The document is a court case document from the Supreme Court of the Philippines regarding a petition seeking review of a Court of Tax Appeals decision. The case involves Rosa Cancio who was apprehended at the airport with over $100,000 in cash that she failed to declare and did not have proper authorization from the Central Bank to carry. The Court of Tax Appeals ruled that the currency should be confiscated. The Supreme Court is considering a motion for reconsideration filed by Rosa Cancio's heirs after her death. The motion argues that Rosa Cancio was a foreign currency depositor according to relevant laws and had withdrawn the funds from her account over multiple occasions leading up to her travel.

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G.R. No. L-46208 April 5, 1990
FIDELITY SAVINGS AND MORTGAGE BANK, petitioner, vs. HON. PEDRO D.
CENZON, in his capacity as Presiding Judge of the Court of First Instance of
Manila (Branch XL) and SPOUSES TIMOTEO AND OLIMPIA
SANTIAGO,respondents.
REGALADO, J.:
The instant petition seeks the review, on pure questions of law, of the decision rendered by the
Court of First Instance of Manila (now Regional Trial Court), Branch XL,on December 3, 1976
in Civil Case No. 84800,1ordering herein petitioner to pay private respondents the following
amounts:
(a) P90,000.00 with accrued interest in accordance with Exhibits A and B until
fully paid;

2. (b) P30,000,00 as exemplary damages; and
(c) P10,000.00 as and for attorney's fees.
The payment by the defendant Fidelity Savings and Mortgage Bank of the
aforementioned sums of money shall be subject to the Bank Liquidation Rules
and Regulations embodied in the Order of the Court of First Instance of Manila,
Branch XIII, dated October 3, 1972, Civil Case No. 86005, entitled, "IN RE:
Liquidation of the Fidelity Savings Bank versus Central Bank of the Philippines,
Liquidator."
With costs against the defendant Fidelity Savings and Mortgage Bank.
SO ORDERED.
Private respondents instituted this present action for a sum of money with damages against
Fidelity Savings and Mortgage Bank, Central Bank of the Philippines, Eusebio Lopez, Jr.,
Arsenio M. Lopez, Sr., Arsenio S. Lopez, Jr., Bibiana E. Lacuna, Jose C. Morales, Leon P. Cusi,
Pilar Y. Pobre-Cusi and Ernani A. Pacana. On motion of herein private respondents, as
plaintiffs, the amended complaint was dismissed without prejudice against defendants Jose C.
Morales, Leon P. Cusi, Pilar Y. Pobre-Cusi and Ernani A. Pacana. 2 Inits aforesaid decision of
December 3, 1976, the court a quo dismissed the complaint as against defendants Central Bank
of the Philippines, Eusebio Lopez, Jr., Arsenio S. Lopez, Jr., Arsenio M. Lopez, Sr. and Bibiana
S. Lacuna.
Back on August 10, 1973, the plaintiffs (herein private respondents) and the defendants Fidelity
Savings and Mortgage Bank (petitioner herein), Central Bankof the Philippines and Bibiana E.
Lacuna had filed in said case in the lower court a partial stipulation of facts, as follows:
COME NOW herein plaintiffs, SPOUSES TIMOTEO M. SANTIAGO and
OLIMPIA R. SANTIAGO, herein defendants FIDELITY SAVINGS AND
MORTGAGE BANK and the CENTRAL BANK OF THE PHILIPPINES, and
herein defendant BIBIANA E. LACUNA, through their respective undersigned
counsel, and before this Honorable Court most respectfully submit the following
Partial Stipulation of Facts:
1. That herein plaintiffs are husband and wife, both of legal age, and presently
residing at No. 480 C. de la Paz Street, Sta. Elena, Marikina, Rizal;
2. That herein defendant Fidelity Savings and Mortgage Bank is a corporation
duly organized and existing under and by virtue of the laws of the Philippines;
that defendant Central Bank of the Philippines is a corporation duly organized
and existing under and by virtue of the laws of the Philippines;
3. That herein defendant Bibiana E. Lacuna is of legal age and a resident of No.
42 East Lawin Street, Philamlife Homes, Quezon City, said defendant was an
assistant Vice-President of the defendant fidelity Savings and Mortgage Bank,
4. That sometime on May 16, 1968, here in plaintiffs deposited with the
defendant Fidelity Savings Bank the amount of FIFTY THOUSAND PESOS

3. (P50,000.00) under Savings Account No. 16-0536; that likewise, sometime on
July 6, 1968, herein plaintiff,- deposited with the defendant Fidelity Savings and
Mortgage Bank the amount of FIFTY THOUSAND PESOS (P50,000.00) under
Certificate of Time Deposit No. 0210; that the aggregate amount of deposits of
the plaintiffs with the defendant Fidelity Savings and Mortgage Bank is ONE
HUNDRED THOUSAND PESOS (P100,000.00);
5. That on February 18, 1969, the Monetary Board, after finding the report of the
Superintendent of Banks, that the condition of the defendant Fidelity Savings and
Mortgage Bank is one of insolvency, to be true, issued Resolution No. 350
deciding, among others, as follows:
1) To forbid the Fidelity Savings Bank to do
business in the Philippines;
2) To instruct the Acting Superintendent of Banks
to take charge, in the name of the Monetary Board,
of the Bank's assets
6. That pursuant to the above-cited instructions of the Monetary Board, the
Superintendent of Banks took charge in the name of the Monetary Board, of the
assets of defendant Fidelity Savings Bank on February 19, 1969; and that since
that date up to this date, the Superintendent of Banks (now designated as
Director, Department of Commercial and Savings Banks) has been taking charge
of the assets of defendant Fidelity Savings and Mortgage Bank;
7. That sometime on October 10, 1969 the Philippine Deposit Insurance
Corporation paid the plaintiffs the amount of TEN THOUSAND PESOS
(P10,000.00) on the aggregate deposits of P100,000.00 pursuant to Republic Act
No. 5517, thereby leaving a deposit balance of P90,000.00;
8. That on December 9, 1969, the Monetary Board issued its Resolution No. 2124
directing the liquidation of the affairs of defendant Fidelity Savings Bank;
9. That on January 25, 1972, the Solicitor General of the Philippines filed a
"Petition for Assistance and Supervision in Liquidation" of the affairs of the
defendant Fidelity Savings and Mortgage Bankwith the Court of First Instance of
Manila, assigned to Branch XIII and docketed as Civil Case No. 86005;
10. That on October 3, 1972, the Liquidation Court promulgated the Bank Rules
and Regulations to govern the liquidation of the affairs of defendant Fidelity
Savings and Mortgage Bank, prescribing the rules on the conversion of the Bank's
assets into money, processing of claims against it and the manner and time of
distributing the proceeds from the assets of the Bank;
11. That the liquidation proceedings has not been terminated and is still pending
up to the present;

