00 with
interest thereon at 12% yearly from the date of the filing of these cases, July 15, 1993, until the said
amount is fully paid, with costs.

ALBERTO filed a motion for reconsideration which was denied by the trial court.

His arguments:

1. The petitioner is not guilty of violating Batas Pambansa Bilang 22 as the subject checks lack
valuable consideration.

2. In any event, the factual setting of the present case warrants leniency in the imposition of criminal
penalty on petitioner.

It was dismissed due to lack of merit.

The conviction of ALBERTO must be sustained.

In the instant case, we see no reason to disturb the factual findings of the trial court which has been
affirmed in toto by the Court of Appeals. ALBERTO’s allegation that the checks were issued to replace
or accommodate the bad checks of Sarangani, Inc. is not worthy of belief.

Hence, without evidentiary support, ALBERTO’s claim that the twelve checks lacks valuable
consideration must fail.
ALBERTO’s alternative prayer for the modification of penalty by deleting the sentence of imprisonment
and, in lieu thereof, that a fine in an increased amount be imposed must likewise be denied.

Each act of drawing and issuing a bouncing check constitutes a violation of B.P. Blg. 22.

WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals upholding the
decision of the Regional Trial Court, Branch 90, Quezon, City in Criminal Cases Nos. Q-93-46489 to
46500 is hereby AFFIRMED.

Rico vs. People of the Philippines (G.R. No. 137191, November 18, 2002)

FACTS: Petitioner Ben B. Rico was a pakyaw contractor who purchased construction materials on
credit from Ever Lucky Commercial (ELC), represented by its Manager Victor Chan. Petitioner payed
either through cash or post-dated checks. Petitioner Rico issued checks in the amount of P178,434.00
drawn against PCIB in favor of ELC as payment for construction materials he that he purchased
through credit. However these checks were dishonored due to insufficient funds or being drawn
against a closed account. ELC demanded payment from Rico, however no formal written demand letter
or notice of dishonor was sent to the latter. It is also established that ELC issued several receipts
covering several payments in various amounts made by Rico as replacement of some dishonoured
checks but returned checks as well as payment of purchased materials. Rico claimed that he had
already paid the amounts covered by the checks totaling P284,340.50 including interest. According to
Rico, the difference between the total amount as reflected in the receipts and the total amount
covered by the subject checks represented interest. ELC filed a complaint for B.P. 22 against Rico. The
trial court found Rico guilty beyond reasonable doubt. The CA affirmed the trial court’s decision.

ISSUE: Whether or not petitioner Rico is guilty under B.P. 22

HELD: No. Petitioner Rico is acquitted of the charge for violation of B.P. 22 on the ground of
reasonable doubt. The law enumerated the 3 elements of B.P. 22, namely: (1) the making, drawing,
issuance of any check for account or value; (2) the knowledge of the maker, drawer, or issuer that at
the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment
of the check in full up on its presentment; and (3) the subsequent dishonor of the check by the
drawee bank for insufficiency of funds or credit or dishonor for the same reason had not the drawer,
without any valid cause, ordered the bank to stop payment. In this case, the second element is not
present. Knowledge of insufficiency of funds or credit in the drawee bank is an essential element of
the offense. If such notice of non-payment by the drawee bank is not sent to the maker or drawer of
the check then the presumption of such knowledge does not arise. The prosecution failed to prove that
petitioner received any notice of dishonor. In fine, the failure of the prosecution to prove the existence
and receipt by petitioner of the requisite written notice of dishonor and that he was given at least five
banking days within which to settle his account constitutes sufficient ground for his acquittal.

In his defense, petitioner did not deny that he issued the subject checks and that they were
dishonored upon presentment for payment with the drawee bank. He claimed, however, that he
already paid the amounts covered by the checks, totaling P284,340.50, including interest. In support
thereof, he submitted as evidence the following official receipts issued by ELC

The absence of a notice of dishonor necessarily deprives an accused an opportunity to preclude a

criminal prosecution.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CR No. 19764 is MODIFIED. Petitioner
BEN RICO is ACQUITTED of the charge for violation of B.P. 22 on the ground of reasonable doubt.
However, he is ordered to pay private complainant the face value of the checks in the total amount of
P178,434.00, with 12 percent interest per annum, from the filing of the informations until the amount
due is fully paid.

San Mateo vs. People of the Philippines (G.R. No. 200090, March 6, 2013)
ERLINDA C. SAN MATEO, Petitioner, vs. PEOPLE OF THE PHILIPPINES, Respondent.

G.R. No. 200090, 6 March 2013.

ABAD, J.:

Petitioner Erlinda San Mateo ordered assorted yarns from ITSP through its the Vice President for Operations, Ravin A.
Sehwani. In partial payment, thereof, she issued 11 postdated checks.

But whenever a check matured, San Mateo would call Sehwani requesting him not to deposit the checks.

Sehwani finally deposited one check, but was it dishonored due to insufficient funds. He informed San Mateo of the
dishonor, who asked him to defer depositing the other checks since she was encountering financial difficulties.

Sehwani deposited another check but was dishonored due to a stop payment order. Sehwani deposited the remaining
checks which were all dishonored because the account had been closed. Sehwani attempted to contact San Mateo but she
never responded.

Sehwani’s counsel then sent a demand letter to San Mateo’s residence but the security guard of the townhouse complex
refused to accept the letter. Thereafter, he sent a copy of the demand letter to San Mateo by registered mail which was
returned to his counsel’s office with the notation "N/S Party Out 12/12/05" and that San Mateo did not claim it despite three
notices to her.

San Mateo was charged with 11 counts of violation of B.P. 22, and was found guilty of 10 counts by the MTC. On appeal,
the ruling was affirmed by the RTC and the CA.

ISSUE: W/N San Mateo was guilty of violating B.P. 22.

RULING: No.

To be liable for violation of B.P. 22, the following essential elements must be present:
1. The making, drawing, and issuance of any check to apply for account or for value;
2. The knowledge of the maker, drawer, or issuer that at the time of issue he does not have sufficient funds
in or credit with the drawee bank for the payment of the check in full upon its presentment; and
3. The subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor
for the same reason had not the drawer, without any valid cause, ordered the bank to stop payment.
In this case, the third element is present and had been adequately established. The first element had also been established
since San Mateo herself admitted that she drew and issued the same as payment for the yarns she ordered from ITSP.
Besides, the issue of lack of valuable consideration for the issuance of checks which were later on dishonored for insufficient
funds is immaterial to the success of a prosecution for violation of B.P. 22.

However, the second element was not sufficiently established. Section 2 of B.P. 22 creates the presumption that the issuer
of the check was aware of the insufficiency of funds when he issued a check and the bank dishonored it. This presumption,
however, arises only after it is proved that the issuer had received a written notice of dishonor.

Here, when Sehwani's counsel's attempted to serve the notice by leaving a copy with the security guard, there was no
showing that the letter ever reached San Mateo.

