FOREIGN CURRENCY DEPOSIT ACT
Manifestation/Comment.
GSIS v. INDUSTRIAL BANK OF KOREA
PEREZ, J.:
FACTS: The controversy originated from a surety agreement by
which Domsat obtained a surety bond from GSIS to secure the
payment of the loan from the Banks. When Domsat failed to pay the
loan, GSIS refused to comply with its obligation reasoning that
Domsat did not use the loan proceeds for the payment of rental for
the satellite. GSIS alleged that Domsat, with Westmont Bank as the
conduit, transferred the U.S. $11 Million loan proceeds from the
Industrial Bank of Korea to Citibank New York account of Westmont
Bank and from there to the Binondo Branch of Westmont Bank. The
Banks filed a complaint before the RTC of Makati against Domsat
and GSIS.
In the course of the hearing, GSIS requested for the issuance of
a subpoena duces tecum to the custodian of records of Westmont
Bank to produce the following documents:
1. Ledger covering the account of DOMSAT Holdings, Inc. with
Westmont Bank (now United Overseas Bank);
2. All applications for cashiers/ managers checks and bank
transfers funded by the account of DOMSAT Holdings, Inc.
with or through the Westmont Bank (now United Overseas
Bank) for the period January 1997 to December 2002;
3. Ledger covering the account of Philippine Agila Satellite, Inc.
with Westmont Bank (now United Overseas Bank) and
4. All applications for cashiers/managers checks funded by the
account of Philippine Agila Satellite, Inc. with or through the
Westmont Bank (now United Overseas Bank) for the period
January 1997 to December 2002
 RTC – issued subpoena duces tecum
A motion to quash was filed by the banks on three grounds: 1)
the subpoena is unreasonable, oppressive and does not establish
the relevance of the documents sought; 2) request for the documents
will violate the Law on Secrecy of Bank Deposits; and 3) GSIS failed
to advance the reasonable cost of production of the documents.
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Domsat also joined the banks motion to quash through its
 RTC – denied the motion to quash
 CA – declared that Domsats deposit in Westmont Bank is
covered by Republic Act No. 6426 or the Bank Secrecy Law.
It upheld the issuance of subpoena praying for the
production of applications for cashiers or managers checks
by Domsat through Westmont Bank, as well as a copy of an
Agreement and/or Contract and/or Memorandum between
Domsat and/or Philippine Agila Satellite and Intersputnik for
the acquisition and/or lease of a Gorizon Satellite. It also
believed that the production of these documents does not
involve the examination of Domsats account since it will
never be known how much money was deposited into it or
withdrawn therefrom and how much remains therein.
GSIS insists that Domsats deposit with Westmont Bank can be
examined and inquired into. It anchored its argument on
Republic Act No. 1405 or the Law on Secrecy of Bank Deposits,
which allows the disclosure of bank deposits in cases where the
money deposited is the subject matter of the litigation. GSIS
asserts that the subject matter of the litigation is the U.S. $11
Million obtained by Domsat from the Banks to supposedly
finance the lease of a Russian satellite from
Intersputnik. Whether or not it should be held liable as a surety
for the principal amount of U.S. $11 Million, GSIS contends, is
contingent upon whether Domsat indeed utilized the amount to
lease a Russian satellite as agreed in the Surety Bond
Agreement. Hence, GSIS argues that the whereabouts of the
U.S. $11 Million is the subject matter of the case and the
disclosure of bank deposits relating to the U.S. $11 Million
should be allowed.
GSIS also contends that the concerted refusal of Domsat and
the banks to divulge the whereabouts of the U.S. $11 Million will
greatly prejudice and burden the GSIS pension fund considering
that a substantial portion of this fund is earmarked every year to
cover the surety bond issued.
 GSIS invokes RA 1405 to justify the issuance
the subpoena while the banks cite RA 6426 to oppose it.
ISSUE: 1. WON the deposits with Westmont Bank can be
examined and inquired into? 2. Which of the two laws should
apply in the instant case.