4. 12. That herein plaintiffs, through their counsel, sent demand letters to herein
defendants, demanding the immediate payment of the aforementioned savings
and time deposits.
WHEREFORE, it is respectfully prayed that the foregoing Partial Stipulation of
Facts be approved by this Honorable Court, without prejudice to the presentation
of additional documentary or testimonial evidence by herein parties.
Manila, Philippines, August 10, 1973. 3
Assigning error in the judgment of the lower court quoted ab antecedents, petitioner raises two
questions of law, to wit:
1. Whether or not an insolvent bank like the Fidelity Savings and Mortgage Bank may be
adjudged to pay interest on unpaid deposits even after its closure by the Central Bank by reason
of insolvency without violating the provisions of the Civil Code on preference of credits; and
2. Whether or not an insolvent bank like the Fidelity Savings and Mortgage Bankmay be
adjudged to pay moral and exemplary damages, attorney's fees and costs when the insolvency is
caused b the anomalous real estate transactions without violating the provisions of the Civil
Code on preference of credits.
There is merit in the petition.
It is settled jurisprudence that a banking institution which has been declared insolvent and
subsequently ordered closed by the Central Bank of the Philippines cannot be held liable to pay
interest on bank deposits which accrued during the period when the bank is actually closed and
non-operational.
In The Overseas Bank of Manila vs. Court of Appeals and Tony D. Tapia, 4 we held that:
It is a matter of common knowledge, which We take judicial notice of, that what
enables a bank to pay stipulated interest on money deposited with it is that thru
the other aspects of its operation it is able to generate funds to cover the payment
of such interest. Unless a bank can lend money, engage in international
transactions, acquire foreclosed mortgaged properties or their proceeds and
generally engage in other banking and financing activities from which it can
derive income, it is inconceivable how it can carry on as a depository obligated to
pay stipulated interest. Conventional wisdom dictates this inexorable fair and just
conclusion. And it can be said that all who deposit money in banks are aware of
such a simple economic proposition. Consequently, it should be deemed read into
every contract of deposit with a bank that the obligation to pay interest on the
deposit ceases the moment the operation of the bank is completely suspended by
the duly constituted authority, the Central Bank.
This was reiterated in the subsequent case of The Overseas Bank of Manila vs. The Hon. Court
of Appeals and Julian R. Cordero. 5 and in the recent cases of Integrated Realty Corporation, et
al. vs. Philippine National Bank, et al. and the Overseas Bank of Manila vs. Court of appeals, et
al. 6

5. From the aforecited authorities, it is manifest that petitioner cannot be held liable for interest on
bank deposits which accrued from the time it was prohibited by the Central Bank to continue
with its banking operations, that is, when Resolution No. 350 to that effect was issued on
February 18, 1969.
The order, therefore, of the Central Bank as receiver/liquidator of petitioner bank allowing the
claims of depositors and creditors to earn interest up to the date of its closure on February 18,
1969, 7 in line with the doctrine laid down in the jurisprudence above cited.
Although petitioner's formulation of the second issue that it poses is slightly inaccurate and
defective, we likewise find the awards of moral and exemplary damages and attorney's fees to be
erroneous.
The trial court found, and it is not disputed, that there was no fraud or bad faith on the part of
petitioner bank and the other defendants in accepting the deposits of private respondents.
Petitioner bank could not even be faulted in not immediately returning the amount claimed by
private respondents considering that the demand to pay was made and Civil Case No. 84800
was filed in the trial court several months after the Central Bank had ordered petitioner's
closure. By that time, petitioner bank was no longer in a position to comply with its obligations
to its creditors, including herein private respondents. Even the trial court had to admit that
petitioner bank failed to pay private respondents because it was already insolvent. 8 Further, this
case is not one of the specified or analogous cases wherein moral damages may be recovered. 9
There is no valid basis for the award of exemplary damages which is supposed to serve as a
warning to other banks from dissipating their assets in anomalous transactions. It was not
proven by private respondents, and neither was there a categorical finding made by the trial
court, that petitioner bank actually engaged in anomalous real estate transactions. The same
were raised only during the testimony of the bank examiner of the Central Bank, 10 but no
documentary evidence was ever presented in support thereof. Hence, it was error for the lower
court to impose exemplary damages upon petitioner bank since, in contracts, such sanction
requires that the offending party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. 11 Neither does this case present the situation where attorney's fees may be
awarded. 12
In the absence of fraud, bad faith, malice or wantonattitude, petitioner bank may, therefore, not
be held responsible for damages which may be reasonably attributed to the non-performance of
the obligation. 13Consequently, we reiterate that under the premises and pursuant to the
aforementioned provisions of law, it is apparent that private respondents are not justifiably
entitled to the payment of moral and exemplary damages and attorney's fees.
While we tend to agree with petitioner bank that private respondents' claims should he been
filed in the liquidation proceedings in Civil Case No. 86005, entitled "In Re: Liquidation of the
Fidelity Savings and Mortgage Bank," pending before Branch XIII of the then Court of First
Instance of Manila, we do not believe that the decision rendered in the instant case would be
violative of the legal provisions on preference and concurrence of credits. As the trial court puts
it:
. . . But this order of payment should not be understood as raising these deposits
to the category of preferred credits of the defendant Fidelity Savings and
Mortgage Bank but shall be paid in accordance with the Bank Liquidation Rules