On the second occasion, Sehwani's counsel sent a demand letter to San Mateo by registered mail. However, the
prosecution must not only prove that a notice of dishonor was sent to the accused, it must also prove actual receipt of said
notice, because the fact of service provided for in the law is reckoned from receipt of such notice of dishonor by the
accused.

Since there is insufficient proof that San Mateo actually received the notice of dishonor, the presumption that she knew of
the insufficiency of her funds cannot arise. For this reason, the Court cannot convict her of violation of B.P. 22.
Nevertheless, San Mateo’s acquittal does not entail the extinguishment of her civil liability for the dishonored checks. An
acquittal based on lack of proof beyond reasonable doubt does not preclude the award of civil damages.

For this reason, the trial court’s directive for San Mateo to pay the civil liability in the amount of ₱134,275.00
representing the total value of the 11 checks plus 12% interest per annum from the time the said sum became due
and demandable until fully paid, stands.

WHEREFORE, the Court GRANTS the petition. The assailed Decision dated August 23, 2011 of the Court of Appeals
in CA-G.R. CR 33434 finding petitioner Erlinda C. San Mateo guilty of 10 counts of violation of B.P. 22 is REVERSED
and SET ASIDE. Petitioner Erlinda C. San Mateo is hereby ACQUITTED on the ground that her guilt has not been
established beyond reasonable doubt. She is ordered, however, to indemnify the complainant, ITSP International,
Incorporated, represented by its Vice-President for Operations Ravin A. Sehwani, the amount of P 134,275.00
representing the total value of the 11 checks plus 12% interest per annum from the time the said sum became due
and demandable until fully paid.

Ongson vs. People of the Philippines (G.R. No. 156169, August 12, 2005)

FACTS: Accused issued postdated checks to private complainant in payment of his rental arrears. All the checks
bounced upon deposit with the drawee bank. Complainant filed a case for BP Blg. 22. At the trial,the prosecution
presented the testimony of complainant to prove the charges against accused. After cross-examination, the
prosecution rested its case, and formally offered the documentary exhibits marked at the pre-trial.
Accused filed a Demurrer to Evidence which was denied by the trial court. Accused appealed alleging
that the trial court acted with grave abuse of discretion when the court held that there exist a prima
facie case, disregarding the prosecutions failure to present as witness a representative of the drawee bank to
testify on the dishonor of the questioned checks as an element of the offense charged. He insists that the
testimony of the banks representative is mandatory.

HELD: It is not required, much less indispensable, for the prosecution to present the drawee banks representative
as a witness to testify on the dishonor of the checks because of insufficiency of funds. The prosecution may
present, as it did in this case, only complainant as a witness to prove all the elements of the offense
charged. She is a competent and qualified witness to testify that she deposited the checks to her account in
a bank; that she subsequently received from the bank the checks returned unpaid with a notation drawn
against insufficient funds stamped or written on the dorsal side of the checks themselves, or in a
notice attached to the dishonored checks duly given to complainant, and that petitioner failed to pay
complainant the value of the checks or make arrangements for their payment in full within five (5)
banking days after receiving notice that such checks had not been paid by the drawee bank.

G.R. Nos. 157294-95

FACTS:

The Special Prosecution Panel filed before the Sandiganbayan a Request for Issuance of Subpoena Duces
Tecum for the issuance of a subpoena directing the President of Export and Industry Bank (EIB, formerly
Urban Bank) or his/her authorized representative to produce documents relating to Trust Account No.
858 and Savings Account of President Estrada. The SB granted the request.

Estrada filed a Motion to Quash the subpoenas claiming that his bank accounts are covered by R.A. No.
1405 (The Secrecy of Bank Deposits Law) and do not fall under any of the exceptions stated therein. He
further claimed that the specific identification of documents in the questioned subpoenas, including
details on dates and amounts, could only have been made possible by an earlier illegal disclosure
thereof by the EIB and the Philippine Deposit Insurance Corporation (PDIC) in its capacity as receiver of
the then Urban Bank. The disclosure being illegal, petitioner concluded, the prosecution in the case may
not be allowed to make use of the information. The SB denied the motion.

ISSUE/S:

1. Is the Trust Account covered by the term “deposit”under the Bank Secrecy Law?

2. Are the Trust and Savings Accounts of Estrada excepted from the protection of the Bank Secrecy Law?

3. Does the fruit of poisonous tree principle apply?

RULING:

1. YES. The contention that trust accounts are not covered by the term “deposits,”as used in R.A. 1405,
by the mere fact that they do not entail a creditor-debtor relationship between the trustor and the
bank, does not lie. An examination of the law shows that the term “deposits”used therein is to be
understood broadly and not limited only to accounts which give rise to a creditor-debtor relationship
between the depositor and the bank. If the money deposited under an account may be used by banks
for authorized loans to third persons, then such account, regardless of whether it creates a creditor-
debtor relationship between the depositor and the bank, falls under the category of accounts which the
law precisely seeks to protect for the purpose of boosting the economic development of the country.

Trust Account No. 858 is, without doubt, one such account. The Trust Agreement between Estrada and
Urban Bank provides that the trust account covers “deposit, placement or investment of funds”by Urban
Bank for and in behalf of Estrada. The money deposited under Trust Account No. 858, was, therefore,
intended not merely to remain with the bank but to be invested by it elsewhere. To hold that this type
of account is not protected by R.A. 1405 would encourage private hoarding of funds that could
otherwise be invested by banks in other ventures, contrary to the policy behind the law.

The phrase “of whatever nature”proscribes any restrictive interpretation of “deposits.”Moreover, it is

clear from the immediately quoted provision that, generally, the law applies not only to money which is
deposited but also to those which are invested. This further shows that the law was not intended to
apply only to “deposits”in the strict sense of the word. Otherwise, there would have been no need to
add the phrase “or invested.” Clearly, therefore, R.A. 1405 is broad enough to cover Trust Account No.
858.

2. YES. The protection afforded by the law is, however, not absolute, there being recognized exceptions
thereto, as abovequoted Section 2 provides. In the present case, two exceptions apply, to wit: (1) the
examination of bank 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 invested is the subject matter of the litigation.
Estrada contends that since plunder is neither bribery nor dereliction of duty, his accounts are not
excepted from the protection of R.A. 1405. He is wrong. Cases of unexplained wealth are similar to cases
of bribery or dereliction of duty and no reason is seen why these two classes of cases cannot be
excepted from the rule making bank deposits confidential. The policy as to one cannot be different from
the policy as to the other. This policy expresses the notion that a public office is a public trust and any
person who enters upon its discharge does so with the full knowledge that his life, so far as relevant to
his duty, is open to public scrutiny. 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.

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 secondary or derivative evidence (the “fruit”) derived
from it is also 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, nowhere provides that an unlawful examination of
bank accounts shall render the evidence obtained therefrom inadmissible in evidence. Moreover, there
is no basis for applying the same in this case since the primary source for the detailed information
regarding petitioner’s bank accounts—the investigation previously conducted by the Ombudsman—was
lawful.

