Rachelle Bonita

Special Commercial Law

February 24,2015

LAW ON SECRECY OF THE BANK DEPOSITS:

1. What is the purpose of the law?

Answer:

- to encourage people to deposit their money in banks

- to discourage private hoarding so that the banks may lend out the money and assist in the economic development of the country

2. What acts are prohibited by the law?

A. the EXAMINATION AND INQUIRY OR LOOKING into all deposits of whatever nature with banks or banking institutions in the Philippines (including investments in bonds issued by the Governments or its political subdivisions and instrumentalities) by

i. any person or

ii. any government official or

iii. any bureau or

iv. any office

EXCEPT:

a. Upon the debtor’s written permission;b. In cases of impeachment;c. Upon a competent court’s order in cases of bribery of, or dereliction of duty by, public officials;

ord. In cases where money deposited or invested is the subject matter of litigation.

B. the DISCLOSURE by

a. any OFFICIAL of any banking institution or

b. any EMPLOYEE of any banking institution

to ANY UNAUTHORIZED PERSON of any information concerning the said deposit.

3. Under what situation could the examination of, or disclosure of information about, deposits be allowed?

a. Under the Law on Secrecy of Bank Deposits – Sec. 2, Law on Secrecy of Bank Deposits

Answer: in cases where the money deposited or invested is the subject matter of the litigation.

Mellon Bank v. Magsino

Even in cases not involving prosecution under the Anti-Graft and Corrupt Practices Act, an inquiry into the whereabouts of the amount converted necessarily to whatever is concealed (by being held or recorded in the name of persons other than the one responsible for illegal acquisition) inasmuch as the case is aimed at recovering the amount converted.

b. Under the Anti-Graft and Corrupt Practices Act (R.A. No. 3019, as amended):In cases involving unexplained wealth – Sec. 8, Anti-Graft and Corrupt Practices Act

Answer: unexplained wealth.

Banco Filipino v. Purisima

The permitted inquiry into illegally acquitted property in anti-graft cases extends to instances where such property is concealed by being held by or recorded in the name of other persons.

c. Under the Ombudsman Act (R.A. No. 6770) – Sec. 15(8), Ombudsman Act

Answer: deposits to its broad meaning.

Ejercito v. Sandiganbayan

An examination of RA 1405 shows that the term “deposits” used therein is to be understood

broadly and not limited to accounts which give rise to a creditor-debtor relationship between the depositor

and the bank. If the money deposited under an account may be used by banks for authorized loans to

third persons, then such account, regardless of whether it creates a creditor-debtor relationship between

the depositor and the bank falls under the category of accounts which the law precisely seeks to protect.

The phrase “of whatever nature” proscribes any restrictive interpretation of deposits. RA 1405 applies not

only to money which are invested, such as those placed in a trust account.

d. Under the Plunder Law (R.A. No. 7080, as amended) – Secs. 1(d) and 4,

Plunder Law

Answer: the exception in the law that is applicable in bribery also applies to plunder.

Ejercito v. Sandiganbayan, supra

Plunder is analogous to bribery. The exception in the law that is applicable in bribery also applies

to plunder. The overt or criminal acts as described in Section 1(d) of Republic Act No. 7080 would make

the similarity between plunder and bribery even more pronounced since bribery is essentially included

among these criminal acts.

e. Under the AMLA – Sec. 11, AMLA

Answer: exceptions under AMLA.

i. Upon order of a competent court when there’s a probable cause that has been established that the deposits or the money involved are related to money laundering activities

ii. Under AMLA, the bank is required to report to the AMLA Council in case of a single or series or combination of transactions involving the amount in excess of 500k or an equivalent amount in foreign currency, especially if the transaction is not supported by any legitimate purpose.

Republic v. Eugenio

There is no need for a preexisting or pending case in court for violation of the Anti- Money

Laundering Law before a bank inquiry order may be issued by the court. However it does not follow that

such order may be availed of ex-parte. A bank inquiry order, unlike a freeze order cannot be issued

unless notice is given to the owners of the account, allowing them the opportunity to contest the issuance

of such order.

f. Under the PDIC Charter – Sec. 8, par. Eighth, PDIC Charter

Answer: revised PDIC Charter.