6. and Regulations embodied in the Order of the. Court of First Instance of Manila,
Branch XIII dated October 3, 1972 (Exh. 3). . . . 14
WHEREFORE, the judgment appealed from is hereby MODIFIED. Petitioner Fidelity Savings
and Mortgage Bank is hereby declared liable to pay private respondents Timoteo and Olimpia
Santiago the sum of P90,000.00, with accrued interest in accordance with the terms of Savings
Account Deposit No. 16-0536 (Exhibit A) and Certificate of Time Deposit No. 0210 (Exhibit B)
until February 18, 1969. The awards for moral and exemplary damages, and attorney's fees are
hereby DELETED. No costs.
SO ORDERED. Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
G.R. No. 73882 October 22, 1987
ROSA CANCIO, petitioner, vs. HON. COURT OF TAX APPEALS and HON.
COMMISSIONEROF CUSTOMS, respondents.
MELENCIO-HERRERA, J.:
Before us is petitioner's Motion for Reconsideration of this Court's Resolution of August 11,
1986, which denied for lack of merit her Petition for Review on certiorari of respondent Court of
Tax Appeals' (CTA) Decision in C.T.A. Case No. 3398.
During the pendency of this case, or on April 23, 1986, petitioner had passed away and her legal
heirs were ordered substituted in her stead and Jose Cancio, Jr., was appointed guardian ad-
litem for the minors Ma. Irene and Roberto, both surnamed Cancio, in this Court's Resolution of
August 11, 1986.
There is no substantial dispute on the background facts and the evidentiary aspects Vol the
controversy, summarized in said
Decision as follows:
The records show that claimant Mrs. Rosa Cancio bearing Philippine Passport No. 11797799
while clearing through the Pre-Boarding (AVSECOM) Area of MIA with her husband and three
(3) children to board PR 306 for Hongkong in the morning of June 12, 1981, was apprehended
with One Hundred Two Thousand Nine Hundred Dollars (US$102,900.00) in cash, six hundred
dollars (US$600.00) in two travelers checks, and one thousand five hundred (Pl,500.00) Pesos;
that such apprehension was effected only thru an alarm sounded by the scanner (metal detecting
device) of the AVSECOM men, when Mrs. Cancio who did not declare her currency had already
passed the Customs inspection area; that subject currencies were placed and concealed inside
the two fairly-sized carton boxes for local chocolates, securely wrapped and taped with tin foil-
back paper; and, that in view of claimant's failure, upon being required, to present the Central
Bank Authority, the said currencies were accordingly confiscated and a seizure Receipt No. 013
was issued to her; hence, this seizure proceedings.
At the hearing of this case, claimant, thru counsel, presented certified xerox copy of her Bank
Book (Exhibit "I") for foreign currency deposit with the Philippine Commercial and Industrial
Bank under Account FCDU No. 0265, dollar remittances in telegraphic transfers from abroad
for deposits in her account from May 13, 1981 to May 21, 1981, and withdrawal cards (Exhibit "l-
A" to "1-E", inclusive), attesting to the fact that claimant Rosa Cancio had withdrawnfrom her

7. FCDU Account a certain amount of United States currency which tended to show that claimant
herein was a foreign currency depositor pursuant to the provisions of Republic Act No. 6426, as
implemented by Central Bank Circular No. 343. And herein claimant testified that because her
foreign currency deposit could not be withdrawn at one time, she made her withdrawal on
several occasions starting from May 14, 1981 up to May 27, 1981 when she closed her account
preparatory to her departure which was scheduled in the morning of June 12, 1981 for
Hongkong; that from Hongkong, she and her family intended to proceed to the United States for
medical treatment of her heart ailment as advised by her two attending physicians from the UST
Hospital; that the US currency that they were carrying and confiscated from them on June 12,
1981 was intended principally for such medical purpose and for other miscellaneous and
necessary expenses, and, that the subject currencies were concealed and hidden by them inside
the two chocolate boxes solely for security reasons. 1
By reason of the forfeiture decreed by respondent Commissioner of Customs of both the foreign
and local currencies due to petitioner's failure to present a Central Bank (CB) authority to bring
said currencies out of the country, petitioner appealed to respondent Court of Tax Appeals. The
latter Court affirmed the forfeiture of the US$102,900.00 in cash, and US$600.00 in travellers'
checks for having been in violation of Central Bank Circulars Nos. 265 and 534, in relation to
Section 2530(f) of the Tariff and Customs Code, as amended. It reversed, however, the forfeiture
of P1,500.00 on the ground that since petitioner was travelling with her husband and three (3)
children, the said amount did not exceed the P500.00 at that each traveller is allowed to bring
out of the country without a CB permit pursuant to paragraph 4 of CB Circular No.383.
Petitioner's unimpugned evidence shows that she was a foreign currency depositor at the
Philippine Commercial and Industrial Bank at Makati, Metro Manila, and that the subject
foreign currency was part of the total amount of US$116,000.00 she had withdrawn from said
bank from May 14 to 27, 1981 for her travel and medical expenses in the United States via
Hongkong. 2 Admitted, too, is the fact that petitioner failed to present to the apprehending
customs authorities a Central Bank authority to bring out of the country the said currencies
while at the pre-boarding area of the Manila International Airport on June 12, 1981 on her
scheduled flight to Hongkong together with her husband and three children.
The primordial issue for resolution is whether or not respondent Court had committed
reversible error in upholding the forfeiture of the foreign currencies in question.
A second look at the facts and the equity of the case, the pertinent laws, and the CB Circulars
involved constrains us to rule in the affirmative and, accordingly, to grant reconsideration of our
Resolution of August 11, 1986 denying review.
It is true that in so far as the exportation or taking out of foreign currency from the country is
concerned, Central Bank Circular No. 265, issued on November 20, 1968, particularly paragraph
3 thereof, mandates:
3. No person shall take out or export from the Philippines foreign currency or any other foreign
exchange except as otherwise authorized by the Central Bank.
Similarly, Central bank Circular No. 534, issued on July 19, 1976, reiterates and provides in Sec.
3 thereof as follows:

8. Sec. 3. Unless specifically authorized by the Central Bank or allowed under existing
international agreements or Central Bank regulations, no person shall take or transmit or
attempt to take or transmit foreign exchange, in any form out of the Philippines only, through
other persons, through the mails, or through international carriers.
The provisions of this Section shall not apply to tourists and non-resident temporary visitors
who are taking or sending out of the Philippines their own foreign exchange brought in by them.
However, peculiar to the present controversy is the fact that, as stated previously, petitioner is a
foreign currency depositor. Relevant and applicable to her is the following provision of the
"Foreign Currency Deposit Act of the Philip pines" (Republic Act No. 6426, as amended), which
took effect upon its approval on April 4,1972:
SEC. 5. Withdrawability and transferability of deposits. — There shall be no restriction on the
withdrawal by the depositor of his deposit or on the transferability of the same abroad except
those arising from the contract between the depositor and the bank.11 (Emphasis Ours).
Under the foregoing provision, the transferability abroad of foreign currency deposits is
unrestricted. Only one exception is provided for therein, which is, any restriction " from the
contract between the depositor and the bank." Neither is a Central Bank authority required for
the transferability abroad of foreign currency deposits.
Attention is called, however, to the implementing rules and regulations to said Republic Act
6426, as embodied in CB Circular No. 343 issued on April 24, 1972, which provides:
SEC. 11. Withdrawability and Liquidity of Deposits.
a. x x x x x x x x x
b. Subject only to the terms of the contract between the bank and the depositor, the latter shall
have a general license to withdraw his deposit, notwithstanding any change in policy or
regulations.
xxx xxx xxx
(Emphaisis supplied)
Respondent Court has taken the position that the foregoing provision its the right of the
depositor to that of withdrawal and withholds from him the right of transferability abroad. That
is not so. Circular-Letter, dated August 3, 1978, issued by the Central Bank reads in explicit
terms:
TO: ALL BANKS AUTHORIZED TO ACCEPT FOREIGN CURRENCY DEPOSITS UNDER THE
PROVISIONS OF RA 6426, AS AMENDED AND PRESIDENTIAL DECREE NO. 1035.
Effective immediately, the banks authorized to accept foreign currency deposits under the
provisions of RA 6426, as amended, and PD 1035 and as implemented by Central Bank Circular
343 and 547, are hereby instructed to advise their foreign currency depositors who are
withdrawing funds for travel purposes to carry with them the certificate of withdrawal that the