Dona Adela Export International vs. Trade and Investment Development Corp.

(G.R. No. 201931, February 11, 2015)

Facts:

Sometime in 2006, Doña Adela Export International, Inc., (DAEI) filed a Petition for Voluntary
Insolvency. RTC issued an order declaring it insolvent and staying all civil proceedings against it.
Sometime in August 2011 TIDCORP and BPI as creditors of DAEI filed a Joint Motion to Approve
Agreement which contained among others a waiver of confidentiality clause wherein DAEI and
the members of its Board of Directors shall waive all rights to confidentiality provided under the
Law on Secrecy of Bank Deposits and The General Banking Law of 2000. The RTC approved the
compromise agreement between BPI and TIDCORP.

DAEI filed a motion for partial reconsideration and claimed that TIDCORP and BPI‘s agreement
imposes on it several obligations such as payment of expenses and taxes and waiver of
confidentiality of its bank deposits but it is not a party and signatory to the said agreement. The
RTC denied the motion and ruled that DAEI‘s silence to the joint motion when it was set for
hearing filed by BPI and TIDCORP is tantamount to its acquiescence thereto.

DAEI asserts that express and written waiver from the depositor concerned is required by law
before any third person or entity is allowed to examine bank deposits or bank records and that
its silence is not tantamount to an admission that binds it to the compromise agreement of its
creditors. BPI counters that DAEI is estopped from questioning the BPI-TIDCORP compromise
agreement because it participated in all the proceedings involving the subject compromise
agreement and did not object when the compromise agreement was considered by the RTC.

Issue: Whether the waiver of confidentiality provision in the Agreement between TIDCORP and
BPI is valid and binding upon DAEI even if it was not a party thereto.

The Supreme Court ruled no. The Joint Motion to Approve Agreement was executed by BPI and
TIDCORP only. There was no written consent given by DAEI or by its representative that it is
waiving the confidentiality of its bank deposits. The provision on the waiver of the
confidentiality of DAEI‘s bank deposits was merely inserted in the agreement and DAEI is not
bound thereby since it was not a signatory to the compromise agreement. Neither can DAEI be
deemed to have given its permission by failure to interpose its objection during the
proceedings.

It is an elementary rule that the existence of a waiver must be positively demonstrated since a
waiver by implication is not normally countenanced. The norm is that a waiver must not only be
voluntary, but must have been made knowingly, intelligently, and with sufficient awareness of
the relevant circumstances and likely consequences. It is basic in law that a compromise
agreement, as a contract, is binding only upon the parties to the compromise, and not upon
non-parties. This is the doctrine of relativity of contracts. The rule is based on Article 1311 (1) of
the Civil Code which provides that ―contracts take effect only between the parties, their
assigns and heirs x x x. ‖ The sound reason for the exclusion of non-parties to an agreement is
the absence of a vinculum or juridical tie which is the efficient cause for the establishment of an
obligation. Consistent with this principle, a judgment based entirely on a compromise
agreement is binding only on the parties to the compromise the court approved, and not upon
the parties who did not take part in the compromise agreement and in the proceedings leading
to its submission and approval by the court.
Mellon Bank vs. Magsino (G.R. No. 71479, October 18, 1990)
Facts: On May 27, 1977, Dolores Ventosa requested the transfer of $1,000 from the First National Bank of
Moundsville, West Virginia, U.S.A. to Victoria Javier in Manila through the Prudential Bank. Accordingly, the First
National Bank requested the petitioner, Mellon Bank, to effect the transfer. Unfortunately the wire sent by Mellon
Bank to Manufacturers Hanover Bank, a correspondent of Prudential Bank, indicated the amount transferred as
“US$1,000,000.00” instead of US$1,000.00. Hence Manufacturers Hanover Bank transferred one million dollars less
bank charges of $6.30 to the Prudential Bank for the account of Victoria Javier.

Javier withdrew $475,000 from account No. 343 and converted it into eight cashier’s checks made out to the
following: (a) F.C. Hagedorn & Co., Inc., two cheeks for the total amount of P1,000,000; (b) Elnor Investment Co.,
Inc., two checks for P1,000,000; (c) Paramount Finance Corporation, two checks for P1,000,000; and (d) M. Javier,
Jr., two checks for P496,000. Javier also brought several properties in the United States including the one of his
lawyer, Poblador.

Mellon Bank filed a complaint docketed as No. 148056 in the Superior Court of California, County of Kern, against
Melchor Javier, Jane Doe Javier, Honorio Poblador, Jrn, and Does I through V. In its first amended complaint to
impose constructive trust. The testimonies of these witnesses were objected to by the defense on the grounds of res
inter alios acta, immateriality, irrelevancy and confidentiality due to RA 1405. The Javier spouses also contend that
inasmuch as the Mellon Bank had filed in California an action to impose constructive trust on the California property
and to recover the same.

Issue:1) Whether or not an account deposit which is relevant and material to the resolution of the case may be
covered under R.A. No. 1405.

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

Held:

1) Whether or not an account deposit which is relevant and material to the resolution of the case may be covered
under R.A. No. 1405.

Yes. Section 2 of said law allows the disclosure of bank deposits in cases where the money deposited is the subject
matter of the litigation. 24 Inasmuch as Civil Case No. 26899 is aimed at recovering the amount converted by the
Javiers for their own benefit, necessarily, an inquiry into the whereabouts of the illegally acquired amount extends to
whatever is concealed by being held or recorded in the name of persons other than the one responsible for the illegal
acquisition.

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

The spouses Javier’s reliance on the procedural principle of election of remedies as part of their ploy to terminate
Civil Case No. 26899 prematurely. With the exception of the Javiers, respondents failed to raise it as a defense in
their answers and therefore, by virtue of Section 2, Rule 9 of the Rules of Court, such defense is deemed
waived. 26 Notwithstanding its lengthy and thorough discussion during the hearing and in pleadings subsequent to
the answers, the issue of election of remedies has not, contrary to the lower court’s assertion, been elevated to a
“substantive one.” Having been waived as a defense, it cannot be treated as if it has been raised in a motion to
dismiss based on the nonexistence of a cause of action.

