China Banking Corporation v Court of Appeals, December 18, 2006, J. Chico-Nazario

SHORT SUMMARYJose alleged that his daughter unlawfully took his foreign currency deposits evidenced by six and/or checks that were deposited in Chinabank. The court issued a subpoena duces tecum to the Chinabank employees, the employees testified that his daughter deposited the checks in the account of Adrienne Chu.Issue: whether or not the court could look into the identity of the depositor of the foreign currency deposits.Held: The general rule is absolute confidentiality, however the court took into the account the “particular circumstances” of this case and permitted the investigation.

FACTS1. Jose Gotianuy filed a complaint against his daughter Mary Margaret Dee and her husband,

George Dee for recovery of sums of money and annulment of sales of real properties and shares of stock.

He accused Mary of stealing US dollar deposits with Citibank amounting 35M pesos, and $864K dollars.

Mary admitted that she received these amounts from Citibank through checks which she deposited at China Bank. This was evidenced by 6 checks payable to Jose Gotianuy and/or Mary Dee, who were co-payees.

2. Jose died and was substituted by his daughter, Elizabeth. Elizabeth filed a motion for issuance of a subpoena.

3. A subpoena was issued to Cristota Labios and Isabel Yap, employees of China bank, to testify and disclose the name or in whose name the foreign currency deposit checks were deposited.

4. Chinabank filed a MFR with the TC and a petition for certiorari with the CA. Both were denied. China bank filed this present petition for review on certiorari before the SC.

ISSUES1. Whether the law on secrecy of foreign currency deposits prohibits the court from looking

into the Citibank dollar checks that were deposited in China bank with both Jose and/or Mary Margaret as payees.

2. Whether Jose may be considered a depositor who is entitled to seek an inquiry over the deposits.

CHINABANK CLAIM: The prescription on absolute confidentiality covers even the name of the depositor and is beyond the compulsive process of the court.

RATIO:General rule: Section 8 of the PD 1246 on secrecy of foreign currency deposits – The deposits are considered absolutely confidential in nature and may not be inquired into. The only exception to the secrecy is that disclosure is allowed upon written permission of the depositor.

This case (pro hac vice): The court can conduct an inquiry into the identity of the depositor Mary admitted that Jose was source of the funds, and there is no dispute that the funds in

the form of Citibank checks were deposited in Chinabank. As the owner of the funds unlawfully taken, and which are indisputably now deposited with

China Bank, Jose (or his estate) has the right to inquire into the deposits, and can be considered a co-depositor of the China bank account.

Jose alleged that his dollar deposits were unlawfully taken from him. The Chinabank employees testified that Mary came to China bank and deposited the funds through US dollar checks in the dollar account of her sister, Adrienne Chua.

“In view of the distinctive circumstances in the presented case the court was constrained to render this pro hac vice ruling. Clearly it was not the intent of the legislature to perpetuate injustice.”

HELD: The petition is denied. The case is ordered remanded to the TC for continuation of the hearing. “At the very least, Jose as owner of these funds is entitled to a hearing on the whereabouts of these funds”

NOTE: I THINK this case should not be understood as an exception to the rule on absolute secrecy of foreign currency deposits. This benefit and protection may be removed only under circumstances similar to the facts of this case.