9. banks shall issue. The travellers shall present the certifications to the Customs and Central Bank
personnel at the MIA, if requested.
The banks shall issue a uniform certification, as follows:
___________________
Date
TO WHOM IT MAY CONCERN:
This certifies that ________________________whose signature appears below has
withdrawn today, the amount of ____________in cash (US$ _______________) and
Travellers Check (US$___________________________) against his/her foreign currency
account maintained with us.
The funds herein withdrawn are represented to be used in connection with the depositor's
foreign travel scheduled on or about ____________________197_________.
___________________________
(Signature of Authorized
Official OverPrinted Name)
_______________________
(Signature of Depositor)
Please be guided accordingly.
(SGD.) R.D.RUIZ
Director
It is a fact that petitioner could not present a certificate of withdrawal at the Manila
International Airport when she was about to depart. As she had explained, however, she was
unaware of this requirement. And if she had wrapped her dollar currency inside a chocolate box
it was for "security reasons." Besides, as instructed in the Circular-Letter abovequoted, it is the
authorized depository bank which should advise its depositors to carry with them the certificate
of withdrawal. At any rate, respondent Court has found that petitioner has presented in evidence
her foreign currency bank book 3 and her withdrawal cards. 4 These may be considered as
substantial compliance for purposes of this case.
Indeed, given the underlying objective of the Foreign Currency Deposit Act, as amended, which
is to attract and invite the deposit of foreign currencies which are acceptable as part of the
international reserve in duly authorized banks in order that they may be put into the stream of
the banking system, it would be to defeat the very purpose of the law to place undue restrictions

10. on the transferability of such funds. The countervailing effect would be to discourage
prospective foreign currency depositors to the detriment of the banking system.
In fine, Central Bank Circulars Nos. 265 and 534 requiring prior Central Bank authority for the
taking out of the country of foreign currency should not be made to encompass foreign currency
depositors whose rights are expressly defined and guaranteed in a special law, the Foreign
Currency Deposit Act (RA 6426, as amended). As a foreign currency depositor, therefore,
petitioner cannot be adjudged to have violated the aforestated Central Bank Circulars. It follows
that neither is there room for the application of Section 2530(f) of the Tariff and Customs Code,
as amended, which provides for the forfeiture of any article and other objects, the exportation of
which is effected or attempted contrary to law.
This is not to condone petitioner's failure to declare the foreign currency she was carrying out of
the country but just to stress that the Foreign Currency Deposit Act grants petitioner the right of
transferability of her funds abroad except that she was not advised by her bank to secure, and
consequently was unable to present, the necessary certificate of withdrawal from said bank.
ACCORDINGLY, the Decision of respondent Court of Tax Appeals is hereby SET ASIDE in so far
as it upheld the forfeiture by respondent Commissioner of Customs of the sums of
US$102,900.00 in cash, and US$600.00 in traveller's checks, which amounts should now be
returned to petitioner's heirs, but AFFIRMED in so far as it reversed the forfeiture by the same
official of the sum of P1,500.00. No costs.
SO ORDERED.
Yap, Actg. C.J., Narvasa, Cruz, Feliciano, Gancayco and Sarmiento, JJ., concur.

11. G.R. No. 94723 August 21, 1997
KAREN E. SALVACION, minor, thru Federico N. Salvacion, Jr., father and Natural
Guardian, and Spouses FEDERICO N. SALVACION, JR., and EVELINA E.
SALVACION, petitioners, vs. CENTRAL BANK OF THE PHILIPPINES, CHINA
BANKING CORPORATION and GREG BARTELLI y NORTHCOTT, respondents.
TORRES, JR., J.:
In our predisposition to discover the "original intent" of a statute, courts become the unfeeling
pillars of the status quo. Ligle do we realize that statutes or even constitutions are bundles of
compromises thrown our way by their framers. Unless we exercise vigilance, the statute may
already be out of tune and irrelevant to our day.
The petition is for declaratory relief. It prays for the following reliefs:
a.) Immediately upon the filing ofthis petition, an Order be issued restraining the respondents from
applying and enforcing Section 113 ofCentral Bank Circular No. 960;
b.) After hearing, judgment be rendered:
1.) Declaring the respectiverights and duties ofpetitioners and respondents;
2.) Adjudging Section 113 ofCentral Bank Circular No. 960 as contrary to the provisions ofthe
Constitution, hencevoid;because its provision that "Foreign currencydeposits shall be exempt from
attachment, garnishment, or any other order or process ofany court, legislative body, government agency
or any administrativebody whatsoever
i.) has taken away the right ofpetitioners to have the bank deposit ofdefendant Greg Bartelli y Northcott
garnished to satisfy the judgmentrendered in petitioners'favor in violation ofsubstantivedue process
guaranteed by the Constitution;
ii.) has given foreign currency depositors an undue favor or a class privilegein violation ofthe equal
protection clause ofthe Constitution;
iii.) has provided a safe haven for criminals like the herein respondentGreg Bartelli y Northcott since
criminals could escapecivil liability for theirwrongful acts by merely converting their money to a foreign
currency and depositing it in a foreign currency depositaccount with an authorized bank.
The antecedent facts:
On February 4, 1989, Greg Bartelli y Northcott, an Americantourist, coaxed and lured petitioner
Karen Salvacion, then 12 years old to go with him to his apartment. Therein, Greg Bartelli
detained Karen Salvacion for four days, or up to February 7, 1989 and was able to rape the child
once on February 4, and three times each day on February 5, 6, and 7, 1989. On February 7,
1989, after policemen and people living nearby, rescued Karen, Greg Bartelli was arrested and
detained at the Makati Municipal Jail. The policemen recovered from Bartelli the following
items: 1.) Dollar Check No. 368, Control No. 021000678-1166111303, US 3,903.20; 2.)
COCOBANK Bank BookNo. 104-108758-8(Peso Acct.); 3.) Dollar Account — China Banking
Corp., US$/A#54105028-2; 4.) ID-122-30-8877; 5.) Philippine Money (P234.00) cash; 6.) Door
Keys 6 pieces; 7.) Stuffed Doll (Teddy Bear) used in seducing the complainant.