Moreover, granting that the defense was properly raised, it is inapplicable in this case. In its broad sense, election of
remedies refers to the choice by a party to an action of one of two or more coexisting remedial rights, where several
such rights arise out of the same facts, but the term has been generally limited to a choice by a party between
inconsistent remedial rights, the assertion of one being necessarily repugnant to, or a repudiation of, the other. In its
technical and more restricted sense, election of remedies is the adoption of one of two or more coexisting remedies,
with the effect of precluding a resort to the others.
Union Bank vs. Court of Appeals (G.R. No. 134699, December 23, 1999)

FACTS:

On March 21, 1990, a check dated March 31, 1990 in the amount of One Million Pesos
(P1,000,000.00) was drawn against Account No. 0111-01854-8 with private respondent Allied Bank
payable to the order of one Jose Ch. Alvarez. The payee deposited the check with petitioner Union
Bank who credited the P1,000,000.00 to the account of Mr. Alvarez. On May 21,
1990,petitioner sent the check for clearing through the Philippine Clearing House Corporation
(PCHC). When the check was presented for payment, a clearing discrepancy was committed by Union
Bank's clearing staff when the amount of One Million Pesos (P1,000,000.00) was erroneously
"under-encoded" to One Thousand Pesos (P1,000.00) only.

Petitioner only discovered the under-encoding almost a year later. Thus, on May 7, 1991,
Union Bank notified Allied Bank of the discrepancy by way of a charge slip for Nine Hundred Ninety-
Nine Thousand Pesos (P999,000.00) for automatic debiting against of Allied Bank. The latter,
however, refused to accept the charge slip "since [the] transaction was completed per your
[Union Bank's] original instruction and client's account is nowinsufficiently funded."

Subsequently, Union Bank filed a complaint against Allied Bank before the PCHC Arbitration
Committee (Arbicom).Thereafter, Union Bank filed in the Regional Trial Court (RTC) of Makati
a petition for the examination of Account No. 111-01854-8. Judgment on the arbitration case was held
in abeyance pending the resolution of said petition.Upon motion of private respondent, the
RTC dismissed Union Bank's petition.

The Court of Appeals affirmed the dismissal of the petition, ruling that the case was not one where the
money deposited is the subject matter of the litigation.

ISSUE:

Whether or not the disclosure of Account No. 111-01854-8 falls under the last exception of the Law on
Secrecy of Bank Deposits.

RULING:

Petitioner points to its prayer in its complaint to show that it sought reimbursement from the drawer's
account. The prayer, however, does not specifically state that it was seeking recovery of the amount
from the depositor's account. Petitioner merely asked that "judgment be rendered in favor of plaintiff
against defendantsentencing it to pay plaintiff:1. The sum of NINE HUNDRED NINETY-NINE
THOUSAND PESOS (P999,000.00).

On the other hand, the petition before this Court reveals that the true purpose for the examination is
to aid petitioner in proving the extent of Allied Bank's liability:

In other words, only a disclosure of the pertinent details and information relating to the
transactions involving subject account will enable petitioner to prove its allegations in the pending
Arbicomcase.

In short, petitioner is fishing for information so it can determine the culpability of private respondent
and the amount of damages it can recover from the latter. It does not seek recovery of
the very money contained in the deposit. The subject matter of the dispute may be the
amount of P999,000.00 that petitioner seeks from private respondent as a result of the latter's
alleged failure to inform the former of the discrepancy; but it is not the P999,000.00 deposited in the
drawer's account. By the terms of R.A. No. 1405, the "money deposited" itself should be the
subject matter of the litigation.

That petitioner feels a need for such information in order to establish its case against
private respondent does not, by itself, warrant the examination of the bank deposits. The
necessity of the inquiry, or the lack thereof, is immaterial since the case does not come under any of
the exceptions allowed by the Bank Deposits Secrecy Act.

WHEREFORE, the petition is DENIED.

Republic vs. Bolante (G.R. No. 186717, April 17, 2017)

Subido Pagente Certeza Mendoza And Binay Law Offices vs. Court Of Appeals

Facts
Challenged in this petition for certiorari and prohibition under Rule 65 of the Rules of Court is the constitutionality of Section
11 of R.A No. 9160, the Anti-Money Laundering Act, as amended, specifically the Anti-Money Laundering Council's authority
to file with the Court of Appeals (CA) in this case, an ex-parte application for inquiry into certain bank deposits and
investments, including related accounts based on probable cause.

In 2015, a year before the 2016 presidential elections, reports abounded on the supposed disproportionate wealth of then
Vice President Jejomar Binay and the rest of his family, some of whom were likewise elected public officers. The Office of
the Ombudsman and the Senate conducted investigations and inquiries thereon.

From various news reports announcing the inquiry into then Vice President Binay's bank accounts, including accounts of
members of his family, petitioner Subido Pagente Certeza Mendoza & Binay Law Firm (SPCMB) was most concerned with
the article published in the Manila Times on 25 February 2015 entitled "Inspect Binay Bank Accounts" which read, in
pertinent part:

xxx The Anti-Money Laundering Council (AMLC) asked the Court of Appeals (CA) to allow the [C]ouncil to peek into the
bank accounts of the Binays, their corporations, and a law office where a family member was once a partner.

xx xx
Also the bank accounts of the law office linked to the family, the Subido Pagente Certeza Mendoza & Binay Law Firm, where
the Vice President's daughter Abigail was a former partner.

By 8 March 2015, the Manila Times published another article entitled, "CA orders probe of Binay 's assets" reporting that the
appellate court had issued a Resolution granting the ex-parte application of the AMLC to examine the bank accounts of
SPCMB. Forestalled in the CA thus alleging that it had no ordinary, plain, speedy, and adequat e remedy to protect its rights
and interests in the purported ongoing unconstitutional examination of its bank accounts by public respondent Anti-Money
Laundering Council (AMLC), SPCMB undertook direct resort to this Court via this petition for certiorari and prohibition on the
following grounds that the he Anti-Money Laundering Act is unconstitutional insofar as it allows the examination of a bank
account without any notice to the affected party: (1) It violates the person's right to due process; and (2) It violates the
person's right to privacy.

Issues:
1. Whether Section 11 of R.A No. 9160 violates substantial due process.
2. Whether Section 11 of R.A No. 9160 violates procedural due process.
3. Whether Section 11 of R.A No. 9160 is violative of the constitutional right to privacy enshrined in Section
2, Article III of the Constitution.

Rulings
1. No. We do not subscribe to SPCMB' s position. Succinctly, Section 11 of the AMLA providing for ex-parte
application and inquiry by the AMLC into certain bank deposits and investments does not violate substantive due
process, there being no physical seizure of property involved at that stage.
In fact, .Eugenio delineates a bank inquiry order under Section 11 from a freeze order under Section 10 on both
remedies' effect on the direct objects, i.e. the bank deposits and investments:

On the other hand, a bank inquiry order under Section 11 does not necessitate any form of physical seizure of
property of the account holder. What the bank inquiry order authorizes is the examination of the particular deposits or
investments in banking institutions or non-bank financial institutions. The monetary instruments or property deposited
with such banks or financial institutions are not seized in a physical sense, but are examined on particular details
such as the account holder's record of deposits and transactions. Unlike the assets subject of the freeze order, the
records to be inspected under a bank inquiry order cannot be physically seized or hidden by the account holder. Said
records are in the possession of the bank and therefore cannot be destroyed at the instance of the account holder
alone as that would require the extraordinary cooperation and devotion of the bank.

