Case Digest (G.R. No. 189206)
Facts:
Government Service Insurance System v. The Honorable 15th Division of the Court of Appeals and Industrial Bank of Korea, et al., G.R. No. 189206, June 08, 2011, First Division, Perez, J., concerns a dispute over whether a U.S. $11,000,000 foreign-currency deposit of Domsat Holdings, Inc. may be examined under the “subject matter of the litigation” exception to the Law on Secrecy of Bank Deposits. The case arose from Civil Case No. 99-1853, a collection suit filed by several banks (the Banks) against Domsat and GSIS based on loans and a surety bond executed by GSIS to guarantee repayment of an $11 million loan intended to finance a satellite lease from Intersputnik.Under the surety bond executed December 13, 1996, GSIS bound itself as surety for Domsat’s obligations to the Banks. When Domsat allegedly failed to apply the loan proceeds to the satellite lease, GSIS refused to pay on the bond, prompting the Banks to sue for collection. GSIS alleged the loan proceeds were diverted and sought discovery. It caused the RTC of Makati to issue a subpoena duces tecum (21 November 2002) directing the records custodian of Westmont Bank (now United Overseas Bank) to produce, among other things, Domsat’s bank ledger and applications for cashier’s/manager’s checks and transfers for the period January 1997–December 2002.
The Banks moved to quash the subpoena on grounds including that (1) the subpoena was oppressive and irrelevant; (2) production would violate the secrecy of bank deposits (foreign currency) under R.A. No. 6426; and (3) GSIS failed to advance costs of production. The RTC first denied the motion to quash (Order of 9 April 2003) and denied a motion for reconsideration (26 June 2003), but on the Banks’ second motion for reconsideration the trial court granted relief and quashed the subpoena for the bank ledger (Order of 1 September 2003); GSIS’s motion for reconsideration was denied on 30 December 2003.
GSIS filed a petition for certiorari under Rule 65 before the Court of Appeals (CA). The CA (penned by A. Dizon) found that Domsat’s deposit was a foreign-currency deposit covered by R.A. No. 6426 and therefore confidential absent written depositor consent; it upheld the quashal of the ledger subpoena but ordered production of (a) applications for cashier’s/manager’s checks, (b) bank transfers by Domsat through Westmont, and (c) a copy of any agreement/contract/memorandum between Domsat/Philippine Agila Satellite and Intersputnik (Decision of 29 February 2008). GSIS’s motion for reconsideration to the CA was denied on 19 June 2009.
GSIS then filed a petition for certiorari under Rule 65 to the Supreme Court, assailing (i) the trial court’s acceptance of the Banks’ second motion for reconsideration despite lack of notice, (ii) the CA’s ruling that the dep...(Subscriber-Only)
Issues:
- Was certiorari under Rule 65 a proper remedy to challenge the Court of Appeals’ decision?
- Are Domsat’s U.S. dollar deposits in Westmont Bank subject to disclosure under the “money deposited is the subject matter of the litigation” exception of R.A. No. 1405, or are they protected by R.A. No. 6426?
- Did the trial court commit grave abuse of discretion in accepting the Banks’ second motion for reconsideration despite the Banks’ alleged failure to comply with the notice requirements of Se...(Subscriber-Only)
Ruling:
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Ratio:
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Doctrine:
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