Scl Banking

7/25/2019 Scl Banking

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G.R. No. L-30751 May 24, 1988

PHILIPPINE NATIONAL BANK, petitioner,vs.GENERAL ACCEPTANCE AN !INANCE CORPORATION, PHILIPPINE AMERICAN GENERAL IN"#RANCE CO.,INC., HON. CO#RT O! APPEAL", a$% MACARIO O!ILAA, a& "'()*++ o+ Ma$*a, respondents.

Conrado E. Medina for petitioner.

Diosdado P. Peralta for respondents.

NARA"A, J.:

What is sought by the petition for review on certiorari in this case is the setting aside of the judgment of the Court ofAppeals in CA-G.R. o. !"#$#-R 1and the affirmance instead, of the decision of the Court of %irst &nstance of 'anila inCivil Case o. $()$*.2

+he facts are set forth in the Appellate Courts decision. 3+he hilippine ational an/, hereafter simply , approvedon %ebruary 0*, (1"0 an application for an import letter of credit in favor of a 2ong 3ong company 4in the amount of 45

6$7,777.77, to cover importation of a defibering machine. +he application was presented by %rancisco 5antos-doingbusiness under the name of %RA5A Coconut &ndustries, and was embodied in a document entitled 8Application andAgreement for Commercial 9etter of Credit,8 dated %ebruary (, (1"0. 5+hat 8Application and Agreement,8 signed in duecourse by and %RA5A, contained an underta/ing by %RA5A and:or %rancisco 5antos to the following effect;

... Absolute, security for the payment and performance of any and all our obligations and or liabilities toyou, direct or indirect, absolute or contingent, due or to become due, now e


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n April !7, (1"0 and again on 'ay 0$, (1"0, the same special time deposit was once more garnished by the 'anila5heriff. informed the sheriff that the deposit had been previously assigned to GA%C, but this notwithstanding, thesheriff served on on uly (*, (1"0, and again on August (),(1"0 a otice of elivery of 'oney. informed GA%Cof these developments on August 0, (1"0.

Evidently, was already willing at this time to release %RA5As deposit of !7,777.77 but its problem was, it did not/now to whom delivery should rightfully be made. +o resolve the problem, it decided to file an action of interpleaderagainst the claimants thereofB GA%C and 2&9A'GE. +his it did on 5eptember (, (1"0.

Answers and other pleadings were in due course filed, and trial was had, after which judgment was rendered on uly (1,(1"$. +he Court inter aliadeclared H

(? as without merit, 2&9A'GEs 8claim that it has a better and superior right over the deposit, < < since, among otherreasons, hilamgens lien was created on !7 April (1"0 when the attachment was served on the plaintiff anew after it waslifted on (" April (1"0, whereas defendant General Acceptances right to the sum in plaintiffs hands arose as early as 0'arch (1"0B and

0? deductions from the deposit, in the total amount of *,!!(.(!, had been correctly made by since it had been8authoriFed to apply the deposit < < to letter of credit o. "07!7(-C and other accounts of %rasan Coconut &ndustriespursuant to the Application and Agreement for Commercial 9etter of Credit ... and by e? to deliver to defendant General Acceptance the sum of 0(,""*.*#, withinterests at the legal rate from the date of this decisionB

0. eclaring as legal and proper the deductions made by the laintiff on the original deposit o!7,777.77B

!. ismissing both defendants counterclaims against the plaintiffB

). ismissing cross-plaintiff General Acceptances cross-claim against ... hilamgenB

$. ismissing plaintiffs counterclaim against defendant General AcceptaneB and

". Without pronouncement as to comes

oth GA%C and 2&9A'GE appealed to the Court of Appeals. +hat Court, in its decision promulgated on ecember 0)(1"*, ethe same /ind?. +itle to the thing deposited remains in the depositor, and the ban/ becomeshis agent, bailee, or trustee. +here is no relation of debtor and creditor between the ban/ in which thedeposit is made and its special depositor, their status or relation being that of agent andprincipal, baileeand bailor, or trustee and cestui !ue trust"or a combination of such relationships >C..5.pp. $"0-$"!?. +his being the case, a ban/ impliedly binds itself, by accepting the special deposit, not toset off against such deposit a debt due it from the depositor ># ur., p. )"(?. As a matter of fact, evenappellee ban/ admits this proposition in the case of special deposits <


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Agreement for Commercial 9etter of Credit ...and by e? to deliver the sum of 0(,""*.*# and the further sum of *,!!(.(!representing the deducted charges and accounts, or a total of !7,777.77, to appellant .. >GA%C? and, by

way of compensatory damages, to pay said appellant interest at the legal rate from 'arch (",(1"0, onsaid amount of !7,777.77B

0. rdering appellee ... >? to pay appellant ... >GA%C? the sum of $,777.77 as e?.

+hus modified, the decision appealed from is affirmed in all other respects.

appealed, as aforestated, and in its petition it contends that the Court of Appeals erred in holding H

(? that the relationship between ... >it? and its depositor, %RA5A ..., on the controverted deposit of !7,777.77 is that ofagent and principal, bailee and bailor, or trustee and cestui =ue trust, and not as debtor and creditorB

0? that the Application and Agreement for Commercial 9etter of Credit ... and the 9etters- Authority ... have no legalsignificance respecting special deposit, hence, the deductions made by petitioner ban/, on the aforesaid deposit, are notlegal and properB and

!? that petitioner ban/ is liable for compensatory and ein? has fi


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$ell as to %&' the general lien and(or right of set)off constituted in s favor over the deposit by the assignor, %RA5AEvidently, the act of assignment could not have, without more, operated to erase hens or restrictions burdening the rightassigned. +he assignee cannot, after all, ac=uire a greater right than that pertaining to the assignor.

+he was therefore acting well within its rights in ma/ing deductions on %RA5As special time deposit in satisfactionof its credits against the latter relative to transactions other than the original letter of credit. +he correctness of the amountof those deductions has not, incidentally, been impugned. +his being the case, its refusing to deliver to GA%C the entiredeposit in the the sum of !7,777.77, in the face of the latters insistence that no deductions should be made therefromand this was the correct amount to be delivered to it, coupled with the conflicting claim made on the same deposit by a

third party, was not of so rec/less, oppressive or malevolent, a character as would give rise to liability for ethe I&+9A5, for short?, doing business under the name and

style 8a< 3in &nternational,8 engaged in the manufacture of raw sea shells into finished products, applied for and weregranted a domestic letter of credit by the &nsular an/ of Asia and America >&AA?, Cebu City. 1 in the amount o)7,777.77. +he 9etter of Credit authoriFed the ban/ to negotiate for their account drafts drawn by their supplier, one5talin +an, on a< 3in &nternational for the purchase of pu/a and olive seashells. &n consideration thereof, the I&+9A5

jointly and severally, agreed to pay the ban/ 8at maturity, in hilippine currency, the e=uivalent, of the aforementionedamount or such portion thereof as may be drawn or paid, upon the faith of the said credit together with the usual charges.8

n the same day, August 07, (1#$, having received from 5talin +an the pu/a and olive shells worth )7,777.77, theI&+9A5 e&AA? the due date indicated in the document was ctober (1, (1#$.

2aving defaulted on their obligation, &AA demanded payment from the I&+9A5 in a letter dated anuary (, (1#". +he

I&+9A5, who were unable to dispose of the shells, responded by offering to return the goods. &AA refused to acceptthe merchandise, and due to the continued refusal of the I&+9A5 to ma/e good their underta/ing, &AA charged themwith Estafa for having misappropriated, misapplied and converted for their own personal use and benefit the aforesaidgoods. uring the trial of the criminal case the I&+9A5 turned over the seashells to the custody of the +rial Court.

n April (0, (1*0, the then Court of %irst &nstance of Cebu, ranch I&&, ac=uitted the I&+9A5 of the crime charged,after finding that the element of misappropriation or conversion was ine


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5hortly thereafter, &AA commenced the present civil action to recover the value of the goods before the Regional +rialCourt of Cebu, ranch JI&.

2olding that the complaint was barred by the judgment of ac=uittal in the criminal case, said Court dismissed thecomplaint. 2owever, on &AAs motion, the Court granted reconsideration and;

(. rder>ed?defendants jointly and severally to pay the plaintiff the sum of 5eventy +wo +housand ine2undred Eighty +wo and 0#:(77 >#0,1*0.0#?, hilippine Currency, plus interest of ()@ per annum andservice charge of one >(@? per cent per annum computed from judicial demand and until the obligation is

fully paidB

0. rdered defendants jointly and severally to pay attorneys fees to the plaintiff in the sum of %our+housand >),777.77? pesos, hilippine Currency, plus costs of the suit. 3

+he I&+9A5 rest their present appeal on the principal allegation that their ac=uittal in the Estafa case bars &AAs filingof the civil action because &AA had not reserved in the criminal case its right to enforce separately their civil liability. +heymaintain that by intervening actively in the prosecution of the criminal case through a private prosecutor, &AA had chosento file the civil action impliedly with the criminal action, pursuant to 5ection (, Rule ((( of the (1*$ Rules on Criminalrocedure, reading;

5ection (. /nstitution of cri#inal and ci0il action. When a criminal action is instituted, the civil action forthe recovery of civil liability arising from the offense charged is impliedly instituted with the criminal action

unless the offended party e


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A trust receipt, therefore, is a security agreement, pursuant to which a ban/ ac=uires a 8security interest8 in the goods. 8&tsecures an indebtedness and there can be no such thing as security interest that secures no obligation.8 4As defined inour laws;

>h? 85ecurity &nterest8means a property interest in goods, documents or instruments to secureperformance of some obligations of the entrustee or of some third persons to the entruster and includestitle, whether or not e


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W2ERE%RE, finding no reversible error in the judgment appealed from, the same is hereby A%%&R'E. o costs.

5 RERE.

G.R. No. L-42735 a$a)y 22, 1990

RAMON L. ABA, petitioner,vs.HON. CO#RT O! APPEAL" THE PHILIPPINE COMMERCIAL AN IN#"TRIAL BANK, respondents.

