Government Service Insurance System

GR No. 189206
Promulgated: June 8, 2011
Facts:

The subject of this petition for certiorari is the Decision of the Court of Appeals in CAG.R. SP No. 82647 allowing the quashal by the Regional Trial Court (RTC) of Makati of
a subpoena for the production of bank ledger. This case is incident to Civil Case No. 99-1853,
which is the main case for collection of sum of money with damages filed by Industrial Bank of
Korea, Tong Yang Merchant Bank, First Merchant Banking Corporation, Land Bank of the
Philippines, and Westmont Bank (now United Overseas Bank), collectively known as the Banks
against Domsat Holdings, Inc. (Domsat) and the Government Service Insurance System (GSIS).
Said case stemmed from a Loan Agreement, whereby the Banks agreed to lend United
States (U.S.) $11 Million to Domsat for the purpose of financing the lease and/or purchase of a
Gorizon Satellite from the International Organization of Space Communications (Intersputnik).
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), any and all documents, records, files, books, deeds,
papers, notes and other data and materials relating to the account or transactions

of DOMSAT Holdings, Inc. with or through the Westmont Bank (now United
Overseas Bank) for the period January 1997 to December 2002, in his/her direct
or indirect possession, custody or control (whether actual or constructive),
whether in his/her capacity as Custodian of Records or otherwise;
2. All applications for cashiers/ managers checks and bank transfers funded by the
account of DOMSAT Holdings, Inc. with or through the Westmont Bank (now
United Overseas Bank) for the period January 1997 to December 2002, and all
other data and materials covering said applications, in his/her direct or indirect
possession, custody or control (whether actual or constructive), whether in his/her
capacity as Custodian of Records or otherwise;
3. Ledger covering the account of Philippine Agila Satellite, Inc. with Westmont
Bank (now United Overseas Bank), any and all documents, records, files, books,
deeds, papers, notes and other data and materials relating to the account or
transactions of Philippine Agila Satellite, Inc. with or through the Westmont bank
(now United Overseas Bank) for the period January 1997 to December 2002, in
his/her direct or indirect possession, custody or control (whether actual or
constructive), whether in his/her capacity as Custodian of Records or otherwise;
4. All applications for cashiers/managers checks funded by the account of
Philippine Agila Satellite, Inc. with or through the Westmont Bank (now United
Overseas Bank) for the period January 1997 to December 2002, and all other data
and materials covering said applications, in his/her direct or indirect possession,
custody or control (whether actual or constructive), whether in his/her capacity as
Custodian of Records or otherwise.
The RTC issued a subpoena decus 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;
Domsat also joined the banks motion to quash through its Manifestation/Comment.
RTC issued an Order denying the motion to quash for lack of merit. We quote the
pertinent portion of the Order, thus:
After a careful consideration of the arguments of the parties, the Court did
not find merit in the motion.
The serious objection appears to be that the subpoena is violative of the
Law on Secrecy of Bank Deposit, as amended. The law declares bank deposits to

be absolutely confidential except: x x x (6) In cases where the money deposited or

invested is the subject matter of the litigation.

Another Order was issued by the RTC denying the motion for reconsideration filed by
the banks. However, the trial court granted the second motion for reconsideration filed by
the banks. The previous subpoenas issued were consequently quashed. The trial court invoked
the ruling in Intengan v. Court of Appeals, where it was ruled that foreign currency deposits are
absolutely confidential and may be examined only when there is a written permission from the
depositor.
Hence, these assailed orders are the subject of the petition for certiorari before the Court
of Appeals.
The Court of Appeals declared that Domsats deposit in Westmont Bank is covered by
Republic Act No. 6426 or the Bank Secrecy Law.
GSIS filed a motion for reconsideration which the Court of Appeals denied
Thus, the instant petition ascribing grave abuse of discretion on the part of the Court of
Appeals in ruling that Domsats deposit with Westmont Bank cannot be examined

ARGUMENTS:
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.
Domsat denies the allegations of GSIS and reiterates that it did not give a categorical or
affirmative written consent or permission to GSIS to examine its bank statements with Westmont
Bank.
The Banks maintain that Republic Act No. 1405 is not the applicable law in the instant
case because the Domsat deposit is a foreign currency deposit, thus covered by Republic Act No.
6426. Under said law, only the consent of the depositor shall serve as the exception for the
disclosure of his/her deposit.
GSIS invokes Republic Act No. 1405 to justify the issuance of the subpoena while the
banks cite Republic Act No. 6426 to oppose it. The core issue is which of the two laws should
apply in the instant case.

Issue: Whether or not Republic Act No 1405 applies in this case?