12. On February 16, 1989, Makati Investigating Fiscal Edwin G. Condaya filed against Greg Bartelli,
Criminal Case No. 801 for Serious Illegal Detention and Criminal Cases Nos. 802, 803, 804, and
805 for four (4) counts of Rape. On the same day, petitioners filed with the Regional Trial Court
of Makati Civil Case No. 89-3214 for damages with preliminary attachment against Greg
Bartelli. On February 24, 1989, the day there was a scheduled hearing for Bartelli's petition for
bail the latter escaped from jail.
On February 28, 1989, the court granted the fiscal's Urgent Ex-Parte Motion for the Issuance of
Warrant of Arrest and Hold Departure Order. Pending the arrest of the accused Greg Bartelli y
Northcott, the criminal cases were archived in an Order dated February 28, 1989.
Meanwhile, in Civil Case No. 89-3214, the Judge issued an Order dated February 22, 1989
granting the application of herein petitioners, for the issuance of the writ of preliminary
attachment. After petitioners gave Bond No. JCL (4) 1981 by FGU Insurance Corporation in the
amount of P100,000.00, a Writ of Preliminary Attachment was issued by the trial court on
February 28, 1989.
On March 1, 1989, the Deputy Sheriff of Makati served a Notice of Garnishment on China
Banking Corporation. Ina letter dated March 13, 1989 to the Deputy Sheriff of Makati, China
Banking Corporation invoked Republic Act No. 1405as its answer to the notice of garnishment
served on it. On March 15, 1989, 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. In answer to this
letter of the Deputy Sheriff of Makati, China Banking Corporation, in a letter dated March 20,
1989, invoked Section 113 of Central Bank Circular No. 960 to the effect that the dollar deposits
or 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,
whatsoever.
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:
May 26, 1989
Ms. Erlinda S. Carolino
12 Pres. Osmena Avenue
South Admiral Village
Paranaque, Metro Manila
Dear Ms. Carolino:
This is in reply to your letter dated April 25, 1989regarding your inquiry on Section 113, CBCircular No.
960 (1983).
The cited provision is absolute in application. It does not admit ofany exception, nor has the same been
repealed nor amended.

13. The purpose ofthe law is to encourage dollar accounts within the country's banking system which would
help in the development ofthe economy. There is no intention to renderfutile 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.
Very truly yours,
(SGD) AGAPITO S. FAJARDO
Director 1
Meanwhile, on April 10, 1989, the trial court granted petitioners' motion for leave to serve
summons by publication in the Civil Case No. 89-3214 entitled "Karen Salvacion, et al. vs. Greg
Bartelli y Northcott." Summons with the complaint was a published in the Manila Times once a
week for three consecutive weeks. Greg Bartelli failed to file his answer to the complaint and was
declared in default on August 7, 1989. After hearing the case ex-parte, the court rendered
judgment in favor of petitioners on March 29, 1990, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant,
ordering the latter:
1. To pay plaintiff Karen E. Salvacion the amount of P500,000.00 as moral damages;
2. To pay her parents, plaintiffs spouses Federico N. Salvacion, Jr., and Evelina E. Salvacion the
amount of P150,000.00 each or a total of P300,000.00 for both of them;
3. To pay plaintiffs exemplary damages of P100,000.00; and
4. To pay attorney's fees in an amount equivalent to 25% of the total amount of damages herein
awarded;
5. To pay litigation expenses of P10,000.00; plus
6. Costs of the suit.
SO ORDERED.
The heinous acts of respondent Greg Bartelli which gave rise to the award were related in
graphic detail by the trial court in its decision as follows:
The defendant in this case was originally detained in the municipal jail of Makati but was able to
escape therefrom on February 24, 1989 as per report of the Jail Warden of Makati to the
Presiding Judge, Honorable Manuel M. Cosico of the Regional Trial Court of Makati, Branch
136, where he was charged with four counts of Rape and Serious Illegal Detention (Crim. Cases
Nos. 802 to 805). Accordingly, upon motion of plaintiffs, through counsel, summons was served
upon defendant by publication in the Manila Times, a newspaper of general circulation as
attested by the Advertising Manager of the Metro Media Times, Inc., the publisher of the said
newspaper. Defendant, however, failed to file his answer to the complaint despite the lapse of
the period of sixty (60) days from the last publication; hence, upon motion of the plaintiffs,
through counsel, defendant was declared in default and plaintiffs were authorized to present
their evidence ex parte.

14. In support of the complaint, plaintiffs presented as witnesses the minor Karen E. Salvacion, her
father, Federico N. Salvacion, Jr., a certain Joseph Aguilar and a certain Liberato Madulio, who
gave the following testimony:
Karen took her first year high school in St. Mary's Academy in Pasay City but has recently
transferred to Arellano University for her second year.
In the afternoon of February 4, 1989, Karen was at the Plaza Fair Makati Cinema Square, with
her friend Edna Tangile whiling away her free time. At about 3:30 p.m. while she was finishing
her snack on a concrete bench in front of Plaza Fair, an Americanapproached her. She was then
alone because Edna Tangile had already left, and she was about to go home. (TSN, Aug. 15,
1989, pp. 2 to 5)
The American asked her name and introduced himself as Greg Bartelli. He sat beside her when
he talked to her. He said he was a Math teacher and told her that he has a sister who is a nurse in
New York.His sister allegedly has a daughter who is about Karen's age and who was with him in
his house along Kalayaan Avenue. (TSN, Aug. 15, 1989, pp. 4-5)
The American asked Karen what was her favorite subject and she told him it's Pilipino. He then
invited her to go with him to his house where she could teach Pilipino to his niece. He even gave
her a stuffed toy to persuade her to teach his niece. (Id., pp. 5-6)
They walked from Plaza Fair along Pasong Tamo, turning right to reach the defendant's house
along Kalayaan Avenue. (Id., p. 6)
When they reached the apartment house, Karen noticed that defendant's alleged niece was not
outside the house but defendant told her maybe his niece was inside. When Karen did not see
the alleged niece inside the house, defendant told her maybe his niece was upstairs, and invited
Karen to go upstairs. (Id., p. 7)
Upon entering the bedroom defendant suddenly locked the door. Karen became nervous
because his niece was not there. Defendant got a piece of cotton cord and tied Karen's hands
with it, and then he undressed her. Karen cried for help but defendant strangled her. He took a
packing tape and he covered her mouth with it and he circled it around her head. (Id., p. 7)
Then, defendant suddenly pushed Karen towards the bed which was just near the door. He tied
her feet and hands spread apart to the bed posts. He knelt in front of her and inserted his finger
in her sex organ. She felt severe pain. She tried to shout but no sound could come out because
there were tapes on her mouth. When defendant withdrew his finger it was full of blood and
Karen felt more pain after the withdrawal of the finger. (Id., p. 8)
He then got a Johnson's Baby Oil and he applied it to his sex organ as well as to her sex organ.
After that he forced his sex organ into her but he was not able to do so. While he was doing it,
Karen found it difficult to breathe and she perspired a lot while feeling severe pain. She merely
presumed that he was able to insert his sex organ a little, because she could not see. Karen could
not recall how long the defendant was in that position. (Id. pp. 8-9)
After that, he stood up and went to the bathroom to wash. He also told Karen to take a shower
and he untied her hands. Karen could only hear the sound of the water while the defendant, she
presumed, was in the bathroom washing his sex organ. Whenshe took a shower more blood