Manuel 2. De +uia for petitioner.

an uan" -frica" +on*ales 5 an -gustin 6a$ 7ffices for pri0ate respondent.

GRINO-A#INO, J.:

+he bone of contention in this petition for review of the decision dated ovember 0(, (1#$ of the Court of Appeals in C.AG.R. o. $(")1-R entitled, 8hilippine Commercial and &ndustrial an/ vs. +'C, &nc., regon &ndustries, &nc., andRamon 9. Abad8 is whether the debtor >or its surety? is entitled to deduct the debtors cash marginal deposit from theprincipal obligation under a letter of credit and to have the interest charges computed only on the balance of the saidobligation.

n ctober !(, (1"!, +'C, &nc., now /nown as 5outheast +imber Co. >hils.?, &nc., applied for, and was granted bythe hilippine Commercial and &ndustrial an/ >hereafter called 8C&8?, a domestic letter of credit for *7,777 in favor ofits supplier, regon &ndustries, &nc., to pay for one 5/agit Karder with accessories. C& paid to regon &ndustries thecost of the machinery against a bill of e


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n %ebruary $, (1#0, the trial court rendered judgment in favor of C& ordering +'C, &nc. and Abad to pay jointly andseverally to the ban/ the sum of (0$,#"".(! as of August 0", (1#7, with interest and other charges until completepayment is made, plus attorneys fees and costs.

Abad appealed to the Court of Appeals which, in a decision dated ovember 0(, (1#$, affirmedin totothe decision of thetrial court.

Abad filed this petition for review raising the issue of whether +'Cs marginal deposit of 0*,777 in the possession ofthe ban/ should first be deducted from its principal indebtedness before computing the interest and other charges due.

etitioner alleges that by not deducting the marginal deposit from +'Cs indebtedness, the ban/ unjustly enricheditself at the e+'C? and its surety >Abad?.

+he petition is impressed with merit.

+he nature and mercantile usage of a trust receipt was eArt. (0*7, Civil Code?.

&t is not farfetched to assume that the ban/ used +'Cs marginal deposit to partially fund the *7,777 letter of credit itissued to +'C, hence, the interests and other charges on said letter of credit should be levied only on the balance of


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$0,777 which was the portion that was actually funded or loaned by the ban/ from its own funds. Re=uiring the importerto pay interest on the entire letter of credit without deducting first him marginal deposit, would be a clear case of unjustenrichment by the ban/.

W2ERE%RE, the petition for review is granted. +he decision of the Court of Appeals is modified by deducting +'Csmarginal deposit of 0*,777 from the principal amount of *7,777 covered by its letter of credit. +he interests and othercharges of the ban/ should be computed on the outstanding loan balance of $0,777 only. +he decision is affirmed inother respects, with costs against the respondent hilippine Commercial and &ndustrial an/.

5 RERE.

G.R. No. 81559-0 A)* , 1992

PEOPLE O! THE PHILIPPINE", >public petitioner?a$% ALLIE BANKING CORPORATION >private petitioner?,vs.HON. #GE AI G. NITA!AN>public respondent? a$% BETT/ "IA ANG >private respondent?.


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G#TIERRE, R., J.:

+his petition for certiorariinvolves an issue that has been raised before this Court several times in the past. +he petitionerin effect, is as/ing for a re-e


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disposed of in accordance with the terms of the trust receipt shall constitute the crime of estafapunishable under the provisions of Article +hree 2undred and %ifteen, paragraph one >b? of Act umbered+hree +housand Eight 2undred and %ifteen, as amended, otherwise /nown as the Revised enal Code.&f the violation or offense is committed by a corporation, partnership, association or other juridical entitiesthe penaltypro0ided for in this ecree shall be imposed upon the directors, officers, employees or otherofficials or persons therein responsible for the offense, without prejudice to the civil liabilities arising fromthe criminal offense.

5ection ( >b?, Article !($ of the RC under which the violation is made to fall, states;

. . . $indling >estafa?. H Any person who shall defraud another by any of the means mentioned hereinbelow . . . ;


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We are continually re-evaluating the opposite view which insists that the violation of a trust receipt agreement shouldresult only in a civil action for collection. +he respondent contends that there is no malice involved. 5he cites the dissent ofthe late Chief ustice Claudio +eehan/ee in 7ng 0. Court of -ppeals" >(0) 5CRA $#* M(1*!N? to wit;

+he old capitalist orientation of putting importers in jail for supposed estafa or swindling for non-paymentof the price of the imported goods released to them under trust receipts >a purely commercial transaction?under the fiction of the trust receipt device, should no longer be permitted in this day and age.

As earlier stated, however, the law punishes the dishonesty and abuse of confidence in the handling of money or goods to

the prejudice of the ban/.

+he Court reiterates that the enactment of .. (($ is a valid e9ee v. Rodil, supra;9oFano v. 'artineF, supra? +he arguments of the respondent are appropriate for arepeal or modification of the law and should be directed to Congress. ut until the law is repealed, we are constrained toapply it.

W2ERE%RE, the petition is hereby GRA+E. +he rder of the respondent Regional +rial Court of 'anila, ranch $0dated anuary #, (1** is 5E+ A5&E. 9et this case be remanded to the said court for disposition in accordance with thisdecision.

5 RERE.

EELOPMENT BANK O! G.R. o. ()!##0THE PHILIPPINE",P(6*6*o$(),resent;AGA&A, ., Chair#an,

5AIA9-G4+&ERREO,- ( ) & & -CRA,CAR& 'RA9E5 and

GARC&A, .PR#ENTIAL BANK,R(&o$%($6. romulgated;

ovember 00, 077$ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

E C I " I O NCORONA, J.

evelopment an/ of the hilippines >? assails in this petition for review on certiorari under Rule )$ of theRules of Court the ecember (), (111 decision M(Nand the une *, 0777 resolution of the Court of Appeals in CA-G.R. CIo. )$#*!. +he challenged decision dismissed s appeal and affirmed the %ebruary (0, (11( decision of the Regiona+rial Court of 'a/ati, ranch (!# in Civil Case o. **-1!( in toto, while the impugned resolution denied s motion foreconsideration for beingpro for#a.&n (1#!, 9irag +e


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n ctober (7, (1*7, granted a foreign currency loan in the amount of 456),*7#,$$( to 9ite9yon? on une *, (1*#.

5ince its demands remained unheeded, rudential an/ filed a complaint for a sum of money with damages

against with the Regional +rial Court of 'a/ati, ranch (!#, on 'ay 0), (1**. +he complaint was doc/eted as CivilCase o. **-1!(.

n %ebruary (0, (11(, the trial court decidedM0Nin favor of rudential an/. Applying the provisions of (($,otherwise /nown as the +rust Receipts 9aw, it ruled;

When R4E+&A9 A3 released possession of the subject properties, over which it holdsabsolute title to 9&+EJ upon the latters ea? to sell or otherwise dispose of the same and to turn over toR4E+&A9 A3 the amount still owingB or >b? to return the goods if unsold. 5ince 9&+EJ was allowedto sell the properties being claimed by R4E+&A9 A3, all the more was it authoriFed to mortgagethe same, provided of course 9&+EJ turns over to R4E+&A9 A3 all amounts owing. When ,well aware of the status of the properties, ac=uired the same in the public auction, it was bound by theterms of the trust receipts of which 9&+EJ was the entrustee. 5imply stated, held no better right than9&+EJ, and is thus bound to turn over whatever amount was due R4E+&A9 A3. eing a trustee e4#aleficioof R4E+&A9 A3, is necessarily liable therefor. &n fact, may well be consideredas an agent of 9&+EJ when the former sold the properties being claimed by R4E+&A9 A3, with thecorresponding responsibility to turn over the proceeds of the same to R4E+&A9 A3. M!N>Citationsomitted?

+he dispositive portion of the decision read;W2ERE%RE, judgment is hereby rendered ordering defendant EIE9'E+ A3 % +2E

2&9&&E5 to pay plaintiff R4E+&A9 A3;

a? !,0"(,*!).77, as actual damages, with interest thereon computed from (7 August (1*$until the entire amount shall have been fully paidB

b? $7,777.77 as e


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5 RERE.

Aggrieved, filed an appeal with the Court of Appeals. 2owever, the appellate court dismissed the appeal andaffirmed the decision of the trial court in toto. &t applied the provisions of (($ and held that ownership over thecontested articles belonged to rudential an/ as entrustor, not to 9ite


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&nstead, the contemporaneous and subse=uent acts of both 9ite< and rudential an/ showed that the imported articleswere released to 9ite< to be installed in its tey a?)(( 6o 'o% &a*% ?oo%& *$ 6)&6 +o) 6'( BANK a$% a& *6&)o()6ywith liberty to sell the same for its account but without authority to ma/e any other dispositionwhatsoever of the said goods or any part thereof >or the proceeds thereof? either by way of conditionalsale, pledge, or otherwise.

< < < < < < < <


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n the matter of actual damages adjudged by the trial court and affirmed by the Court of Appeals, wants this Court toreview the evidence presented during the trial and to reverse the factual findings of the trial court. +his Court is, howevernot a trier of facts and it is not its function to analyFe or weigh evidence anew. M(!N+he rule is that factual findings of the triacourt, when adopted and confirmed by the CA, are binding and conclusive on this Court and generally will not be reviewedon appeal.M()NWhile there are recogniFed e


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a#on B. de los eyes and =oilo P. Perlas for plaintiffs)appellants.8illa#or 5 +ancayco for defendants)appellees.

REGALA, J.:

+he principal =uestion presented in this case is whether a ban/ can be compelled to disclose the records of accounts of adepositor who is under investigation for unewhich too/ effect on5ept. 1, (1$$?, because of the rule that repeals by implication are not favored. 5econd, they argue that to construesection * of the Anti-Graft 9aw as allowing in=uiry into ban/ deposits would be to negate the policy e


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to discourage private hoarding so that the same may be utiliFed by ban/s in authoriFed loans to assist in the economicdevelopment of the country.8

Contrary to their claim that their position effects a reconciliation of the provisions of the two laws, plaintiffs are actuallyma/ing the provisions of Republic Act o. ()7$ prevail over those of the Anti-Graft 9aw, because even without the latterlaw the balance standing to the depositors credit can be considered provided its disclosure is made in any of the casesprovided in Republic Act o. ()7$.

