BANKS AND FINANCIAL INTERMEDIARIES

Submitted by: Submitted to:

Querijero, Frances Loren P. Atty. Monica L. Jimenez-Bigbig
Cisneros, Jued February 19, 2019

Invasion of Right to Privacy as Warranted in the Exceptions

Under Republic Act 1405 (Bank Secrecy Law)

Exceptions Under RA 1405 State Interest it Protects

The state has the duty to ensure that
high-ranking public officers have the
moral fitness and integrity to fulfill their
mandate pursuant to Section 1, Article
XI of the 1987 Constitution which
states:
1) In cases of impeachment
“Public office is a public trust. Public
officers and employees must at all times
be accountable to the people, serve them
with utmost responsibility, integrity,
loyalty, and efficiency, act with patriotism
and justice, and lead modest lives.”

The state affords protection against

irresponsible and dishonest public
officials and employees pursuant to
Section 2 of RA 6713 (Code of
Conduct of Public Officials and
Employees) which states:
2) Upon order of the court in cases of
bribery or dereliction of duty of “Public officials and employees shall at
public officials all times be accountable to the people
and shall discharge their duties with
utmost responsibility, integrity,
competence, and loyalty, act with
patriotism and justice, lead modest lives,
and uphold public interest over personal
interest.”

This exception is a means of giving the

state an effective investigative tool in
3) Upon order of the court in cases cases where the money deposited or
where the money deposited or invested is the subject matter of the
invested is the subject matter of the litigation. Jurisprudence provides
litigation foundations for this exception, which
states, among others, that:

“The disclosure of deposits to satisfy the

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writ of garnishment issued by the court is

not a violation of deposit secrecy since
the disclosure is purely incidental to the
execution process.” (China Banking
Corp. vs. Ortega, 49 SCRA 355)

“Inquiry in cases of unexplained wealth

under the Anti-Graft and Corrupt
Practices Act and in plunder under RA
No. 7080, stating that these offenses are
similar to bribery or dereliction of duty
may be allowed.” (Phil. National Bank vs.
Gancayco, 122 Phil. 503; Ejercito vs.
Sandiganbayan and People of the
Philippines, 509 SCRA 190)

“On grounds of equity, the deposit of a

foreign transient can be proceeded
against to prevent an injustice to an
aggrieved citizen.” (Salvacion vs. Central
Bank, 278 SCRA 27)

“Also on grounds of equity, the Supreme

Court allowed the owner of funds
unlawfully taken to inquire on the deposit
of said funds.” (China Banking Corp. vs.
Court of Appeals, 511 SCRA 110).
The specific provision of R.A. 6770, in
accordance to Sec. 13 (1) Article XI of
the 1987 Constitution, places the
4) Upon a subpoena issued by the Office of the Ombudsman in the same
Ombudsman concerning an footing as the courts of law, to wit:
investigation it is conducting,
provided that there must already be Section 15. Powers, Functions and Duties.
a case pending in the court, the — The Office of the Ombudsman shall have
account be clearly identified, the the following powers, functions and duties:
inspection be limited to the subject (1) Investigate and prosecute on its own or on
complaint by any person, any act or omission
matter of the pending case; and the of any public officer or employee, office or
bank personnel and the depositor agency, when such act or omission appears to
must be notified to be present be illegal, unjust, improper or inefficient. It has
during the inspection primary jurisdiction over cases cognizable by
the Sandiganbayan and, in the exercise of his
primary jurisdiction, it may take over, at any
stage, from any investigatory agency of
Government, the investigation of such cases;
Under Section 6 (f) of the National
5) The BIR can inquire into bank
Internal Revenue Code (NIRC) of
deposits in an application for
1997, as amended by RA 10021, the
compromise of tax liability or
Commissioner of Internal Revenue
determination of a decedent’s gross
(CIR) has the authority to inquire into
estate
the bank deposits and other related

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information held by the financial

institutions of:

a. A decedent to determine his

gross estate;
b. Any taxpayer who has filed an
application for compromise of
his tax liabilities on his claim that
his financial position
demonstrates a clear inability to
pay the tax assessed, his
application shall not be
considered unless and until he
waives in writing his privilege
under RA 1405, RA 6426, or
under other general or special
laws, and such waiver shall
constitute the authority of the
Commissioner to inquire into the
bank deposits of the taxpayer;
and
c. A pecific taxpayer subject of a
request for the supply of tax
information froma foreign tax
authority pursuant to an
international convention or
agreement on tax matters to
which the Philippines is a
signatory or a party of: Provided,
that the information obtained
from the banks and other
financial institutions may be
used by the BIR for tax
assessment, verification, audit
and enforcement purposes.