15. came out from her. Inthe meantime, defendant changed the mattress because it was full of
blood. After the shower, Karen was allowed by defendant to sleep. She fell asleep because she
got tired crying. The incident happened at about 4:00 p.m. Karen had no way of determining the
exact time because defendant removed her watch. Defendant did not care to give her food before
she went to sleep. Karen woke up at about 8:00 o'clock the following morning. (Id., pp. 9-10)
The following day, February 5, 1989, a Sunday, after a breakfast of biscuit and coke at about
8:30 to 9:00 a.m. defendant raped Karen while she was still bleeding. For lunch, they also took
biscuit and coke. She was raped for the second time at about 12:00 to 2:00 p.m. In the evening,
they had rice for dinner which defendant had stored downstairs; it was he who cooked the rice
that is why it looks like "lugaw". For the third time, Karen was raped again during the night.
During those three times defendant succeeded in inserting his sex organ but she could not say
whether the organ was inserted wholly.
Karen did not see any firearm or any bladed weapon. The defendant did not tie her hands and
feet nor put a tape on her mouth anymore but she did not cry for help for fear that she might be
killed; besides, all the windows and doors were closed. And even if she shouted for help, nobody
would hear her. She was so afraid that if somebody would hear her and would be able to call the
police, it was still possible that as she was still inside the house, defendant might kill her.
Besides, the defendant did not leave that Sunday, ruling out her chance to call for help. At
nighttime he slept with her again. (TSN, Aug. 15, 1989, pp. 12-14)
On February 6, 1989, Monday, Karen was raped three times, once in the morning for thirty
minutes after a breakfast of biscuits; again in the afternoon; and again in the evening. At first,
Karen did not know that there was a window because everything was covered by a carpet, until
defendant opened the window for around fifteen minutes or less to let some air in, and she
found that the window was covered by styrofoam and plywood. After that, he again closed the
window with a hammer and he put the styrofoam,plywood, and carpet back. (Id., pp. 14-15)
That Monday evening, Karen had a chance to call for help, although defendant left but kept the
door closed. She went to the bathroom and saw a small window covered by styrofoam and she
also spotted a small hole. She stepped on the bowl and she cried for help through the hole. She
cried: "Maawa no po kayo so akin. Tulungan n'yo akong makalabas dito. Kinidnap ako!"
Somebody heard her. It was a woman, probably a neighbor, but she got angry and said she was
"istorbo". Karen pleaded for help and the womantold her to sleep and she will call the police.
She finally fell asleep but no policeman came. (TSN, Aug. 15, 1989, pp. 15-16)
She woke up at 6:00 o'clock the following morning, and she saw defendant in bed, this time
sleeping. She waited for him to wake up. When he woke up, he again got some food but he
always kept the door locked. As usual, she was merely fed with biscuit and coke. On that day,
February 7, 1989, she was again raped three times. The first at about 6:30 to 7:00 a.m., the
second at about 8:30 — 9:00, and the third was after lunch at 12:00 noon. After he had raped
her for the second time he left but only for a short while. Upon his return, he caught her
shouting for help but he did not understand what she was shouting about. After she was raped
the third time, he left the house. (TSN, Aug. 15, 1989, pp. 16-17) She again went to the bathroom
and shouted for help. After shouting for about five minutes, she heard many voices. The voices
were asking for her name and she gave her name as Karen Salvacion.After a while, she heard a
voice of a woman saying they will just call the police. They were also telling her to change her
clothes. She went from the bathroom to the room but she did not change her clothes being afraid
that should the neighbors call for the police and the defendant see her in different clothes, he

16. might kill her. At that time she was wearing a T-shirt of the American because the latter washed
her dress. (Id., p. 16)
Afterwards, defendant arrived and he opened the door. He asked her if she had asked for help
because there were many policemen outside and she denied it. He told her to change her clothes,
and she did change to the one she was wearing on Saturday. He instructed her to tell the police
that she left home and willingly; then he went downstairs but he locked the door. She could hear
people conversing but she could not understand what they were saying. (Id., p. 19)
When she heard the voices of many people who were conversing downstairs, she knocked
repeatedly at the door as hard as she could. She heard somebody going upstairs and when the
door was opened, she saw a policeman. The policeman asked her name and the reason why she
was there. She told him she was kidnapped. Downstairs, he saw about five policemen in uniform
and the defendant was talking to them. "Nakikipag-areglo po sa mga pulis," Karen added. "The
policeman told him to just explain at the precinct. (Id., p. 20)
They went out of the house and she saw some of her neighbors in front of the house. They rode
the car of a certain person she called Kuya Boy together with defendant, the policeman, and two
of her neighbors whom she called Kuya Bong Lacson and one Ate Nita. They were brought to
Sub-Station I and there she was investigated by a policeman. At about 2:00 a.m., her father
arrived, followed by her mother together with some of their neighbors. Then they were brought
to the second floor of the police headquarters. (Id., p. 21)
At the headquarters, she was asked several questions by the investigator. The written statement
she gave to the police was marked as Exhibit A. Then they proceeded to the National Bureau of
Investigation together with the investigator and her parents. At the NBI, a doctor, a medico-
legal officer, examined her private parts. It was already 3:00 in the early morning of the
following day whenthey reached the NBI. (TSN, Aug. 15, 1989, p. 22) The findings of the
medico-legal officer has been marked as Exhibit B.
She was studying at the St. Mary's Academy in Pasay City at the time of the incident but she
subsequently transferred to Apolinario Mabini, Arellano University, situated along Taft Avenue,
because she was ashamed to be the subject of conversation in the school. She first applied for
transfer to Jose Abad Santos, Arellano University along Taft Avenue near the Light Rail Transit
Station but she was denied admission after she told the school the true reason for her transfer.
The reason for their denial was that they might be implicated in the case. (TSN, Aug. 15, 1989, p.
46)
xxx xxx xxx
After the incident, Karen has changed a lot. She does not play with her brother and sister
anymore, and she is always in a state of shock; she has been absent-minded and is ashamed
even to go out of the house. (TSN, Sept. 12, 1989, p. 10) She appears to be restless or sad, (Id., p.
11) The father prays for P500,000.00 moral damages for Karen for this shocking experience
which probably, she would always recall until she reaches old age, and he is not sure if she could
ever recover from this experience. (TSN, Sept. 24, 1989, pp. 10-11)
Pursuant to an Order granting leave to publish notice of decision, said notice was published in
the Manila Bulletin once a week for three consecutive weeks. 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

