DUMLAO, Cheyenne Hope 1P

QUESTION: Can bank officials refuse to testify as witness regarding the

dishonor of a check in Batas Pambansa Blg. 22 case because of the bank
secrecy rule in Republic Act 1405?

To be able to answer the issue at hand, the writer will first provide a
background of the two laws mentioned – Batas Pambansa Blg. 22 and Repubic
Act 1405. Second, the writer will provide an answer to the question from her
analysis of what the Republic Act 1405 specifically provides. Third, to
strengthen the answer of the writer, jurisprudence, extrinsic and intrinsic aids,
as well as, pertinent rules in Statutory Construction that is applicable in this
case will likewise be provided. Finally, a conclusion will be made at the end of
the discussion in this paper.

REPUBLIC ACT NO. 1405

On the one hand, Republic Act No. 1405, “An Act Prohibiting Disclosure of
or Inquiry into, Deposits with any Banking Institution and Providing Penalty
Therefor”, is a policy of the Government to encourage people to deposit their
money in banking institutions and also to discourage private hoarding so that
the resources will be utilized properly by banks through the form of authorized
loans to help in the economic development of the country. Sections 2 and 3
of the R.A. 1405 provides what is included and what is exempted from the
law.1

SECTION 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 of an absolutely condential nature and may not be examined,
inquired or looked into by any person, government ofcial, bureau or ofce,
except 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

SECTION 3. It shall be unlawful for any official or employee of a banking

institution to disclose to any person other than those mentioned in Section two
hereof any information concerning said deposits. 3

Sections 2 and 3 of R.A. 1405 was amended by P.D. 1792, issued

January 16, 1981. P.D. 1792 added two (2) exceptions:

1
Republic Act No. 1405
2
Ibid.
3
Ibid.
 1. the examination of the deposit authorized by the Monetary Board
after being satisfied that there is reasonable ground that there is
bank fraud or an irregularity being or has been committed, and;
2. the examination of the deposit made by an independent auditor hired
by the bank to conduct its regular audit which are for audit purposes
only and exclusive use of the bank.

P.D. 1792 also amended Sec. 3 of R.A. 1405, which provided a

prohibition on disclosing any information of deposit by an independent auditor
hired by a bank to conduct its regular audit to disclose to any person other
than a bank director, official or employee authorized by the bank. In June 14,
1993, P.D. 1792 was repealed by the Sec. 135 of R.A. 7653, also known as
the New Central Bank Act. R.A. 1405 is now read in its original text.

BATAS PAMBANSA BLG. 22

On the other hand, Batas Pambansa Blg. 22, “An Act Penalizing the
Making or Drawing and Issuance of a Check without Sufficient Funds or Credit
and for Other Purposes”, sought to curtail the evil of issuing checks without
sufficient funds to the detriment of the receiver.4 However, it may also be
gleaned that there is no apparent problem between R.A. 1405 and B.P Blg.
22. In Recuerdo v. People the Court ruled that “it is not required, much less
indispensable, for the prosecution to present the drawee banks representative
as a witness to testify on the dishonor of the checks because of insufficiency
of funds”.5 Nevertheless, for the sake of argument, the writer will still argue
why, in a case of B.P. 22 and similar other cases or judicial inquire, bank
officials may not refuse to testify by invoking R.A. 1405.

Having explained the two laws, the writer now posits that bank officials
cannot refuse to testify as witness regarding the dishonor of a check in Batas
Pambansa Blg. 22 case by invoking the bank secrecy rule in Republic Act 1405.
The pivotal issue in this case is whether the exceptions provided under
Republic Act 1405, otherwise known as the Bank Secrecy Law, are applicable
or not. Hence, the confidentiality of bank deposits is the general rule while the
exceptions to such confidentiality are the following:
1. When the depositor waives his right in writing;
2. In case of impeachment;
3. In case of bribery and dereliction of duty; and
4. Where the money deposited or invested is the subject matter of the
litigation.6

4
Batas Pambansa Blg. 22
5
Recuerdo vs. People
6
Republic Act No. 1405
 I submit that since in the B.P. 22 case, it is the dishonor of the check that
is tried, nevertheless, the same incontrovertibly concerns money deposited
that is the subject of litigation. The bank officials called to testify in the case
do not, therefore, run afoul of the prohibitions under R.A.1405, because the
check under consideration is in the nature of "money deposited which is the
subject of a litigation".

STATUTORY CONSTRUCTION PRINCIPLES AND JURISPRUDENCE

It is a general rule in Statutory Construction that the intent of the

legislature is found in the language of the statute.7 In line with this, R.A.
1045 has expressly provided for exemptions wherein the said law may not be
applied. All exemptions provided in the law are for some judicial purpose.
From this, we can deduce that the legislature did not intend to make the
law as an excuse for people to pursue their illegal activities and invoke
this law to continue their illegal acts covertly or clandestinely.

CHINA BANKING CORPORATION AND TAN KIM LIONG VS. HON.

