Spec Comm Notes

Law on Secrecy of Bank Deposits

See page 39 reviewer

**Discussed 3.1

In addition, the law serves a practical purpose as well: One’s financial status should be a private matter.

**Discussed 3.2

Question:

A depositor, who is a journalist, was looking over the shoulder of another person. The journalist then
discloses the existence of the bank account of the other person.

Here, the bank officials or employees are not liable because the disclosure was not done by them.

**Discussed 3.3 as exceptions; Note that the instances under 3.3 (j) are without court order

Deposits under RA 1405 pertains to an act which gives rise to a creditor-debtor relationship. **How
banks came about possession of the money. To be a deposit, the bank must be allowed to lend out the
money.

In Ejercito vs. SB – GR 157294, November 30, 2006

- Facts: an account was turned into a Trust account. It was argued that this is not a trust account
because it cannot be lent out by the bank.
- However, the SC said that a trust account is not a real trust. It does not dictate how the money is
to be used because there are conditions as to how the money will be used. It can be used by the
bank in any manner as it may deem fit as long as it would benefit the trustee.

Discussion for Foreign Currency Deposit Act – See reviewer page 46. Read 3.8, 3.9, 3.10

In Chinabank vs CA – December 2006 **Note that this is a pro hac vise decision

- Facts: A and B maintained a foreign currency dollar account with Citibank. B withdrew the
amounts deposited and deposited the same to Chinabank but it was only under his name. A
then filed an action for recovery.
- B deposited a check from Citibank payable to A or B. Chinabank allowed the account to be
opened only in the name of B. A sought to recover the amount from Chinabank and A asked a
subpoena to be used to respondent officers of Chinabank.
- Chinabank resisted the subpoena.
- Chinabank used RA 6426 as a contention: Absolutely confidential. Exceptions do not apply.
- SC said: Chinabank must comply with the subpoena on the ground that A’s request for subpoena
operates as his written consent for the details of the account to be disclosed. The basis being
the check presented to Chinabank is payable to A or B.
- A has a share here.

***Read notes on Garnishment both for domestic and foreign bank secrecy laws.
Discussion on Safety deposit box

Are they protected by the law on secrecy?

The relationship created here is bailor-bailee. The Safety deposit box is actually for hire here and it is for
the mutual benefit of the parties.

There is no full and absolute custody and control granted to the renter of the safety deposit box because
there is a counterpart key on the part of the bank and the renter cannot open the safety deposit box on
his or her own.

***Di ko sure kung ano sagot sa tanong haha sorry wala ako nanote ask natin iba nalang

Still on Foreign Currency Deposit Act

Without notice to the depositor (as an exception to the GR that there must be a written permission of
the depositor) only in the following instances:

a. Suspicious transactions without any underlying cause

**example here is breaking the pattern: Kunyare hindi tumataas ang deposit mo ng 20K tapos
biglang nagdeposit ka ng 1 million. Here, no need for a notice and the depositor must have a
justification as to the transaction.
b. Unlawful activity
c. Money laundering offense

PHILIPPINED DEPOSIT INRSURANCE CORPORATION ACT NOTES

The only amendment is the increase in the amount of the coverage of the insurance – 500K

Deposit under this law: Unpaid balance of money or its equivalent by a bank in its usual course of
business for which it is given and it is obliged to give credit.

Evidenced by a passbook, checkbook, or certificate.

Accounts referred to: Savings, Current, Foreign Currency either savings or current, Time Deposit
Account.

What is paid by the PDIC under its insurance coverage?

- Net amount les the offsets

- Offsets are liabilities which depositor may have to the bank. (Example: outstanding loan)
- Net amount is the outstanding balance at the time of the closure.

How is it paid by PDIC?

- In cash
- Thru transfer deposit: Bank A closed. PDIC may say your money is now deposited to Bank B.

See notes: 4.9 discussed page 54

Note that the PDIC is the preferred creditor of the bank. The PDIC ha the same preference as national
taxes due to the government. This is because what PDIC paid to the depositors is in the nature of public
funds. Thus, if A has 800k as a deposit, PDIC will only pay 500K. If the bank is already liquidated, PDIC
gets paid first. A then has a right to claim the remaining 300K but only as an ordinary creditor. Whatever
is left after payment of the preferred creditors, there will be a prorata distribution to all ordinary
creditors.

See two years sa notes? D ko alam bakit di ko na note yung 2 years ang sabi lang sa notes ko ay must file
within such period.

Six months: PDIC must settle with the depositor because if it does not settle and it is due to grave abuse
of discretion, bad faith, malice and GN (d ko maalala ano ang GN hahaha ask tayo ulit), the officer in
charge may be imprisoned for 6 months to 1 year. But if the non-settlement is due to conflicting claims,
PDIC has no fault with its inability to settled within the six months from filing of the claim.

INSURED AND UNINSURED

Suppose:

A has a:

Savings Account – Php 250K

Checking Account – Php 250 K

Time Deposit – Php 500 K

How much is insured? Since the accounts are maintained under the same name and under the same
capacity, the amounts are treated together and considered only as one account. Hence, only 500K is
insured and 500K is uninsured.

Suppose:

A has a:

Savings Account – Php 250K

Checking Account – Php 250 K

Time Deposit – Php 500 K

Acme enterprises where A is the sole proprietor – Php 1M

**Add everything and Insured is still 500K, Uninsured is 1.5M

Suppose:

A for B – Php 300K

C for A – Php 300K

A: Savings – Php 250K

A: Checking – Php 250K

ADD nasa box: Thus Insured is 500 for A, Uninsured is 300

For B, since sya ang beneficial owner and A only holds deposits in trust for B, B is entitled to separate
insurance coverage.

Suppose: INSURED
A B C

A Savings – Php 250K 250

A or B – Savings – Php 250K 125 125

A and C – Savings Php 300K 150 150

A/B/C – Savings Php 450K 150 150 150

**No uninsured here because none of the accounts were more than 500K.

Also, a joint account is subject to separate insurance. The presumption is the sharing is equal unless
otherwise stated.

**Note that if the co-depositor in a joint account is a juridical person, the rule on equal shares does not
apply. In the absence of any indication amounts deposited are presumed to belong to the juridical entity
entirely.

What If:

A/B/C – 750K Uninsured and insured? Pro rata. 250K each ang hatian pero ang insured and uninsured
must be of equal amounts since the deposit exceeded 500K.

**note on splitting of deposits

Exceeds 500K ang deposit tapos amount is deposited to two or more accounts under a natural or
juridical person who have no beneficial interest in the deposit.

There is splitting when it is done within 120 days immediately preceding or during a bank-declared
holiday or closure by the Monetary Board.
- This is a prohibited act and if found guilty, the penalty of prision mayor or fine may be imposed. Fine is
not less than 50K but not more than 2M.

**May be both penalties – discretion of the court.