BANK SECRECY LAW &

BOUNCING CHECK
Bank Secrecy Law (RA 1405)
This is an act prohibiting disclosure of or
inquiry into all types of deposits in any banking
institution including investments in bonds
issued by the Philippine government and its
political subdivisions and instrumentalities.

It is also unlawful for any official or employee
of a bank to disclose to any person any
information concerning deposits

Purpose


Encourage enough people to deposit in banks

Discourage private hoardings so that banks
may lend such funds

Coverage


All deposits of whatever nature with banks or
banking institution in the Philippines, including
investments in bond issued by the
Government of the Philippines , its political
subdivision and its instruments.

Prohibited Acts

Examination and inquiry and looking all deposits
a. any person
b. any government official or
c. any bureau or
d. any office
Disclosure by any
official
Employee

ANY UNAUTHORIZED PERSON of any information
concerning the said deposit.



General Rule

The deposits covered by law are considered
absolutely confidential nature and may not
be examined, inquired or looked into by any
person, government bureau or office.

Grounds to Allow Examination Of A
Bank Account:

Depositor consents in writing
Impeachment cases
By court order in bribery or dereliction of duty
cases against public officials
Deposit is subject of litigation

REQUISITES BEFORE ALLOWING
AN IN- CAMERA INSPECTION

Pending case before a court of competent
jurisdiction
Account must be clearly identified
The inspection is limited to the subject matter of
the pending case
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.
An investigation by the Office of the Ombudsman is
not
a pending litigation to allow examination of a bank
account.

Other Exemptions
NIRC Inquiry by the Commissioner of Internal
Revenue
Cases of Unclaimed Balances
Anti-Graft and Corrupt Practices Act (unexplained
wealth).
Inquiry or examination by the Anti-Money
Laundering Council
By order of the court in cases filed by the
ombudsman and upon the latters authority to
examine and obtain access to bank accounts and
bank records
Audit purposes, made by an independent auditor
hired by the bank, the results of which used
exclusively for the latter



Foreign Currency
These deposits :
absolutely confidential nature and
cannot be
examined
inquired or looked into
by any person, government official,
bureau or office
whether judicial or administrative or
legislative
any other entity whether public or
private.
Exemption for Foreign Currency
written permission of the
depositor


that provided for by AMLA




Liability of Banks and Officers
Under RA 1405 - the offender is subject to
imprisonment of not more than 5 years or a
fine of not more than P20,000, or both, in the
discretion of the court.
Under RA 6426 - the penalty is imprisonment
of not less than 1year not more than 5 years or
a fine of not less than P5,000 nor more than
P25,000, or both, in the discretion of the court.
Application:
Hi Yielding Corporation filed a complaint
against five of its officers for violation of
Section 31 of the Corporation Code. The
corporation claimed that the said officers were
guilty of advancing their personal interests to
the prejudice of the corporation, and that they
were grossly negligent in handling its affairs.
Aside from documents and contracts, the
corporation also submitted in evidence records
of the officers U.S. Dollar deposits in several
banks overseas - Boston Bank, Bank of
Switzerland, and Bank of New York.

For their part, the officers filed a criminal
complaint against the directors of Hi Yielding
Corporation for violation of Republic Act No.
6426, otherwise known as the Foreign
Currency Deposit Act of the Philippines. The
officers alleged that their bank deposits were
illegally disclosed for want of a court order,
and that such deposits were not even the
subject of the case against them.


a) Will the complaint filed
against the directors of Hi
Yielding Corporation
prosper?
Ans.
No, because the Foreign Currency Deposit Act
(R.A. No. 6426), including its punitive
provisions, refers to foreign currency deposits
accounts constituted within the Philippines. It
has no application at all to accounts, even
though they are banks, opened and
constituted abroad.

b) Was there a violation of
the Secrecy of Bank
Deposits Law (Republic Act
No. 1405)?

Ans.
No, because the punitive provisions of the
Secrecy of Bank Deposits Law (R.A. No.
1405), including the statutory exemptions
provided therein, are not applicable to FCDU
accounts, even when constituted locally.
(Intengan v. Court of Appeals, G.R. No.
128996, February 15, 2002)

Cases
PNB v. Gancayco 15 SCRA 91 (1965)
Mellon Bank v. Magsino 190 SCRA (1990)
PCIB v CA 193 SCRA 452 (1991)
Onate v. Abrogar 241 SCRA 659 (1995)