Ruling: No. It is Ra 6426 that applies in the case at bar
Republic Act No. 1405 was enacted in 1955. Section 2 thereof was first amended by
Presidential Decree No. 1792 in 1981 and further amended by Republic Act No. 7653 in 1993. It
now reads:
Section 2. All deposits of whatever nature with banks or banking
institutions in the Philippines including investments in bonds issued by the
Government of the Philippines, its political subdivisions and its instrumentalities,
are hereby considered as of an absolutely confidential nature and may not be
examined, inquired or looked into by any person, government official, bureau or
office, except upon written permission of the depositor, or in cases of
impeachment, or upon order of a competent court in cases of bribery or
dereliction of duty of public officials, or in cases where the money deposited or
invested is the subject matter of the litigation.
Section 8 of Republic Act No. 6426, which was enacted in 1974, and amended by
Presidential Decree No. 1035 and later by Presidential Decree No. 1246, provides:
Section 8. Secrecy of Foreign Currency Deposits. All foreign currency
deposits authorized under this Act, as amended by Presidential Decree No. 1035,
as well as foreign currency deposits authorized under Presidential Decree No.

1034, are hereby declared as and considered of an absolutely confidential nature

and, except upon the written permission of the depositor, in no instance shall
foreign currency deposits be examined, inquired or looked into by any person,
government official, bureau or office whether judicial or administrative or
legislative or any other entity whether public or private; Provided, however, That
said foreign currency deposits shall be exempt from attachment, garnishment, or
any other order or process of any court, legislative body, government agency or
any administrative body whatsoever. (As amended by PD No. 1035, and further
amended by PD No. 1246, prom. Nov. 21, 1977.)

On the one hand, Republic Act No. 1405 provides for four (4) exceptions when records
of deposits may be disclosed. These are under any of the following instances: a) upon written
permission of the depositor, (b) in cases of impeachment, (c) upon order of a competent court in
the case of bribery or dereliction of duty of public officials or, (d) when the money deposited or
invested is the subject matter of the litigation, and e) in cases of violation of the Anti-Money
Laundering Act (AMLA), the Anti-Money Laundering Council (AMLC) may inquire into a bank
account upon order of any competent court.
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 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 Republic Act No. 6426 applies in this case.
In Intengan v. Court of Appeals, the court affirmed the above-cited principle and
categorically declared that for foreign currency deposits, such as U.S. dollar deposits, the
applicable law is Republic Act No. 6426.
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.

DOA Adela Export International Incorporated vs. Trade and

Investment Development Corporaton and Bank of the Philippine
Island
GR No. 201931
Promulgated on: February 11, 2015

Facts:
Petitioner Doa Adela Export International, Inc., (petitioner, for brevity) filed a
Petition for Voluntary Insolvency.
RTC, after finding the petition sufficient in form and substance, issued an order
declaring petitioner as insolvent and staying all civil proceedings against petitioner.
Thereafter, Atty. Arlene Gonzales was appointed as receiver. Atty. Gonzales
proceeded to make the necessary report, engaged appraisers and required the creditors to
submit proof of their respective claims.
Atty. Gonzales filed a Motion for Parties to Enter Into Compromise Agreement
incorporating therein her proposed terms of compromise, the pertinent portion of which reads:
1. The remaining assets of the Petitioner Dona Adela Export Intl., Inc., (Dona Adela)
consists of the following:
Asset

Appraised Value

Remarks

1.1 Land

P5,616,000

w/ REM to TRC

1.2 Building

6,480,000

w/ REM to TRC

1.3 Sewing machines

942,000

w/o chattel mortgage to TRC (sic)

1.4 Sewing machines

755,000

1.5 Furnitures and Fixtures

w/chattel mortgage
w/o appraised value

2. The claims of the creditors of Petitioner previously submitted with their respective
proofs of claim are shown below:
NAME OF
CREDITO
R
Technology Resource Center
BPI

AMOUNT
29,546,342.45
11,069,575.82

*TIDCORP
City of Mandaluyong as of 3/25/09

1,061,370.12

*TIDCORP has not yet submitted its peso amount of claim

xxxx
WHEREFORE, undersigned receiver respectfully proposed for the concerned parties
of this (sic) proceedings to enter into a compromise Agreement under the following terms and
conditions:
a. That the remaining assets of the Petitioner mentioned under 1 above be assigned
and applied to their respective claims
xxxx
Petitioner, through its President Epifanio C. Ramos, Jr., and Technology Resource
Center (TRC) entered into a Dacion En Pagoby Compromise Agreement wherein petitioner
agreed to transfer a 351-square meter parcel of land covered by TCT No. 10027 with existing
improvements situated in the Barrio of Jolo, Mandaluyong City, in favor of TRC in full
payment of petitioners obligation. The agreement bears the conformity of Atty. Gonzales as
receiver.
Creditors TIDCORP and BPI also filed a Joint Motion to Approve Agreement which
contained the following terms:
1. OBLIGATION OF PETITIONER. The parties agree that the outstanding principal
obligation of petitioner to TIDCORP shall be in the amount of NINE MILLION
FORTY-FOUR THOUSAND SEVEN HUNDRED EIGHT & 15/100 PESOS
(P9,044,708.15), while to BPI in the amount of ELEVEN MILLION SIXTY NINE
THOUSAND FIVE HUNDREDSEVENTY FIVE & 82/100 PESOS

