LEGAL MEMORANDUM

Re: Bank Secrecy Law

SECRECY OF BANK DEPOSITS

To encourage people to deposit their money in banking institutions
thereby discouraging private hoarding so that the same may be properly
utilized by banks to assist in the economic development of the country, 1
the Bank Secrecy Law was enacted in 1955. Section 2 of said law
provides for the secrecy of bank deposits.

Sec. 2. All deposits of whatever nature with banks or

banking institutions in the Philippines including
investments in bonds issued by the Government of the
Philippines, its political subdivisions and its
instrumentalities, are hereby considered as absolutely
confidential nature and may not be examined, inquired or
looked into by any person, government official, bureau or
office, except when the examination is made in the course
of a special or general examination of a bank and is
specifically authorized by the Monetary Board after being
satisfied that there is reasonable ground to believe that a
bank fraud or serious irregularity has been or is being
committed and that it is necessary to look into the deposit
to establish such fraud or irregularity, or when the
examination is made by an independent auditor hired by the
bank to conduct its regular audit provided that the
examination is for audit purposes only and the results
thereof shall be for the exclusive use of the bank, or upon
written permission of the depositor, or in cases of
impeachment, or upon order of a competent court in cases
of bribery or dereliction of duty of public officials, or in
cases where the money deposited or invested is the subject
matter of the litigation.2

As can be gleaned from the above-quoted provision, the general

rule is that bank deposits are absolutely confidential in nature. The same
section, however, provides for the exceptions to the general rule, to wit:

1
An Act Prohibiting Disclosure of or Inquiry into, Deposits with any Banking Institution and Providing
Penalty Therefor [Bank Secrecy Law], Republic Act No. 1405, as Amended, § 1 (1955).
2
Id. § 2.
 2

1. In an examination made in the course of a special or

general examination of a bank that is specifically
authorized by the Monetary Board after being satisfied
that there is reasonable ground to believe that a bank
fraud or serious irregularity has been or is being
committed and that it is necessary to look into the
deposit to establish such fraud or irregularity;
2. In an examination made by an independent auditor
hired by the bank to conduct its regular audit provided
that the examination is for audit purposes only and the
results thereof shall be for the exclusive use of the
bank;
3. Upon written permission of the depositor;
4. In cases of impeachment;
5. Upon order of a competent court in cases of bribery or
dereliction of duty of public officials; or
6. In cases where the money deposited or invested is the
subject matter of the litigation.3

SUBJECT MATTER OF THE LITIGATION EXCEPTION

One of the instances when an inquiry on a bank deposit or bank

account may be conducted is “where the money deposited or invested is
the subject matter of the litigation.” The subject of the action, as
defined by the Court in Yusingco v. Ong Hing Lian is “the matter or thing
with respect to which the controversy has arisen, concerning which the
wrong has been done, and this ordinarily is the property, or the contract
and its subject matter, or the thing in dispute.” 4 In Union Bank v. Court
of Appeals, the Court held that the foregoing definition of “subject of the
action” is consistent with the term “subject matter of the litigation” as
used in the Bank Secrecy Law. In the same case, the Court also ruled
that “the inquiry into bank deposits allowable under R.A. No. 1405 must
be premised on the fact that the money deposited in the account is itself
the subject of the action.”

In BSB Group, Inc. v. Sally Go, the Court discussed the “subject
matter of the litigation” exception under the Bank Secrecy Law. In this
case, Sally Go, the cashier of BSB Group Inc., was charged with
Qualified Theft for allegedly depositing to her personal bank account
maintained at Security Bank, Divisoria Branch several checks issued by
customers of the corporation representing the aggregate amount of

3
Id.
4
Union Bank v. Court of Appeals, 378 PHIL. 1177 (1999).
 3

Php1,534,135.50 instead of turning over these payments to the

company’s coffers.5 The Information read as follows:

“That in or about or sometime during the period

comprised (sic) between January 1988 [and] October 1989,
inclusive, in the City of Manila, Philippines, the said
accused did then and there willfully, unlawfully, and
feloniously with intent [to] gain and without the knowledge
and consent of the owner thereof, take, steal, and carry
away cash money in the total amount of Php 1,534,135.50
belonging to BSB GROUP OF COMPANIES represented
by RICARDO BANGAYAN, to the damage and prejudice
of said owner in the aforesaid amount of Php 1,534,135.50.