At the stage in which the petition was filed before us, the inquiry into certain bank deposits and investments by the
AMLC still does not contemplate any form of physical seizure of the targeted corporeal property.

2. No. The AMLC functions solely as an investigative body in the instances mentioned in Rule 5.b.26 Thereafter, the
next step is for the AMLC to file a Complaint with either the DOJ or the Ombudsman pursuant to Rule 6b. Even in the
case of Estrada v. Office of the Ombudsman, where the conflict arose at the preliminary investigation stage by the
Ombudsman, we ruled that the Ombudsman's denial of Senator Estrada's Request to be furnished copies of the
counter-affidavits of his co-respondents did not violate Estrada's constitutional right to due process where the sole
issue is the existence of probable cause for the purpose of determining whether an information should be filed and
does not prevent Estrada from requesting a copy of the counter-affidavits of his co-respondents during the pre-trial or
even during trial.

Plainly, the AMLC's investigation of money laundering offenses and its determination of possible money laundering
offenses, specifically its inquiry into certain bank accounts allowed by court order, does not transform it into an
investigative body exercising quasi-judicial powers. Hence, Section 11 of the AMLA, authorizing a bank inquiry court
order, cannot be said to violate SPCMB's constitutional right to due process.

3. No. We now come to a determination of whether Section 11 is violative of the constitutional right to privacy
enshrined in Section 2, Article III of the Constitution. SPCMB is adamant that the CA's denial of its request to be
furnished copies of AMLC's ex-parte application for a bank inquiry order and all subsequent pleadings, documents
and orders filed and issued in relation thereto, constitutes grave abuse of discretion where the purported blanket
authority under Section 11: ( 1) partakes of a general warrant intended to aid a mere fishing expedition; (2) violates
the attorney-client privilege; (3) is not preceded by predicate crime charging SPCMB of a money laundering offense;
and ( 4) is a form of political harassment [of SPCMB' s] clientele.
We thus subjected Section 11 of the AMLA to heightened scrutiny and found nothing arbitrary in the allowance and
authorization to AMLC to undertake an inquiry into certain bank accounts or deposits. Instead, we found that it
provides safeguards before a bank inquiry order is issued, ensuring adherence to the general state policy of
preserving the absolutely confidential nature of Philippine bank accounts:
1. The AMLC is required to establish probable cause as basis for its ex-parte application for bank
inquiry order;
2. The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of
probable cause that the deposits or investments are related to an unlawful activity under Section 3(i) or a
money laundering offense under Section 4 of the AMLA;
3. A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court order
ex-parte for the principal account which court order ex-parte for related accounts is separately based on
probable cause that such related account is materially linked to the principal account inquired into; and
4. The authority to inquire into or examine the main or principal account and the related accounts shall
comply with the requirements of Article III, Sections 2 and 3 of the Constitution. The foregoing demonstrates
that the inquiry and examination into the bank account are not undertaken whimsically and solely based on
the investigative discretion of the AMLC. In particular, the requirement of demonstration by the AMLC, and
determination by the CA, of probable cause emphasizes the limits of such governmental action. We will
revert to these safeguards under Section 11 as we specifically discuss the CA' s denial of SPCMB' s letter
request for information concerning the purported issuance of a bank inquiry order involving its accounts.

All told, we affirm the constitutionality of Section 11 of the AMLA allowing the ex-parte application by the AMLC for
authority to inquire into, and examine, certain bank deposits and investments.

WHEREFORE, the petition is DENIED. Section 11 of Republic Act No. 9160, as amended, is
declared VALID and CONSTITUTIONAL.

Marquez vs. Desierto (G.R. No. 135882, June 27, 2001)

FACTS:

SHORT VERSION: Petitioner Marquez, a Branch Manager of Union Bank. received an Order from the
Ombudsman to produce several bank documents for purposes of inspection in camera relative to
various accounts maintained at said Bank. The accounts to be inspected were involved in a case
pending with the Ombudsman. Marquez agreed to an in camera inspection. But later on, Marquez
wrote the Ombudsman that he could not comply with the in camera inspection since the accounts in
question could not readily be identified. Marquez asked for time to respond to the order. But the
Ombudsman issued an order directing Marquez to produce the said bank documents stating that her
persistent refusal to comply with the order is unjustified and is punishable as Indirect Contempt.
Petitioner Marquez received a copy of the motion to cite her for contempt. Petitioner filed with the
Ombudsman an opposition to the motion to cite her in contempt on the ground that the filing thereof
was premature due to the petition pending in the lower court.

LONG VERSION: Petitioner Marquez received an Order from the Ombudsman Ato produce several
bank documents for purposes of inspection in camera relative to various accounts maintained at Union
Bank where petitioner was the branch manager. The accounts to be inspected were involved in a case
pending with the Ombudsman entitled. The Order was grounded on Section 15 of RA 6770
(Ombudsman Act of 1989) which modifies the law on the Secrecy of Bank Deposits (R.A. 1405) and
places the office of the Ombudsman in the same footing as the courts of law in this regard.”

The basis of the Ombudsman in ordering an in camera inspection of the accounts was a trail of
managers checks (MCs) purchased by one Trivinio, a respondent in the case pending with the office of
the Ombudsman. It appeared that Trivinio purchased MCs at Traders Royal Bank (TRB) and 11 of MCs
in were deposited and credited to an account maintained at Union Bank.
Petitioner agreed to an in camera inspection. However, later on, Marquez wrote the Ombudsman that
the accounts in question could not readily be identified since the checks were issued in cash or bearer,
and asked for time to respond to the order. Marquez surmised that these accounts had long been
dormant, hence were not covered by the new account number generated by the UB system, thus
sought to verify from the Interbank records archives for the whereabouts of these accounts.

The Ombudsman, responding to the request of Marquez for time to comply with the order, stated that
UBP-Julia Vargas, not Interbank, was the depositary bank of the subject TRB MCs as shown at its
dorsal portion and as cleared by the Philippine Clearing House. Notwithstanding the fact that the
checks were payable to cash or bearer, the name of the depositor(s) could easily be identified since
the account numbers where said checks were deposited were identified in the order. Even assuming
that the accounts were already classified as dormant accounts, the bank was still required to preserve
the records pertaining to the accounts within a certain period of time as required by existing banking
rules and regulations.

The Ombudsman issued an order directing Marquez to produce the bank documents relative to the
accounts in issue, stating that her persistent refusal to comply with the order is unjustified and is
punishable as Indirect Contempt.

Marquez together with UBP filed a petition for declaratory relief, prohibition and injunction with the
RTC against the Ombudsman allegedly because the Ombudsman and other persons acting under his
authority were continuously harassing her to produce the bank documents relative to the accounts in
question. Moreover, , the Ombudsman issued another order stating that unless she appeared before
the FFIB with the documents requested, Marquez would be charged with indirect contempt and
obstruction of justice.

