In the case of Doña Adela Export International, Inc. v. Trade and Investment Development Corporation (TIDCORP) and the Bank of the Philippine Islands (BPI), the Supreme Court held that a waiver of bank deposit confidentiality must be explicit and cannot be implied, especially when the waiver is part of an agreement where the depositor is not a direct party. This decision protects individuals and entities undergoing insolvency from having their bank records accessed without their express written consent, reinforcing the constitutional right to privacy and the statutory guarantees under the Law on Secrecy of Bank Deposits.

When Debtors Can’t Waive Away Your Privacy Rights

Doña Adela Export International, Inc., facing insolvency, found itself in a legal tug-of-war between creditor claims and the sacrosanct right to bank secrecy. After filing a petition for voluntary insolvency, the company became embroiled in a dispute over a “Joint Motion to Approve Agreement” between its creditors, TIDCORP and BPI. This agreement contained a contentious clause: a waiver of Doña Adela’s rights to bank deposit confidentiality. The legal question before the Supreme Court was whether Doña Adela could be bound by this waiver, despite not being a direct party to the agreement and without providing explicit consent.

The Supreme Court anchored its decision on Republic Act (R.A.) No. 1405, the Law on Secrecy of Bank Deposits, which establishes a general policy of confidentiality concerning bank deposits. This law has been amended over time but retains its core principle. Section 2 of R.A. No. 1405 explicitly states that bank deposits are considered absolutely confidential and cannot be examined except under specific circumstances. These exceptions include situations where there is written permission from the depositor, cases of impeachment, court orders related to bribery or dereliction of duty by public officials, instances where the deposited money is the subject of litigation, and cases involving violations of the Anti-Money Laundering Act.

Crucially, the Court emphasized that these exceptions are strictly construed to protect the depositor’s right to privacy. The law mandates that any waiver of this right must be explicit and in writing. In Doña Adela’s case, the waiver was embedded within an agreement between TIDCORP and BPI, to which Doña Adela was not a direct signatory. The Court found that this did not meet the standard of ‘written permission’ required by R.A. No. 1405. There was no clear, unambiguous consent from Doña Adela or its representatives to relinquish their right to bank secrecy. “In this case, the Joint Motion to Approve Agreement was executed by BPI and TIDCORP only. There was no written consent given by petitioner or its representative, Epifanio Ramos, Jr., that petitioner is waiving the confidentiality of its bank deposits. The provision on the waiver of the confidentiality of petitioner’s bank deposits was merely inserted in the agreement. It is clear therefore that petitioner is not bound by the said provision since it was without the express consent of petitioner who was not a party and signatory to the said agreement.”

The creditors argued that Doña Adela’s silence and lack of objection during the proceedings implied consent to the waiver. The Supreme Court rejected this argument, asserting that waivers cannot be presumed and must be demonstrated positively. The Court underscored that mere silence does not equate to a waiver, and courts must presume against the existence and validity of any such waiver. The Court’s emphasis on the requirement for a demonstrably clear intent to relinquish a right underscores the importance of protecting individuals from inadvertently losing their legal protections through ambiguous or passive behavior.

The decision also considered the role of the court-appointed receiver in insolvency cases. When a company is declared insolvent, its assets are transferred to a receiver who is responsible for managing and distributing them to creditors. The Court noted that any agreement affecting the insolvent company’s assets, including a waiver of bank secrecy, requires the receiver’s approval. In this case, while the receiver was aware of the Joint Motion to Approve Agreement, there was no explicit indication that she conformed to the waiver of confidentiality. This lack of conformity from the receiver provided additional grounds for the Court to invalidate the waiver provision.

“While it was Atty. Gonzales who filed the Motion for Parties to Enter Into Compromise Agreement, she did not sign or approve the Joint Motion to Approve Agreement submitted by TIDCORP and BPI. In her Manifestation and Comment (on Dacion En Pago by Compromise Agreement with TRC and Joint Motion to Approve Agreement of BPI and TIDCORP) there is no showing that Atty. Gonzales signified her conformity to the waiver of confidentiality of petitioner’s bank deposits. Atty. Gonzales stated thus:”

The Supreme Court emphasized the principle of **relativity of contracts**, as enshrined in Article 1311(1) of the Civil Code, which provides that “contracts take effect only between the parties, their assigns and heirs x x x.” This principle dictates that a contract is binding only upon the parties who entered into it, not upon third parties. The Court stated that “It is basic in law that a compromise agreement, as a contract, is binding only upon the parties to the compromise, and not upon non-parties. This is the doctrine of relativity of contracts.” Since Doña Adela was not a party to the agreement between TIDCORP and BPI, it could not be bound by its terms, including the waiver of bank secrecy.

This ruling reinforces the importance of obtaining clear and explicit consent for any waiver of bank deposit confidentiality. It also underscores the protection afforded to individuals and entities undergoing insolvency proceedings. Creditors cannot circumvent the legal requirements for accessing bank information by inserting waiver clauses into agreements to which the debtor is not a direct party. The decision serves as a reminder that the right to privacy, as it relates to bank deposits, is a fundamental right that must be actively and knowingly relinquished.

FAQs

What was the key issue in this case?	The central issue was whether Doña Adela could be bound by a waiver of bank deposit confidentiality contained in an agreement between its creditors, TIDCORP and BPI, to which Doña Adela was not a direct party and had not explicitly consented.
What is the Law on Secrecy of Bank Deposits?	The Law on Secrecy of Bank Deposits (R.A. No. 1405) generally protects the confidentiality of bank deposits, prohibiting their examination except under specific circumstances like written permission from the depositor or a court order.
What does ‘relativity of contracts’ mean?	The principle of relativity of contracts, as per Article 1311 of the Civil Code, dictates that a contract is binding only upon the parties who entered into it, not upon third parties.
Can silence be interpreted as a waiver?	No, the Supreme Court held that silence cannot be interpreted as a waiver; a waiver must be demonstrated positively with clear and convincing evidence of an actual intention to relinquish the right.
What role does the receiver play in insolvency cases?	The receiver manages the assets of the insolvent company, and any agreement affecting those assets, like a waiver of bank secrecy, requires the receiver’s approval.
What are the exceptions to bank secrecy?	Exceptions include written permission from the depositor, cases of impeachment, court orders related to bribery or dereliction of duty by public officials, instances where the deposited money is the subject of litigation, and cases involving violations of the Anti-Money Laundering Act.
What was the Supreme Court’s ruling?	The Supreme Court ruled that Doña Adela was not bound by the waiver of confidentiality because it was not a party to the agreement and had not given express written consent.
What is the practical implication of this ruling?	The ruling protects individuals and entities undergoing insolvency from having their bank records accessed without their express written consent, reinforcing the right to privacy.

In conclusion, the Supreme Court’s decision in Doña Adela Export International, Inc. v. Trade and Investment Development Corporation (TIDCORP) and the Bank of the Philippine Islands (BPI) reaffirms the importance of explicit consent in waiving bank deposit secrecy, ensuring that individual privacy rights are protected even in insolvency proceedings. This case highlights the judiciary’s commitment to upholding constitutional rights against potential overreach by creditors.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Doña Adela Export International, Inc. v. Trade and Investment Development Corporation (TIDCORP) and the Bank of the Philippine Islands (BPI), G.R. No. 201931, February 11, 2015