That in the commission of the said offense, said

accused acted with grave abuse of confidence, being then
employed as cashier by said complainant at the time of the
commission of the said offense and as such she was
entrusted with the said amount of money.

Contrary to law.”6

The trial court issued a subpoena duces tecum/ad testificandum

against the respective managers or records custodians of Security Bank’s
Divisoria Branch.7 The prosecution was then able to present in court the
testimony of the representative of Security Bank. The testimony sought
to prove that respondent, while engaged as cashier at the corporation,
was able to run away with the checks issued to the company by its
customers, endorse the same, and credit the corresponding amounts to
her personal deposit account with Security Bank. 8 The representative
identified the subject checks in the course of her testimony. Sally Go
then filed a Motion to Suppress seeking to exclude the testimony of the
representative and the documents she identified. 9

The issues raised before the Supreme Court was whether the
testimony of the representative and the accompanying documents are
relevant to the case and whether testimony of the representative violated
the absolutely confidential nature of bank deposits and, hence, excluded
by operation of R.A. 1405. The Supreme Court held that the testimony of

5
BSB Group, Inc. v. Sally Go, 626 PHIL. 501 (2010).
6
Id.
7
Id.
8
Id.
9
Id.
 4

the representative and the documents she identified are irrelevant, and
excluded by the Bank Secrecy Law and, thus, inadmissible.

In arguing for the admissibility of the testimony and the checks,

BSB Group attempted to draw a connection between the evidence subject
of the review (testimony of the representative and the subject checks),
and the allegation of theft in the Information by claiming that Sally Go
had fraudulently deposited the checks in her own name. 10 In resolving
the issue, the Court differentiated theft from estafa and examined the
allegations in the Information. It held that,

“But this line of argument works more prejudice than favor,

because it in effect, seeks to establish the commission, not
of theft, but rather of some other crime – probably estafa.

Moreover, that there is no difference between cash and

check is true in other instances. In estafa by conversion, for
instance, whether the thing converted is cash or check, is
immaterial in relation to the formal allegation in an
information for that offense; a check, after all, while not
regarded as legal tender, is normally accepted under
commercial usage as a substitute for cash, and the credit it
represents in stated monetary value is properly capable of
appropriation. And it is in this respect that what the
offender does with the check subsequent to the act of
unlawfully taking it becomes material inasmuch as this
offense is a continuing one. In other words, in pursuing a
case for this offense [estafa by conversion], the
prosecution may establish its cause by the presentation
of the checks involved. These checks would then
constitute the best evidence to establish their contents
and to prove the elemental act of conversion in support
of the proposition that the offender has indeed indorsed
the same in his own name.

Theft, however, is not of such character. Thus, for our

purposes, as the Information in this case accuses
respondent of having stolen cash, proof tending to establish
that respondent has actualized her criminal intent by
indorsing the checks and depositing the proceeds thereof in
her personal account, becomes not only irrelevant but also
immaterial and, on that score, inadmissible in evidence.” 11
(emphasis supplied).
10
Id.
11
Id.
 5

BSB Group also argued that the account maintained by Sally Go

with Security Bank contains the proceeds of the checks that she has
fraudulently appropriated to herself, and thus, falls under one of the
exceptions in Section 2 of the Bank Secrecy Law. The Supreme Court, in
holding that the subject evidence does not fall under one of the
exceptions in the said law, cited Union Bank v. Court of Appeals stating
that “the inquiry into the bank deposits allowable under R.A. No. 1405
must be premised on the fact that the money deposited in the account is
itself the subject of the action.12 The Court further held that,