The lower court denied petitioner’s prayer for a temporary restraining order stating that since
petitioner failed to show prima facie evidence that the subject matter of the investigation is outside
the jurisdiction of the Office of the Ombudsman, no writ of injunction may be issued by the RTC to
delay the investigation pursuant to Section 14 of the Ombudsman Act of 1989.

Petitioner filed a motion for reconsideration but was denied.

Petitioner received a copy of the motion to cite her for contempt. Petitioner then filed with the
Ombudsman an opposition to the motion to cite her in contempt on the ground that the filing thereof
was premature due to the petition pending in the lower court. Petitioner likewise reiterated that she
had no intention to disobey the orders of the Ombudsman. However, she wanted to be clarified as to
how she would comply with the orders without her breaking any law, particularly RA 1405.

ISSUE/S: WON the order of the Ombudsman to have an in camera inspection of the questioned
account is allowed as an exception to the law on secrecy of bank deposits (RA 1405).

HELD: NO. The requisites in order for an In camera inspection to be allowd are: there must be a
pending case before a court of competent jurisdiction; the account must be clearly identified;
the inspection limited to the subject matter of the pending case before the court of competent
jurisdiction; the bank personnel and the account holder must be notified to be present during the
inspection;and such inspection may cover only the account identified in the pending case.

In the case at bar, there is yet no pending litigation before any court of competent authority. What is
existing is an investigation by the office of the Ombudsman. Clearly, there was no pending case in
court which would warrant the opening of the bank account for inspection.
GSIS vs. Court of Appeals (G.R. No. 189206, June 8, 2011)

Facts:
In this case DOMSAT obtained a loan in the amount of 11 million dollars from the “ banks”
Banks- industrial bank of korea, tong yang merchant bank, first merchant banking corp, land bank of the
Philippines, and Westmont bank.
The purpose of the loan is the renewal of the lease or acquisition of a gorizon satellite from intersputnik.
Part of the loan agreement was that gsis would be made a surety.
Domsat failed to make payments. Gsis was then being pressured by the “banks” to make the payments for
DOMSAT.
Gsis refused.
Gsis claims- that domsat did not use the loan proceeds for the payment of rental for the satellite. Gsis further
claims that domsat through Westmont bank, transferred the 11 million dollars 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.
Due to the refusal of gsis, the banks were forced to file a complaint with the rtc.
Gsis then requested the court to issue a subpoena duces tecum with regards the bank accounts of DOMSAT
with Westmont bank.
Initially the rtc granted the subpoena, but upon the second mr of Westmont, this was then denied.
Documents requested by gsis:
 Ledgers of domsat with Westmont bank
 Application for cashier’s check of domsat
 Ledger covering the account of Philippine agila satellite with Westmont.
Ca ruling: that the bank accounts that is covered with the requested subpoena is under ra 6426. As such, the
accounts cannot be examined, inquired, or looked into without the written consent of its owner
The ca further referred to the case of intengan vs ca. In that case the sc declared that under ra 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

Issue: is the ruling of the ca correct in stating that the bank accounts in Westmont bank is covered by the bank
secrecy law?

Sc ruling: yes
The position of gsis would want the court to think that there is a conflict between ra 1405 and ra 6426
Gsis believes that the banks account are under ra 1405.
Ra 1405-
 That bank deposits are thereby considered confidential and
may not be examined or inquired into y any person,
government official. Bureau or office except:
Upon written permission of the depositor
In cases of impeachment
Upon order of a competent court in the case of bribery or dereliction of duty of public officials
When the money deposited or invested is the subject matter of litigation
In cases of violation of AMLA
The lone exception for the bank secrecy law (ra 6426), for the none disclosure of foreign currency deposits is
disclosure upon the written permission of the depositor.
Ra 6426 solely pertains to foreign currency deposits.
The sc stated: there is no conflict between the 2 laws.
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.
There was no distinction as to whether ra 1405 pertains to local currency or foreign currency.
Ra 6426 on the other hand was intended to encourage deposits from foreign lenders and investors.
 Ra 6426 is a special law, while ra 1405 is a general law
Therefore, since the subject matter of the subpoena pertains to foreign currency, then ra 6426 is applicable.
Hence, gsis may not inspect such accounts, unless the depositor would give its consent.

Salvacion vs. Central Bank (G.R. No. 94723, August 21, 1997)

FACTS: Bartelli, an American tourist, detained and raped Salvacion. Salvacion was rescued and Bartelli was arrested. The
policemen recovered from Bartelli several dollar checks and a dollar account in China Bank. Bartelli however escaped from
prison. In the civil case filed against Bartelli, the trial court awarded Salvacion moral, exemplary and attorney’s fees.

Petitioners tried to execute on Bartelli's dollar deposit with China Bank. But China Bank refused arguing that Section 113 of
Central Bank Circular No. 960 exempts foreign currency deposits from attachment, garnishment, or any other order or process
of any court, legislative body, government agency or any administrative body whatsoever. Salvacion therefore filed this action
for declaratory relief in the Supreme Court.

ISSUE/S:

1) WON the Supreme Court has jurisdiction over petitions for declaratory relief since the lower coirt has original jurisdiction
over such petitions.

2) WON the secrecy of Foreign Currency Deposit Act should be made applicable to a foreign transient?

HELD:

1) YES. The general rule is that lower Courts has original jurisdiction over Petitions for Declaratory Relief. But an exception to
this rules is that the SC takes cognizance of Petitions for Declaratory Relief and treat it as one for mandamus is such petition has
far-reaching implications and raises questions that should be resolved.

2) NO. The provisions of Section 133 of CB Circular No. 960 are hereby held to be inapplicable to this case because of its
peculiar circumstances. If we rule that the questioned Section 113 of Central Bank Circular No. 960 which exempts from
attachment, garnishment, or any other order or process of any court, legislative body, government agency or any
administrative body whatsoever, is applicable to a foreign transient, injustice would result especially to a citizen aggrieved by a
foreign guest like accused Bartelli. Supreme Court ruled that the questioned law makes futile the favorable judgment and
award of damages that Salvacion and her parents fully deserve. This would negate Article 10 of the New Civil Code which
provides that “in case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended
right and justice to prevail.” Hence, Respondents are hereby required to comply with the writ of execution issued in the civil
case and to release to petitioners the dollar deposit of Bartelli in such amount as would satisfy the judgment.

Moreover, the SC ruled that economic basis for the enactment of RA No. 6426 is not anymore present; and even if it still exists,
the questioned law still denies those entitled to due process of law for being unreasonable and oppressive. The intention of the
law may be good when enacted but the law failed to anticipate the iniquitous effects producing outright injustice and
inequality such as the case before us.