RA 9576, in revising the PDIC Charter, provided that, notwithstanding the provisions of the

Secrecy of Bank Deposit Act, PDIC and/or BSP “may inquire into or examine deposit accounts and all

information related to – bank deposits, in case there is a finding of unsafe or unsound banking practice.”

g. Under the Human Security Act (R.A. No. 9732) – Secs. 27-43, Human Security

Act

Answer: regarding anti-terrorism.

This is handled by a special court like the CA. In handling these cases, it’s possible for CA to

require disclosure of bank deposits of persons suspected or charged of a crime involving terrorism.

h. Under the NIRC – Sec. 6(F), NIRC

Answer: authorizes the CIR to inquire into bank deposits of.

i. A decedent to determine his gross estate; and

ii. If the tax payer has filed for a compromise on his tax liability on the ground of financial capacity. In this case, normally, he would be required to sign a waiver of his privilege under RA 1405.

i. Under the Unclaimed Balances Law (R.A. No. 3936, as amended by P.D.

No.679) – Disclosure to the Treasurer of the Philippines for dormant deposits

for at least ten (10) years – Sec. 2, Unclaimed Balances Law; DOJ Opinion No.

104 (Series of 1975)

Answer: dormant accounts or dormant deposits.

Accounts which have been dormant for 10 years and that the bank is require to report that to the treasurer of the Philippines for purposes of escheat proceedings.

j. Under the Rules of Court

Answer: disclosures by authorized and responsible bank official.

China Banking Corporation v. Ortega

Submission of report, and turn-over to, the court officer or executing sheriff of garnished

amounts pursuant to a writ of garnishment in satisfaction of a judgment (Sec. 9[c], Rule 39, Rules of

Court)

WHAT ARE THE PRINCIPLES INVOLVE IN THE FF. CASES:

- Mellon Bank v. Magsino et. al. GR No. 71479, 18 October 1990

Republic Act No. 1405 on the secrecy of bank deposits, Section 2 of said law allows the disclosure of

bank deposits in cases where the money deposited is the subject matter of the litigation. Inasmuch as

Civil is aimed at recovering the amount converted by the Javiers for their own benefit, necessarily, an

inquiry into the whereabouts of the illegally acquired amount extends to whatever is concealed by being

held or recorded in the name of persons other than the one responsible for the illegal acquisition.

- Banco Filipino Bank v. Purisima, 161 SCRA 576 (1988)

While Republic Act No. 1405 provides that bank deposits are "absolutely confidential ... and [therefore]

may not be examined, inquired or looked into," except in those cases enumerated therein, the Anti-Graft

Law directs in mandatory terms that bank deposits "shall be taken into consideration in the enforcement

of this section, notwithstanding any provision of law to the contrary." The only conclusion possible is that

section 8 of the Anti-Graft Law is intended to amend section 2 of Republic Act No. 1405 by providing

additional exception to the rule against the disclosure of bank deposits.

- Marquez v. Desierto, 359 SCRA 772 (2001)

Before an in camera inspection may be allowed, there must be a pending case before a court of

competent jurisdiction. Further, the account must be clearly identified, the inspection limited to the subject

matter of the pending case before the court of competent jurisdiction. The bank personnel and the

account holder must be notified to be present during the inspection, and such inspection may cover only

the account identified in the pending case.

- Republic v. Eugenio, 545 SCRA 384 (2008)

There is no need for a preexisting or pending case in court for violation of the Anti- Money Laundering

Law before a bank inquiry order may be issued by the court. However it does not follow that such order

may be availed of ex-parte. A bank inquiry order, unlike a freeze order cannot be issued unless notice is

given to the owners of the account, allowing them the opportunity to contest the issuance of such order.

FOREIGN CURRENCY DEPOSIT ACT

1. What are the unique features of Foreign Currency Deposit?

2. What is the coverage of this law?

3. What are prohibited under this law?

4. What are the exceptions?

5. What are the penalties for violation of this law?

WHAT ARE THE PRINCIPLES INVOLVE IN THE FF. CASES: