SECRECY OF BANK DEPOSITS SECRECY OF BANK DEPOSITS L AW PROHIBITED ACT • It shall be unlawful for any official or employee of a banking institution to disclose to any person any information concerning bank deposits DEPOSITS COVERED BY BANK SECRECY LAW • Tina bought some garments from a boutique and paid the latter using an Eastwest bank check. When the check was presented for payment, it was dishonored by Eastwest with notation “closed account”. Since the boutique owner cannot identify the name of the buyer, he, through his legal counsel, wrote a letter to Eastwest inquiring about the name of the drawer of the check. Eastwest refused to disclose the name of the drawer. • Was it proper for Eastwest to refuse disclosure of the information? • ANSWER: Yes, it was proper for Eastwest to refuse disclosure of the information. Under the Bank Secrecy Law, any information involving bank deposits is confidential and the unauthorized disclosure thereof is prohibited by law. WHOSE DISCLOSURE IS THEN PROHIBITED UNDER THE BANK SECRECY LAW? • It is the unauthorized disclosure by an official or employee of a banking institution of information relative to the peso deposit of an account holder. • Thus, if the disclosure was made by somebody who is neither an official nor an employee of a banking institution, such act cannot be considered as violation of the law. EXCEPTIONS 1. If there is written permission of the depositor 2. In case of impeachment 3. In case of order of a competent court in any of the following cases : i. bribery or dereliction of duty of public officials ii. where the subject matter of litigation is the money deposited iii. prosecution for unexplained wealth iv. prosecution for violation of the anti-graft and corrupt practices act v. if there is a probable cause of violation of the anti-money laundering law 4. Garnishment of bank deposits 5. The BIR may also inquire into bank deposits if there is an offer of compromise of tax liability on account of the depositor’s financial incapacity to verify such representation. EXCEPTIONS • 6. Upon a subpoena issued by the Ombudsman concerning an investigation it is conducting, provided that there must already be a case pending in court, the account be clearly identified, the inspection be limited to the subject matter of the pending case; and the bank personnel and the depositor must be notified to be present during the inspection. • 7. Under the Unclaimed Balances law, the bank may disclose to the National Treasurer information concerning dormant deposits for the purpose of initiating escheat proceedings. • 8. The BSP may also conduct examination of bank accounts to ensure compliance with the Anti-Money Laundering law, and to investigate unsafe and unsound banking practices. EXCEPTIONS 9. Republic Act No. 10021 or Exchange of Information on Tax Matters Act of 2009 allows Commissioner of Internal Revenue to inquire into bank deposits of the following: – A decedent to determine his estate; – Any taxpayer who has filed for an application for compromise of his tax liability; and – A specific taxpayer upon request for tax information from a foreign tax authority pursuant to an international convention or agreement on tax matters to which the Philippines is a party. CASE • Bola-bola Investments, Inc. bought treasury bills from Shock Brokers Corporation, a dealer of treasury bills. Bola-bola paid ₱100 million to Shock but the latter did not deliver the treasury bills to Bola-bola. Bolabola’s officers and employees deposited the money in various bank accounts. Bola-bola sued Shock for its failure to deliver the treasury bills. During the pendency of the case, Bola-bola applied for a court order to examine the bank accounts to which the money was deposited. Should the application for the order be granted? • ANSWER: No. The money deposited in the bank accounts was not the subject matter of the case. The legal issue of the case pertains to the non-delivery of the treasury bills, not the money itself. CASE • In another case, Spouses A and B received USD1,000,000 instead of the USD1,000 which they were actually supposed to receive. In the suit by GG Bank against the A and B, the action was for recovery of the money by virtue of a constructive trust. Can GG Bank inquire into the bank deposits of Spouses A and B? • ANSWER during discussion: Yes, GG Bank can inquire into the bank deposits of Spouses A and B considering that the money deposited is the subject matter of litigation. (Answer when not USD account) • True Answer • No. GG cannot inquire into the bank deposit. For Foreign Currency Deposits, the money deposited being the subject matter of litigation is not an exception. Here, the subject deposit is a US Dollar bank account. Thus, not an exception under Foreign currency deposit law. Thus, GG cannot inquire. REPUBLIC ACT NO. 6426 OR FOREIGN CURRENCY DEPOSIT ACT OF THE PHILIPPINES • All foreign currency deposits authorized the Foreign Currency Deposit Act, as amended by PD No. 1035 (Expanding the Authority of Certain Depository Banks under R.A. No. 6426 and for other Purposes), as well as foreign currency deposits authorized under PD No. 1034(Expanding the Authority of Certain Depository Banks under R.A. No. 6426 and for other Purposes), are declared as and considered of an absolutely confidential nature and, except upon the written permission of the depositor, in no instance shall foreign currency deposits be examined, inquired or looked into by any person, government official, bureau or office whether judicial or administrative or legislative, or any other entity whether public or private; provided, however, that said foreign currency deposits shall be exempt from attachment, garnishment, or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. (As amended by PD No. 1035, and further amended by PD No. 1246, promulgated on Nov. 21, 1977) EXCEPTIONS TO CONFIDENTIALITY OF FOREIGN CURRENCY DEPOSITS 1. Written Permission 2. Upon order of AMLC 3. PDIC/BSP may inquire into bank deposits if there is finding of unsound or unsafe banking practices 4. Anti-Terror Law by AMLC 5. Commissioner of BIR EXEMPTION FROM PROCESS OF FCD • Foreign currency Deposits shall be exempt from attachment, garnishment or any other order or process of any court, legislative body, government agency or any administrative body whatsoever. (sec 8 FCDA)