WENCESLAO ORTEGA (GR. L-34964)
FACTS: On the 17th of December 1968, Vicente Acaban filed a complaint
against Bautista Logging Co., Inc., B & B Forest Development Corporation and
Marino Bautista for the collection of a sum of money. The court declared the
defendants in default for not answering within the prescribed period upon
motion of the plaintiff. To satisfy the judgment, the plaintiff sought for the
garnishment of the bank deposits of the defendants with the China Banking
Corporation. Accordingly, a notice of garnishment was issued by the deputy
sheriff of the trial court and served on the bank’s cashier. In the reply of the
bank cashier, the bank invoked R.A. 1405 or the Bank Secrect Law. The trial
court, despite having denied the motion, ordered that the cashier confirm
whether or not the defendants have existing deposit in their bank. The cashier
moved to reconsider but was denied and, subsequently, he was ordered to
comply with the order of the court within 10 days, otherwise, he would be
arrested. Hence this petition.8

ISSUE: Whether or not China Bank may validly refuse to comply with a
court process garnishing the bank deposit of the debtor by invoking the
provisions of RA 1405.9

In the case of China Banking Corporation and Tan Kim Liong vs. Hon.
Wenceslao Ortega, Presiding Judge of the Court of First Instance Manila, the

7
Reuben E. Agpalo, Statutory Construction, Rex: 2009, p. 206
8
China Banking Corporation and Tan Kim Liong vs. Hon. Wenceslao Ortega, G.R. No. L-34964, January 31, 1973.
9
Ibid.
main contention is whether or not a banking institution may validly refuse to
comply with a court process garnishing the bank deposit of a judgment debtor,
by invoking the provisions of Republic Act No. 1405.10 This case looked for the
conference committee report on Senate Bill No. 351 and House Bill No. 3977,
which later became R.A. 1405, from the discussion of the lawmakers, it is
clear that it was not part of their intention to place bank deposits and
other details beyond the reach of execution to satisfy a final
judgment.11

It is elucidated from the conference committee report of the two houses

of Congress that the prohibition against examination of or inquiry into a bank
deposit under Republic Act 1405 does not preclude its being garnished to
insure satisfaction of a judgment.12 Indeed there is no real inquiry in such a
case, and if the existence of the deposit is disclosed the disclosure is purely
incidental to the execution process. It is improbable that the Congress
intended to enable debtors to evade payment of their just debts, even
if the same be ordered by a Court, by means of converting their assets into
cash and depositing it in a bank.13

In Statutory Construction, legislative debates, views and

deliberations are aids in understanding the spirit of the law.14 Thus,
included herein is the pertinent discussion on the conference committee report
of the Congress regarding R.A. 1405:

Mr. MARCOS: Now, for purposes of the record, I should like the Chairman of
the Committee on Ways and Means to clarify this further. Suppose an individual
has a tax case. He is being held liable by the Bureau of Internal Revenue for,
say, P1,000.00 worth of tax liability, and because of this the deposit of this
individual is attached by the Bureau of Internal Revenue.

Mr. RAMOS: The attachment will only apply after the court has pronounced
sentence declaring the liability of such person. But where the primary aim is to
determine whether he has a bank deposit in order to bring about a proper
assessment by the Bureau of Internal Revenue, such inquiry is not authorized
by this proposed law.

Mr. MARCOS: But under our rules of procedure and under the Civil Code, the
attachment or garnishment of money deposited is allowed. Let us assume, for
instance, that there is a preliminary attachment which is for garnishment or for
holding liable all moneys deposited belonging to a certain individual, but such
attachment or garnishment will bring out into the open the value of such
deposit. Is that prohibited by this amendment or by this law?

10
China Banking Corporation and Tan Kim Liong vs. Hon. Wenceslao Ortega, G.R. No. L-34964, January 31, 1973.
11
Ibid.
12
Ibid.
13
Ibid.
14
Reuben E. Agpalo, Statutory Construction, Rex: 2009, p. 206
 Mr. RAMOS: It is only prohibited to the extent that the inquiry is limited, or
rather, the inquiry is made only for the purpose of satisfying a tax liability
already declared for the protection of the right in favor of the government; but
when the object is merely to inquire whether he has a deposit or not for
purposes of taxation, then this is fully covered by the law.
xxx
"Mr. MARCOS: So I come to my original question. Therefore, preliminary
garnishment or attachment of the deposit is not allowed?

Mr. RAMOS: No, without judicial authorization.

Mr. MARCOS: I see. Suppose there has been a decision, definitely establishing
the liability of an individual for taxation purposes and this judgment is sought
to be executed… in the execution of that judgment, does this bill, or this
proposed law, if approved, allow the investigation or scrutiny of the bank
deposit in order to execute the judgment?

Mr. RAMOS: To satisfy a judgment which has become executory.

