BANKS: SECRECY OF BANK DEPOSITS; EXCEPTIONS (2015)

Raymond invested his money in securities issued by the Philippine government, through his
bank. Subsequently, the Bureau of Internal Revenue asked his bank to disclose his
investments. His bank refused the request for disclosure on the ground that the investments
are confidential under the Secrecy of Bank Deposits Law (Republic Act No. 1405, as
amended).

Is the bank's refusal justifi ed? Defend your answer. (2%)

Suggested answer:
Yes. The bank’s refusal is justified.
According to the law, the BIR may inquire into the bank deposits of a person if:
a. In order to verify the gross estate of the decedent; or
b. In cases the taxpayer requests for a compromise agreement for his inability to pay tax

In this case, since none of the exceptions are present, there is no justification for the
examination of Raymond’s bank account. Hence, the bank’s refusal was justified.

BANKS: SECRECY OF BANK DEPOSITS; EXCEPTIONS (2015)

First Bank received an order of garnishment over a client's peso and dollar deposits in First
Bank.

Should First Bank comply with that order? Explain. (3%)

Suggested answer:
Yes. First Bank should comply on the order of garnishment.

In the case of China bank v. Ortega, when a bank account is garnished, no real inquiry is made
on the account and the disclosure of the deposit made by the bank is purely incidental, hence
there is no violation on the bank secrecy law.

With respect to the dollar deposits. The same may be garnished. The dollar deposits must be
deposited in one of the banks duly authorized by the BSP.

Foreign deposits in another country are beyond the reach of Philippine jurisdiction, so as to be
subject to garnishment