+he truth is that these laws are so repugnant to each other than no reconciliation is possible. +hus, while Republic Act o.

()7$ provides that ban/ deposits are 8absolutely confidential ... and MthereforeN may not be e


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LO#RE" T. MAR#E, *$ '() :aa:*6y a& B)a$:' Ma$a?(), #$*o$ Ba$@ o+ 6'( P'***$(&,petitioners, vs. HONANIANO A. E"IERTO, *$ '*& :aa:*6y a& OMB#"MAN, Eaa6*o$ a$% P)(*;*$a)y I$(&6*?a6*o$

B)(a, O++*:( o+ 6'( O;>%&;a$, ANGEL C. MA/OR-ALGO, R., MAR/ ANN CORP#-MANALAC a$%O"E T. E E"#", R., *$ 6'(*) :aa:*6*(& a& C'a*);a$ a$% M(;>()& o+ 6'( Pa$()(&(:6*(y, respondents.

E C I " I O N

PARO, J.

&n the petition at bar, petitioner see/s to--

a. Annul and set aside, for having been issued without or in e


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with the mbudsman entitled, %act-%inding and &ntelligence ureau >%%&? v. Amado 9agdameo, et. al. +he order furthestates;

&t is worth mentioning that the power of the mbudsman to investigate and to re=uire the production and inspection ofrecords and documents is sanctioned by the (1*# hilippine Constitution, Republic Act o. "##7, otherwise /nown as thembudsman Act of (1*1 and under eR.A.()7$? and places the office of the mbudsman in the same footing as the courts of law in this regard. M0N

+he basis of the mbudsman in ordering an in camerainspection of the accounts is a trail of managers chec/spurchased by one George +rivinio, a respondent in '-7-1#-7)((, pending with the office of the mbudsman.

&t would appear that 'r. George +rivinio, purchased fifty one >$(? 'anagers Chec/s >'Cs? for a total amount of0#0.( 'illion at +raders Royal an/, 4nited ations Avenue branch, on 'ay 0 and !, (11$. ut of the $( 'Cs, eleven>((? 'Cs

in the amount of #7." million, were deposited and credited to an account maintained at the 4nion an/, uliaIargas ranch.M!N

n 'ay 0", (11*, the %%& panel met in conference with petitioner 9ourdes +. 'ar=ueF and Atty. %e . 'acalino atthe ban/s main office, Ayala Avenue, 'a/ati City. +he meeting was for the purpose of allowing petitioner and Atty.'acalino to view the chec/s furnished by +raders Royal an/. After convincing themselves of the veracity of the chec/s,

Atty. 'acalino advised 's. 'ar=ueF to comply with the order of the mbudsman. etitioner agreed to an incamerainspection set on une !, (11*. M)N

2owever, on une ), (11*, petitioner wrote the mbudsman es?could easily be identified since the account numbers < < < where said chec/s were deposited are identified in the order.

Even assuming that the accounts


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n uly (7, (11*, petitioner together with 4nion an/ of the hilippines, filed a petition for declaratory relief,prohibition and injunctionM*Nwith the Regional +rial Court, 'a/ati City, against the mbudsman.

+he petition was intended to clear the rights and duties of petitioner. +hus, petitioner sought a declaration of herrights from the court due to the clear conflict between R. A. o. "##7, 5ection ($ and R. A. o. ()7$, 5ections 0 and !.

etitioner prayed for a temporary restraining order >+R? because the mbudsman and other persons acting underhis authority were continuously harassing her to produce the ban/ documents relative to the accounts in =uestion'oreover, on une (", (11*, the mbudsman issued another order stating that unless petitioner appeared before the%%& with the documents re=uested, petitioner manager would be charged with indirect contempt and obstruction of

justice.&n the meantime,M1Non uly (), (11*, the lower court denied petitioners prayer for a temporary restraining order and

stated thus;

After hearing the arguments of the parties, the court finds the application for a +emporary Restraining rder to be withoutmerit.

5ince the application prays for the restraint of the respondent, in the e1?in relation to paragraph >*? of R.A. "##7, /nown as +he mbudsman Act of (1*1, there is no great or irreparable injuryfrom which petitioners may suffer, if respondent is not so restrained. Respondent should he decide to e


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n 5eptember (7, (11*, petitioner filed with the mbudsman a motion for reconsideration of the above order. M0(N2emotion was premised on the fact that there was a pending case with the Regional +rial Court, 'a/ati City, M00Nwhich woulddetermine whether obeying the orders of the mbudsman to produce ban/ documents would not violate any law.

+he %%& opposed the motion,M0!Nand on ctober (), (11*, the mbudsman denied the motion by order thedispositive portion of which reads;

Wherefore, respondent 9ourdes +. 'ar=ueFs motion for reconsideration is hereby E&E, for lac/ of merit. 9et thehearing of the motion of the %act %inding &ntelligence ureau >%%&? to cite her for indirect contempt be intransferrably setto 01 ctober (11* at 0;77 ocloc/ p.m. at which date and time she should appear personally to submit her additional

evidence. %ailure to do so shall be deemed a waiver thereof.M0)N

2ence, the present petition.M0$N

+he issue is whether petitioner may be cited for indirect contempt for her failure to produce the documents re=uestedby the mbudsman. And whether the order of the mbudsman to have an in ca#erainspection of the =uestioned accounis allowed as an eR. A. o. ()7$?.

An eR. A. o. ()7$? would reveal the following e


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letters and other private communications. +he Revised enal Code ma/es a crime of the violation of secrets by an officerthe revelation of trade and industrial secrets, and trespass to dwelling. &nvasion of privacy is an offense in special laws li/ethe Anti-Wiretapping 9aw, 6'( "(:)(:y o+ Ba$@ (o&*6& A:6, and the &ntellectual roperty Code.M0*N

IN IE= =HEREO!, we GRA+ the petition. We order the mbudsman to cease and desist from re=uiring 4nionan/ 'anager 9ourdes +. 'ar=ueF, or anyone in her place to comply with the order dated ctober (), (11*, and similarorders. o costs.

"O ORERE.
http://sc.judiciary.gov.ph/jurisprudence/2001/jun2001/135882.htm#_edn28http://sc.judiciary.gov.ph/jurisprudence/2001/jun2001/135882.htm#_edn28


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O!!ICE O! THE OMB#"MAN,petitioner, vs. HON. !RANCI"CO B. IBA/, *$ '*& :aa:*6y a& P)(&*%*$? %?( o+6'( R(?*o$a T)*a Co)6, Ma@a6* C*6y, B)a$:' 135, #NION BANK O! THE PHILIPPINE", a$% LO#RE" TMAR#E, *$ '() :aa:*6y a& B)a$:' Ma$a?() o+ #BP *a a)?a& B)a$:', respondents.

R E " O L # T I O N

#I"#MBING, J.

+his special civil action for certiorarisee/s to annul the rders of public respondent dated August (1, (11* andecember 00, (11*, and to dismiss the proceedings in Civil Case o. 1*-($*$.

+he factual antecedents of this case are as follows;

5ometime in (11*, petitioner conducted an investigation on the alleged scam on the ublic Estates Authority-AmariCoastal ay evelopment Corporation. +he case, entitled Fact)Finding and /ntelligence Bureau 0s. -#adeo 6agda#eo"et al., was doc/eted as '-7-1#-7)((. &nitial result of the investigation revealed that the alleged anomaly was committedthrough the issuance of chec/s which were subse=uently deposited in several financial institutions. n April 01, (11*,petitioner issued an rder directing private respondent 9ourdes 'ar=ueF, branch manager of 4nion an/ of thehilippines branch at ulia Iargas Avenue, asig City, to produce several ban/ documents for inspection relative to

Account os. 7((-!#0#7-$, 0)7-707#(*, 0)$-!7!(#-! and 0)$-!7!(*-(, reportedly maintained in the said branch. +hedocuments referred to include ban/ account application forms, signature cards, transactions history, ban/ statements,ban/ ledgers, debit and credit memos, deposit and withdrawal slips, application for purchase of managers chec/s, used

managers chec/s and chec/ microfilms. +he inspection would be done in ca#erawherein the ban/ records would bee1? of R.A. "##7 >mbudsman Act of (1*1?. +he same might alsoconstitute willful obstruction of the lawful e


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+he only =uestion raised by petitioner for resolution is whether or not public respondent acted without jurisdictionand:or with grave abuse of discretion in entertaining the cited petition for declaratory relief.

etitioner contends that the R+C of 'a/ati City lac/s jurisdiction over the petition for declaratory relief. &t asserts tharespondent judge should have dismissed the petition outright in view of 5ection () of R.A. "##7.

5ection () of R.A. "##7 provides;

estrictions.- o writ of injunction shall be issued by any court to delay an investigation being conducted by thembudsman under this Act, unless there is apri#a facieevidence that the subject matter of the investigation is outside

the jurisdiction of the ffice of the mbudsman.

o court shall hear any appeal or application for remedy against the decision or findings of the mbudsman, e)? that the issue is ripe for judicial determination. M#N&n this case, the controversy concerns the e


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G.R. No. L-3142 Ma):' 31, 1973

O"#E AELLANA, petitioner,vs.THE EEC#TIE "ECRETAR/, THE "ECRETAR/ O! NATIONAL E!EN"E, THE "ECRETAR/ O! #"TICE ANTHE "ECRETAR/ O! !INANCE, respondents.