This exception is a means of providing

the state with an effective examination
6) The Anti-Money Laundering Council device in crimes involving money
(AMLC) can examine bank laundering, as stated under Section 11
accounts pursuant to a court order, of the Anti-Money Laundering Act:
where there is probable cause that
the deposits are related to an “AMLC may inquire into or examine any
unlawful activity or money particular deposit or investment,
laundering offense including related accounts, with any
banking institution or non-bank financial
institution upon order of any competent

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court based on an ex parte application

in cases of violations of this Act, when it
has been established that there is
probable cause that the deposits or
investments, including related accounts
involved, are related to an unlawful
activity xxx.”

7) The AMLC can examine bank The state has the duty to protect the
accounts, WITHOUT a court order, people as stated in Section 4, Article II
where there is probable cause that of the Constitution:
the deposits are related to certain “Section 4. The prime duty of the
Government is to serve and protect the
crimes such as kidnapping for
people xxx.”
ransom, violation of the Dangerous
Drugs Act, hijacking, destructive (This is in relation to acts of terrorism and other violent
arson, murder and violations of RA acts. Refer to number 8 for a more detailed explanation
on the Human Security Act)
6235 (acts inimical to civil aviation)
RA 9372 or the human Security Act
provides for the procedure

Section 7. Surveillance of suspects and

interception and recording of
communications. The provisions of RA
4200 (Anti-Wiretapping Law) to the
contrary notwithstanding, a police or law
enforcement official and the members of
his team may, upon a written order of the
Court of Appeals, listen to, intercept and
record, with the use of any mode, form or
kind or type of electronic or other
surveillance equipment or intercepting and
8) Upon a court order in cases related tracking devices, or with the use of any
to the financing of acts of terrorism other suitable ways or means for that
purpose, any communication, message,
conversation, discussion, or spoken or
written words between members of a
judicially declared and outlawed terrorist
organization, association, or group of
persons or of any person charged with or
suspected of the crime of terrorism or
conspiracy to commit terrorism.

Provided, That surveillance, interception

and recording of communications between
lawyers and clients, doctors and patients,
journalists and their sources and
confidential business correspondence shall

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9) The Bangko Sentral can examine as may be determined by the Monetary
bank accounts in the course of its Board.
periodic or special examination
regarding compliance with Anti-
Money Laundering Law.
not be authorized.
R.A. No. 7653 provides for the powers of
the BSP the examination of bank accounts.
Section 25. Supervision and Examination. -
The Bangko Sentral shall have supervision
over, and conduct periodic or special
examinations of, banking institutions and
quasi-banks, including their subsidiaries
and affiliates engaged in allied activities.
For purposes of this section, a
subsidiary means a corporation more than
fifty percent (50%) of the voting stock of
which is owned by a bank or quasi-bank
and an affiliate means a corporation the
voting stock of which, to the extent of fifty
percent (50%) or less, is owned by a bank
or quasi-bank or which is related or linked
to such institution or intermediary through
common stockholders or such other factors
The department heads and the
examiners of the supervising and/or
examining departments are hereby
authorized to administer oaths to any
director, officer, or employee of any
institution under their respective
supervision or subject to their examination
and to compel the presentation of all books,
documents, papers or records necessary in
their judgment to ascertain the facts relative
to the true condition of any institution as
well as the books and records of persons
and entities relative to or in connection
with the operations, activities or
transactions of the institution under
examination, subject to the provision of
existing laws protecting or safeguarding the
secrecy or confidentiality of bank deposits
as well as investments of private persons,
natural or juridical, in debt instruments
issued by the Government.
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No restraining order or injunction

shall be issued by the court enjoining the
Bangko Sentral from examining any
institution subject to supervision or
examination by the Bangko Sentral,
unless there is convincing proof that the
action of the Bangko Sentral is plainly
arbitrary and made in bad faith and the
petitioner or plaintiff files with the clerk
or judge of the court in which the action
is pending a bond executed in favor of
the Bangko Sentral, in an amount to be
fixed by the court. The provisions of Rule
58 of the New Rules of Court insofar as
they are applicable and not inconsistent
with the provisions of this section shall
govern the issuance and dissolution of
the restraining order or injunction
contemplated in this section.