Furthermore, the Offshore Banking System and the Foreign Currency Deposit System were designed to draw deposits from
foreign lenders and investors and, subsequently, to give the latter protection. However, the foreign currency deposit made by a
transient or a tourist is not the kind of deposit encouraged because such depositor stays only for a few days in the country and,
therefore, will maintain his deposit in the bank only for a short time. Considering that Bartelli is just a tourist or a transient, he
is not entitled to the protection of Section 113 of Central Bank Circular No. 960 and PD No. 1246 against attachment,
garnishment or other court processes.
China Banking Corporation vs. Court of Appeals (G.R. No. 140687, December 18, 2006)

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 Margaret Dee received these amounts from Citibank N.A. through checks which
she allegedly deposited at China Banking Corporation (China Bank). He likewise accused his son-in-
law, George Dee, husband of his daughter, Mary Margaret, of transferring his real properties and
shares of stock in George Dees name without any consideration. Jose Gotianuy, died during 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 Citibank.

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. 1246, Presidential Decree No. 1035, as well as foreign
currency deposits authorized under Presidential Decree No. 1034 are considered absolutely
confidential in nature and may not be inquired into. There is only one exception to the secrecy of
foreign currency deposits, that is, disclosure is allowed upon the written permission of the depositor.

In the case at bar, there is no issue as to the source of the funds. Mary Margaret Dee declared the
source to be Jose Gotianuy. There is likewise no dispute that these funds in the form of Citibank US
dollar Checks are now deposited with China Bank. As the owner of the funds unlawfully taken and
which are undisputably now deposited with China Bank, Jose Gotianuy has the right to inquire into the
said deposits.

Van Twest vs. Court of Appeals (G.R. No. 106253 February 10, 1994)

FACTS

Petitioner alleged in his complaint that in 1989, he and private respondent opened a joint foreign
currency savings account with Interbank to hold funds which "belonged entirely and exclusively" to
petitioner, to "facilitate the funding of certain business undertakings" of both of them and which funds
were to be "temporarily (held) in trust" by private respondent, who "shall turnover the same to plaintiff
upon demand."

Petitioner further alleged that withdrawals from the account were always made through their joint
signatures; that when his business relationship with private respondent turned sour, the latter
unilaterally closed their joint account, withdrew the remaining balance of Deutschmark (DM) 269,777.37
and placed the money in her own personal account with the same bank.
On March 1990, petitioner Alexander Van Twest filed a complaint against private respondent Gloria
Anacleto and International Corporate Bank ("Interbank") for recovery of a sum of money with prayer for
a writ of preliminary injunction, before Branch 142 of the Regional Trial Court of Makati. After issuing a
temporary restraining order upon the filing of the complaint. The hearings culminated in the issuance of
an order, enjoining private respondent and Interbank from effecting and allowing withdrawals from the
foreign currency deposit account until further orders from the trial court.

The preliminary injunction order of the Regional Trial Court was, however, annulled on petition for
certiorari filed by private respondent before the Court of Appeals in a Decision. In ruling that petitioner
was not entitled to the provisional remedy of preliminary injunction during the pendency of Civil Case
No. 90-659, the Court of Appeals said private respondent had failed to show that he has a right to stop
petitioner from withdrawing the foreign currency deposit under their joint "and/or" account. And it was
error for respondent Judge to have issued the Order of injunction.

Petitioner's principal contention is that the public respondent misappreciated the facts of the case; he
did not seek injunction to restrain private respondent from withdrawing the funds from their joint
account, since private respondent indeed enjoyed a semblance of right to do so and the withdrawal had
already become a fait accompli. Rather, petitioner seeks to restrain private respondent from effecting
withdrawals from her personal account, into which she had transferred the foreign currency, in order
not to defeat his main action seeking recovery of said fund.

Private respondent contends for the first before the CA that the personal foreign currency deposit
account she is maintaining is exempt from processes issued by the courts, pursuant to Section 8 of R.A.
6426 as amended by P. D. 1246, the statute in force on 26 February 1990, the date she withdrew the
foreign exchange fund from her joint account with petitioner and transferred the same to her personal
account.

ISSUE

Whether or not the account is covered by confidentiality

RULING

NO. Circular No. 960, Series of 1983 was in force at the time the private respondent undertook her
questioned transactions; thus, such local transfer from the original joint foreign currency account to
another personal foreign currency account, was not an eligible foreign currency deposit within the
coverage of RA No. 6426 and not entitled to the benefit of the confidentiality provisions of RA No. 6426.

Although transfers from one foreign currency deposit account to another foreign currency deposit
account in the Philippines are now eligible deposits under the Central Bank's Foreign Currency Deposit
System, private respondent is still not entitled to the confidentiality provisions of the relevant circulars.
For, as noted earlier, private respondent is not the owner of such foreign currency funds and her
personal deposit account is not protected.
International Harvester Macleod, Inc. vs. Medina Jr. (G.R. No. L-53623,
March 22, 1990)

I was not able to find the digest for this one

United Coconut Planters Bank vs. Spouses Samuel and Odette Beluso (G.R.
No.159912, August 17, 2007)

Facts:

On 16 April 1996, UCPB granted the spouses Beluso a Promissory Notes Line under a Credit Agreement whereby the latter
could avail from the former credit of up to a maximum amount of P1.2 Million pesos for a term ending on 30 April 1997.

On 2 September 1998, UCPB demanded that the spouses Beluso pay their total obligation of P2,932,543.00 plus 25% attorney's
fees, but the spouses Beluso failed to comply therewith. On 28 December 1998, UCPB foreclosed the properties mortgaged by
the spouses Beluso to secure their... credit line, which, by that time, already ballooned to P3,784,603.00.

On 9 February 1999, the spouses Beluso filed a Petition for Annulment, Accounting and Damages against UCPB with the RTC of
Makati City.

On 23 March 2000, the RTC ruled in favor of the spouses Beluso

On 8 May 2000, the RTC denied UCPB's Motion for Reconsideration

On 9 September 2003, the Court of Appeals denied UCPB's Motion for Reconsideration for lack of merit.

Issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT AFFIRMED
THE DECISION OF THE TRIAL COURT

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT AFFIRMED
THE COMPUTATION BY THE TRIAL COURT OF RESPONDENTS' INDEBTEDNESS

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT AFFIRMED
THE DECISION OF THE TRIAL COURT WHICH ANNULLED THE FORECLOSURE BY PETITIONER OF THE SUBJECT PROPERTIES DUE

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT AFFIRMED
THE DECISION OF THE TRIAL COURT WHICH FOUND PETITIONER LIABLE FOR VIOLATION OF THE TRUTH IN LENDING ACT

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT FAILED TO
ORDER THE DISMISSAL OF THE CASE

Ruling:

The Court of Appeals held that the imposition of interest in the following provision found in the promissory notes of the
spouses Beluso is void, as the interest rates and the bases therefor were determined solely by petitioner

We agree with the Court of Appeals, and find no merit in the contentions of UCPB.

The provision stating that the interest shall be at the "rate indicative of DBD retail rate or as determined by the Branch Head" is
indeed dependent solely on the will of petitioner UCPB.
It should be pointed out that the authority to review the interest rate was given UCPB alone as the lender. Moreover, UCPB
may apply the considerations enumerated in this provision as it wishes.