(P11,069,575.82).
2. SETTLEMENT. TIDCORP and BPI both hereby agree to accept all the
machineries in petitioners inventory set aside pursuant to the Motion for Parties to
Enter Into Compromise Agreement dated 18 October 2010 filed by the Receiver, Atty.
Arlene T. Gonzales. The said machineries valued at THREE HUNDRED FIFTY
THOUSAND PESOS (P350,000.00)shall be divided equally between TIDCORP and
BPI.
3. SETTLEMENT OF CLAIMS. TIDCORP and BPI hereby agree that acceptance
of the abovementioned settlement shall constitute payment of petitioners aforesaid
obligation pursuant to Act No. 1956 (Insolvency Act). However, the benefit of
payment under the said Insolvency Act shall only be in favor of petitioner and shall
not in any manner affect the claims of TIDCORP and BPI as against its sureties and/or
guarantors.
xxxx
5. WAIVER OF CONFIDENTIALITY. The petitioner and the members of its Board
of Directors shall waive all rights to confidentiality provided under the provisions of
Republic Act No. 1405, as amended, otherwise known as the Law on Secrecy of Bank
Deposits, and Republic Act No. 8791, otherwise known as The General Banking Law
of 2000. Accordingly, the petitioner and the members of its Board of Directors by
these presents grant TIDCORP and BPI access to any deposit or other accounts
maintained by them with any bank.
For this purpose, the petitioner and the members of its Board of Directors shall
authorize TIDCORP and BPI to make, sign, execute and deliver any document of whatever
kind or nature which may be necessary or proper to allow them access to such deposits or
other accounts.
TIDCORP and BPI shall be further authorized to delegate to any person, who may
exercise in their stead, any or all of the powers and authority herein granted to them or
substitute any person in their place to do and perform said powers and authority.
Atty. Gonzales filed a Manifestation and Comment (On Dacion En Pago by
Compromise Agreement with TRC and Joint Motion to Approve Agreement of BPI and
TIDCORP) with Motion for Payment of Administrative Expenses and Receivers Fees.
Atty. Gonzales manifested that she is entitled to payment of administrative expenses
and receivers fees in the total amount of P740,200.00. She further stated that it is just and fair
for her to ask her due for services rendered as officer of the Court from TRC who benefitted
the most from the insolvency proceedings; and, that she is waiving the administrative expenses
and receivers fees due from TIDCORP and BPI.

RTC rendered the assailed Decision approving the Dacion En Pago by Compromise
Agreement and the Joint Motion to Approve Agreement
Petitioner filed a motion for partial reconsideration and claimed that TIDCORP and
BPIs agreement imposes on it several obligations such as payment of expenses and taxes and
waiver of confidentiality of its bank deposits but it is not a party and signatory to the said
agreement.
RTC denied the motion and held that petitioners silence and acquiescence to the joint
motion to approve compromise agreement while it was set for hearing by creditors BPI and
TIDCORP is tantamount to admission and acquiescence thereto. There was no objection filed
by petitioner to the joint motion to approve compromise agreement prior to its approval, said
the RTC. The RTC also noted that petitioners President attended every hearing of the case but
did not interpose any objection to the said motion when its conditions were being discussed
and formulated by the parties and Atty. Gonzales.
Hence, this petition.
ARGUMENTS:
Petitioner asserts that express and written waiver from the depositor concerned is
required by law before any third person or entity is allowed to examine bank deposits or bank
records. According to petitioner, it is not a party to the compromise agreement between BPI
and TIDCORP and its silence or acquiescence is not tantamount to an admission that binds it
to the compromise agreement of the creditors especially the waiver of confidentiality of bank
deposits. Petitioner cites the rule on relativity of contracts which states that contracts can only
bind the parties who entered into it, and it cannot favor or prejudice a third person, even if he
is aware of such contract and has knowledge thereof.
Respondent BPI counters that petitioner is estopped from questioning the BPITIDCORP compromise agreement because petitioner and its counsel participated in all the
proceedings involving the subject compromise agreement and did not object when the
compromise agreement was considered by the RTC.
Respondent TIDCORP contends that the waiver of confidentiality under Republic Act
(R.A.) Nos. 1405 and 8791 does not require the express or written consent of the depositor. It
is TIDCORPs position that upon declaration of insolvency, the insolvency court obtains
complete jurisdiction over the insolvents property which includes the authority to issue orders
to look into the insolvents bank deposits. Since bank deposits are considered debts owed by
the banks to the petitioner, the receiver is empowered to recover them even without
petitioners express or written consent, said TIDCORP.
Issue: Whether the petitioner is bound by the provision in the BPI-TIDCORP Joint Motion
to Approve Agreement that petitioner shall waive its rights to confidentiality of its bank
deposits under R.A. No. 1405, as amended, otherwise known as the Law on Secrecy of Bank