G.R. No. L-314 Ma):' 31, 1973

IAL TAN, . ANTONIO ARANETA, ALEANRO ROCE", MAN#EL CR#O, ANTONIO #. MIRANA, EMILIO EPERALTA AN LORENO M. TAAA, petitioners,vs.THE EEC#TIE "ECRETAR/, THE "ECRETAR/ O! !INANCE , THE "ECRETAR/ O! #"TICE, THE "ECRETAR/O! LAN RE!ORM, THE "ECRETAR/ O! NATIONAL E!EN"E, THE A#ITOR GENERAL, THE B#GETCOMMI""IONER, THE CHAIRMAN O! PRE"IENTIAL COMMI""ION ON REORGANIATION, THE TREA"#RERO! THE PHILIPPINE", THE COMMI""ION ON ELECTION" AN THE COMMI""IONER O! CIIL"ERICE, respondents.

G.R. No. L-315 Ma):' 31, 1973.


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GERARO ROA", AMBRO"IO PAILLA, OITO R. "ALONGA, "ALAOR H. LA#REL, RAMON . MITRA, R.a$% EA E"TRAA-KALA=, petitioners,vs.ALEANRO MELCHOR, *$ '*& :aa:*6y a& E(:6*( "(:)(6a)yD #AN PONCE ENRILE, *$ '*& :aa:*6y a&"(:)(6a)y o+ Na6*o$a (+($&(D G($()a ROMEO E"PINO, *$ '*& :aa:*6y a& C'*(+ o+ "6a++ o+ 6'( A);(% !o):(& o+6'( P'***$(&D TANCIO E. CA"TAEA, *$ '*& :aa:*6y a& "(:)(6a)y G($()a "()*:(&D "($a6o) GIL . P#/AT, *$'*& :aa:*6y a& P)(&*%($6 o+ 6'( "($a6(D a$% "($a6o) O"E RO/, '*& :aa:*6y, a& P)(&*%($6 P)o T(;o)( o+ 6'( o+6'( "($a6(, respondents.

G.R. No. L-323 Ma):' 31, 1973

EIE B. MONTECLARO, ()&o$ay a$% *$ '*& :aa:*6y a& P)(&*%($6 o+ 6'( Na6*o$a P)(&& C> o+ 6'(P'***$(&F, petitioner,vs.THE EEC#TIE "ECRETAR/, THE "ECRETAR/ O! P#BLIC IN!ORMATION, THE A#ITOR GENERAL, THEB#GET COMMI""IONER THE NATIONAL TREA"#RER, respondents.

G.R. No. L-3283 Ma):' 31, 1973

NAPOLEON . ILAG, AL!REO "ALAPANTAN, R., LEONARO A"OI"EN, R., a$% RA#L MGONALE, petitioners,vs.

THE HONORABLE EEC#TIE "ECRETAR/, THE HONORABLE "ECRETAR/ O! NATIONAL E!EN"E, THEHONORABLE B#GET COMMI""IONER, THE HONORABLE A#ITOR GENERAL, respondents.

a#on -. +on*ales for petitioner osue a0ellana.

6oren*o M. 2a,ada and -ssociates for petitioners 8idal 2an" et al.

2a,ada" alonga" 7rdo,e*" odrigo" anidad" o4as. +on*ales and -rroyo for petitioners +erardo o4as" et al.

oer P. -rroyo and ogelio B. Padilla for petitioner Eddie Monteclaro.

aul M. +on*ales and -ssociates for petitioners Napoleon 8. Dilag" et al.

-rturo M. 2olentino for respondents +il . Puyat and ose oy.

7ffice of the olicitor +eneral Estelito P. Mendo*a" olicitor 8icente 8. Mendo*a and olicitor eynato . Puno for otherrespondents.

R E 5 9 4 + &

CONCEPCION, C.J.:

+he above-entitled five >$? cases are a se=uel of cases G.R. os. 9-!$10$,9-!$101, 9-!$1)7, 9-!$1)(, 9-!$1)0, 9-!$1)*, 9-!$1$!, 9-!$1"(, 9-!$1"$ and9-!$1#1, decided on anuary 00, (1#!, to which We will hereafter refer collectively as the plebiscite cases.

Bacground of the Plebiscite Cases.

+he factual setting thereof is set forth in the decision therein rendered, from which We =uote;

n 'arch (", (1"#, Congress of the hilippines passed Resolution o. 0, which was amended byResolution o. ) of said body, adopted on une (#, (1"1, calling a Convention to propose amendmentsto the Constitution of the hilippines. 5aid Resolution o. 0, as amended, was implemented by Republic

Act o. "(!0, approved on August 0), (1#7, pursuant to the provisions of which the election of delegates


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to said Convention was held on ovember (7, (1#7, and the (1#( Constitutional Convention began toperform its functions on une (, (1#(. While the Convention was in session on 5eptember 0(, (1#0, theresident issued roclamation o. (7*( placing the entire hilippines under 'artial 9aw. n ovember01, (1#0, the Convention approved its roposed Constitution of the Republic of the hilippines. +he neCase G.R. o. 9-!$1"$?B and on ecember (", (1#0, by Ernesto C. 2idalgo against theCommission on Elections, the 5ecretary of Education, the ational +reasurer and the Auditor General>Case G.R. o. 9-!$1#1?.

&n all these cases, eG.R. o. 9-!$1#1?, the respondents were re=uired to file their answers8not later than (0;77 >ocloc/? noon of 5aturday, ecember (", (1#0.8 5aid cases were, also, set forhearing and partly heard on 'onday, ecember (*, (1#0, at 1;!7 a.m. +he hearing was continued onecember (1, (1#0. y agreement of the parties, the aforementioned last case H G.R. o. 9-!$1#1 Hwas, also, heard, jointly with the others, on ecember (1, (1#0. At the conclusion of the hearing, on thatdate, the parties in all of the aforementioned cases were given a short period of time within which 8tosubmit their notes on the points they desire to stress.8 5aid notes were filed on different dates, betweenecember 0(, (1#0, and anuary ), (1#!.

'eanwhile, or on ecember (#, (1#0, the resident had issued an order temporarily suspending theeffects of roclamation o. (7*(, for the purpose of free and open debate on the roposed Constitution.n ecember 0!, the resident announced the postponement of the plebiscite for the ratification orrejection of the roposed Constitution. o formal action to this effect was ta/en until anuary #, (1#!,when General rder o. 07 was issued, directing 8that the plebiscite scheduled to be held on anuary ($,(1#*, be postponed until further notice.8 5aid General rder o. 07, moreover, 8suspended in themeantime8 the 8order of ecember (#, (1#0, temporarily suspending the effects of roclamation o.(7*( for purposes of free and open debate on the proposed Constitution.8

&n view of these events relative to the postponement of the aforementioned plebiscite, the Court deemedit fit to refrain, for the time being, from deciding the aforementioned cases, for neither the date nor theconditions under which said plebiscite would be held were /nown or announced officially. +hen, again,Congress was, pursuant to the (1!$ Constitution, scheduled to meet in regular session on anuary 00(1#!, and since the main objection to residential ecree o. #! was that the resident does not havethe legislative authority to call a plebiscite and appropriate funds therefor, which Congress un=uestionablycould do, particularly in view of the formal postponement of the plebiscite by the resident H reportedly


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after consultation with, among others, the leaders of Congress and the Commission on Elections H theCourt deemed it more imperative to defer its final action on these cases.

8&n the afternoon of anuary (0, (1#!, the petitioners in Case G.R. o.9-!$1)* filed an 8urgent motion,8 praying that said case be decided 8as soon as possible, preferably notlater than anuary ($, (1#!.8 &t was alleged in said motion, inter alia;

8". +hat the resident subse=uently announced the issuance of residential ecree o. *" organiFing theso-called CitiFens Assemblies, to be consulted on certain public =uestions Mulletin +oday, anuary (,

(1#!NB

8#. +hat thereafter it was later announced that 8the Assemblies will be as/ed if they favor or oppose H

M(N +he ew 5ocietyB

M0N Reforms instituted under 'artial 9awB

M!N +he holding of a plebiscite on the proposed new Constitution and when >the tentativenew dates given following the postponement of the plebiscite from the original date ofanuary ($ are %ebruary (1 and 'arch $?B

M)N +he opening of the regular session slated on anuary 00 in accordance with thee


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M0N Do you appro0e of the ne$ Constitution@

M!N o you want a plebiscite to be called to ratify the new ConstitutionQ

M)N o you want the elections to be held in ovember, (1#! in accordance with theprovisions of the (1!$ ConstitutionQ

M$N &f the elections would not be held, when do you want the ne#? years from the approval of theew Constitution by the CitiFens Assemblies.

L4E5+& o. !

+he vote of the CitiFens Assemblies should already be considered the plebiscite on the

ew Constitution.

&f the CitiFens Assemblies approve of the ew Constitution, then the new Constitutionshould be deemed ratified.

L4E5+& o. )

We are sic/ and tired of too fre=uent elections. We are fed up with politics, of so manydebates and so much e#? years moratorium on elections will be enough forstability to be established in the country, for reforms to ta/e root and normalcy to return.

L4E5+& o. "

We want resident 'arcos to continue with 'artial 9aw. We want him to e


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L4E5+& o. !

+he vote of the CitiFens Assemblies should be considered the plebiscite on the ewConstitution.

&f the CitiFens Assemblies approve of the ew Constitution, then the new Constitutionshould be deemed ratified.

+his, we are afraid, and therefore allege, is pregnant with ominous possibilities.