In view of the foregoing, the Separability Clause cannot save either of the two options of UCPB as to the interest to be imposed,
as both options violate the principle of mutuality of contracts.

We agree with UCPB on this score. Default commences upon judicial or extrajudicial demand.[

We agree with UCPB and affirm the validity of the foreclosure proceedings.

As argued by UCPB, none of the grounds for the annulment of a foreclosure sale are present in this case.

We agree with the Court of Appeals. The allegations in the complaint, much more than the title thereof, are controlling. Other
than that stated by the Court of Appeals, we find that the allegation of violation of the Truth in Lending Act can also be inferred
from the same... allegation in the complaint

In the case at bar, Civil Case... before the RTC of Roxas City was an action for injunction against a foreclosure sale that has
already been held, while Civil Case No. 99-314 before the RTC of Makati City includes an action for the annulment of said
foreclosure, an... action certainly more proper in view of the execution of the foreclosure sale.

WHEREFORE, the Decision of the Court of Appeals is hereby AFFIRMED

Heirs Of Zoilo Espiritu And Primitiva Espiritu vs. Spouses Maximo Landrito and Paz Landrito,
Represented by Zoilo Landrito, as their Attorney-in-Fact (G.R. No. 169617, April 4, 2007)

Facts:

Petitioners DULCE, BENLINDA, EDWIN, CYNTHIA, AND MIRIAM ANDREA, all surnamed ESPIRITU, are the
only children and legal heirs of the Spouses Zoilo and Primitiva Espiritu, who both died during the pendency of
the case... pouses Landrito loaned from the Spouses Espiritu the amount of P350,000.00 payable in three
months. To secure the loan, the Spouses Landrito executed a real estate mortgage over a five hundred forty
(540) square meter lot located in Alabang,... Sp
17,500.00 was deducted as interest for the first month which was equivalent to five percent of the principal
debt, and
P7,500.00 was further deducted as service fee.
hey actually received a net amount of P325,000.00... provided that the principal indebtedness earns "interest at
the legal rate... when the debt became due and demandable
Spouses Landrito were unable to pay the principal, and had not been able to make any interest payments other
than the amount initially deducted from the proceeds of the loan.
loan agreement... was extended to 4 January 1987 through an Amendment of Real Estate Mortgage... thus
increasing the principal to P385,000... new loan agreement adopted all other terms and conditions... contained
in first agreement
Due to the continued inability of the Spouses Landritos to settle their obligations with the Spouses Espiritu, the
loan agreement was renewed three more times.
The debt remained unpaid... he Spouses Espiritu foreclosed the mortgaged property... the property was sold to
the Spouses Espiritu as the lone bidder... the Sheriff's Certificate of Sale was annotated on... the title of the
mortgaged property, giving the Spouses Landrito until 8 January 1992 to redeem the property
The Spouses Landrito failed to redeem the subject property
Spouses Landrito allegedly tendered two manager's checks and some cash, totaling P1,800,000.00 to the
Spouses Espiritu on 13 January 1992, but the latter refused to accept the same.
upon inquiry, they found out that on 24 June 1992, the Spouses Espiritu had already executed an Affidavit of
Consolidation of Ownership and registered the mortgaged property in their name,... and that the Register of
Deeds of Makati had already issued Transfer Certificate of Title No. 179802 in the name of the Spouses
Espiritu.
The trial court dismissed the complaint and upheld the validity of the foreclosure sale... he Court of Appeals
reversed the trial court's decision
REVERSING AND SETTING ASIDE THE DECISION OF THE TRIAL COURT AND ORDERING HEREIN
PETITIONERS TO RECONVEY TRANSFER CERTIFICATE OF TITLE NO. 18918 TO HEREIN
RESPONDENTS, WITHOUT ANY FACTUAL OR LEGAL BASIS THEREFOR.
Issues:
REVERSING AND SETTING ASIDE THE DECISION OF THE TRIAL COURT AND ORDERING HEREIN
PETITIONERS TO RECONVEY TRANSFER CERTIFICATE OF TITLE NO. 18918 TO HEREIN
RESPONDENTS, WITHOUT ANY FACTUAL OR LEGAL BASIS THEREFOR.
FINDING THAT HEREIN PETITIONERS UNILATERALLY IMPOSED ON HEREIN RESPONDENTS THE
ALLEGEDLY UNREASONABLE INTERESTS ON THE MORTGAGE LOANS.
Ruling:
The agreement contained no other provision on interest or any fees or charges incident to the debt. In at least
three contracts, all... designated as Amendment of Real Estate Mortgage, the interest rate imposed was,
likewise, unspecified.
The total interest and charges amounting to P559,125.00 on the original principal of P350,000 was
accumulated over only two years and one month. These charges are not found in any written agreement
between the parties
The records fail to show any computation on how much... interest was charged and what other fees were
imposed. Not only did lack of transparency characterize the aforementioned agreements, the interest rates and
the service charge imposed, at an average of 6.39% per month, are excessive.
In enacting Republic Act No. 3765, known as the "Truth in Lending Act," the State seeks to protect its citizens
from a lack of awareness of the true cost of credit by assuring the full disclosure of such costs.
Article 1956. No interest shall be due unless it has been stipulated in writing.
In several cases, this Court has been known to declare null and void stipulations on interest and charges that
were found excessive, iniquitous, and unconscionable.
Stipulation authorizing iniquitous or unconscionable interests are contrary to morals, if not against the law.
Under Article 1409 of the Civil Code, these contracts are inexistent and void from the beginning.
Moreover, it is evident from the facts of the case that despite considerable effort on their part, the Spouses
Landrito failed to redeem the mortgaged property because they were unable to raise the total amount, which
was grossly inflated by the excessive interest imposed.
Since the Spouses Landrito, the debtors in this case, were not given an opportunity to settle their debt, at the
correct amount and without the iniquitous interest imposed, no foreclosure proceedings may be instituted.
Moreover, if the proceeds of the sale together with its reasonable rates of interest were applied to the
obligation, only a small part of its original loans would actually remain outstanding,... but because of the
unconscionable interest rates, the larger part corresponded to said excessive and iniquitous interest.
As a result, the subsequent registration of the foreclosure sale cannot transfer any rights over the mortgaged
property to the Spouses Espiritu. The registration of the foreclosure sale, herein declared invalid, cannot vest
title over the mortgaged property.
he records show that the property mortgaged was purchased by the Spouses Espiritu and had not been
transferred to an innocent purchaser for value. This means that an action for reconveyance may still be availed
of in this case
Registration of property by one person in his or her name, whether by mistake or fraud, the real owner being
another person, impresses upon the title so acquired the character of a constructive trust for the real owner,
which would justify an action for reconveyance.[34] This is based on Article 1465 of the Civil Code