THE CASE OF KAREN SALVACION V. CENTRAL BANK (1997) - 31 PJP 21

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This is the case of Karen Salvacion v. Central Bank (1997).[1]

In the case of Karen Salvacion v. Central Bank, on February 04, 1989, Greg, an American tourist, lured petitioner Karen, then 12 years old, to go with him in his apartment. Therein, Greg detained Karen for four days, or up to February 07, 1989, and was able to rape her once on February 04 and three times each day on February 05, 06, and 07, 1989. On February 07, 1989, after policemen and people living nearby the apartment rescued Karen, Greg was arrested and detained at the Makati Municipal Jail. The policemen recovered from Greg certain bank documents.

Attachment proceedings were sought by Karen’s camp but their pursuits were objected to by the local bank and, later, by the Central Bank (now Bangko Sentral ng Pilipinas [“BSP”]) on grounds of foreign currency deposit immunity or exemption from “attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever.” The question that reached the Supreme Court was whether Section 113 of Central Bank Circular No. 960 and Section 8 of RA No. 6426, as amended by Presidential Decree (“PD”) No. 1246, otherwise known as the Foreign Currency Deposit Act, should be made applicable to Greg, a foreign transient.

Ruling in the negative, the Court found it worth mentioning that RA No. 6426 was enacted in 1983 or at a time when the country’s economy was in shambles; when foreign investments were minimal. Presumably, this was the reason why said statute was enacted.

However, the realities of then-present times showed that the country had already recovered economically; and even if not, the questioned law’s unreasonable and oppressive application would still deny due process of law from those entitled to other legal rights and remedies. The intention of the questioned law may be good when enacted but the law failed to anticipate the iniquitous effects producing outright injustice and inequality such as this case.

In other words, the Supreme Court ruled that the application of a law should depend on the extent of the justice it dispenses. Otherwise, injustice would result, especially to a citizen aggrieved by a foreign guest like Greg. This would negate Article 10 of the NCC 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. Simply stated, when the statute is silent or ambiguous, one of those fundamental solutions that would respond to the vehement urge of conscience is to presume that Congress intended right and justice to prevail; hence, an interpretation that would result in injustice should be avoided. Therefore, Greg should not be allowed to hide under the protection of foreign currency deposit laws to evade the justice that Karen obviously deserved.

Notice that in the Karen Salvacion case, foreign factual matters – Greg’s citizenship and the foreign nature of the currency involved – were present. However, the Supreme Court did not find it necessary to apply municipal laws that point to the application of foreign laws because the connecting factors or points of contact do not invite such application. In short, there is no true foreign element in the case.

[1] 343 Phil. 539 [ G.R. No. 94723. August 21, 1997 ] KAREN E. SALVACION, MINOR, ET AL., PETITIONERS, VS. CENTRAL BANK OF THE PHILIPPINES, ET AL., RESPONDENTS.