“Given this perspective, we deduce that the subject matter

of the action in the case at bar is to be determined from
the indictment that charges respondent with the offense,
and not from the evidence sought by the prosecution to
be admitted into the records.”13 (emphasis and
underscoring supplied)

Thus, the Court looked at the Information charging Sally Go with

qualified theft. The Court found that,

“The said Information makes no factual allegation that in

some material way involves the checks subject of the
testimonial and documentary evidence sought to be
suppressed. Neither do the allegations in said Information
make mention of the supposed bank account in which the
funds represented by the checks have allegedly been kept.

In other words, it can be hardly inferred from the

indictment itself that the Security Bank account is the
ostensible subject of the prosecution’s inquiry. […] The
subject matter of the action in this case is the money
amounting to Php 1,534,135.50 alleged to have been stolen
by respondent, and not the money equivalent to the checks
which are sought to be admitted in evidence.” 14 (emphasis
supplied)

In sum, the following are the pronouncements of the Court in the

case of BSB Group v. Sally Go:

1. In cases of estafa by conversion, the prosecution may present the

checks as evidence to prove one of the elements of the crime –
12
Id.
13
Id.
14
Id.
 6

conversion – through the offender’s act of indorsing the said

checks in his own name.

2. In determining whether testimonial or documentary evidence

relates to the subject matter of the litigation and is therefore
covered by the exception under the Bank Secrecy Law, the
evidence must pertain to the bank account which is the subject of
the prosecution’s inquiry.

The elements the crime of estafa by false pretense are as follows:

(a) There must be a false pretense or fraudulent representation as

to his power, influence, qualifications, property, credit, agency,
business or imaginary transactions;

(b) Such false pretense or fraudulent representation was made or

executed prior to or simultaneously with the commission of the
fraud;

(c) The offended party relied on the false pretense, fraudulent act,
or fraudulent means and was induced to part with his money or
property; and

(d) As a result thereof, the offended party suffered damage.

The ruling of the Court in BSB Group v. Sally Go regrading the

presentation of checks in a case for estafa by conversion can be applied
analogously to a case for estafa by false pretense when the offender
utilized checks in making fraudulent representations. The checks used
by the offender and the details relating thereto are the very subject of the
prosecution’s inquiry. Specifically, the checks and the corresponding
details related thereto seek to establish the existence of the element of
false pretense or fraudulent representation as to credit. More so when
the Information charging the accused of estafa by conversion mentions
the check itself. In such case, there is no quibbling that the checks itself
are the subject matter of the litigation. Thus, an inquiry thereto falls
under one of the exceptions to the Bank Secrecy Law.

The Court cited its Decision in BSB Group v. Sally Go in the recent
case of People v. BDO Unibank, Inc.15 The several accused in this case
were charged with estafa by false pretense in relation to syndicated
estafa. It must be noted that the Informations in this case did not

15
People v. BDO Unibank, G.R. No. 241115, Jan. 7, 2019.
 7

mention a bank account nor a check relating to the alleged crime. The
three Informations were almost similarly worded and the difference
among the three lies only on the date of the commission of the crime, the
names of the offended parties, and the amount swindled. One of the
Informations contain the following recitals:

