BLAW 102 – LAW ON NEGOTIABLE INSTRUMENTS

POINTERS FOR FINAL EXAMINATION

RA 1405 – LAW ON SECRECY OF BANK DEPOSITS

 TWO (2) ALLIED PURPOSES/RATIONALE:

1. To discourage private hoarding; and
2. Encourage people to deposit money in banks to be utilized in authorized loans.
 Section 2 institutionalized the basic policy of the State by characterizing as “Absolutely
confidential” in general all deposits of whatever nature with banks and other financial institutions
in the country.
 Prohibited Acts:
o The law declares that all banks deposits of whatever nature with banks or banking
institutions in the Philippines, including investments in bonds issued by the Government
of the Philippines, its political subdivisions and its instrumentalities, are hereby considered
as of an absolutely confidential nature and may not be examined, inquired or looked into
by any person, government official, bureau or office:
o Exceptions to the prohibited acts:
1. In an examination made in the course of a special or general examination of a bank
that is specifically authorized by the Monetary Board after being satisfied that there
is reasonable ground to believe that a bank fraud or serious irregularity has been
or is being committed and that it is necessary to look into the deposit to establish
such fraud or irregularity;
2. In an examination made by an independent auditor hired by the bank to conduct
its regular audit provided that the examination is for audit purposes only and the
results thereof shall be for the exclusive use of the bank;
3. Upon written permission of the depositor;
4. In cases of impeachment;
5. Upon order of a competent court in cases of bribery or dereliction of duty of public
officials;
6. In cases where the money deposited or invested is the subject matter of the
litigation;
7. In cases of unexplained wealth under RA 3019 or the Anti-Graft and Corrupt
Practices Act;
8. In inquiry into bank deposits, trusts or investment funds, or banking transactions
when there is reasonable ground to believe that they have been used in support or
in furtherance of the December 1989 coup d’etat, under RA 6832;
9. When inquiry is conducted under the authority of the CIR into the bank accounts
of following: a) a decedent in order to determine his gross estate; b) any taxpayer
who has filed an application for compromise of his tax liability on the ground of
financial incapacity, which application is accompanied by a waiver of his privilege
under RA 1405;
10. In the following cases under the Anti-Money Laundering Act of 2001:
a) When a banking and other covered institutions are required to report to the
Anti-Money Laundering Council (AMLC) any single, series or
combination of transactions involving a total amount in excess of P4
Million (or an equivalent in foreign currency) within 5 working days from
occurrence thereof unless the Supervising Authority concerned prescribes
a longer period not to exceed 10 working days;
b) When AMLC inquires into or examines any particular deposit or
investment upon order of any competent court, when it has been
 established that there is probable cause that deposits or investments
involved are in any way related to money laundering offense, except that
no court order is required in the following cases: (1) kidnapping for
ransom; (2) unlawful activities under the Comprehensive Dangerous
Drugs Act of 2002; (3) hijacking and other violations under RA 6235; and
(4) destructive arson and murder including those perpetrated by terrorists
against non-combatants and similar targets.
11. Under RA 7653 or the New Central Bank Act of 1993, when the examination is
conducted pursuant to the required waiver of the secrecy of bank deposits made by
any director, Officer or Stockholder who together with his related interest,
contracts a loan or any other form of financial accommodation; and
12. Disclosure of certain information about bank deposits which have been dormant
for at least ten years, to the Treasurer of the Philippines in a sworn statement, a
copy of which is posted in the bank premises.