Deposits and R.A. No. 8791, otherwise known as The General Banking Law of 2000.
Ruling: No

According to petitioner, R.A. No. 1405requires the express and written consent of the
depositor to make the waiver effective.
Section 2 of R.A. No. 1405, the Law on Secrecy of Bank Deposits enacted in 1955,
was first amended by Presidential Decree No. 1792 in 1981 and further amended by R.A. No.
7653 in 1993. It now reads:
SEC. 2. All deposits of whatever nature with banks or banking institutions in the
Philippines including investments in bonds issued by the Government of the
Philippines, its political subdivisions and its instrumentalities, are hereby considered as
of an absolutely confidential nature and may not be examined, inquired or looked into
by any person, government official, bureau or office, except when the examination is
made in the course of a special or general examination of a bank and is specifically
authorized by the Monetary Board after being satisfied that there is reasonable ground
to believe that a bank fraud or serious irregularity has been or is being committed and
that it is necessary to look into the deposit to establish such fraud or irregularity, or
when the examination is made by an independent auditor hired by the bank to conduct
its regular audit provided that the examination is for audit purposes only and the results
thereof shall be for the exclusive use of the bank, or upon written permission of the
depositor, or in cases of impeachment, or upon order of a competent court in cases of
bribery or dereliction of duty of public officials, or in cases where the money deposited
or invested is the subject matter of the litigation.
R.A. No. 1405 provides for 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, the Anti-Money Laundering Council may inquire into a bank account upon order of any
competent court.
In this case, the Joint Motion to Approve Agreement was executed by BPI and
TIDCORP only. There was no written consent given by petitioner or its representative,
Epifanio Ramos, Jr., that petitioner is waiving the confidentiality of its bank deposits. The
provision on the waiver of the confidentiality of petitioners bank deposits was merely inserted
in the agreement. It is clear therefore that petitioner is not bound by the said provision since it
was without the express consent of petitioner who was not a party and signatory to the said
agreement.

Neither can petitioner be deemed to have given its permission by failure to interpose
its objection during the proceedings. It is an elementary rule that the existence of a waiver
must be positively demonstrated since a waiver by implication is not normally countenanced.
The norm is that a waiver must not only be voluntary, but must have been made knowingly,
intelligently, and with sufficient awareness of the relevant circumstances and likely
consequences. There must be persuasive evidence to show an actual intention to relinquish the
right. Mere silence on the part of the holder of the right should not be construed as a surrender
thereof; the courts must indulge every reasonable presumption against the existence and
validity of such waiver.
In addition, considering that petitioner was already declared insolvent by the RTC, all
its property, assets and belongings were ordered delivered to the appointed receiver or
assignee. Thus, in the order of the RTC appointing Atty. Gonzales as receiver, petitioner was
directed to assign and convey to Atty. Gonzales all its real and personal property, monies,
estate and effects with all the deeds, books and papers relating thereto, pursuant to Section
32 of the Insolvency Law.
Such assignment shall operate to vest in the assignee all of the estate of the insolvent
debtor not exempt by law from execution. Corollarily, the stipulation in the Joint Motion to
Approve Compromise Agreement that petitioner waives its right to confidentiality of its bank
deposits requires the approval and conformity of Atty. Gonzales as receiver since all the
property, money, estate and effects of petitioner have been assigned and conveyed to her and
she has the right to recover all the estate, assets, debts and claims belonging to or due to the
insolvent debtor.
While it was Atty. Gonzales who filed the Motion for Parties to Enter Into
Compromise Agreement, she did not sign or approve the Joint Motion to Approve Agreement
submitted by TIDCORP and BPI. There is no showing that Atty. Gonzales signified her
conformity to the waiver of confidentiality of petitioners bank deposits.
Clearly, the waiver of confidentiality of petitioners bank deposits in the BPITIDCORP Joint Motion to Approve Agreement lacks the required written consent of petitioner
and conformity of the receiver. We, thus, hold that petitioner is not bound by the said
provision.