RULING: 1. No. Applying Section 8 of Republic Act No. 6426,
absent the written permission from Domsat, Westmont Bank
cannot be legally compelled to disclose the bank deposits of
Domsat, otherwise, it might expose itself to criminal liability
under the same act. The basis for the application of subpoena is
to prove that the loan intended for Domsat by the Banks and
guaranteed by GSIS, was diverted to a purpose other than that
stated in the surety bond. The Banks, however, argue that GSIS
is in fact liable to them for the proper applications of the loan
proceeds and not vice-versa. We are however not prepared to
rule on the merits of this case lest we pre-empt the findings of
the lower courts on the matter.
2. RA 6426 applies in this case. RA 1405 was enacted in
1955. Section 2 thereof was first amended by PD 1792 in 1981
and further amended by RA 7653 in 1993. On the one hand,
Republic Act No. 1405 provides for four (4) exceptions when
records of deposits may be disclosed. These are under any of
the following instances: a) upon written permission of the
depositor, (b) in cases of impeachment, (c) upon order of a
competent court in the case of bribery or dereliction of duty of
public officials or, (d) when the money deposited or invested is
the subject matter of the litigation, and e) in cases of violation of
the Anti-Money Laundering Act (AMLA), the Anti-Money
Laundering Council (AMLC) may inquire into a bank account
upon order of any competent court. On the other hand, the lone
exception to the non-disclosure of foreign currency deposits,
under Republic Act No. 6426, is disclosure upon the written
permission of the depositor.
These two laws both support the confidentiality of bank deposits.
There is no conflict between them. Republic Act No. 1405 was
enacted for the purpose of giving encouragement to the people
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of to deposit their money in banking institutions and to discourage
private hoarding so that the same may be properly utilized by
banks in authorized loans to assist in the economic development
of the country. It covers all bank deposits in the Philippines and
no distinction was made between domestic and foreign
deposits.Thus, Republic Act No. 1405 is considered a law of
general application. On the other hand, Republic Act No. 6426
was intended to encourage deposits from foreign lenders and
investors. It is a special law designed especially for foreign
currency deposits in the Philippines. A general law does not
nullify a specific or special law. Generalia specialibus non
derogant.
Therefore, it is beyond cavil that RA 6426 applies in this case.
SALVACION v. CENTRAL BANK
TORRES JR., J:
FACTS: Greg Bartelli y Northcott, an American tourist, coaxed
and lured petitioner Karen Salvacion, then 12 years old to go
with him to his apartment. Greg Bartelli detained Karen
Salvacion for four days and was able to rape the child.
Policemen and people living nearby, rescued Karen, Greg
Bartelli was arrested and detained at the Makati Municipal Jail.
Bartelli were charged of four counts of Rape and Serious Illegal
Detention. He was originally detained in the municipal jail of
Makati but was able to escape. In Civil Case the Judge issued
an Order granting the application of the petitioners, for the
issuance of the writ of preliminary attachment.
The Deputy Sheriff of Makati served a Notice of Garnishment
on China Banking Corporation for Dollar Account·China
Banking Corp., US$/A#54105028-2; China Banking Corporation
invoked Republic Act No. 1405 as its answer to the notice of
garnishment served on it. Deputy Sheriff of Makati Armando de
Guzman sent his reply to China Banking Corporation saying that
the garnishment did not violate the secrecy of bank deposits
since the disclosure is merely incidental to a garnishment
properly and legally made by virtue of a court order which has
placed the subject deposits in custodia legis.