17. had become final, petitioners tried to execute on Bartelli's dollar deposit with China Banking
Corporation. Likewise, the bank invoked Section 113 of Central Bank Circular No. 960.
Thus, petitioners decided to seek relief from this Court.
The issues raised and the arguments articulated by the parties boil down to two:
May this Court entertain the instant petition despite the fact that original jurisdiction in
petitions for declaratory relief rests with the lower court? Should 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?
Petitioners aver as heretofore stated 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: 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 petitioners' 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 plaintiffs 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; b.) the plaintiffs substantive
right to have the judgment credit satisfied by way of the writ of execution out of the bank deposit
of the judgment debtor as granted to the judgment creditor by Rule 39 of the Revised Rules of
Court, which is beyond its power to do so.
On the other hand, respondent 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; that it does not violate the
substantive due process guaranteed by the Constitution because a.) it was based on a law; b.) the
law seems to be reasonable; c.) it is enforced according to regular methods of procedure; and d.)
it applies to all members of a class.
Expanding, the Central Bank said; that one reason for exempting the foreign currency deposits
from attachment, garnishment or any other order or process of any court, is to assure the
development and speedy growth of the Foreign Currency Deposit System and the Offshore
Banking System in the Philippines; that another reason is to encourage the inflow of foreign
currency deposits into the banking institutions thereby placing such institutions more in a
position to properly channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country; that the subject section is being
enforced according to the regular methods of procedure; and that it applies to all foreign
currency deposits made by any person and therefore does not violate the equal protection clause
of the Constitution.

18. Respondent Central Bank further avers that the questioned provision is needed to promote the
public interest and the general welfare; that the State cannot just stand idly by while a
considerable segment of the society suffers from economic distress; that the State had to take
some measures to encourage economic development; and that in so doing persons and property
may be subjected to some kinds of restraints or burdens to secure the general welfare or public
interest. Respondent Central Bank also alleges that Rule 39 and Rule 57 of the Revised Rules of
Court provide that some properties are exempted from execution/attachment especially
provided by law and R.A. No. 6426 as amended is such a law, in that it specifically provides,
among others, that foreign currency deposits shall be exempted from attachment, garnishment,
or any other order or process of any court, legislative body, government agency or any
administrative body whatsoever.
For its part, respondent China Banking Corporation, aside from giving reasons similar to that of
respondent Central Bank, also stated that respondent China Bank is not unmindful of the
inhuman sufferings experienced by the minor Karen E. Salvacion from the beastly hands of Greg
Bartelli; that it is only too willing to release the dollar deposit of Bartelli which may perhaps
partly mitigate the sufferings petitioner has undergone; but it is restrained from doing so in view
of R.A. No. 6426 and Section 113 of Central Bank Circular No. 960; and that despite the harsh
effect of these laws on petitioners, CBC has no other alternative but to follow the same.
This Court finds the petition to be partly meritorious.
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 in Civil Case No. 89-3214.
This Court has no original and exclusive jurisdiction over a petition for declaratory
relief. 2 However, exceptions to this rule have been recognized. Thus, where the petition has far-
reaching implications and raises questions that should be resolved, it may be treated as one
for mandamus.3
Here is a child, a 12-year old girl, who in her belief that all Americans are good and in her
gesture of kindness by teaching his alleged niece the Filipino language as requested by the
American, trustingly went with said stranger to his apartment, and there she was raped by said
American tourist Greg Bartelli. Not once, but ten times. She was detained therein for four (4)
days. This American tourist was able to escape from the jail and avoid punishment. On the other
hand, the child, having received a favorable judgment in the Civil Case for damages in the
amount of more thanP1,000,000.00, 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. As stated
by the trial court in its decision,
Indeed, after hearing the testimony of Karen, the Court believes that it was undoubtedly a
shocking and traumatic experience she had undergone which could haunt her mind for a long,
long time, the mere recall of which could make her feel so humiliated, as in fact she had been
actually humiliated once whenshe was refused admission at the Abad Santos High School,
Arellano University, where she sought to transfer from another school, simply because the
school authorities of the said High School learned about what happened to her and allegedly
feared that they might be implicated in the case.

19. xxx xxx xxx
The reason for imposing exemplary or corrective damages is due to the wanton and bestial
manner defendant had committed the acts of rape during a period of serious illegal detention of
his hapless victim, the minor Karen Salvacion whose only fault was in her being so naive and
credulous to believe easily that defendant, an American national, could not have such a bestial
desire on her nor capable of committing such a heinous crime. Being only 12 years old when that
unfortunate incident happened, she has never heard of an old Filipino adage that in every forest
there is a
snake, . . . . 4
If Karen's sad fate had happened to anybody's own kin, it would be difficult for him to fathom
how the incentive for foreign currency deposit could be more important than his child's rights to
said award of damages; in this case, the victim's claim for damages from this alien who had the
gall to wrong a child of tender years of a country where he is a mere visitor. This further
illustrates the flaw in the questioned provisions.
It is worth mentioning that 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 law may be good whenenacted. The law failed to anticipate the iniquitous effects
producing outright injustice and inequality such as the case before us.
It has thus been said that —
But I also know,5 that laws and institutions must go hand in hand with the progress of the
human mind. As that becomes more developed, more enlightened, as new discoveries are made,
new truths are disclosed and manners and opinions change with the change of circumstances,
institutions must advance also, and keep pace with the times. . . We might as well require a man
to wear still the coat which fitted him when a boy, as civilized society to remain ever under the
regimen of their barbarous ancestors.
In his Comment, the Solicitor General correctly opined, thus:
The present petition has far-reaching implications on the right of a national to obtain redress for
a wrong committed by an alien who takes refuge under a law and regulation promulgated for a
purpose which does not contemplate the application thereof envisaged by the alien. More
specifically, the petition raises the question whether the protection against attachment,
garnishment or other court process accorded to foreign currency deposits by PD No. 1246 and
CB Circular No. 960 applies when the deposit does not come from a lender or investor but from
a mere transient or tourist who is not expected to maintain the deposit in the bank for long.
The resolution of this question is important for the protection of nationals who are victimized in
the forum by foreigners who are merely passing through.
xxx xxx xxx

