- Domsat obtained a loan from banks secured by a surety bond from GSIS to rent a satellite, but failed to pay back the loan. GSIS refused to pay, claiming the loan proceeds were not used as intended.
- The banks sued Domsat and GSIS. GSIS subpoenaed records from Westmont Bank regarding Domsat's deposits, claiming the loan was diverted.
- The court ruled that without Domsat's written permission, Westmont Bank could not be legally compelled to disclose Domsat's foreign currency deposits under Republic Act No. 6426, as that would expose the bank to criminal liability.
- Domsat obtained a loan from banks secured by a surety bond from GSIS to rent a satellite, but failed to pay back the loan. GSIS refused to pay, claiming the loan proceeds were not used as intended.
- The banks sued Domsat and GSIS. GSIS subpoenaed records from Westmont Bank regarding Domsat's deposits, claiming the loan was diverted.
- The court ruled that without Domsat's written permission, Westmont Bank could not be legally compelled to disclose Domsat's foreign currency deposits under Republic Act No. 6426, as that would expose the bank to criminal liability.
- Domsat obtained a loan from banks secured by a surety bond from GSIS to rent a satellite, but failed to pay back the loan. GSIS refused to pay, claiming the loan proceeds were not used as intended.
- The banks sued Domsat and GSIS. GSIS subpoenaed records from Westmont Bank regarding Domsat's deposits, claiming the loan was diverted.
- The court ruled that without Domsat's written permission, Westmont Bank could not be legally compelled to disclose Domsat's foreign currency deposits under Republic Act No. 6426, as that would expose the bank to criminal liability.
- Domsat obtained a loan from banks secured by a surety bond from GSIS to rent a satellite, but failed to pay back the loan. GSIS refused to pay, claiming the loan proceeds were not used as intended.
- The banks sued Domsat and GSIS. GSIS subpoenaed records from Westmont Bank regarding Domsat's deposits, claiming the loan was diverted.
- The court ruled that without Domsat's written permission, Westmont Bank could not be legally compelled to disclose Domsat's foreign currency deposits under Republic Act No. 6426, as that would expose the bank to criminal liability.
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CHEW, PHILIP ROLAND ESPESO – BSA 3B
GSIS vs. Court of Appeals
G.R. No. 189206 June 8, 2011
FACTS: Domsat obtained a loan from the Banks which was secured by a surety bond from GSIS in order to rent a satellite. Domsat failed to pay the loan, GSIS refused to comply with its obligation reasoning that Domsat did not use the loan proceeds for intended purpose. 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 bank ledger. The subpoena was granted.
ISSUE: Whether or not Westmont Bank can be legally compelled to disclose the bank deposits of Domsat. - No, Westmonk Bank cannot be legally compelled to disclose bank deposits of Domsat absent the written permission from it. Otherwise, it might expose itself to criminal liability under RA No. 6426
RULING:
A Law of General Application vs. A Specific Law
Act No. 1405 or the AN ACT PROHIBITING DISCLOSURE OF OR INQUIRY INTO,
DEPOSITS WITH ANY BANKING INSTITUTION AND PROVIDING PENALTY THEREFOR 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 or the AN ACT INSTITUTING A FOREIGN CURRENCY DEPOSIT SYSTEM IN THE PHILIPPINES, AND FOR OTHER PURPOSES 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 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.
In China Banking Corporation v. Court of Appeals, this Court highlighted the
exception to the non-disclosure of foreign currency deposits, i.e., in the case of a written permission of the depositor, and ruled that respondent, as owner of the funds unlawfully taken and which are undisputably now deposited with China Bank, he has the right to inquire into the said deposits.
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.
By 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
Lucia Embrado and Oreste Torregiani, Petitioners, vs. Court of Appeals, Pacifico Cimafranca, Marcos Salimbagat, Eda Jimenez and Santiago Jimenez, Respondents.