 China Banking Corporation, invoked Section 113 of Central
Bank Circular No. 960 to the effect that the dollar deposits of
defendant Greg Bartelli are exempt from attachment,
garnishment, or any other order or process of any court,
legislative body, government agency or any administrative body
This prompted the counsel for petitioners to make an inquiry
with the Central Bank in a letter dated April 25, 1989 on whether
Section 113 of CB Circular No. 960 has any exception or
whether said section has been repealed or amended since said
section has rendered nugatory the substantive right of the
plaintiff to have the claim sought to be enforced by the civil
action secured by way of the writ of preliminary attachment as
granted to the plaintiff under Rule 57 of the Revised Rules of
Court. The Central Bank responded as follows:
The cited provision is absolute in application. It does not
admit of any exception, nor has the same been repealed nor
amended. The purpose of the law is to encourage dollar
accounts within the country’s banking system which would
help in the development of the economy. There is no
intention to render futile the basic rights of a person as was
suggested in your subject letter. The law may be harsh as
some perceive it, but it is still the law. Compliance is,
therefore, enjoined
After hearing the case ex-parte, the court rendered judgment
in favor of petitioners. After the lapse of fifteen (15) days from the
date of the last publication of the notice of judgment and the
decision of the trial court had become final, petitioners tried to
execute on Bartelli’s dollar deposit with China Banking
Corporation. The bank invoked Section 113 of Central Bank
Circular No. 960.
Petitioners aver that Section 113 of Central Bank Circular
No. 960 providing that “Foreign currency deposits shall be
exempt from attachment garnishment, or any other order or
process of any court, legislative body, government agency or any
administrative body whatsoever should be adjudged as
unconstitutional on the grounds that:
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1.) it has taken away the right of petitioners to have the bank
deposit of defendant Greg Bartelli y Northcott garnished to
satisfy the judgment rendered in petitioner’s favor in violation of
substantive due process guaranteed by the Constitution;
2.) it has given foreign currency depositors an undue favor or a
class privilege in violation of the equal protection clause of the
Constitution;
3.) it has provided a safe haven for criminals like the herein
respondent Greg Bartelli y Northcott since criminals could
escape civil liability for their wrongful acts by merely converting
their money to a foreign currency and depositing it in a foreign
currency deposit account with an authorized bank; and
4.) the Monetary Board, in issuing Section 113 of Central Bank
Circular No. 960 has exceeded its delegated quasi-legislative
power when it took away: a.) the plaintiff’s substantive right to
have the claim sought to be enforced by the civil action secured
by way of the writ of preliminary attachment as granted by Rule
57 of the Revised Rules of Court;
Central Bank, in its Comment alleges that the Monetary
Board in issuing Section 113 of CB Circular No. 960 did not
exceed its power or authority because the subject Section is
copied verbatim from a portion of R.A. No. 6426 as amended by
P.D. 1246.
Hence, it was not the Monetary Board that grants exemption
from attachment or garnishment to foreign currency deposits, but
the law (R.A. 6426 as amended) itself
ISSUE: W/N Section 113 of Central Bank Circular No. 960 and
Section 8 of R.A. 6426, as amended by P.D. 1246, otherwise
known as the Foreign Currency Deposit Act be made applicable
to a foreign transient.
RULING: NO. The application of the law depends on the extent
of its justice. The provisions of Section 113 of CB Circular No.
960 and PD No. 1246, insofar as it amends Section 8 of R.A. No.
 6426 are hereby held to be INAPPLICABLE to this case because
of its peculiar circumstances.
The Offshore Banking System and the Foreign Currency
Deposit System were designed to draw deposits from foreign
lenders and investors .It is these deposits that are induced by the
two laws and given protection and incentives by them.
Obviously, the foreign currency deposit made by a transient or a
tourist is not the kind of deposit encouraged by PD Nos. 1034
and 1035 and given incentives and protection by said laws
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.