20. . . . Respondents China Banking Corporation and Central Bank of the Philippines refused to
honor the writ of execution issued in Civil Case No. 89-3214 on the strength of the following
provision of Central Bank Circular No. 960:
Sec. 113. Exemption from attachment. — 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.
Central Bank Circular No. 960 was issued pursuant to Section 7 of Republic Act No. 6426:
Sec. 7. Rules and Regulations. The Monetary Board of the Central Bank shall promulgate such
rules and regulations as may be necessary to carry out the provisions of this Act which shall take
effect after the publication of such rules and regulations in the Official Gazette and in a
newspaper of national circulation for at least once a week for three consecutive weeks. In case
the Central Bank promulgates new rules and regulations decreasing the rights of depositors, the
rules and regulations at the time the deposit was made shall govern.
The aforecited Section 113 was copied from Section 8 of Republic Act NO. 6426, as amended by
P.D. 1246, thus:
Sec. 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 such 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.
The purpose of PD 1246 in according protection against attachment, garnishment and other
court process to foreign currency deposits is stated in its whereases, viz.:
WHEREAS, under Republic Act No. 6426, as amended by Presidential Decree No. 1035, certain
Philippine banking institutions and branches of foreign banks are authorized to accept deposits
in foreign currency;
WHEREAS, under the provisions of Presidential Decree No. 1034 authorizing the establishment
of an offshore banking system in the Philippines, offshore banking units are also authorized to
receive foreign currency deposits in certain cases;
WHEREAS, in order to assure the development and speedy growth of the Foreign Currency
Deposit System and the Offshore Banking System in the Philippines, certain incentives were
provided for under the two Systems such as confidentiality of deposits subject to certain
exceptions and tax exemptions on the interest income of depositors who are nonresidents and
are not engaged in trade or business in the Philippines;
WHEREAS, making absolute the protective cloak of confidentiality over such foreigncurrency
deposits, exempting such deposits from tax, and guaranteeing the vested rights of depositors
would better encourage the inflow of foreign currency deposits into the banking institutions

21. authorized to accept such deposits in the Philippines thereby placing such institutions more in a
position to properly channel the same to loans and investments in the Philippines, thus directly
contributing to the economic development of the country;
Thus, one of the principal purposes of the protection accorded to foreign currency deposits is "to
assure the development and speedy growth of the Foreign Currency Deposit system and the
Offshore Banking in the Philippines" (3rd Whereas).
The Offshore Banking System was established by PD No. 1034. In turn, the purposes of PD No.
1034 are as follows:
WHEREAS, conditions conducive to the establishment of an offshore banking system, such as
political stability, a growing economy and adequate communication facilities, among others,
exist in the Philippines;
WHEREAS, it is in the interest of developing countries to have as wide access as possible to the
sources of capital funds for economic development;
WHEREAS, an offshore banking system based in the Philippines will be advantageous and
beneficial to the country by increasing our links with foreign lenders, facilitating the flow of
desired investments into the Philippines, creating employment opportunities and expertise in
international finance, and contributing to the national development effort.
WHEREAS, the geographical location, physical and human resources, and other positive factors
provide the Philippines with the clear potential to develop as another financial center in Asia;
On the other hand, the Foreign Currency Deposit system was created by PD. No. 1035. Its
purposes are as follows:
WHEREAS, the establishment of an offshore banking system in the Philippines has been
authorized under a separate decree;
WHEREAS, a number of local commercial banks, as depository bank under the Foreign
Currency Deposit Act (RA No. 6426), have the resources and managerial competence to more
actively engage in foreign exchange transactions and participate in the grant of foreign currency
loans to resident corporations and firms;
WHEREAS, it is timely to expand the foreign currency lending authority of the said depository
banks under RA 6426 and apply to their transactions the same taxes as would be applicable to
transaction of the proposed offshore banking units;
It is evident from the above [Whereas clauses] that the Offshore Banking System and the
Foreign Currency Deposit System were designed to draw deposits from
foreign lenders and investors (Vide second Whereas of PD No. 1034; third Whereas of PD No.
1035). 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

22. 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.
Respondent Greg Bartelli, as stated, is just a tourist or a transient. He deposited his dollars with
respondent China Banking Corporation only for safekeeping during his temporary stay in the
Philippines.
For the reasons stated above, the Solicitor General thus submits that the dollar deposit of
respondent Greg Bartelli is not entitled to the protection of Section 113 of Central Bank Circular
No. 960 and PD No. 1246 against attachment, garnishment or other court processes. 6
In fine, the application of the law depends on the extent of its justice. Eventually, if we rule that
the questioned Section 113 of Central Bank Circular No. 960 which exempts from attachment,
garnishment, or any other order or process of any court, legislative body, government agency or
any administrative body whatsoever, is applicable to a foreign transient, injustice would result
especially to a citizen aggrieved by a foreign guest like accused Greg Bartelli. This would negate
Article 10 of the New Civil Code which provides that "in case of doubt in the interpretation or
application of laws, it is presumed that the lawmaking body intended right and justice to prevail.
"Ninguno non deue enriquecerse tortizeramente con dano de otro." Simply stated, when the
statute is silent or ambiguous, this is one of those fundamental solutions that would respond to
the vehement urge of conscience. (Padilla vs. Padilla, 74 Phil. 377).
It would be unthinkable, that the questioned Section 113 of Central Bank No. 960 would be used
as a device by accused Greg Bartelli for wrongdoing, and in so doing, acquitting the guilty at the
expense of the innocent.
Call it what it may — but is there no conflict of legal policy here? Dollar against Peso? Upholding
the final and executory judgment of the lower court against the Central BankCircular protecting
the foreign depositor? Shielding or protecting the dollar deposit of a transient alien depositor
against injustice to a national and victim of a crime? This situation calls for fairness against legal
tyranny.
We definitely cannot have both ways and rest in the belief that we have served the ends of
justice.
IN VIEW WHEREOF, 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. Respondents are hereby REQUIRED to COMPLY
with the writ of execution issued in Civil Case No. 89-3214, "Karen Salvacion, et al. vs. Greg
Bartelli y Northcott, by Branch CXLIV, RTC Makati and to RELEASE to petitioners the dollar
deposit of respondent Greg Bartelli y Northcott in such amount as would satisfy the judgment.
SO ORDERED.