Mr. MARCOS: Yes, but, as I said before, suppose the tax liability is P1,000,000
and the deposit is half a million, will this bill allow scrutiny into the deposit in
order that the judgment may be executed?

Mr. RAMOS: Merely to determine the amount of such money to satisfy that
obligation to the Government, but not to determine whether a deposit has been
made in evasion of taxes.

Mr. MACAPAGAL: But let us suppose that in an ordinary civil action for the
recovery of a sum of money the plaintiff wishes to attach the properties of the
defendant to insure the satisfaction of the judgment. Once the judgment is
rendered, does the gentleman mean that the plaintiff cannot attach the bank
deposit of the defendant?

Mr. RAMOS: That was the question raised by the gentleman from Pangasinan
to which I replied that outside the very purpose of this law it could be reached
by attachment.

Mr. MACAPAGAL: Therefore, in such ordinary civil cases it can be attached?

Mr. RAMOS: That is so.15

Some argue that B.P. 22 is not included in the fourth exemption - where
the money deposited or invested is the subject matter of the litigation. The
sole basis of this contention is that checks are not money deposited. However,
it was held in Rufino Lopez and Sons, Inc. vs. CTA, that a statute may be
extended to cases not within the literal meaning of its terms, so long
as they come within its spirit or intent.16 Under the principle of
Construction to Accomplish Purpose, statutes should be construed in the

15
Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27, 1955
16
Rufino Lopez and Sons, Inc. vs. CTA
light of the object to be achieved and the evil or mischief to be suppressed.17
On the one hand, the object to be achieved of R.A. 1405 is to encourage
people to deposit their money in banking institutions. On the other hand, the
evil or mischief it seeks to suppress is the private hoarding and as may be
deemed from its exemptions, the use of this law to cover up for illegal
activities. In view thereof, there are two interpretations in the case at hand.
First, that cases of B.P. 22 is not considered to be part of the exemptions
enumerated in R.A. 1405. Second, that cases of B.P. 22 should be construed
as included in the fourth exemption. The second interpretation is the one that
should prevail since as between two statutory interpretations, the one
which better serves the purpose of the law should prevail. This is
because laws are not just mere composition, but have end to be achieved and
that the general purpose is a more important aid to the meaning of a law than
any rule which grammar may lay down.18 Aside from this principle, the court
may also consider the spirit and reason of a statute where a literal
meaning would lead to absurdity, contradiction, injustice, or would
defeat the clear purpose of the lawmakers.19 In the case at bar, if cases
of B.P. 22 would not be construed as part of the fourth exemption of R.A.
1405, then it would lead to injustice and would defeat the purpose of the
lawmakers. As already stated, from the conference committee reports, the
lawmakers made clear of some particular situations.

While the maxim casus omissus pro omisso habendus est – meaning, a
person, object or thing omitted from an enumeration must be held to have
been omitted intentionally is true, this applies only if and when the omission
has been clearly established. The exception is that when the legislature did
not intend to exclude the person, thing, or object from the
enumeration.20

Additionally, a statute should be construed as a whole. A statute is

passed as a whole and not in parts or sections and is animated by one general
purpose and intent. Hence, it should be construed as a harmonious whole. The
maxim ut res magis valeat quam pereat – construction is to be sought which
gives effect to the whole of the statute. As already discussed, the entirety of
R.A. 1405 specifically provides for the object to be achieved and the mischief
to be suppressed. Laws must receive sensible interpretation to promote the
ends of which they are enacted.21 It should not be construed as to allow
the doing of an act prohibited by law.22

17
LVN Pictures, Inc. vs. Philippine Musicians Guild
18
Reuben E. Agpalo, Statutory Construction, Rex: 2009
19
Ibid.
20
Ibid.
21
Lichauco and Co. vs. Apostol
22
Uy Ha vs. City Mayor of Manila
 Aside from this, it is presumed that laws are consistent with each
other. Whenever a legislature enacts a law, it has in mind the previous
statutes relating to the same subject matter.23

As stated previously, there is actually no need for a discussion on

whether R.A. 1405 may be invoked in cases of B.P. Blg. 22 since in cases of
bouncing checks, “it is not required, much less indispensable, for the
prosecution to present the drawee banks representative as a witness to testify
on the dishonor of the checks because of insufficiency of funds”.24 However,
for the sake of argument and for other similar cases, it is argued that R.A.
1405 cannot be invoked when there is a judicial need to look in to the nature
or information of banks or bank deposits.25 The law itself has provided for
exemptions. Also, it is a basic tenet in Statutory Construction that laws are
made to achieve a positive objective and to suppress an evil or mischief. In
line with this, a law may never be invoked to promote or further illegal
activities. To conclude, Republic Act No. 1405, otherwise known as the Bank
Secrecy Law, cannot be invoked to refuse to testify when required to do so by
a competent court or when it is necessary to arrive at a judicial decision.

23
Reuben E. Agpalo, Statutory Construction, Rex: 2009
24
Recuerdo vs. People
25
Republic Act 1405