Petitioner deserves to receive the damages awarded to her
by the court. But this petition for declaratory relief can only be
entertained and treated as a petition for mandamus to require
respondents to honor and comply with the writ of execution This
Court has original and exclusive jurisdiction over a petition for
declaratory relief. However, exceptions to this rule have been
recognized. Thus, where the petition has farreaching implications
and raises questions that should be resolved, it may be treated
as one for mandamus. the child, having received a favorable
judgment in the Civil Case for damages in the amount of more
than P1,000,000.00, which amount could alleviate the
humiliation, anxiety, and besmirched reputation she had suffered
and may continue to suffer for a long, long time; and knowing
that this person who had wronged her has the money, could not,
however get the award of damages because of this
unreasonable law. This questioned law, therefore, makes futile
the favorable judgment and award of damages that she and her
parents fully deserve. R.A. No. 6426 was enacted in 1983 or at a
time when the country’s economy was in a shambles; when
foreign investments were minimal and presumably, this was the
reason why said statute was enacted.
But the realities of the present times show that the country
has recovered economically; and even if not, the questioned law
still denies those entitled to due process of law for being
unreasonable and oppressive. The intention of the questioned
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law may be good when enacted. The law failed to anticipate the
iniquitous effects producing outright injustice and inequality such
as the case before us.
PSBANK v. SENATE
Feb 9, 2012
Facts: Subpoena Ad Testificandum and Subpoena Duces
Tecum were issued by the Senate sitting as an Impeachment
Court against the Branch Manager (and/or authorized
representative competent to testify on the matter) of the PSBank,
Katipunan Branch.
The subject of the said subpoena was the five Foreign Currency
Deposits allegedly owned by Chief Justice Corona. PSBank filed
a petition for certiorari and prohibition with application for
temporary restraining order and/or writ of preliminary injuction.
Issue: W/N the alleged foreign currency deposits are considered
absolutely confidential, as provided under RA 6426.
Held: Yes.
The court granted the petition and eventually issued a TRO
enjoining the respondents from implementing the subpoena, and
stated that a clear right to maintain the confidentiality of the
foreign currency deposits of the Chief Justice is provided under
Section 8 of Republic Act No. 6426, otherwise known as the
Foreign Currency Deposit Act of the Philippines (RA 6426). This
law establishes the absolute confidentiality of foreign currency
deposits.
Under R.A. No. 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. The
written consent under RA 6426 constitutes a waiver of the
depositor’s right to privacy in relation to such deposit. In the
present case, neither the prosecution nor the Impeachment
Court has presented any such written waiver by the alleged
depositor, Chief Justice Renato C. Corona. Also, while
impeachment may be an exception to the secrecy of bank
 deposits under RA 1405, it is not an exemption to the absolute
confidentiality of foreign currency deposits under RA 6426.
Concurring Opinion (Justice Brion)
RA No. 6426 guarantees a clear right to the depositors and
demands an exacting obligation from banks to maintain the
absolute confidentiality of the foreign currency deposits. The
failure of a bank to fulfill its obligation under the law subjects the
bank and its officials to criminal liability under Section 10 of RA
No. 6426, and its authority to accept new foreign currency
deposits may be revoked or suspended by the Bangko Sentral
ng Pilipinas under Section 87 of the Manual of Regulations on
Foreign Exchange Transactions. More than this, the banks’
failure in its obligation given media coverage and the non-legal
slant it can give gives rise to a real danger that the banks
reputation may suffer. In a very bad situation, the effect goes
beyond the banks reputation and can adversely affect the
economy.
In the Courts discussion, objections have been raised as to the
absolute terms of the confidentiality that RA No. 6426
guarantees by claims that the Court in several cases has relaxed
or liberalized the application of the rule. These cases in particular
are Salvacion v. Central Bank of the Philippines, China Banking
Corporation v. Court of Appeals and Ejercito v. Sandiganbayan.
The cited cases, however, are off-tangent and in fact, did not
relax or liberalize the rule on absolute confidentiality of foreign
deposit accounts.