“That prior to or in July 2012, in Cagayan de Oro City,

Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, holding themselves as
officers/owners/associates of And Auto Option Corporation
and BDR Group of Companies, conspiring and
confederating with one another, with false pretenses,
fraudulent act, and fraudulent means, knowingly, willfully,
and feloniously enticed complainants ABDUL JABBAR
DIAMPUAN, ABU-AMAR SAMBITORY, MANGODA
TAGORANAO, SIDICK DIBARATON, YOSUPH
PAITO, MOAMAR SAMBITORY, ACMAD
LOMONDOT, SAID KUDARAT, OLAKI DERON,
SAMANODEN OTE, MONNIB HASSAN, NASH
RAMOS, ISAMEL MAMA, ABULHAIR GURO,
ASNAWI HAMDAG, PRINCESS DERON, SOHARTO
BULEG, BAGOATAO DIAMPUAN, CAMAD
BONGAROS, MIHAD PUMBAYA, SAMSON ADIONG,
MINOYOD DIAMPUAN, JAMAEL DIPATUAN,
AMERODIN HAMDAG JR., and MUHAIMEN BENITO,
to invest in NAD Auto Option Corporation when, in truth
and in fact, the same is a non-existent corporation, and
assured complainants the return of their investments
ranging from 50% - 100% within a period of sixty (60)
days from date of transactions thereby inducing
complainants to part with their money in the total amount
of One Hundred Twenty Million Pesos (Php,
120,000,000.00), more or less, and upon demand, failed to
return the same, to their damage and prejudice.”16

The Special Panel of Prosecutors filed three motions for the

issuance of subpoenas on various banks, including BDO, where the
several accused maintained accounts related to the alleged scam. 17 At
first, the trial court issued subpoenas duces tecum/ad testificandum.
However, subsequently, the trial court denied the prosecution’s motion
for want of legal basis. The court also recalled all the subpoenas issued
to various banks.

16
People v. Hon. Puruganan and BDO Unibank, Inc., CA-G.R. SP No. 139412, Nov. 28, 2017.
17
Id.
 8

The prosecution filed a Rule 65 petition arguing that the subject

bank accounts fall under the exception to the Bank Secrecy Law. The
Court of Appeals, in ruling that the bank accounts do not fall under the
exception cited BSB Group Inc., v. Sally Go. It held that,

“Indeed, the allegations in the three Information[s] against

accused Rasuman, et al. failed to specifically allege that the
accounts in BDO and/or other banks were being used in
any manner to defraud or commit the charges of syndicated
estafa against the private complainants. Not being the
subject of the criminal complaint, We agree with the
respondent court that to allow inquiry through subpoena
into the details of the bank account of accused with BDO
and/or other banks will be tantamount to violation of the
secrecy of bank deposits under R.A. No. 1405.”18

The Supreme Court concurred with the ruling of the appellate

court that the documents subject of the subpoena are shielded by the
Bank Secrecy Law.19 The Court added,

“It is clear from the Information that the subject matter of

the action is the millions of pesos alleged to have been
swindled by Rasuman, et al., and not the money in the bank
accounts which are sought to be subpoenaed. Stated
otherwise, the bank accounts subject of the subpoena duces
tecum were not the subject matter of a litigation and as
such, are protected by the Bank Secrecy Law.”

The similarity between the case of BSB Group and BDO Unibank
where the Court held that the bank accounts are shielded by the Bank
Secrecy Law is the fact that the Informations therein made no mention of
the checks or the bank accounts they were seeking to look into through
the issuance of a subpoena.

In summary, one of the exceptions to the absolutely confidential

nature of bank deposits is when the money deposited or invested is the
subject matter of the litigation. It has been held that the phrase “subject
matter” as used in the Bank Secrecy Law means “the matter or thing
with respect to which the controversy has arisen, concerning which the
wrong has been done, and this ordinarily is the property, or the contract
and its subject matter, or the thing in dispute.”

18
Id.
19
BDO Unibank, G.R. No. 241115.
 9

To determine whether the evidence sought to be presented in a

case falls under one of the exceptions to the secrecy of bank deposits, the
allegations in the Information or the Complaint must be examined. If the
Information or Complaint contains allegations about the bank account
which is the ostensible subject of the inquiry in a case, then the
information regarding the said bank account falls under the “subject
matter of the litigation” exception under the Bank Secrecy Law and can
therefore be the subject of a subpoena.