(). +hat, in the meantime, spea/ing on television and over the radio, on anuary #, (1#!, the residentannounced that the limited freedom of debate on the proposed Constitution was being withdrawn and thatthe proclamation of martial law and the orders and decrees issued thereunder would thenceforth strictlybe enforced Maily E


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+he ne!? cases to comment on said 8urgent motion8 and 8manifestation,8 8not laterthan +uesday noon, anuary (", (1#!.8 rior thereto, or on anuary ($, (1#!, shortly before noon, thepetitioners in said Case G.R. o. 9-!$1)* riled a 8supplemental motion for issuance of restraining orderand inclusion of additional respondents,8 praying H

8... that a restraining order be issued enjoining and restraining respondent Commissionon Elections, as well as the epartment of 9ocal Governments and its head, 5ecretaryose RoPoB the epartment of Agrarian Reforms and its head, 5ecretary Conrado

EstrellaB the ational Ratification Coordinating Committee and its Chairman, Guillermo deIegaB their deputies, subordinates and substitutes, and all other officials and personswho may be assigned such tas/, from collecting, certifying, and announcing and reportingto the resident or other officials concerned, the so-called CitiFens Assembliesreferendum results allegedly obtained when they were supposed to have met during theperiod comprised between anuary (7 and anuary ($, (1#!, on the two =uestions=uoted in paragraph ( of this 5upplemental 4rgent 'otion.8

&n support of this prayer, it was alleged H

8!. +hat petitioners are now before this 2onorable Court in order to as/ further that this 2onorable Courtissue a restraining order enjoining herein respondents, particularly respondent Commission on Electionsas well as the epartment of 9ocal Governments and its head, 5ecretary ose RoPoB the epartment of

Agrarian Reforms and its head, 5ecretary Conrado EstrellaB the ational Ratification CoordinatingCommittee and its Chairman, Guillermo de IegaB and their deputies, subordinates and:or substitutes,from collecting, certifying, announcing and reporting to the resident the supposed CitiFens Assembliesreferendum results allegedly obtained when they were supposed to have met during the period betweenanuary (7 and anuary ($, (1#!, particularly on the two =uestions =uoted in paragraph ( of this5upplemental 4rgent 'otionB

8). +hat the proceedings of the so-called CitiFens Assemblies are illegal, null and void particularly insofaras such proceedings are being made the basis of a supposed consensus for the ratification of theproposed Constitution because; H

MaN +he elections contemplated in the Constitution, Article JI, at which the proposedconstitutional amendments are to be submitted for ratification, are elections at which only

=ualified and duly registered voters are permitted to vote, whereas, the so called CitiFensAssemblies were participated in by persons ($ years of age and older, regardless of=ualifications or lac/ thereof, as prescribed in the Election CodeB

MbN Elections or plebiscites for the ratification of constitutional amendments contemplatedin Article JI of the Constitution have provisions for the secrecy of choice and of vote,which is one of the safeguards of freedom of action, but votes in the CitiFens Assemblieswere open and were cast by raising handsB

McN +he Election Code ma/es ample provisions for free, orderly and honest elections, andsuch provisions are a minimum re=uirement for elections or plebiscites for the ratificationof constitutional amendments, but there were no similar provisions to guide and regulateproceedings of the so called CitiFens AssembliesB

MdN &t is seriously to be doubted that, for lac/ of material time, more than a handful of theso called CitiFens Assemblies have been actually formed, because the mechanics oftheir organiFation were still being discussed a day or so before the day they weresupposed to begin functioning; H

8rovincial governors and city and municipal mayors had been meetingwith barrio captains and community leaders since last 'onday Manuary*, (1#!? to thresh out the mechanics in the formation of the CitiFens

Assemblies and the topics for discussion.8 Mulletin +oday, anuary (7(1#!N


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8&t should be recalled that the CitiFens Assemblies were ordered formed only at the beginning of the yearMaily E


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+ransitory rovisions of the proposed Constitution, has placed residential ecree os#! and *" beyond the reach and jurisdiction of this 2onorable Court.8

n the same date H anuary ($, (1#! H the Court passed a resolution re=uiring the respondents in saidcase G.R. o. 9-!$1)* to file 8file an answer to the said motion not later than ) .'., +uesday, anuary(", (1#!,8 and setting the motion for hearing 8on anuary (#, (1#!, at 1;!7 a.m.8 While the case wasbeing heard, on the date last mentioned, at noontime, the 5ecretary of ustice called on the writer of thisopinion and said that, upon instructions of the resident, he >the 5ecretary of ustice? was delivering tohim >the writer? a copy of roclamation o. ((70, which had just been signed by the resident

+hereupon, the writer returned to the 5ession 2all and announced to the Court, the parties in G.R. o. 9-!$1)* H inasmuch as the hearing in connection therewith was still going on H and the public therepresent that the resident had, according to information conveyed by the 5ecretary of ustice, signedsaid roclamation o. ((70, earlier that morning. +hereupon, the writer read roclamation o. ((70which is of the following tenor;

8K +2E RE5&E+ % +2E 2&9&&E5

8RC9A'A+& . ((70

8A4C&G +2E RA+&%&CA+& K +2E %&9&& E9E % +2E C5+&+4+& R5EK +2E (1#( C5+&+4+&A9 CIE+&.

8W2EREA5, the Constitution proposed by the nineteen hundred seventy-one Constitutional Conventionis subject to ratification by the %ilipino peopleB

8W2EREA5, CitiFens Assemblies were created in barrios, in municipalities and in districts:wards inchartered cities pursuant to residential ecree o. *", dated ecember !(, (1#0, composed of allpersons who are residents of the barrio, district or ward for at least si< months, fifteen years of age orover, citiFens of the hilippines and who are registered in the list of CitiFen Assembly members /ept bythe barrio, district or ward secretaryB

8W2EREA5, the said CitiFens Assemblies were established precisely to broaden the base of citiFenparticipation in the democratic process and to afford ample opportunity for the citiFenry to e(),01*,*()? answered that there was no need for a plebiscite and that the vote of the arangays>CitiFens Assemblies? should be considered as a vote in a plebisciteB

8W2EREA5, since the referendum results show that more than ninety-five >1$? per cent of the membersof the arangays >CitiFens Assemblies? are in favor of the new Constitution, the Aatipunan ng MgaBarangayhas strongly recommended that the new Constitution should already be deemed ratified by the%ilipino peopleB

8W, +2ERE%RE, &, %ER&A E. 'ARC5, resident of the hilippines, by virtue of the powersin me vested by the Constitution, do hereby certify and proclaim that the Constitution proposed by thenineteen hundred and seventy-one >(1#(? Constitutional Convention has been ratified by anoverwhelming majority of all of the votes cast by the members of all the arangays >CitiFens Assemblies?throughout the hilippines, and has thereby come into effect.


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8& W&+E55 W2ERE%, & have hereunto set my hand and caused the seal of the Republic of thehilippines to be affi"? 'embers of the Court, are of the opinion that the issue has become moot and academicwhereas ustices arredo, 'a/asiar and Antonio voted to uphold the validity of said ecree.

!. n the authority of the (1#( Constitutional Convention to pass the proposed Constitution or toincorporate therein the provisions contested by the petitioners in 9-!$1)*, ustices 'a/alintal, Castro,

+eehan/ee and Esguerra opine that the issue has become moot and academic. ustices %ernando,arredo, 'a/asiar, Antonio and myself have voted to uphold the authority of the Convention.

). ustice %ernando, li/ewise, e


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=uestions of fact which cannot be predetermined, and that 'artial 9aw per sedoes not necessarilypreclude the factual possibility of ade=uate freedom, for the purposes contemplated.

". n residential roclamation o. ((70, the following views were e


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the udget Commissioner and the ational +reasurer5and on %ebruary (0, (1#!, by apoleon I. ilag, Alfredo5alapantan, r., 9eonardo Asodisen, r. and Raul '. GonFales,against the E


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incorporate certain contested provisions thereof, the alleged lac/ of authority of the resident to create and establishCitiFens Assemblies 8for the purpose submitting to them the matter of ratification of the new Constitution,8 the alleged8improper or inade=uate submiss of the proposed constitution,8 the 8procedure for ratification adopted ... through theCitiFens Assemblies8B a maintaining that; (? 8>t?he Court is without jurisdiction to act on these petitions8B 0? the =uestionsraised therein are 8political in character and therefore nonjusticiable8B !? 8there substantial compliance with Article JI ofthe ( Constitution8B )? 8>t?he Constitution was properly submitted the people in a free, orderly and honest electionB $?8roclamation o. ((70, certifying the results of the election, is conclusive upon the courts8B and "? 8>t?he amendingprocess outlined in Article JI of the (1!$ Constitution is not et?hesubject matter8 of said case 8is a highly political =uestion which, under the circumstances, this ...Court would not be in aposition to act upon judicially,8 and that, in view of the opinions e


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the claim that such plebiscite was not held accordingly8B and that he accepted 8as a fait acco#pli that the Constitutionadopted >by the (1#( Constitutional Convention? on ovember !7, (1#0, has been duly ratified.

Counsel for respondents Gil . uyat and ose Roy goes on to say that, under these circumstances, 8it seems remote orimprobable that the necessary eight >*? votes under the (1!$ Constitution, and much less the ten >(7? votes re=uired bythe (1#0 >(1#!? Constitution, can be obtained for the relief sought in the Amended etition8 in G.R. o.9-!"("$.

& am unable to share this view. +o begin with, 'r. ustice arredo announced publicly, in open court, during the hearing of

these cases, that he was and is willing to be convinced that his aforementioned opinion in the plebiscite cases should bereconsidered and changed. &n effect, he thus declared that he had an open mind in connection with the cases at bar, andthat in deciding the same he would not necessarily adhere to said opinion if the petitioners herein succeeded inconvincing him that their view should be sustained.

