G.R. No. 246313 - Philippine Charity Sweepstakes Office vs. Commission on Audit

On December 12, 1996, Industrial Bank of Korea, Tong Yang Merchant Bank, First Merchant Banking Corporation, Land Bank of the Philippines and Westmont Bank (collectively “the Banks”) lent US$11,000,000.00 to Domsat Holdings, Inc. (“Domsat”) to finance the two-year lease and/or purchase of a Gorizon Satellite from Intersputnik.
To secure repayment, Domsat obtained a surety bond from the Government Service Insurance System (GSIS) under which GSIS guaranteed performance of all covenants in the loan agreement.

Domsat failed to pay its obligations. GSIS refused to honor the bond, alleging that Domsat diverted the loan proceeds through Westmont Bank instead of using them to pay satellite rent.
The Banks filed Civil Case No. 99-1853 for collection of sums due with damages against Domsat and GSIS before the Regional Trial Court (RTC) of Makati.

GSIS sought a subpoena duces tecum requiring Westmont Bank’s records custodian to produce:

All ledgers, documents and records of Domsat’s and Philippine Agila Satellite, Inc.’s accounts with Westmont (Jan. 1997–Dec. 2002).
All applications for cashier’s/manager’s checks and bank transfers funded by those accounts (same period).

On November 21, 2002, the RTC issued the subpoena. The Banks and Domsat moved to quash on grounds of irrelevance, undue oppression, violation of bank secrecy laws and non-payment of production costs.
On April 9, 2003, the RTC denied the motion to quash. A subsequent motion for reconsideration was also denied on June 26, 2003. On September 1, 2003, however, the RTC granted the Banks’ second motion for reconsideration—albeit pro forma—and quashed the subpoenas. GSIS’s motion for reconsideration was denied on December 30, 2003.

GSIS filed a petition for certiorari under Rule 65 before the Court of Appeals (CA), assailing the RTC’s quashal orders and raising:

Grave abuse of discretion in admitting the second motion for reconsideration without notice.
Misapplication of the Law on Secrecy of Bank Deposits (RA 1405) and the Foreign Currency Deposit Act (RA 6426).
Waiver of secrecy since the deposit was openly disclosed in trial.

Upheld the quashal of Domsat’s bank ledger subpoena, holding that US$11,000,000.00 is a foreign currency deposit covered absolutely by RA 6426 and disclosable only upon written consent of the depositor.
Ordered production of (i) applications for cashier’s/manager’s checks and bank transfers by Domsat (Jan. 1997–Dec. 2002) and (ii) the agreement between Domsat (and/or Philippine Agila Satellite) and Intersputnik, deeming these documents non-invasive of deposit secrecy.

Was certiorari under Rule 65 the proper remedy for GSIS, or should it have filed a petition for review under Rule 45?
Did the CA err in validating the Banks’ second motion for reconsideration despite its pro forma nature and lack of hearing notice?

Which law governs Domsat’s US$11,000,000.00 deposit at Westmont Bank—RA 1405 (general secrecy law) or RA 6426 (special law on foreign currency deposits)?
Does the exception in RA 1405 allowing disclosure when the deposited money is the subject matter of litigation apply to this foreign currency deposit?
Has confidentiality been waived by the alleged disclosure of the deposit during trial?

May the subpoena duces tecum compel production of bank ledgers and records revealing deposit amounts without violating the applicable bank secrecy law?
Are applications for cashier’s/manager’s checks, bank transfers and the Domsat-Intersputnik agreement exempt from secrecy protection?