Dissenting Opinion (Justice Sereno)
The prayer for a TRO by PSBank against the Senate
Impeachment Court should not have been granted for the
following reasons: (1) the protection of absolute confidentiality
under the Foreign Currency Deposits Act (FCDA) or Republic
Act (R.A.) No. 6426 can only be invoked by the owner, and in
this case, the five (5) Foreign Currency Deposits (FCDs)
involved are not being officially claimed by Chief Justice Renato
C. Corona at this time; (2) if indeed those five accounts belong to
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Chief Justice Corona, there appears to be a constitutionally-
generated permission on the latters part to disclose the FCDs;
(3) even if the permission to disclose is deemed absent, the
subpoena issued by the Impeachment Court is a constitutionally-
imposed exception to the secrecy of FCDs. From all three
perspectives, the requirements for the issuance of a TRO have
not been satisfied.
The decision to lift the cloak of absolute secrecy was
categorically pronounced to apply only in the context of the
impeachment trial of Chief Justice Corona. There are only thirty-
one (31) impeachable officers, and there have been only two (2)
impeachment trials since the beginning of Philippine
constitutional history. The care with which the Senate discharged
its role is in sharp contrast with the incomprehensible decision of
the majority to abandon the clear stand that the Court took in
Salvacion v. Central Bank of the Philippines that exceptions in
the interest of justice can lift the absolute secrecy of FCDs. In the
scale of constitutional values, nothing can be higher than the
requirement of public accountability.
What can be logically inferred from this provision is that the
confidentiality nature of the FCD is extended only in favor of the
owner of the account. Stated differently, it is only the depositor
who may invoke the confidentiality privilege and the exception
thereto. In the present case, the prosecution alleges that the
FCD accounts are owned by the Chief Justice, while the defense
denies his ownership of the same. The documents relating to
these accounts were in fact subpoenaed to ascertain whether
the Chief Justice is the named depositor therein. Thus, until the
ownership of these FCDs is established, the confidentiality
privilege under R.A. 6426 is yet to attach.
 PSBANK v. SENATE
Nov. 20, 2012
FACTS: Petitioners Philippine Savings Bank (PSBank) and
Pascual M. Garcia III, as President of PSBank, filed a Petition for
Certiorari and Prohibition seeking to nullify and set aside the
Resolution of respondent Senate of the Republic of the
Philippines, sitting as an Impeachment Court, which granted the
prosecution's requests for subpoena duces tecum ad
testificandum to PSBank and/or its representatives requiring
them to testify and produce before the Impeachment Court
documents relative to the foreign currency accounts that were
alleged to belong to then Supreme Court Chief Justice Renato C.
Corona.
- During the pendency of this petition, petitioners filed a Motion
with Leave of Court to Withdraw the Petition averring that
subsequent events have overtaken the petition and that, with the
termination of the impeachment proceedings against former
Chief Justice Corona, they are no longer faced with the dilemma
of either violating Republic Act No. 6426 (RA 6426) or being held
in contempt of court for refusing to disclose the details of the
subject foreign currency deposits.
moot and academic, there is no justiciable controversy, so that a
declaration thereon would be of no practical use or value. There
is no actual substantial relief to which petitioners would be
entitled and which would be negated by the dismissal of the
petition. (Citations omitted)
Indeed, the main issue of whether the Impeachment Court acted
arbitrarily when it issued the assailed subpoena to obtain
information concerning the subject foreign currency deposits
notwithstanding the confidentiality of such deposits under RA
6426 has been overtaken by events. The supervening conviction
of Chief Justice Corona on May 29, 2012, as well as his
execution of a waiver against the confidentiality of all his bank
accounts, whether in peso or foreign currency, has rendered the
present petition moot and academic.

ISSUE: Whether or not herein petition is moot and academic.

HELD: YES. It is well-settled that courts will not determine

questions that have become moot and academic because there
is no longer any justiciable controversy to speak of. The
judgment will not serve any useful purpose or have any practical
legal effect because, in the nature of things, it cannot be
enforced.

In Gancho-on v. Secretary of Labor and Employment, the Court

ruled:

It is a rule of universal application that courts of justice

constituted to pass upon substantial rights will not consider
questions in which no actual interests are involved; they decline
jurisdiction of moot cases. And where the issue has become

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