5econdly, counsel for the aforesaid respondents had apparently assumed that, under the (1!$ Constitution, eight >*?votes are necessary to declare invalid the contested roclamation o. ((70. & do not believe that this assumption is borneout by any provision of said Constitution. 5ection (7 of Article I&&& thereof reads;

All cases involving the constitutionality of a treaty or law shall be heard and decided by the 5upremeCourt in banc, and no treaty or law may be declared unconstitutional without the concurrence of two thirdsof all the members of the Court.

ursuant to this section, the concurrence of two-thirds of all the 'embers of the 5upreme Court is re=uired only to declare8treaty or law8 unconstitutional. Construing said provision, in a resolution dated 5eptember (", (1)1, then Chief ustice'oran, voicing the unani#ousview of the 'embers of this Court, postulated;

... +here is nothingeither in the Constitution or in the udiciary Act re=uiring the vote of eight ustices tonullify a rule or regulation or an eGovernor-General? resident of the hilippines touching theorganiFation or mode of operation of the Government or rearranging or readjusting any of the districts,divisions, parts or ports of the >hilippine &slands? hilippines and all acts and commands governing thegeneral performance of duties by public employees or disposing of issues of general concern shall bemade effective in e


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in G.R. o.9-!"("$. 15As conse=uence, an e


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of habeas corpuson August 0(, (1#(, despite the opposite view ta/en by this Court in Barcelona 0Baer20and Montenegro 0. Casta,eda, 21insofar as it adhered to the former case, which view We, accordinglyabandoned and refused to apply. %or the same reason, We did not apply and e


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9egislature. +he Governor may eEmphasis supplied.?

and, in an attempt to describe the nature of a political =uestion in terms, it was hoped, understandable to the laymen, Weadded that 8... the term 8political =uestion8 connotes, in legal parlance, what it means in ordinary parlance, namely, a=uestion of policy8 in matters concerning the government of a 5tate, as a body politic. 8&n other words, in the language ofCorpus uris 5ecundum >supra?, it refers to 8those =uestions which, under the Constitution, are to be decided by the

peoplein their sovereign capacity, or in regard to which full discretionary authorityhas been delegated to the 9egislatureor ei?n times of social dis=uietude or political e


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any law of the e


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governments derive their authority from the national government. Again, unlieour (1!$ Constitution, the charter oorganic law of Rhode &sland contained noprovision on the manner, procedure or conditions for its amendment.

+hen, too, the case of 6uther 0. Bordenhinged more on the =uestion of recognition of go0ern#ent, than on recognitionof constitution, and there is a fundamental difference between these two >0? types of recognition, the first being generallyconceded to be a political =uestion, whereas the nature of the latter depends upon a number of factors, one of them beingwhether the new Constitution has been adopted in the manner prescribed in the Constitution in force at the time of thepurported ratification of the former, which is essentiallyausticiable=uestion. +here was, in 6uther 0. Borden, a conflicbetween t$o >0? ri0al governments, antagonistic to each other, which is absent in the present cases. 2ere, the

Government established under the (1!$ Constitution is the very same government whose E


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+he 5upreme Court of the 4nited 5tates has meaningfully postulated that 8the courts cannot reject as no law suit 8 Hbecause it allegedly involves a political =uestion H 8a bona fide controversy as to whether some action denominated8political8 e4ceeds constitutional authority.8 37

&&&

:as the proposed ne$ or re0ised Constitution been ratified confor#ably to said -rt. G8 of the 193 Constitution@

etitioners in 9-!"()0 maintain the negative view, upon ground; (? that the resident 8is without authority to create the

CitiFens Assemblies8 through which, respondents maintain, the proposed new Constitution has been ratifiedB that saidAssemblies 8are without power to approve the proposed Constitution8B !? that the resident 8is without power to proclaimthe ratification by the %ilipino people of the proposed Constitution8B and )? that 8the election held >in the CitiFens

Assemblies? to ratify the proposed Constitution was not a free election, hence null and void.8

Apart from substantially reiterating these grounds support of said negative view, the petitioners in 9-!"(") contend; (? thatthe resident 8has no power to call a plebiscite for the ratification or rejection8 of the proposed new Constitution or 8toappropriate funds for the holding of the said plebiscite8B 0? that the proposed new or revised Constitution 8is vague andincomplete,8 as well as 8contains provisions which are beyond the powers of the (1#( Convention to enact,8 therebyrendering it 8unfit for ... submission the peopleB8 !? that 8>t?he period of time between ovember (1#0 when the (1#0 draftwas approved and anuary ((-($, (1#!,8 when the CitiFens Assemblies supposedly ratified said draft, 8was too short,worse still, there was practically no time for the CitiFens Assemblies to discuss the merits of the Constitution which themajority of them have not read a which they never /new would be submitted to them ratification until they were as/ed the

=uestion H 8do you approve of the ew ConstitutionQ8 during the said days of the voting8B and that 8>t?here was altogetherno freedom discussion and no opportunity to concentrate on the matter submitted to them when the (1#0 draft wassupposedly submitted to the CitiFens Assemblies for ratification.8

etitioner in 9-!"0!" added, as arguments in support of the negative view, that ; (? 8>w?ith a government-controlled pressthere can never be a fair and proper submission of the proposed Constitution to the people8B and 0? roclamation o.((70 is null and void 8>i?nasmuch as the ratification process8 prescribed 8in the (1!$ Constitution was not followed.8

esides adopting substantially some of the grounds relied upon by the petitioners in the above-mentioned cases, thepetitioners in 9-!"0*! argue that 8>t?he creation of the CitiFens Assemblies as the vehicle for the ratification of theConstitution was a deception upon the people since the resident announced the postponement of the anuary ($, (1#!plebiscite to either %ebruary (1 or 'arch $, (1#!.8 38

+he reasons adduced by the petitioners in 9-!"("$ in favor of the negative view have already been set forth earlier in thisopinion. 2ence, it is unnecessary to reproduce them here. 5o it is, with respect to the positions ta/en in 9-!"("$ bycounsel for therein respondents Gil . uyat and ose Roy H although more will be said later about them H and by the5olicitor General, on behalf of the other respondents in that case and the respondents in the other cases.

(. !? steps are essential, namely;

(. +hat the amendments to the Constitution be proposed either by Congress or by a convention called for that purpose,8by a vote of three-fourths of all the 'embers of the 5enate and the 2ouse of Representatives voting separately,8 but 8in

joint session assembled8B

0. +hat such amendments be 8submitted to the people for their ratification8 at an 8election8B and

!. +hat such amendments be 8approved by a majority of the votes cast8 in said election.

Compliance with the first re=uirement is virtually conceded, although the petitioners in 9-!"(") =uestion the authority ofthe (1#( Constitutional Convention to incorporate certain provisions into the draft of the new or revised Constitution. +hemain issue in these five >$? cases hinges, therefore, on whether or not the last two >0? re=uirements have been compliedwith.

0. :as the contested draft of the ne$ or re0ised Constitution been sub#itted to the people for their ratificationconfor#ably to -rt. G8 of the Constitution@


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&n this connection, other provisions of the (1!$ Constitution concerning 8elections8 must, also, be ta/en into account,namely, section & of Art. I and Art. J of said Constitution. +he former reads;

5ection (. 5uffrage may be e


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+he third recommendation on 8compulsory8 voting was, also debated upon rather e


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favorable action of the barrio council H the approval of barrio asse#blythrough aplebiscite, lesser =ualifications thanthose prescribed in dealing with ordinary measures for which such plebiscite need not be held.

&t is similarly inconceivable that those who drafted the (1!$ Constitution intended section ( of Art. I thereof toapply onlyto elections ofpublic officers, not toplebiscites for the ratification of amendments to the %undamental 9aw orrevision thereof, or of an entirely new Constitution, and permit the legislature to re=uire lesser =ualifications for suchratification, notwithstanding the fact that the object thereof much more important H if not fundamental, such as the basicchanges introduced in the draft of the revised Constitution adopted by the (1#( Constitutional Convention, which aintended to be in force permanently, or, at least, for many decades, and to affect the way of life of the nation H and,

accordingly, demands greater eCitiFens Assemblies? should be considered as a vote in a plebiscite.8 &n other words, it is conceded thatthe number of people who allegedly voted at the CitiFens Assemblies for e4ceeded the nu#ber of registered 0oters undethe Election Code in force in anuary (1#!.

&t is thus clear that the proceedings held in such CitiFens Assemblies H and We have more to say on this point insubse=uent pages H were fundamentally irregular, in that persons lac/ing the =ualifications prescribed in section ( of ArtI of the Constitution were allowed to vote in said Assemblies. And, since there is no means by which the invalid votes ofthose less than 0( years of age can be separated or segregated from those of the =ualified voters, the proceedings in theCitiFens Assemblies must be considered null and void. 53

&t has been held that 8>t?he power to reject an entirepoll ... should be e4ercised... in a case where it is i#possibletoascertain with reasonable certainty the true vote,8 as where 8it is i#possible to separatethe legal votes from the illegal or

spurious ... .854

&n Is#an 0. Co##ission on Elections" et al., 55We held;

5everal circumstances, defying e


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&n short, said Art. JI envisages H with the term 8votes cast8 H choices made on ballotsH not orally or by raising H bythe persons ta/ing part in plebiscites. +his is but natural and logical, for, since the early years of the American regime, wehad adopted the Australian allot 5ystem, with its major characteristics, namely, unifor# official ballots prepared andfurnished by the Government and secrecy in the voting, with the advantage of /eeping records that permit judicial in=uirywhen necessary, into the accuracy of the election returns. And the (1!$ Constitution has been consistently interpretedin all plebiscites for the ratification rejection of proposed amendments thereto, from (1!$ to (1"#. 2ence, the 0i0a0ocevoting in the CitiFens Assemblies was and is null and void ab initio.

b. :o$ should the plebiscite be held@ %C7ME6EC super0ision indispensable; essential re!uisites'

ust as essential as compliance with said Art. I of the (1 Constitution is that of Art. J thereof, particularly its sections (and 0. &ndeed, section ( provides that 8>t?here shall be an independent Commission on Elections ... .8 +he point to bestressed here is the term 8independent.8 &ndeed, why was the term usedQ

&n the absence of said constitutional provision as to the independence of the Commission, would it have been dependsupon either Congress or the udiciaryQ +he answer must be the negative, because the functions of the Commission H8enforcement and administration8 of election laws H are neither legislative nor judicial in nature, and, hence, beyond thefield allocated to either Congress or courts of justice. 5aid functions are by their nature essentially e4ecuti0e, for whichreason, the Commission would be under the 8control8 of the resident, pursuant to section (7, paragraph >(? of Art. I&& ofthe Constitution, if Art. J thereof did not ethe Commission? is an 8independent8 body. &n otherwords, in amending the original (1!$ Constitution, by inserting therein said Art. J, on the Commission on Elections, thepurpose was to ma/e said Commission independent principally of the Chief E4ecuti0e.

And the reason therefor is, also, obvious. rior to the creation of the Commission on Elections as a constitutional organelection laws in the hilippines were enforced by the then epartment of the &nterior, through its E


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&n accordance with the letter and spirit of said Art. J of the Constitution, Rep. Act o. "!**, otherwise /nown as theElection Code of (1#(, implements the constitutional powers of the Commission on Elections and grants additionalpowers thereto, some of which are enumerated in sections $ and " of said Act, =uoted below. 4'oreover, said Accontains, inter alia, detailed provisions regulating contributions and other >corrupt? practicesB the establishment of electionprecinctsB the designation and arrangement of polling places, including voting booths, to protect the secrecy of the ballotformation of lists of voters, the identification and registration of voters, the proceedings therefor, as well as for theinclusion in, or e


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the immediate submission of the result thereof to the epartment of 9ocal Governments Community evelopment is notnecessarily inconsistent with, and must be subordinate to the constitutional power of the Commission on Elections toe


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Convention has been ratified by an overwhelming majority of all of the votes cast by the members of all the arangays>CitiFens Assemblies? throughout the hilippines and has thereby come into effect.8

&n this connection, it is not claimed that the Chief E


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9egislature enacted statutes providing for a 5tate +a< Commission and a mortgage registry ta


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/n 0ie$ of these e0ents relati0e to the postpone#ent of the afore#entioned plebiscite" the Court dee#edit fit to refrain" for the ti#e being" fro# deciding the afore#entioned cases" for neither the date nor theconditions under $hich said plebiscite $ould be held $ere no$n or announced officially. 2hen again"Congress $as" pursuant to the 193 Constitution" scheduled to #eet in regular session on anuary &&"19J3" and since the #ain obection to Presidential Decree No. J3 $as that the President does not ha0ethe legislati0e authority to call a plebiscite and appropriate funds therefor" $hich Congress un!uestionablycould do" particularly in 0ie$ of the for#al postpone#ent of the plebiscite by the President reportedlyafter consultation $ith" a#ong others" the leaders of Congress and the Co##ission on Elections theCourt dee#ed it #ore i#perati0e to defer its final action on these cases.

And, apparently, the parties in said cases entertained the same belief, for, on ecember 0!, (1#0 H four >)? days afterthe last hearing of said cases 7H the resident announced thepostpone#entof the plebiscite scheduled by residentiaecree o. #! to be held on anuary ($, (1#!, after consultation with the Commission on Elections and the leaders ofCongress, owing to doubts on the sufficiency of the time available to translate the proposed Constitution into some localdialects and to comply with some pre-electoral re=uirements, as well as to afford the people a reasonable opportunity tobe posted on the contents and implications of said transcendental document. n anuary #, (1#!, General rder o. 07was issued formally, postponing said plebiscite 8until further notice.8 2ow can said postpone#ent be reconciled with thetheory that the proceedings in the CitiFens Assemblies scheduled to be held from anuary (7 to anuary ($, (1#!, were8plebiscites,8 in effect, accelerated, according to the theory of the 5olicitor General, for the ratification of the proposedConstitutionQ &f said Assemblies were meant to be the plebiscites or elections envisaged in Art. JI of the Constitutionwhat, then, was the 8plebiscite8postponedby General rder o. 07Q 4nder these circumstances, it was only reasonablefor the people who attended such assemblies to believe that the same were not an 8election8 or plebiscite for theratification or adoption of said proposed Constitution.

And, this belief is further bolstered up by the =uestions propounded in the CitiFens Assemblies, namely;

M(N o you li/e the ew 5ocietyQ

M0N o you li/e the reforms under martial lawQ

M!N o you li/e Congress again to hold sessionsQ

M)N o you li/e the plebiscite to be held laterQ

M$N Do you lie the $ay President Marcos is running the affairs of the go0ern#ent@ Mulletin +odayanuary (7, (1#!B emphasis an additional =uestion.N

M"N o you approve of the citiFens assemblies as the base of popular government to decide issues ofnational interestsQ

M#N o you approve of the new ConstitutionQ

M*N o you want a plebiscite to be called to ratify the new ConstitutionQ

M1N o you want the elections to be held in ovember, (1#! in accordance with the provisions of the (1!$ConstitutionQ

M(7N &f the elections would not be held, when do you want the ne


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could be held thereafter in connection therewith, even if the majority of the answers to =uestion o. * were, also, in theaffirmative. &f the majority of the answers to =uestion o. # were in the negative, neither may another plebiscite be held,even if the majority of the answers to =uestion o. * were in the affirmative. &n either case, not more than one plebiscitecould be held for the ratification or rejection of the proposed Constitution. &n short, the insertion of said two >0? =uestionsH apart from the other =uestions adverted to above H indicates strongly that the proceedings therein did not parta/e othe nature of a plebiscite or election for the ratification or rejection of the proposed Constitution.

&ndeed, & can not, in good conscience, declare that the proposed Constitution has been approved or adopted by thepeople in the citiFens assemblies all over the hilippines, when it is, to my mind, a matter of judicial /nowledge that there

have been no such citiFens assemblies in #anyparts of 'anila and suburbs, not to say, also, in other parts of thehilippines. &n a letter of Governor Efren . ascual of ataan, dated anuary ($, (1#!, to the Chief Esic? of the activities we undertoo/ in effecting the referendu#on theeleven =uestions you wanted our people consultedon and the 5ummary of Results thereof for eachmunicipality and for the whole province.


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Amendment case, 77attention was called to the 8duty cast upon the court of taing udicial cogni*ance of anythingaffecting the e


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0. +he 89egislature in itsfor#al officialact adopting aoint resolution, uly ($, (170, recogniFing the Constitution ordainedby the Convention ...8B

!. +he 8individual oaths of its members to support it, and by its ha0ing been engaged for nearly a year, in legislating undeit and putting its provisions intooperation ...8B

). +he 8judiciary in ta/ing the oath prescribed thereby to support it and by enforcing its provisions ...8B and

$. +he 8people in their primary capacity by peacefully accepting it and ac=uiescing in it, by registering as voters under it tothe e0? chambersB by the judiciaryB and by the people, in the various waysspecified above. What is more, there was no #artial la$. &n the present cases, noneof the foregoing acts of ac=uiescencewas present. Worse still, there is martial law, the strict enforce#ent of which was announced shortly before the allegedcitiFens assemblies. +o top it all, in the +aylor case, the effectivity of the contested amendment was not contested

judicially until about one %1' yearafter the amendment had been put into operation in all branches of the Government, andcomplied with by the people who participated in the elections held pursuant to the provisions of the new Constitution. &n

the cases under consideration, the legality of residential ecree o. #! calling a plebiscite to be held on anuary ($,(1#!, was impugned as early as ecember #, (1#0, or five >$? wee/s before the scheduled plebiscite, whereas thevalidity of roclamation o. ((70 declaring on anuary (#, (1#!, that the proposed Constitution had been ratified Hdespite General rder o. 07, issued on anuary #, (1#0, formally and officially suspending the plebiscite until furthernotice H was impugned as early as anuary 07, (1#!, when 9-!"()0 was filed, or three %3' daysafter the issuance oroclamation o. ((70.

&t is further alleged that a majority of the members of our 2ouse of Representatives and 5enate have ac=uiesced in thenew or revised Constitution, by filing written statements opting to serve in the Ad &nterim Assembly established in the+ransitory rovisions of said Constitution. &ndividual acts of recognition by members of our legislature, as well as of othercollegiate bodies under the government, are invalid as acts of said legislature or bodies, unless its members haveperformed said acts in session duly asse#bled, or unless the law provides otherwise, and there is no such law in thehilippines. +his is a well-established principle of Administrative 9aw and of the 9aw of ublic fficers, and no plausible

reason has been adduced to warrant departure therefrom.81

&ndeed, if the members of Congress were generally agreeable to the proposed Constitution, why did it become necessaryto padloc/ its premises to prevent its meeting in session on anuary 00, (1#!, and thereafter as provided in the (1!$ConstitutionQ &t is true that, theoretically, the members of Congress, if bent on discharging their functions under saidConstitution, could have met in any other place, the building in which they perform their duties being immaterial to thelegality of their official acts. +he force of this argument is, however, offset or dissipated by the fact that, on or aboutecember 0#, (1#0, immediately after a conference between the E


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%or the same reasons, especially because of roclamation o. (7*(, placing the entire hilippines under 'artial 9aw,neither am & prepared to declare that the peoples inaction as regards roclamation o. ((70, and their compliance with anumber of residential orders, decrees and:or instructions H some or many of which have admittedly had salutary effectsH issued subse=uently thereto amounts, constitutes or attests to a ratification, adoption or approval of said roclamationo. ((70. &n the words of the Chief E


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the ambit of judicial in=uiry and determination. &f this defense was sustained, the cases could readily be dismissedB but,owing to the importance of the =uestions involved, a reasoned resolution was demanded by public interest. At the sametime, respondents had cautioned against a judicial in=uiry into the merits of the issues posed on account of the magnitudeof the evil conse=uences, it was claimed, which would result from a decision thereon, if adverse to the Government.

As a matter of fact, some of those issues had been raised in the plebiscite cases, which were dismissed as moot andacademic, owing to the issuance of roclamation o. ((70 subse=uently to the filing of said cases, although before therendition of judgment therein. 5till one of the members of the Court >ustice Oaldivar? was of the opinion that theaforementioned issues should be settled in said cases, and he, accordingly, filed an opinion passing upon the merits

thereof. n the other hand, three >!? members of the Court H ustices arredo, Antonio and Esguerra H filed separateopinions favorable to the respondents in the plebiscite cases, ustice arredo holding 8that the (1!$ Constitution has protanto passed into history and has been legitimately supplanted by the Constitution in force by virtue of roclamation((70.8 8When the petitions at bar were filed, the same three >!? members of the Court, conse=uently, voted for thedismissal of said petitions. +he majority of the members of the Court did not share, however, either view, believing that themain =uestion that arose before the rendition of said judgment had not been sufficiently discussed and argued as thenature and importance thereof demanded.

+he parties in the cases at bar were accordingly given every possible opportunity to do so and to elucidate on and discusssaid =uestion. +hus, apart from hearing the parties in oral argument for five >$? consecutive days H morning andafternoon, or a total of e


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As earlier stated, after the submittal by the members of the Court of their individual opinions and:or concurrences asappended hereto, the writer will now ma/e, with the concurrence of his colleagues, a resume or summary of the votescast by each of them.

&t should be stated that by virtue of the various approaches and views ewith substantial, if not strictcompliance? conformably to the applicable constitutional and statutory provisionsQ

!. 2as the aforementioned proposed Constitution ac=uiesced in >with or without valid ratification? by the peopleQ

). Are petitioners entitled to reliefQ and

$. &s the aforementioned proposed Constitution in forceQ

+he results of the voting, premised on the individual views e"? members of the Court also hold that the Constitution proposed by the (1#( Constitutional Conventionwas not validly ratified in accordance with Article JI, section ( of the (1!$ Constitution, which provides only one way forratification, i.e., 8in an election or plebiscite held in accordance with law and participated in only by =ualified and dulyregistered voters. 87

ustice arredo =ualified his vote, stating that 8>A?s to whether or not the (1#! Constitution has been validly ratifiedpursuant to Article JI, & still maintain that in the light of traditional concepts regarding the meaning and intent of said

Article, the referendum in the CitiFens Assemblies, specially in the manner the votes therein were cast, reported andcanvassed, falls short of the re=uirements thereof. &n view, however, of the fact that & have no means of refusing to

recogniFe as a judge that factually there was voting and that the majority of the votes were for considering as approvedthe (1#! Constitution without the necessity of the usual form of plebiscite followed in past ratifications, & am constrained tohold that, in the political sense, if not in the orthodo< legal sense, the people may be deemed to have cast their favorablevotes in the belief that in doing so they did the part re=uired of them by Article JI, hence, it may be said that in its politicaaspect, which is what counts most, after all, said Article has been substantially complied with, and, in effect, the (1#!Constitution has been constitutionally ratified.8

ustices 'a/asiar, Antonio and Esguerra, or three >!? members of the Court hold that under their view there has been ineffect substantial compliance with the constitutional re=uirements for valid ratification.

!. n the third =uestion of ac=uiescence by the %ilipino people in the aforementioned proposed Constitution, no majorityvote has been reached by the Court.


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%our >)? of its members, namely, ustices arredo, 'a/asiar, Antonio and Esguerra hold that 8the people have alreadyaccepted the (1#! Constitution.8

+wo >0? members of the Court, namely, ustice Oaldivar and myself hold that there can be no free e"? members of the Court, namely, ustices 'a/alintal, Castro, arredo, 'a/asiar,Antonio and Esguerra voted to &5'&55 the petition. ustice 'a/alintal and Castro so voted on the strength of their viewthat 8>+?he effectivity of the said Constitution, in the final analysis, is the basic and ultimate =uestion posed by these casesto resolve which considerations other than judicial, an therefore beyond the competence of this Court, 90are relevant andunavoidable.8 91

%our >)? members of the Court, namely, ustices Oaldivar, %ernando, +eehan/ee and myself voted to deny respondentsmotion to dismiss and to give due course to the petitions.

$. n the fifth =uestion of whether the new Constitution of (1#! is in force;

%our >)? members of the Court, namely, ustices arredo, 'a/asiar, Antonio and Esguerra hold that it isin force by virtue of the peoples acceptance thereofB

%our >)? members of the Court, namely, ustices 'a/alintal, Castro, %ernando and +eehan/ee cast novote thereon on the premise stated in their votes on the third =uestion that they could not state with

judicial certainty whether the people have accepted or not accepted the ConstitutionB and

+wo >0? members of the Court, namely, ustice Oaldivar and myself voted that the Constitution proposedby the (1#( Constitutional Convention is not in forceB

with the result that there are not enough votes to declare that the new Constitution is not in force.

ACCR&G9K, by virtue of the majority of si< >"? votes of ustices 'a/alintal, Castro, arredo, 'a/asiar, Antonio andEsguerra with the four >)? dissenting votes of the Chief ustice and ustices Oaldivar, %ernando and +eehan/ee, all theaforementioned cases are hereby dismissed. +his being the vote of the majority, there is no further judicial obstacle to thenew Constitution being considered in force and effect.

&t is so ordered.


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G.R. No. L-3494 a$a)y 31, 1973

CHINA BANKING CORPORATION a$% TAN KIM LIONG, petitioners-appellants,vs.HON. =ENCE"LAO ORTEGA, a& P)(&*%*$? %?( o+ 6'( Co)6 o+ !*)&6 I$&6a$:( o+ Ma$*a, B)a$:' III, a$%ICENTE G. ACABAN, respondents-appellees.

y antos" Del osario and -ssociates for petitioners)appellants.

2agalo" +o*ar and -ssociates for respondents)appellees.

MAKALINTAL, J.:

+he only issue in this petition for certiorarito review the orders dated 'arch ), (1#0 and 'arch 0#, (1#0, respectively, ofthe Court of %irst &nstance of 'anila in its Civil Case o. #$(!*, is whether or not a ban/ing institution may validly refuseto comply with a court process garnishing the ban/ deposit of a judgment debtor, by invo/ing the provisions of Republic

Act o. ()7$.

n ecember (#, (1"* Iicente Acaban filed a complaint in the court a !uoagainst autista 9ogging Co., &nc., D %orest evelopment Corporation and 'arino autista for the collection of a sum of money. 4pon motion of the plaintiff thetrial court declared the defendants in default for failure to answer within the reglementary period, and authoriFed theranch Cler/ of Court and:or eputy Cler/ to receive the plaintiffs evidence. n anuary 07, (1#7 judgment by defaultwas rendered against the defendants.

+o satisfy the judgment, the plaintiff sought the garnishment of the ban/ deposit of the defendant D %oresevelopment Corporation with the China an/ing Corporation. Accordingly, a notice of garnishment was issued by the

eputy 5heriff of the trial court and served on said ban/ through its cashier, +an 3im 9iong. &n reply, the ban/ cashierinvited the attention of the eputy 5heriff to the provisions of Republic Act o. ()7$ which, it was alleged, prohibit thedisclosure of any information relative to ban/ deposits. +hereupon the plaintiff filed a motion to cite +an 3im 9iong forcontempt of court.

&n an order dated 'arch ), (1#0 the trial court denied the plaintiffs motion. 2owever, +an 3im 9iong was ordered 8toinform the Court within five days from receipt of this order whether or not there is a deposit in the China an/ingCorporation of defendant D %orest evelopment Corporation, and if there is any deposit, to hold the same intact andnot allow any withdrawal until further order from this Court.8 +an 3im 9iong moved to reconsider but was turned down byorder of 'arch 0#, (1#0. &n the same order he was directed 8to comply with the order of this Court dated 'arch ), (1#0within ten >(7? days from the receipt of copy of this order, otherwise his arrest and confinement will be ordered by theCourt.8 Resisting the two orders, the China an/ing Corporation and +an 3im 9iong instituted the instant petition.


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+he pertinent provisions of Republic Act o. ()7$ relied upon by the petitioners reads;

5ec. 0. All deposits of whatever nature with ban/s or ban/ing institutions in the hilippines includinginvestments in bonds issued by the Government of the hilippines, its political subdivisions and itsinstrumentalities, are hereby considered as of absolutely confidential nature and may not be e


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'r. 'ARC5. 5o & come to my original =uestion. +herefore, preliminary garnishment or attachment of thedeposit is not allowedQ

'r. RA'5. o, without judicial authoriFation.

'r. 'ARC5. & am glad that is clarified. 5o that the established rule of procedure as well as thesubstantive law on the matter is amendedQ

'r. RA'5. Kes. +hat is the effect.

'r. 'ARC5. & see. 5uppose there has been a decision, definitely establishing the liability of anindividual for ta() 23, 1999F

#NION BANK O! THE PHILIPPINE",petitioner, vs.CO#RT O! APPEAL" a$% ALLIE BANKCORPORATION, respondents.


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E C I " I O N

KAP#NAN, J.

5ection 0 of the 9aw on 5ecrecy of an/ eposits,M(Nas amended, declares ban/ deposits to be absolutelyconfidential e(? &n an eChec/ o. ((""1"##? dated 'arch !(, (117 in the amount of ne 'illion esos>(,777,777.77? was drawn against Account o. 7(((-7(*$)-* with private respondent Allied an/ payable to the order ofone ose Ch. AlvareF. +he payee deposited the chec/ with petitioner 4nion an/ who credited the (,777,777.77 to theaccount of 'r. AlvareF. n 'ay 0(, (117, petitioner sent the chec/ for clearing through the hilippine Clearing 2ouseCorporation >C2C?. When the chec/ was presented for payment, a clearing discrepancy was committed by 4nion an/sclearing staff when the amount of ne 'illion esos >(,777,777.77? was erroneously under-encoded to ne +housandesos >(,777.77? only.

etitioner only discovered the under-encoding almost a year later. +hus, on 'ay #, (11(, 4nion an/ otified Alliedan/ of the discrepancy by way of a charge slip for ine 2undred inety-ine +housand esos >111,777.77? forautomatic debiting against the account of Allied an/. +he latter, however, refused to accept the charge slip since MtheNtransaction was completed per your M4nion an/sN original instruction and clients account is now insufficiently funded.

5ubse=uently, 4nion an/ filed a complaint against Allied an/ before the C2C Arbitration Committee >Arbicom?praying that;

judgment be rendered in favor of plaintiff against defendant sentencing it to pay plaintiff;

(. +he sum of &E 24RE &E+K-&E +245A E55 >111,777.77?B

0. +he sum of +2REE 24RE 5&J+K-E A %4R 24RE E&G2+K A 07:JJ !"(,)*7.07 as of ctober 1,(11( representing reimbursements for opportunity losses and interest at the rate of 0)@ per annum arising from actuallosses sustained by plaintiff as of 'ay 0(, (117

Documents

Scl Banking